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PINEBRIDGE ASIAN BOND FUND

REPORTS AND FINANCIAL STATEMENTS

FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Asian Bond Fund

Reports and Financial StatementsFor the year ended 31 December 2017

Contents

Pages

Management and professional service details 1

Manager’s report 2

Investment report 3-13

Trustee’s report 14

Independent auditor’s report 15-17

Statement of net assets 18

Statement of comprehensive income 19

Statement of changes in equity 20

Statement of cash flows 21

Notes to the financial statements 22-36

PineBridge Asian Bond Fund

Management and Professional Service Details

1

Manager Trustee

PineBridge Investments Hong Kong Limited AIA Company (Trustee) LimitedLevel 31, Three Pacific Place, 1 Queen’s Road East 2nd Floor, AIA Building, 1 Stubbs Road,Hong Kong Hong Kong

Administrator and Custodian Application and Redemption Agents

Citibank N.A., Hong Kong Branch Citicorp Financial Services Limited50th Floor, Champion Tower Citi Tower, One Bay EastThree Garden Road, Central 83 Hoi Bun RoadHong Kong Kwun Tong, Kowloon

Hong Kong

Auditor Registered Office

Ernst & Young 2nd Floor, AIA Building22/F CITIC Tower 1 Stubbs Road,1 Tim Mei Avenue Hong KongCentral, Hong Kong

Legal Advisers

Deacons5th Floor, Alexandra House18 Chater RoadCentral, Hong Kong

PineBridge Asian Bond FundManager’s ReportFor the year ended 31 December 2017

2

Manager’s Market Perspective

2017 Market Overview

Asia Fixed Income market had a strong year during 2017 benefiting from strong fundamentals and positivesentiment with regards to emerging market broadly, including Asia. Macro themes focused on the improvingtrend of global growth, trade rebound benefiting Asia in particular and normalization of monetary policies in anumber of key economies.

The Federal Reserve raised policy rates three times in 2017 and also commenced its balance sheet reduction atthe start of 4Q 2017. Other central banks such has ECB, Bank of England, the Bank of Canada all adopted lessaccommodative rhetoric or actions.

Credit ratings for India and Indonesia, now fully investment grade rated, were positively received. China’s ratingdowngrade to A+ by Moody’s had muted impact to the market, given it highlighted well telegraphed China risks.The China’s 19th National Congress, which solidified President’s Xi position and stature, also emphasis on thequality of Chinese economic growth as well as some reform policies, providing stability for the region.

Returns for the JACI was strong at 5.8% in 2017 with credit spread compression creating 3.8% of return. Highyield (+6.9%) outperformed investment grade (5.5%). New issuance reached a record high of USD 294 billiondominated by Chinese issuers. Unsurprisingly, China now represents 48% of the JACI index.

We expect the Asian Fixed Income market will continue to be well supported with ample liquidity. Creditfundamentals within Asia are generally stable and well anchored by a benign default environment. Primarymarket will continue to be busy with new issuance expectations going from USD 220 to USD 300 billion. Wethink the higher end of the range should materialize as we expect a number Chinese maiden issuers will issuebonds before expiry of their NDRC quota in Q12018. The synchronization of global economic growth will allowcentral banks to shift towards a normalize monetary policy. We are expecting the Federal Reserve to raise policythree times in 2018. China growth is expected to further decelerate in 2018 on the back of financial deleveraging,supply-side reform and property market slow-down. Policy makers will focus on the quality of growth ratherthan the speed of growth and we expect policy to remain relatively tight in the onshore markets.

PineBridge Asian Bond FundInvestment ReportAs at 31 December 2017

3

INVESTMENT PORTFOLIO Nominal Market % of net

value value assetsUS$ US$

LISTED/QUOTED INVESTMENTS

BONDS

UNITED STATES DOLLARABU DHABI NATIONAL ENERGY CO PJSC 4.375% 22JUN2026 300,000 309,495 0.19%ALIBABA GROUP HOLDING LTD 4% 6DEC2037 520,000 539,218 0.33%AUSTRALIA & NEW ZEALAND BANKING GROUP LTD/UNITED KINGDOM

6.75% 29DEC2049 1,500,000 1,710,000 1.05%AZURE NOVA INTERNATIONAL FINANCE LTD 2.625% 1NOV2021 1,500,000 1,461,608 0.90%AZURE ORBIT INTERNATIONAL FINANCE LTD 3.75% 6MAR2023 1,100,000 1,122,939 0.69%BANGKO SENTRAL NG PILIPINAS BOND 8.6% 15JUN2027 1,000,000 1,405,790 0.86%BANK OF CHINA LTD 5% 13NOV2024 3,400,000 3,631,034 2.23%BANK OF COMMUNICATIONS CO LTD 4.5% 3OCT2024 380,000 387,512 0.24%BAOSTEEL FINANCING 2015 PTY LTD 3.875% 28JAN2020 1,500,000 1,524,099 0.94%BDO UNIBANK INC 2.95% 6MAR2023 1,520,000 1,495,925 0.92%BHARTI AIRTEL INTERNATIONAL NETHERLANDS BV 5.125% 11MAR2023 1,100,000 1,167,858 0.72%BLUESTAR FINANCE HOLDINGS LTD 3.5% 30SEP2021 1,000,000 1,000,914 0.61%BOC AVIATION LTD 4.375% 2MAY2023 1,000,000 1,052,199 0.65%BUSAN BANK CO LTD 3.625% 25JUL2026 2,000,000 1,936,300 1.19%CCBL CAYMAN CORP LTD 3.25% 28JUL2020 620,000 620,561 0.38%CDBL FUNDING 1 3.25% 2DEC2019 750,000 752,235 0.46%CDBL FUNDING 1 4.25% 2DEC2024 2,350,000 2,441,488 1.50%CENTURY MASTER INVESTMENT CO LTD 4.75% 19SEP2018 1,000,000 1,013,297 0.62%CGN NEW ENERGY HOLDINGS CO LTD 4% 19AUG2018 1,075,000 1,080,686 0.66%CGNPC INTERNATIONAL LTD 4% 19MAY2025 900,000 928,661 0.57%CHARMING LIGHT INVESTMENTS LTD 4.375% 21DEC2027 200,000 201,405 0.12%CHINA CONSTRUCTION BANK ASIA CORP LTD 4.25% 20AUG2024 1,000,000 1,016,146 0.62%CHINA CONSTRUCTION BANK CORP 3.875% 13MAY2025 1,500,000 1,514,586 0.93%CHINA GREAT WALL INTERNATIONAL HOLDINGS III LTD 3.125%

31AUG2022 200,000 197,304 0.12%CHINA LIFE INSURANCE OVERSEAS CO LTD/HONG KONG 3.35%

27JUL2027 330,000 326,596 0.20%CHINA MINMETALS CORP 3.75% 31DEC2049 3,200,000 3,152,771 1.94%CHINA OVERSEAS FINANCE CAYMAN II LTD 5.5% 10NOV2020 400,000 427,258 0.26%CHINA OVERSEAS FINANCE CAYMAN V LTD 3.95% 15NOV2022 1,000,000 1,030,358 0.63%CHINA OVERSEAS FINANCE CAYMAN VI LTD 4.25% 8MAY2019 1,200,000 1,222,950 0.75%CHINA OVERSEAS FINANCE CAYMAN VI LTD 5.95% 8MAY2024 1,500,000 1,705,887 1.05%CHINA RESOURCES GAS GROUP LTD 4.5% 5APR2022 1,500,000 1,579,729 0.97%CHINA RESOURCES LAND LTD 4.375% 27FEB2019 800,000 813,301 0.50%CHINA SHENHUA OVERSEAS CAPITAL CO LTD 3.125% 20JAN2020 1,000,000 1,003,427 0.62%CHINA SHENHUA OVERSEAS CAPITAL CO LTD 3.875% 20JAN2025 1,000,000 1,027,408 0.63%CITIC LTD 3.875% 28FEB2027 1,000,000 1,001,608 0.61%CK HUTCHISON INTERNATIONAL 17 LTD 2.875% 5APR2022 1,000,000 997,305 0.61%CNOOC FINANCE 2012 LTD 3.875% 2MAY2022 1,300,000 1,341,616 0.82%CNOOC FINANCE 2015 USA LLC 3.5% 5MAY2025 2,000,000 2,019,314 1.24%CNOOC NEXEN FINANCE 2014 ULC 4.25% 30APR2024 1,500,000 1,583,886 0.97%


4

INVESTMENT PORTFOLIO (CONTINUED) Nominal Market % of net


LISTED/QUOTED INVESTMENTS (CONTINUED)

BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)COMMONWEALTH BANK OF AUSTRALIA 3.375% 20OCT2026 1,000,000 993,720 0.61%CRCC YUPENG LTD 3.95% 28FEB2049 1,000,000 1,008,851 0.62%DAH SING BANK LTD 4.25% 30NOV2026 1,400,000 1,418,019 0.87%DAH SING BANK LTD 5.25% 29JAN2024 1,000,000 1,019,385 0.63%DAI-ICHI LIFE INSURANCE CO LTD 4% 29DEC2049 1,350,000 1,325,970 0.81%DAI-ICHI LIFE INSURANCE CO LTD 5.1% 29OCT2049 500,000 530,000 0.33%ENN ENERGY HOLDINGS LTD 3.25% 24JUL2022 800,000 795,326 0.49%EXPORT-IMPORT BANK OF CHINA 3.625% 31JUL2024 800,000 827,452 0.51%EXPORT-IMPORT BANK OF INDIA 3.375% 5AUG2026 1,000,000 984,458 0.60%EXPORT-IMPORT BANK OF KOREA 5.125% 29JUN2020 1,000,000 1,054,999 0.65%FUKOKU MUTUAL LIFE INSURANCE CO 5% 29DEC2049 750,000 779,625 0.48%GOHL CAPITAL LTD 4.25% 24JAN2027 1,300,000 1,335,317 0.82%GOODMAN HK FINANCE 4.375% 19JUN2024 1,000,000 1,048,013 0.64%HUARONG FINANCE 2017 CO LTD 4.25% 7NOV2027 280,000 276,767 0.17%HUARONG FINANCE CO LTD 4% 17JUL2019 1,500,000 1,514,737 0.93%HUARONG FINANCE II CO LTD 5.5% 16JAN2025 2,500,000 2,698,097 1.66%HUTCHISON WHAMPOA INTERNATIONAL 11 LTD 4.625% 13JAN2022 1,000,000 1,063,738 0.65%HYUNDAI CAPITAL SERVICES INC 2.625% 29SEP2020 1,700,000 1,682,381 1.03%ICBCIL FINANCE CO LTD 3.375% 5APR2022 650,000 650,673 0.40%ICBCIL FINANCE CO LTD 3.625% 19MAY2026 1,500,000 1,483,879 0.91%INDONESIA GOVERNMENT INTERNATIONAL BOND 4.35% 8JAN2027 300,000 317,888 0.20%INDONESIA GOVERNMENT INTERNATIONAL BOND 4.75% 8JAN2026 1,500,000 1,633,263 1.00%INDONESIA GOVERNMENT INTERNATIONAL BOND 7.75% 17JAN2038 500,000 715,990 0.44%INDONESIA GOVERNMENT INTERNATIONAL BOND 8.5% 12OCT2035 500,000 750,485 0.46%INDUSTRIAL & COMMERCIAL BANK OF CHINA ASIA LTD 4.5%

10OCT2023 850,000 858,398 0.53%INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD 4.875% 21SEP2025 2,000,000 2,120,234 1.30%INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD/NEW YORK 2.957%

8NOV2022 1,380,000 1,367,968 0.84%INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD/NEW YORK 3.538%

8NOV2027 720,000 717,064 0.44%KASIKORNBANK PCL/CAYMAN ISLANDS 3.5% 25OCT2019 500,000 506,468 0.31%KEB HANA BANK 4.25% 14OCT2024 1,600,000 1,653,818 1.02%KEB HANA BANK 4.375% 30SEP2024 2,675,000 2,784,124 1.71%KOREA HYDRO & NUCLEAR POWER CO LTD 2.375% 28OCT2019 2,000,000 1,985,940 1.22%KOREA HYDRO & NUCLEAR POWER CO LTD 3% 19SEP2022 500,000 497,881 0.31%KOREA MIDLAND POWER CO LTD 2.5% 21JUL2021 2,000,000 1,964,478 1.21%KOREA RESOURCES CORP 2.25% 19APR2021 1,000,000 971,582 0.60%KOREA WESTERN POWER CO LTD 2.625% 22SEP2019 1,300,000 1,295,815 0.80%KUNLUN ENERGY CO LTD 3.75% 13MAY2025 1,000,000 1,025,700 0.63%LEMBAGA PEMBIAYAAN EKSPOR INDONESIA 3.875% 6APR2024 500,000 510,774 0.31%LONGFOR PROPERTIES CO LTD 3.875% 13JUL2022 400,000 399,949 0.25%


5




BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)LOTTE SHOPPING BUSINESS MANAGEMENT HONG KONG LTD 2.375%

5SEP2020 1,000,000 985,101 0.60%MINERA Y METALURGICA DEL BOLEO SA DE CV 2.875% 7MAY2019 1,500,000 1,502,656 0.92%MINMETALS BOUNTEOUS FINANCE BVI LTD 3.5% 30JUL2020 2,100,000 2,115,922 1.30%MINMETALS BOUNTEOUS FINANCE BVI LTD 4.2% 27JUL2026 850,000 871,500 0.54%MINMETALS BOUNTEOUS FINANCE BVI LTD 4.75% 30JUL2025 2,000,000 2,124,460 1.30%NEXEN ENERGY ULC 5.875% 10MAR2035 1,500,000 1,844,421 1.13%NIPPON LIFE INSURANCE CO 4.7% 20JAN2046 1,500,000 1,552,500 0.95%OIL INDIA INTERNATIONAL PTE LTD 4% 21APR2027 1,730,000 1,734,155 1.06%ONGC VIDESH LTD 4.625% 15JUL2024 1,700,000 1,812,759 1.11%OVERSEA-CHINESE BANKING CORP LTD 4.25% 19JUN2024 1,000,000 1,040,834 0.64%PELABUHAN INDONESIA II PT 4.25% 5MAY2025 4,500,000 4,612,500 2.82%PERTAMINA PERSERO PT 4.875% 3MAY2022 2,000,000 2,130,336 1.31%PERTAMINA PERSERO PT 6% 3MAY2042 2,000,000 2,278,000 1.40%PERTAMINA PERSERO PT 6.45% 30MAY2044 500,000 600,281 0.37%PERTAMINA PERSERO PT 6.5% 27MAY2041 1,750,000 2,108,755 1.29%PERUSAHAAN GAS NEGARA PERSERO TBK 5.125% 16MAY2024 3,800,000 4,088,139 2.51%PHILIPPINE GOVERNMENT INTERNATIONAL BOND 4% 15JAN2021 750,000 788,492 0.48%PHILIPPINE GOVERNMENT INTERNATIONAL BOND 4.2% 21JAN2024 1,700,000 1,850,644 1.14%PTT GLOBAL CHEMICAL PCL 4.25% 19SEP2022 650,000 681,223 0.42%RELIANCE HOLDING USA INC 5.4% 14FEB2022 2,500,000 2,717,812 1.67%RELIANCE INDUSTRIES LTD 4.125% 28JAN2025 500,000 519,621 0.32%RH INTERNATIONAL SINGAPORE CORP PTE LTD 3.5% 2MAY2019 1,380,000 1,394,533 0.86%RURAL ELECTRIFICATION CORP LTD 3.875% 7JUL2027 500,000 496,963 0.31%SANTOS FINANCE LTD 4.125% 14SEP2027 870,000 859,877 0.53%SHINHAN BANK 3.875% 24MAR2026 1,500,000 1,522,173 0.93%SHINHAN BANK 3.875% 7DEC2026 2,000,000 2,024,894 1.24%SHINHAN BANK CO LTD 3.75% 20SEP2027 800,000 804,526 0.49%SIAM COMMERCIAL BANK PCL/CAYMAN ISLANDS 3.2% 26JUL2022 1,000,000 1,007,375 0.62%SINOCHEM INTERNATIONAL DEVELOPMENT PTE LTD 3.125% 25JUL2022 210,000 208,375 0.13%SINOPEC CAPITAL 2013 LTD 3.125% 24APR2023 2,000,000 1,992,466 1.22%SINOPEC GROUP OVERSEAS DEVELOPMENT 2015 LTD 3.25% 28APR2025 1,500,000 1,491,844 0.92%STATE GRID OVERSEAS INVESTMENT 2014 LTD 4.125% 7MAY2024 1,000,000 1,058,390 0.65%SUMITOMO LIFE INSURANCE CO 4% 14SEP2077 1,000,000 982,124 0.60%SUN HUNG KAI PROPERTIES CAPITAL MARKET LTD 3.375% 25FEB2024 1,750,000 1,761,632 1.08%SWIRE PROPERTIES MTN FINANCING LTD 4.375% 18JUN2022 2,000,000 2,114,910 1.30%TEWOO GROUP FINANCE NO 3 LTD 4.625% 6APR2020 1,300,000 1,316,931 0.81%TIANQI FINCO CO LTD 3.75% 28NOV2022 1,000,000 986,588 0.61%UNION BANK OF THE PHILIPPINES 3.369% 29NOV2022 630,000 630,159 0.39%UNITED OVERSEAS BANK LTD 3.5% 16SEP2026 2,000,000 2,016,260 1.24%


6




BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)WEICHAI INTERNATIONAL HONG KONG ENERGY GROUP CO LTD 3.75%

14SEP2049 1,870,000 1,842,255 1.13%WING LUNG BANK LTD 3.75% 22NOV2027 2,000,000 1,981,120 1.22%WING LUNG BANK LTD 4.793% 7NOV2022 500,000 503,222 0.31%XI'AN MUNICIPAL INFRASTRUCTURE CONSTRUCTION INVESTMENT

GROUP CORP LTD 2.8% 13SEP2019 1,350,000 1,331,936 0.82%ZHUZHOU CITY CONSTRUCTION DEVELOPMENT GROUP CO LTD 2.98%

19OCT2019 1,150,000 1,130,821 0.69%TOTAL UNITED STATES DOLLAR 159,733,385 98.07%

TOTAL INVESTMENTS* 159,733,385 98.07%

TOTAL INVESTMENTS, AT COST* 158,397,723

* Investments are accounted for on a trade date basis

PineBridge Asian Bond FundInvestment ReportFor the year ended 31 December 2017

7

STATEMENT OF MOVEMENTS IN INVESTMENT PORTFOLIO

Nominal value

1 January 2017 Additions Deductions 31 December 2017US$ US$ US$ US$


BONDS

UNITED STATES DOLLARABU DHABI NATIONAL ENERGY CO PJSC 4.375%

22JUN2026 300,000 – – 300,000ALIBABA GROUP HOLDING LTD 3.6% 28NOV2024 2,000,000 – (2,000,000) –ALIBABA GROUP HOLDING LTD 4% 6DEC2037 – 520,000 – 520,000AMBANK M BHD 3.125% 3JUL2019 500,000 – (500,000) –AUSTRALIA & NEW ZEALAND BANKING GROUP LTD

4.4% 19MAY2026 2,140,000 – (2,140,000) –AUSTRALIA & NEW ZEALAND BANKING GROUP LTD

4.5% 19MAR2024 2,500,000 – (2,500,000) –AUSTRALIA & NEW ZEALAND BANKING GROUP

LTD/UNITED KINGDOM 6.75% 29DEC2049 3,500,000 – (2,000,000) 1,500,000AZURE NOVA INTERNATIONAL FINANCE LTD 2.625%

1NOV2021 1,500,000 – – 1,500,000AZURE ORBIT INTERNATIONAL FINANCE LTD 3.75%

6MAR2023 2,500,000 – (1,400,000) 1,100,000BANGKO SENTRAL NG PILIPINAS BOND 8.6%

15JUN2027 2,000,000 – (1,000,000) 1,000,000BANK OF CHINA HONG KONG LTD 5.55% 11FEB2020 1,200,000 – (1,200,000) –BANK OF CHINA LTD 5% 13NOV2024 2,500,000 1,650,000 (750,000) 3,400,000BANK OF COMMUNICATIONS CO LTD 4.5% 3OCT2024 380,000 – – 380,000BAOSTEEL FINANCING 2015 PTY LTD 3.875% 28JAN2020 2,800,000 – (1,300,000) 1,500,000BDO UNIBANK INC 2.95% 6MAR2023 – 1,520,000 – 1,520,000BHARTI AIRTEL INTERNATIONAL NETHERLANDS BV

5.125% 11MAR2023 2,000,000 1,100,000 (2,000,000) 1,100,000BHARTI AIRTEL INTERNATIONAL NETHERLANDS BV

5.35% 20MAY2024 2,250,000 550,000 (2,800,000) –BLUESTAR FINANCE HOLDINGS LTD 3.5% 30SEP2021 – 1,000,000 – 1,000,000BOC AVIATION LTD 4.375% 2MAY2023 1,000,000 – – 1,000,000BUSAN BANK CO LTD 3.625% 25JUL2026 2,800,000 – (800,000) 2,000,000CCBL CAYMAN CORP LTD 3.25% 28JUL2020 620,000 – – 620,000CDBL FUNDING 1 3.25% 2DEC2019 750,000 – – 750,000CDBL FUNDING 1 4.25% 2DEC2024 1,000,000 1,350,000 – 2,350,000CENTURY MASTER INVESTMENT CO LTD 4.75%

19SEP2018 2,000,000 – (1,000,000) 1,000,000CGN NEW ENERGY HOLDINGS CO LTD 4% 19AUG2018 1,075,000 – – 1,075,000CGNPC INTERNATIONAL LTD 4% 19MAY2025 900,000 – – 900,000CHARMING LIGHT INVESTMENTS LTD 4.375%

21DEC2027 – 200,000 – 200,000CHINA CINDA FINANCE 2014 LTD 5.625% 14MAY2024 1,000,000 – (1,000,000) –CHINA CINDA FINANCE 2017 I LTD 4.1% 9MAR2024 – 500,000 (500,000) –CHINA CONSTRUCTION BANK ASIA CORP LTD 4.25%

20AUG2024 1,000,000 – – 1,000,000CHINA CONSTRUCTION BANK CORP 3.875% 13MAY2025 2,500,000 – (1,000,000) 1,500,000CHINA GREAT WALL INTERNATIONAL HOLDINGS III

LTD 3.125% 31AUG2022 – 200,000 – 200,000CHINA GREAT WALL INTERNATIONAL HOLDINGS III

LTD 3.875% 31AUG2027 – 200,000 (200,000) –CHINA LIFE INSURANCE OVERSEAS CO LTD/HONG

KONG 3.35% 27JUL2027 – 330,000 – 330,000CHINA MERCHANTS FINANCE CO LTD 3.5% 3AUG2020 500,000 – (500,000) –CHINA MERCHANTS FINANCE CO LTD 4.75% 3AUG2025 1,300,000 – (1,300,000) –CHINA MERCHANTS FINANCE CO LTD 5% 4MAY2022 500,000 – (500,000) –CHINA MINMETALS CORP 3.75% 31DEC2049 – 3,200,000 – 3,200,000CHINA OVERSEAS FINANCE CAYMAN II LTD 5.5%

10NOV2020 400,000 – – 400,000


8

STATEMENT OF MOVEMENTS IN INVESTMENT PORTFOLIO (CONTINUED)

Nominal value



BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)CHINA OVERSEAS FINANCE CAYMAN V LTD 3.95%

15NOV2022 2,250,000 – (1,250,000) 1,000,000CHINA OVERSEAS FINANCE CAYMAN VI LTD 4.25%

8MAY2019 2,500,000 – (1,300,000) 1,200,000CHINA OVERSEAS FINANCE CAYMAN VI LTD 5.95%

8MAY2024 1,500,000 – – 1,500,000CHINA RESOURCES GAS GROUP LTD 4.5% 5APR2022 1,500,000 – – 1,500,000CHINA RESOURCES LAND LTD 4.375% 27FEB2019 800,000 – – 800,000CHINA SHENHUA OVERSEAS CAPITAL CO LTD 3.125%

20JAN2020 1,000,000 – – 1,000,000CHINA SHENHUA OVERSEAS CAPITAL CO LTD 3.875%

20JAN2025 2,000,000 – (1,000,000) 1,000,000CITIC LTD 3.875% 28FEB2027 – 1,000,000 – 1,000,000CITIC LTD 6.8% 17JAN2023 2,500,000 – (2,500,000) –CK HUTCHISON INTERNATIONAL 16 LTD 1.875%

3OCT2021 1,000,000 – (1,000,000) –CK HUTCHISON INTERNATIONAL 17 LTD 2.875%

5APR2022 – 1,000,000 – 1,000,000CNAC HK FINBRIDGE CO LTD 3.5% 19JUL2022 – 300,000 (300,000) –CNAC HK FINBRIDGE CO LTD 4.125% 19JUL2027 – 2,000,000 (2,000,000) –CNOOC CURTIS FUNDING NO 1 PTY LTD 4.5% 3OCT2023 2,500,000 – (2,500,000) –CNOOC FINANCE 2012 LTD 3.875% 2MAY2022 1,300,000 – – 1,300,000CNOOC FINANCE 2015 USA LLC 3.5% 5MAY2025 2,000,000 – – 2,000,000CNOOC NEXEN FINANCE 2014 ULC 4.25% 30APR2024 1,500,000 – – 1,500,000CNPC GENERAL CAPITAL LTD 3.95% 19APR2022 2,000,000 – (2,000,000) –COMMONWEALTH BANK OF AUSTRALIA 3.375%

20OCT2026 1,500,000 1,000,000 (1,500,000) 1,000,000CRCC YUPENG LTD 3.95% 28FEB2049 2,000,000 – (1,000,000) 1,000,000DAH SING BANK LTD 4.25% 30NOV2026 1,400,000 – – 1,400,000DAH SING BANK LTD 5.25% 29JAN2024 2,000,000 – (1,000,000) 1,000,000DAI-ICHI LIFE INSURANCE CO LTD 4% 29DEC2049 1,350,000 – – 1,350,000DAI-ICHI LIFE INSURANCE CO LTD 5.1% 29OCT2049 500,000 – – 500,000ENN ENERGY HOLDINGS LTD 3.25% 24JUL2022 – 800,000 – 800,000EQUATE PETROCHEMICAL BV 4.25% 3NOV2026 1,000,000 – (1,000,000) –EXPORT-IMPORT BANK OF CHINA 3.625% 31JUL2024 800,000 – – 800,000EXPORT-IMPORT BANK OF INDIA 3.375% 5AUG2026 2,000,000 – (1,000,000) 1,000,000EXPORT-IMPORT BANK OF KOREA 4.375% 15SEP2021 1,000,000 – (1,000,000) –EXPORT-IMPORT BANK OF KOREA 5.125% 29JUN2020 1,000,000 – – 1,000,000FUKOKU MUTUAL LIFE INSURANCE CO 5% 29DEC2049 2,250,000 – (1,500,000) 750,000FUKOKU MUTUAL LIFE INSURANCE CO 6.5% 29SEP2049 – 700,000 (700,000) –GLOBAL LOGISTIC PROPERTIES LTD 3.875% 4JUN2025 – 1,500,000 (1,500,000) –GOHL CAPITAL LTD 4.25% 24JAN2027 – 1,300,000 – 1,300,000GOODMAN HK FINANCE 4.375% 19JUN2024 – 2,000,000 (1,000,000) 1,000,000HUARONG FINANCE 2017 CO LTD 2.82% 27APR2020 – 200,000 (200,000) –HUARONG FINANCE 2017 CO LTD 4.25% 7NOV2027 – 280,000 – 280,000HUARONG FINANCE CO LTD 4% 17JUL2019 2,500,000 – (1,000,000) 1,500,000HUARONG FINANCE II CO LTD 3.25% 3JUN2021 620,000 – (620,000) –HUARONG FINANCE II CO LTD 3.75% 19NOV2020 1,600,000 – (1,600,000) –HUARONG FINANCE II CO LTD 4.5% 16JAN2020 1,100,000 – (1,100,000) –HUARONG FINANCE II CO LTD 5.5% 16JAN2025 2,500,000 – – 2,500,000


9


Nominal value



BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)HUTCHISON WHAMPOA INTERNATIONAL 11 LTD

4.625% 13JAN2022 1,000,000 – – 1,000,000HUTCHISON WHAMPOA INTERNATIONAL 14 LTD

3.625% 31OCT2024 1,000,000 – (1,000,000) –HYUNDAI CAPITAL SERVICES INC 2.625% 29SEP2020 1,700,000 – – 1,700,000ICBCIL FINANCE CO LTD 2.75% 19MAY2021 2,000,000 – (2,000,000) –ICBCIL FINANCE CO LTD 3.2% 10NOV2020 600,000 – (600,000) –ICBCIL FINANCE CO LTD 3.375% 5APR2022 – 650,000 – 650,000ICBCIL FINANCE CO LTD 3.625% 19MAY2026 2,250,000 – (750,000) 1,500,000INCITEC PIVOT FINANCE LLC 3.95% 3AUG2027 – 500,000 (500,000) –INDONESIA GOVERNMENT INTERNATIONAL BOND

4.35% 8JAN2027 300,000 – – 300,000INDONESIA GOVERNMENT INTERNATIONAL BOND

4.75% 8JAN2026 1,500,000 – – 1,500,000INDONESIA GOVERNMENT INTERNATIONAL BOND

5.375% 17OCT2023 1,000,000 – (1,000,000) –INDONESIA GOVERNMENT INTERNATIONAL BOND

5.875% 15JAN2024 2,000,000 – (2,000,000) –INDONESIA GOVERNMENT INTERNATIONAL BOND

7.75% 17JAN2038 500,000 – – 500,000INDONESIA GOVERNMENT INTERNATIONAL BOND

8.5% 12OCT2035 500,000 – – 500,000INDUSTRIAL & COMMERCIAL BANK OF CHINA ASIA

LTD 4.5% 10OCT2023 1,850,000 – (1,000,000) 850,000INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD

4.875% 21SEP2025 2,500,000 1,000,000 (1,500,000) 2,000,000INDUSTRIAL & COMMERCIAL BANK OF CHINA

LTD/NEW YORK 2.957% 8NOV2022 – 1,380,000 – 1,380,000INDUSTRIAL & COMMERCIAL BANK OF CHINA

LTD/NEW YORK 3.538% 8NOV2027 – 720,000 – 720,000KASIKORNBANK PCL/CAYMAN ISLANDS 3.5%

25OCT2019 500,000 – – 500,000KEB HANA BANK 4.25% 14OCT2024 1,600,000 – – 1,600,000KEB HANA BANK 4.375% 30SEP2024 1,675,000 1,000,000 – 2,675,000KOMATSU FINANCE AMERICA INC 2.437% 11SEP2022 – 1,000,000 (1,000,000) –KOREA GAS CORP 2.25% 18JUL2026 1,350,000 – (1,350,000) –KOREA HYDRO & NUCLEAR POWER CO LTD 2.375%

28OCT2019 2,000,000 – – 2,000,000KOREA HYDRO & NUCLEAR POWER CO LTD 3%

19SEP2022 500,000 – – 500,000KOREA MIDLAND POWER CO LTD 2.5% 21JUL2021 2,000,000 – – 2,000,000KOREA RESOURCES CORP 2.25% 19APR2021 1,000,000 – – 1,000,000KOREA WESTERN POWER CO LTD 2.625% 22SEP2019 1,300,000 – – 1,300,000KUNLUN ENERGY CO LTD 3.75% 13MAY2025 1,000,000 – – 1,000,000LEMBAGA PEMBIAYAAN EKSPOR INDONESIA 3.875%

6APR2024 – 500,000 – 500,000LONGFOR PROPERTIES CO LTD 3.875% 13JUL2022 – 400,000 – 400,000LOTTE SHOPPING BUSINESS MANAGEMENT HONG

KONG LTD 2.375% 5SEP2020 – 1,000,000 – 1,000,000MALAYAN BANKING BHD 3.25% 20SEP2022 1,000,000 – (1,000,000) –MCC HOLDING HONG KONG CORP LTD 2.5% 28AUG2017 1,200,000 – (1,200,000) –MINERA Y METALURGICA DEL BOLEO SA DE CV

2.875% 7MAY2019 1,500,000 – – 1,500,000MINMETALS BOUNTEOUS FINANCE BVI LTD 3.5%

30JUL2020 2,100,000 – – 2,100,000MINMETALS BOUNTEOUS FINANCE BVI LTD 4.2%

27JUL2026 2,050,000 – (1,200,000) 850,000


10


Nominal value



BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)MINMETALS BOUNTEOUS FINANCE BVI LTD 4.75%

30JUL2025 1,500,000 500,000 – 2,000,000MITSUI FUDOSAN CO LTD 3.65% 20JUL2027 – 300,000 (300,000) –MIZUHO FINANCIAL GROUP INC 3.477% 12APR2026 750,000 – (750,000) –MTR CORP CI LTD 2.5% 2NOV2026 1,000,000 – (1,000,000) –NEXEN ENERGY ULC 5.875% 10MAR2035 1,500,000 – – 1,500,000NIPPON LIFE INSURANCE CO 4.7% 20JAN2046 1,500,000 – – 1,500,000OCBC WING HANG BANK LTD 6% 29APR2049 1,500,000 – (1,500,000) –OIL INDIA INTERNATIONAL PTE LTD 4% 21APR2027 – 1,730,000 – 1,730,000ONGC VIDESH LTD 3.25% 15JUL2019 1,500,000 – (1,500,000) –ONGC VIDESH LTD 4.625% 15JUL2024 1,000,000 1,450,000 (750,000) 1,700,000ORIX CORP 2.9% 18JUL2022 – 450,000 (450,000) –OVERSEA-CHINESE BANKING CORP LTD 4.25%

19JUN2024 1,000,000 – – 1,000,000PELABUHAN INDONESIA II PT 4.25% 5MAY2025 3,000,000 3,500,000 (2,000,000) 4,500,000PERTAMINA PERSERO PT 4.3% 20MAY2023 2,500,000 – (2,500,000) –PERTAMINA PERSERO PT 4.875% 3MAY2022 2,000,000 – – 2,000,000PERTAMINA PERSERO PT 6% 3MAY2042 2,000,000 – – 2,000,000PERTAMINA PERSERO PT 6.45% 30MAY2044 500,000 – – 500,000PERTAMINA PERSERO PT 6.5% 27MAY2041 1,000,000 750,000 – 1,750,000PERUSAHAAN GAS NEGARA PERSERO TBK 5.125%

16MAY2024 – 3,800,000 – 3,800,000PETRONAS CAPITAL LTD 7.875% 22MAY2022 1,000,000 – (1,000,000) –PHILIPPINE GOVERNMENT INTERNATIONAL BOND 4%

15JAN2021 750,000 – – 750,000PHILIPPINE GOVERNMENT INTERNATIONAL BOND

4.2% 21JAN2024 2,500,000 – (800,000) 1,700,000PHILIPPINE GOVERNMENT INTERNATIONAL BOND

7.5% 25SEP2024 500,000 – (500,000) –PTT GLOBAL CHEMICAL PCL 4.25% 19SEP2022 – 650,000 – 650,000RELIANCE HOLDING USA INC 5.4% 14FEB2022 2,500,000 – – 2,500,000RELIANCE INDUSTRIES LTD 4.125% 28JAN2025 1,000,000 – (500,000) 500,000RH INTERNATIONAL SINGAPORE CORP PTE LTD 3.5%

2MAY2019 1,380,000 – – 1,380,000RURAL ELECTRIFICATION CORP LTD 3.875% 7JUL2027 – 500,000 – 500,000SANTOS FINANCE LTD 4.125% 14SEP2027 – 870,000 – 870,000SGSP AUSTRALIA ASSETS PTY LTD 3.25% 29JUL2026 1,000,000 – (1,000,000) –SHANHAI HONG KONG INTERNATIONAL

INVESTMENTS LTD 3.875% 20APR2020 – 680,000 (680,000) –SHINHAN BANK 3.875% 24MAR2026 – 1,500,000 – 1,500,000SHINHAN BANK 3.875% 7DEC2026 2,000,000 – – 2,000,000SHINHAN BANK CO LTD 3.75% 20SEP2027 – 800,000 – 800,000SIAM COMMERCIAL BANK PCL/CAYMAN ISLANDS

3.2% 26JUL2022 – 2,000,000 (1,000,000) 1,000,000SIAM COMMERCIAL BANK PCL/CAYMAN ISLANDS

3.5% 7APR2019 1,000,000 – (1,000,000) –SINOCHEM INTERNATIONAL DEVELOPMENT PTE LTD

3.125% 25JUL2022 – 210,000 – 210,000SINOCHEM OFFSHORE CAPITAL CO LTD 3.124%

24MAY2022 – 1,000,000 (1,000,000) –


11


Nominal value



BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)SINOPEC CAPITAL 2013 LTD 3.125% 24APR2023 2,000,000 – – 2,000,000SINOPEC GROUP OVERSEAS DEVELOPMENT 2015 LTD

3.25% 28APR2025 – 1,500,000 – 1,500,000SINOPEC GROUP OVERSEAS DEVELOPMENT 2017 LTD

3.625% 12APR2027 – 2,000,000 (2,000,000) –SKYSEA INTERNATIONAL CAPITAL MANAGEMENT

LTD 4.875% 7DEC2021 500,000 – (500,000) –SMBC AVIATION CAPITAL FINANCE DAC 2.65%

15JUL2021 2,850,000 – (2,850,000) –SPIC 2016 US DOLLAR BOND CO LTD 3.875% 6DEC2026 230,000 – (230,000) –STATE GRID OVERSEAS INVESTMENT 2014 LTD 4.125%

7MAY2024 1,000,000 – – 1,000,000SUMITOMO LIFE INSURANCE CO 4% 14SEP2077 – 1,240,000 (240,000) 1,000,000SUN HUNG KAI PROPERTIES CAPITAL MARKET LTD

3.375% 25FEB2024 1,750,000 – – 1,750,000SWIRE PROPERTIES MTN FINANCING LTD 4.375%

18JUN2022 2,000,000 – – 2,000,000TEWOO GROUP FINANCE NO 3 LTD 4.625% 6APR2020 – 2,000,000 (700,000) 1,300,000THAI OIL PCL 3.625% 23JAN2023 – 1,000,000 (1,000,000) –TIANQI FINCO CO LTD 3.75% 28NOV2022 – 1,000,000 – 1,000,000UNION BANK OF THE PHILIPPINES 3.369% 29NOV2022 – 630,000 – 630,000UNITED OVERSEAS BANK LTD 3.5% 16SEP2026 2,000,000 – – 2,000,000WANT WANT CHINA FINANCE LTD 1.875% 14MAY2018 1,500,000 – (1,500,000) –WEICHAI INTERNATIONAL HONG KONG ENERGY

GROUP CO LTD 3.75% 14SEP2049 – 1,870,000 – 1,870,000WING LUNG BANK LTD 3.75% 22NOV2027 – 2,000,000 – 2,000,000WING LUNG BANK LTD 4.793% 7NOV2022 – 500,000 – 500,000XI'AN MUNICIPAL INFRASTRUCTURE CONSTRUCTION

INVESTMENT GROUP CORP LTD 2.8% 13SEP2019 1,350,000 – – 1,350,000ZHEJIANG ENERGY GROUP HONG KONG LTD 2.3%

30SEP2017 1,000,000 – (1,000,000) –ZHUZHOU CITY CONSTRUCTION DEVELOPMENT

GROUP CO LTD 2.98% 19OCT2019 1,150,000 – – 1,150,000


12

PineBridge Asian Bond Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998, asamended, supplemented and restated. The Fund is managed in accordance with the distinct investment policy.There have been no changes to the investment policy during the year.

Investment objectives and policies

The Fund seeks to provide a stable return and long term capital growth through investing in a wide range of debtsecurities within the Asian region. The Fund shall predominantly be invested in fixed income securities issuedby corporations, banks and sovereigns in the Asian markets.

2017 2016 2015US$ US$ US$

Investments and investment income

Total value of investments 159,733,385 192,097,970 156,498,965

Interest on bank deposits 21,695 10,431 856Interest on investments (net of withholding tax) 6,615,543 6,548,027 5,491,705

Net foreign currency gains/(losses) – 26 (90)Net income excluding capital appreciation 6,458,650 6,426,050 5,250,441

Net appreciation of investments and derivativefinancial instruments- realized and unrealized 4,734,833 62,177 21,870

Performance table

Net asset valueTotal net Net asset

asset value value perunitUS$ US$

Provident Fund units2017 162,883,756 13.362016 198,299,279 12.592015 159,452,395 12.03


13

Performance table (Continued)

Performance record since inception

Highestissue price

per unitUS$

Lowestredemption price

per unitUS$

Annualizedinvestment

return(Note 2)

%Provident Fund units2017 13.41 12.61 6.122016 13.10 12.07 4.662015 12.10 11.61 3.622014 11.66 10.88 6.712013 11.21 10.53 (1.10)2012 (Note 1) 11.01 9.99 9.96

Note 1: The Fund started to issue Provident Fund units on 10 February 2012.

Note 2: The annualized investment return is calculated by comparing the net asset value per unit at the year endagainst the net asset value per unit at the beginning of the year except for the first period where the initialsubscription price per unit is used. The Fund was launched on 10 February 2012.

Note 3: No Standard units were issued by the Fund since inception. The “Standard units” have been renamed to“Standard units - Accumulation” with effect from 27 June 2013.

Note 4: No Standard units - Monthly Distribution were issued by the Fund since its launch.

Commentary by the Trustee

Based on the information received from the Manager of the Fund during the year, the Trustee of the Fundconfirmed, to the best of its knowledge and belief, that the investment objectives and policies for the Fund werecomplied with.

PineBridge Asian Bond FundTrustee’s ReportFor the year ended 31 December 2017

14

We hereby confirm that, in our opinion, the Manager of the Fund has, in all material respects, managed the Fundfor the year ended 31 December 2017 in accordance with the provisions of the Trust Deed dated 10 August1998, as amended, supplemented and restated.

On behalf ofAIA Company (Trustee) Limited

______________________________ ______________________________Director Director

18 April 2018

INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE ASIAN BOND FUND (THE “FUND”)

15

Report on the Audit of the Financial Statements

OpinionWe have audited the financial statements of PineBridge Asian Bond Fund (the “Fund”) set out on pages 18 to36, which comprise the statement of net assets as at 31 December 2017, and the statement of comprehensiveincome, the statement of changes in equity and the statement of cash flows for the year then ended, and notes tothe financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Fund as at 31December 2017, and of its financial transactions and its cash flows for the year then ended in accordance withHong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified PublicAccountants (“HKICPA”).

Basis for opinionWe conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) and with referenceto Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Ourresponsibilities under those standards are further described in the Auditor’s responsibilities for the audit of thefinancial statements section of our report. We are independent of the Fund in accordance with the HKICPA’sCode of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethicalresponsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficientand appropriate to provide a basis for our opinion.

Other information included in the Reports and Financial StatementsThe Manager and the Trustee of the Fund are responsible for the other information. The other informationcomprises the information included in the Reports and Financial Statements, other than the financial statementsand our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form ofassurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,in doing so, consider whether the other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work wehave performed, we conclude that there is a material misstatement of this other information, we are required toreport that fact. We have nothing to report in this regard.

Responsibilities of the Manager and Trustee and those charged with governance for the financialstatementsThe Manager and the Trustee of the Fund are responsible for the preparation of the financial statements thatgive a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control asthe Manager and the Trustee determine is necessary to enable the preparation of financial statements that arefree from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Manager and the Trustee of the Fund are responsible for assessing theFund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern andusing the going concern basis of accounting unless the Manager and the Trustee of the Fund either intend toliquidate the Fund or to cease operations or have no realistic alternative but to do so.

The Manager and the Trustee of the Fund are required to ensure that the financial statements have been properlyprepared in accordance with the relevant disclosure provisions of the constitutive documents of the Fund ("theConstitutive Documents"), the Mandatory Provident Fund Schemes Ordinance ("the MPFSO"), the MandatoryProvident Fund Schemes (General) Regulation ("the General Regulation"), the Code on MPF Investment Funds("the MPF Code"), and Guidelines II.5 issued by the Mandatory Provident Fund Schemes Authority ("theMPFA") and the Code on Unit Trusts and Mutual Funds ("the Code") issued by the Hong Kong Securities andFutures Commission ("the SFC").

Those charged with governance are responsible for overseeing the Fund's financial reporting process.

INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE ASIAN BOND FUND (THE “FUND”)(CONTINUED)

16

Auditor’s responsibilities for the audit of the financial statementsOur objectives are to obtain reasonable assurance about whether the financial statements as a whole are freefrom material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes ouropinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibilitytowards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordancewith HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud orerror and are considered material if, individually or in the aggregate, they could reasonably be expected toinfluence the economic decisions of users taken on the basis of these financial statements. In addition, we arerequired to assess whether the financial statements of the Fund have been properly prepared, in all materialrespects, in accordance with the relevant disclosure provisions of the Constitutive Documents, the MPFSO, theGeneral Regulation, the MPF Code and Guidelines II.5 issued by the MPFA and the Code issued by the SFC.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraudor error, design and perform audit procedures responsive to those risks, and obtain audit evidence thatis sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error, as fraud may involvecollusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures thatare appropriate in the circumstances, but not for the purpose of expressing an opinion on theeffectiveness of the Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accountingestimates and related disclosures made by the Manager and the Trustee

• Conclude on the appropriateness of the Manager and the Trustee’s use of the going concern basis ofaccounting and, based on the audit evidence obtained, whether a material uncertainty exists related toevents or conditions that may cast significant doubt on the Fund’s ability to continue as a goingconcern. If we conclude that a material uncertainty exists, we are required to draw attention in ourauditor’s report to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However, future events or conditions may cause the Fund to cease tocontinue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including thedisclosures, and whether the financial statements represent the underlying transactions and events in amanner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope andtiming of the audit and significant audit findings, including any significant deficiencies in internal control thatwe identify during our audit.

INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE ASIAN BOND FUND (THE “FUND”)(CONTINUED)

17

Report on matters under the relevant disclosure provisions of the Constitutive Documents, the MPFSO,the General Regulation, the MPF Code, and Guidelines II.5 issued by the MPFA and the Code issued bythe SFC

(a) In our opinion, the financial statements have been properly prepared, in all material respects, inaccordance with the relevant disclosure provisions of the Constitutive Documents, the MPFSO, theGeneral Regulation, the MPF Code and Guidelines II.5 issued by the MPFA and the Code issued by theSFC; and

(b) We have obtained all the information and explanations which, to the best of our knowledge and belief,are necessary for the purpose of our audit.

Certified Public AccountantsHong Kong18 April 2018

PineBridge Asian Bond FundStatement of Net AssetsAs at 31 December 2017

18

2017 2016Note US$ US$

AssetsCurrent assetsInvestments 4(b) 159,733,385 192,097,970Interest receivable on investments 1,569,516 2,058,966Bank interest receivable 231 175Amounts receivable on subscription 68,216 713,725Cash and cash equivalents 1,723,006 3,764,837Total assets 163,094,354 198,635,673

LiabilitiesCurrent liabilitiesAmounts payable on redemption 166,781 282,422Accounts payable and accrued expenses 43,817 53,972Total liabilities 210,598 336,394

EquityNet assets attributable to unitholders 3 162,883,756 198,299,279

On behalf of On behalf ofAIA Company (Trustee) Limited PineBridge Investments Hong Kong

Limited

_________________________ _________________________ _________________________Director Director Director

The notes on pages 22 to 36 are an integral part of these financial statements.

PineBridge Asian Bond FundStatement of Comprehensive IncomeFor the year ended 31 December 2017

19

2017 2016Note US$ US$

IncomeInterest on bank deposits 21,695 10,431Interest on investments 6,615,555 6,548,027Net gains on investments 5 4,734,833 62,177Net foreign currency gains – 26Other income – 60,000Total investment income 11,372,083 6,680,661

ExpensesTrustee’s fee 7(b) 90,087 90,392Custodian and administration fees 8 54,332 58,949Audit fee 12,165 12,463Bank charges 214 226Legal and professional fees 2,518 2,591Other expenses 19,272 27,813Total operating expenses 178,588 192,434

TaxationWithholding tax (12) –

Total comprehensive income 11,193,483 6,488,227


PineBridge Asian Bond FundStatement of Changes in EquityFor the year ended 31 December 2017

20

2017 2016Note US$ US$

Balance at the beginning of the year 198,299,279 159,452,395

Issue of units 3 20,552,565 81,876,739

Redemption of units 3 (67,161,571) (49,518,082)

Net (decrease)/increase from unit transactions (46,609,006) 32,358,657


Balance at the end of the year 162,883,756 198,299,279


PineBridge Asian Bond FundStatement of Cash FlowsFor the year ended 31 December 2017

21

2017 2016US$ US$

Cash flows from operating activities


Adjustment for:Interest on investments (6,615,555) (6,548,027)Interest on bank deposits (21,695) (10,431)Withholding tax 12 –

Operating profit/(loss) before working capital changes 4,556,245 (70,231)

Net decrease/(increase) in investments 32,364,585 (35,599,005)Net (decrease)/increase in accounts payable and accrued

expenses (10,155) 12,213Cash generated from/(used in) operations 36,910,675 (35,657,023)

Interest on investments received 7,104,993 6,150,315Interest on bank deposits received 21,639 10,268

Net cash generated from/(used in) operating activities 44,037,307 (29,496,440)

Cash flows from financing activities

Proceeds from issue of units 21,198,074 81,268,889Payments on redemption of units (67,277,212) (49,672,728)

Net cash (used in)/generated from financing activities (46,079,138) 31,596,161

Net (decrease)/increase in cash and cash equivalents (2,041,831) 2,099,721

Cash and cash equivalents at the beginning of the year 3,764,837 1,665,116Cash and cash equivalents at the end of the year 1,723,006 3,764,837

Analysis of balance of cash and cash equivalents

Cash at banks 35,706 10,037Short-term deposits 1,687,300 3,754,800

1,723,006 3,764,837


PineBridge Asian Bond FundNotes to the Financial StatementsFor the year ended 31 December 2017

22

1. The Fund

PineBridge Asian Bond Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998,as amended, supplemented and restated. The Fund has been authorized by the Securities and FuturesCommission of Hong Kong and approved by the Mandatory Provident Fund Schemes Authority of HongKong.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of the financial statements are set out below.These policies have been consistently applied to all the years presented, unless otherwise stated.

(a) Basis of preparation

The financial statements have been prepared in accordance with Hong Kong Financial ReportingStandards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants(“HKICPA”). The financial statements have been prepared under the historical cost convention, asmodified by the revaluation of financial assets and financial liabilities (including derivative financialinstruments) at fair value through profit or loss.

The preparation of financial statements in conformity with HKFRS requires the Trustee and Managerto make judgments, estimates and assumptions that affect the application of policies and the reportedamounts of assets and liabilities, income and expenses. The estimates and associated assumptions arebased on historical experience and various other factors that are believed to be reasonable under thecircumstances, the results of which form the basis of making the judgments about carrying values ofassets and liabilities that are not readily apparent from other sources. Actual results may differ fromthese estimates.

New and amended standards that are effective in the current year and have been adopted by the Fund

There are no standards, interpretations or amendments to existing standards that are effective for thefirst time for the financial year beginning 1 January 2017 that would be expected to have a significantimpact on the Fund.

New standards, amendments and interpretations issued but not effective for the financial yearbeginning 1 January 2017 and have not been early adopted

HKFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition offinancial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. Itreplaces the guidance in HKAS 39 that relates to the classification and measurement of financialinstruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes threeprimary measurement categories for financial assets: amortized cost, fair value through othercomprehensive income ("OCI") and fair value through profit or loss. The basis of classificationdepends on the entity's business model and the contractual cash flow characteristics of the financialasset. Investments in equity instruments are required to be measured at fair value through profit or losswith the irrevocable option at inception to present changes in fair value in OCI not recycling. There isnow a new expected credit losses model that replaces the incurred loss impairment model used inHKAS 39. For financial liabilities there were no changes to classification and measurement except forthe recognition of changes in own credit risk in other comprehensive income, for liabilities designatedat fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness byreplacing the bright line hedge effectiveness tests. It requires an economic relationship between thehedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one managementactually use for risk management purposes.


23

2. Summary of significant accounting policies (Continued)

(a) Basis of preparation (Continued)

New standards, amendments and interpretations issued but not effective for the financial yearbeginning 1 January 2017 and have not been early adopted (Continued)

Contemporaneous documentation is still required but is different to that currently prepared underHKAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Earlyadoption is permitted. The Fund plans to adopt the new standard on the required effective date. During2017, the Fund has performed a high-level impact assessment of all three aspects of HKFRS 9. Thispreliminary assessment is based on currently available information and may be subject to changesarising from further detailed analysis or additional reasonable and supportable information being madeavailable to the Fund in the future. Overall, the Fund expects no significant impact on its statement ofnet assets.

There are no other standards, interpretations or amendments to existing standards that are not yeteffective that would be expected to have a significant impact on the Fund.

(b) Investments

All investments are classified as “financial assets at fair value through profit or loss”. These financialassets are classified as held for trading or designated by the Trustee and the Manager at fair valuethrough profit or loss at inception. Purchases and sales of investments are accounted for on a trade datebasis. Investments are initially recognized at fair value, excluding transaction costs which are expensedas incurred in the statement of comprehensive income, and are subsequently re-measured at fair value.Realized and unrealized gains and losses on investments are recognized in the statement ofcomprehensive income within “net gains/(losses) on investments” in the period in which they arise.Investments are derecognized when the rights to receive cash flows from the investments have expiredor the Fund has transferred substantially all risks and rewards of ownership.

The following represent the basis of valuation for financial reporting purposes:

(i) Investments which are listed or traded on an exchange are fair valued based on last traded prices.

(ii) Investments which are not listed on an exchange or are thinly traded are valued by using quotesfrom brokers.

(c) Income

Interest income is recognized on a time-proportionate basis using the effective interest method in thestatement of comprehensive income for all interest bearing instruments. Other income is accounted foron an accrual basis.

The effective interest method is a method of calculating the amortized cost of an interest bearing assetand of allocating the interest income over the relevant period. The effective interest rate is the rate thatexactly discounts estimated future cash receipts throughout the expected life of the financialinstrument, or a shorter period where appropriate, to the net carrying amount of the financialinstrument. When calculating the effective interest rate, the Fund estimates cash flows considering allcontractual terms of the financial instrument (for example, prepayment options) but does not considerfuture credit losses. The calculation includes all fees and points received between parties to thecontract that are an integral part of the effective interest rate, transaction costs and all other premiumsor discounts.

(d) Translation of foreign currencies

(i) Functional and presentation currencies

Items included in the Fund’s financial statements are measured using the currency of the primaryeconomic environment in which it operates (the “functional currency”). The financial statementsare presented in United States dollar, which is the Fund’s functional and presentation currency.


24


(d) Translation of foreign currencies (Continued)

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange ratesprevailing at the dates of the transactions. Foreign currency assets and liabilities are translated intothe functional currency using the exchange rate prevailing at the year end date.

Foreign exchange gains and losses arising from translation are included in the statement ofcomprehensive income.

Foreign exchange gains and losses relating to cash and cash equivalents are presented in thestatement of comprehensive income within “net foreign currency gains/(losses)”.

Foreign exchange gains and losses relating to the financial assets and liabilities carried at fairvalue through profit or loss are presented in the statement of comprehensive income within “netgains/(losses) on investments”.

(e) Expenses

Expenses are accounted for on an accrual basis.

(f) Subscription and redemption of units

Proceeds and payments on the subscription and redemption of units are recorded in the statement ofchanges in equity. The price at which units are subscribed or redeemed is calculated by reference to thenet asset value per unit as at the close of business on the relevant dealing day.

(g) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of net assetswhere the Fund currently has a legally enforceable right to set-off the recognized amounts and there isan intention to settle on a net basis or realize the asset and liability simultaneously.

(h) Cash and cash equivalents

Cash and cash equivalents include cash at banks, deposits held with banks with original maturities ofthree months or less and bank overdrafts, if any.


25

3. Number of units in issue and net assets attributable to unitholders per unit

The Fund issues units, which are redeemable at the holder’s option, are classified as equity.

The Fund has no restrictions on the subscriptions of units. Pursuant to the Trust Deed and subject to theconditions and procedures set out therein, the Manager is entitled, having regard to the interests ofunitholders, to limit the total number of units which unitholders are entitled to redeem on any dealing dayto 10% of the units then in issue or deemed to be in issue. Subscriptions and redemptions of units duringthe year are shown in the statement of changes in equity. In order to achieve the investment objectives, theFund endeavors to invest its capital in accordance with the investment policies as outlined in note 4, whilstmaintaining sufficient liquidity to meet redemption requests. Such liquidity is augmented by the holding ofliquid investments.

The Fund’s objectives and policies for managing its obligations to redeem units are included in note 4(h) oncapital risk management and note 4(e) on liquidity risk.

2017 2016Units Units

Number of Provident Fund units in issue 12,192,824 15,744,870

US$ US$

Net asset value per Provident Fund unit 13.36 12.59

2017 2017 2017Standard

Units - Monthly

Distribution

StandardUnits

- AccumulationProvident

Fund UnitsUnits Units Units

Balance brought forward – – 15,744,870Total issues – – 1,565,210Total redemptions – – (5,117,256)Balance carried forward – – 12,192,824

2016 2016 2016Standard

Units - Monthly

Distribution

StandardUnits

- AccumulationProvident

Fund UnitsUnits Units Units

Balance brought forward – – 13,249,913Total issues – – 6,391,461Total redemptions – – (3,896,504)Balance carried forward – – 15,744,870


26

3. Number of units in issue and net assets attributable to unitholders per unit (Continued)

The Fund offers three classes of units. Provident Fund units are offered to provident fund schemesapproved by the Mandatory Provident Fund Schemes Authority. Standard units - Accumulation are offeredto all investors other than the provident fund schemes approved by the Mandatory Provident Fund SchemesAuthority. The Standard units have been renamed to “Standard units - Accumulation” with effect from 27June 2013. Standard units - Monthly Distribution are offered to all investors other than the provident fundschemes approved by the Mandatory Provident Fund Schemes Authority with distribution policy set out inthis class. No Standard units - Accumulation & Standard units - Monthly Distribution were issued for theyears ended 31 December 2017 and 2016.

4. Financial risk management

(a) Financial risk factors

The investment objective of the Fund is to seek to provide a stable return and long term capital growththrough investing in a wide range of debt securities within the Asian region. The Fund shallpredominantly be invested in fixed income securities issued by corporations, banks and sovereigns inthe Asian markets.

The Fund is exposed to market price risk, cash flow and fair value interest rate risk, credit and custodyrisk, liquidity risk and currency risk.

The risks and the respective risk management policies employed by the Fund to manage these risks arediscussed below.

(b) Market price risk

Market price risk is the risk that the value of a financial instrument will fluctuate as a result of changesin market prices, whether those changes are caused by factors specific to the individual instrument orfactors affecting all instruments in the market.

All investments present a risk of loss of capital. The Fund’s market price risk is managed through (i)deliberate securities selection, and (ii) diversification of the investment portfolio.

As at year end, the overall market exposures were as follows:

2017 2016Fair value

US$CostUS$

% of netassets

Fair valueUS$

CostUS$

% of netassets

Held for trading:Bonds 159,733,385 158,397,723 98.07 192,097,970 194,084,825 96.87


27

4. Financial risk management (Continued)

(b) Market price risk (Continued)

Net market exposures

The following table shows the net market exposure of the Fund to various markets, incorporating theunderlying market risk through all financial assets and liabilities held by the Fund as at 31 December.

2017 2016US$ equivalent US$ equivalent

Markets exposed to

Australia 5,087,696 16,325,690Bermuda 3,686,115 3,653,906British Virgin Islands 22,233,073 31,404,455Canada 3,428,307 3,231,470Cayman Islands 18,203,766 21,904,169China 16,507,974 11,388,137Hong Kong 16,812,228 24,047,627India 3,813,801 5,423,432Indonesia 19,746,411 17,363,941Ireland – 2,746,502Isle of Man 1,335,317 –Japan 5,170,219 6,281,326Malaysia – 2,738,276Mexico 1,502,656 1,527,780Netherlands 1,167,858 5,412,041Philippines 6,171,010 6,950,893Singapore 7,446,356 5,446,726South Korea 20,178,911 19,753,255Thailand 2,195,066 1,542,753United Arab Emirates 309,495 302,418United States of America 4,737,126 4,653,173

159,733,385 192,097,970

The following table shows the net exposures to sectors as at 31 December 2017 and 2016:

2017 2016% %

Sectors exposed to

Basic Materials 9 6Communications 1 3Consumer, Cyclical 5 1Consumer, Non-cyclical – 1Diversified 1 2Energy 18 18Financial 44 47Government 6 8Industrial 5 6Utilities 11 8

100 100

There were no investments issued by the same issuer with market value exceeding 10% of the Fund’snet asset value as at 31 December 2017 and 2016.


28



Net market exposures (Continued)

The table below summarizes the impact on net assets attributable to unitholders as a result ofincreases/decreases of the key index to which the Fund is exposed. The analysis is based on theassumption that the index had increased/decreased by the respective percentage with all other variablesheld constant and the Fund’s investments moved according to the historical correlation with the index.

2017 2016Change in

market index %Impact

US$Change in


US$+/- +/- +/- +/-

JACI Investment Grade TRI(prior to 1 April 2016: HSBCAsian High Grade BondIndex) 5% 7,917,287 4% 7,553,747

The Manager has used their view of what would be a “reasonable shift” in JACI Investment Grade TRI(prior to 1 April 2016: HSBC Asian High Grade Bond Index), having regard to the historical volatilityof the index, to estimate the change for use in the market price risk sensitivity analysis above.

Disclosures above are shown in absolute terms, changes and impacts could be positive or negative.Changes in market index % are revised annually depending on the Manager’s current view of marketvolatility and other relevant factors.

(c) Cash flow and fair value interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes inmarket interest rates.

Interest rate risk arises from the effects of fluctuations in the prevailing levels of markets interest rateson the fair value of interest-bearing assets and liabilities and future cash flow. The Fund holds bondsthat expose the Fund to fair value interest rate risk. The Fund also holds cash and cash equivalents thatexpose the Fund to cash flow interest rate risk.


29


(c) Cash flow and fair value interest rate risk (Continued)

The table below summarizes the Fund’s exposure to interest rate risk. It includes the Fund’s assets andliabilities at fair values, categorized by the earlier of contractual re-pricing or maturity dates.

At 31 December 2017

Up to 1 year 1-5 years Over 5 yearsNon-interest

bearing TotalUS$ US$ US$ US$ US$

AssetsInvestments 2,093,983 51,270,992 106,368,410 – 159,733,385Other assets – – – 1,637,963 1,637,963Cash and cash

equivalents 1,723,006 – – – 1,723,006Total assets 3,816,989 51,270,992 106,368,410 1,637,963 163,094,354

LiabilitiesOther liabilities – – – 210,598 210,598Total liabilities – – – 210,598 210,598

Total interestsensitivity gap 3,816,989 51,270,992 106,368,410

At 31 December 2016

Up to 1 year 1-5 years Over 5 yearsNon-interest

bearing TotalUS$ US$ US$ US$ US$

AssetsInvestments 2,201,563 51,743,821 138,152,586 – 192,097,970Other assets – – – 2,772,866 2,772,866Cash and cash

equivalents 3,764,837 – – – 3,764,837Total assets 5,966,400 51,743,821 138,152,586 2,772,866 198,635,673

LiabilitiesOther liabilities – – – 336,394 336,394Total liabilities – – – 336,394 336,394

Total interestsensitivity gap 5,966,400 51,743,821 138,152,586

At 31 December 2017, should interest rates have lowered/risen by 25 basis points with all othervariables remaining constant, the increase/decrease in net assets attributable to unitholders for the yearwould amount to approximately US$2.57 million (2016: US$2.97 million), arising substantially fromthe increase/decrease in market values of debt securities.


30


(d) Credit and custody risk

The Fund is exposed to credit risk which is the risk that an issuer or counterparty will be unable orunwilling to pay amounts in full when due.

The main concentration of credit risk to which the Fund is exposed arises from the Fund’s investmentsin debt securities. The Fund is also exposed to credit risk on cash and cash equivalents and assets heldwith custodian. The table below summarizes the assets placed with banks and custodian at 31December 2017 and 2016:

At 31 December 2017

US$ Credit ratingSource of

credit ratingCustodianCitibank, N.A. 159,733,385 P-1 Moody's

BanksCitibank, N.A. 35,706 P-1 Moody'sDah Sing Bank Limited 1,687,300 P-2 Moody's

At 31 December 2016




As the Fund holds debt securities, it is also exposed to risk that the issuers may not be able to repay theprincipal amount at maturity and interest. The credit risk is mitigated as the debt securities held aresubject to the requirements of (i) minimum credit rating, and (ii) maximum holding of 10% of net assetvalue for any single issuer other than an exempt authority as defined in section 7(1) of Schedule 1 tothe Mandatory Provident Fund Schemes (General) Regulation (“Exempt Authority”), and/or (iii)maximum holding of 30% of net asset value for any single issue that is issued by an Exempt Authority(or unconditionally guaranteed by an Exempt Authority).


31


(d) Credit and custody risk (Continued)

The table below summarizes the credit rating of the investment portfolio by S&P/Moody’s/Fitch:

Portfolio by rating category of bonds:

Rating 2017 2016AA/Aa 5% 14%A/A 30% 28%BBB/Baa 65% 58%Total 100% 100%

The maximum exposure to credit risk at year end is the carrying amount of the financial assets asshown on the statement of net assets.

None of the assets is impaired nor past due but not impaired.

All transactions in listed/quoted investments are settled/paid for upon delivery using approved andreputable brokers. The risk of default is considered minimal since delivery of securities sold is onlymade when the broker has received payment. Payment is made on a purchase when the securities havebeen received by the broker. The trade will fail if either party fails to meet its obligation.

The Fund limits its exposure to credit risk by transacting the majority of its securities and contractualcommitment activities with broker-dealers, banks and regulated exchanges with high credit ratings andthat the Fund considers to be well established.

(e) Liquidity risk

Liquidity risk is the risk that an enterprise will encounter difficulty in settling a liability, including aredemption request.

The Fund is exposed to daily cash redemptions of units in the Fund. The Fund invests the majority ofits assets in investments that are traded in an active market and can be readily disposed of.

The table below analyzes the Fund’s non-derivative financial liabilities into relevant maturitygroupings based on the remaining period at the year end date to the contractual maturity date. Theamounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equaltheir carrying balances, as the impact of discounting is not significant.


32


(e) Liquidity risk (Continued)

Less than 1-3 Over 31 month months months

US$ US$ US$At 31 December 2017

Amounts payable on redemption 166,781 – –Accounts payable and accrued expenses 16,298 – 27,519

Total financial liabilities 183,079 – 27,519



Amounts payable on redemption 282,422 – –Accounts payable and accrued expenses 17,620 – 36,352


Units are redeemed on demand at the unitholder’s option. At 31 December 2017 and 2016, no ultimateindividual investor held more than 10% of the Fund’s units.

The Fund manages its liquidity risk by investing predominantly in debt securities that it expects to beable to liquidate within 1 month or less. The following table illustrates the expected liquidity of assetsheld by the Fund:


US$ US$ US$

At 31 December 2017

Total assets 162,156,251 463,606 474,497

At 31 December 2016

Total assets 197,518,984 550,738 565,951

(f) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreignexchange rates.

The Fund is not exposed to significant currency risk because majority of the assets and liabilities aredenominated in United States dollar, the Fund’s functional and presentation currency, and Hong Kongdollar which is linked with the United States dollar.


33


(g) Fair value estimation

The fair value of financial assets and liabilities traded in active markets (such as trading securities) arebased on quoted market prices at the close of trading on the year end date. The Fund utilizes the lasttraded market price as its fair valuation inputs for both financial assets and financial liabilities.

An active market is a market in which transactions for the asset or liability take place with sufficientfrequency and volume to provide pricing information on an ongoing basis.

A financial instrument is regarded as quoted in an active market if quoted prices are readily andregularly available from an exchange, dealer, broker, industry group, pricing service, or regulatoryagency, and those prices represent actual and regularly occurring market transactions on an arm’slength basis.

The carrying value less impairment provision of other receivables and payables are assumed toapproximate their fair values. The fair value of financial liabilities for disclosure purposes is estimatedby discounting the future contractual cash flows at the current market interest rate that is available tothe Fund for similar financial instruments.

HKFRS 13 requires the Fund to classify fair value measurements using a fair value hierarchy thatreflects the significance of the inputs used in making the measurements. The fair value hierarchy hasthe following levels:

· Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity canaccess at the measurement date (Level 1).

· Inputs other than quoted prices included within level 1 that are observable for the asset or liability,either directly or indirectly (Level 2).

· Inputs for the asset or liability that are unobservable inputs (Level 3).

The level in the fair value hierarchy within which the fair value measurement is categorized in itsentirety is determined on the basis of the lowest level input that is significant to the fair valuemeasurement in its entirety. For this purpose, the significance of an input is assessed against the fairvalue measurement in its entirety. If a fair value measurement uses observable inputs that requiresignificant adjustment based on unobservable inputs, that measurement is a level 3 measurement.Assessing the significance of a particular input to the fair value measurement in its entirety requiresjudgment, considering factors specific to the asset or liability.

The determination of what constitutes “observable” requires significant judgment by the Fund. TheFund considers observable data to be that market data that is readily available, regularly distributed orupdated, reliable and verifiable, not proprietary, and provided by independent sources that are activelyinvolved in the relevant market.

The following table analyzes within the fair value hierarchy the Fund’s investments (by class)measured at fair value at 31 December 2017 and 2016:

At 31 December 2017

Level 1 Level 2 Level 3 TotalAssets US$ US$ US$ US$Held for trading:- Bonds – 159,733,385 – 159,733,385Total assets – 159,733,385 – 159,733,385


34


(g) Fair value estimation (Continued)

At 31 December 2016

Level 1 Level 2 Level 3 TotalAssets US$ US$ US$ US$Held for trading:- Bonds – 192,097,970 – 192,097,970Total assets – 192,097,970 – 192,097,970

Investments whose values are based on quoted market prices in active markets, and therefore classifiedwithin level 1. As of 31 December 2017 and 2016, the Fund did not hold any investments classified inlevel 1.

Financial instruments that trade in markets that are not considered to be active but are valued based onquoted market prices, dealer quotations or alternative pricing sources supported by observable inputsare classified within level 2. These include bonds. As level 2 investments include positions that are nottraded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflectilliquidity and/or non-transferability, which are generally based on available market information.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently.As of 31 December 2017 and 2016, the Fund did not hold any investments classified in level 3.

There is no transfer between levels for the years ended 31 December 2017 and 2016.

Assets and liabilities included in the statement of net assets, except for investments, are carried atamortized cost; their carrying values are a reasonable approximation of fair value.

(h) Capital risk management

The capital of the Fund is represented by the net assets attributable to unitholders. The amount of netassets attributable to unitholders can change significantly on a daily basis as the Fund is subject to dailysubscriptions and redemptions at the discretion of unitholders. The Fund’s objective when managingcapital is to safeguard the Fund’s ability to continue as a going concern in order to provide returns forunitholders and benefits for other stakeholders and to maintain a strong capital base to support thedevelopment of the investment activities of the Fund.

In order to maintain or adjust the capital structure, the Fund’s policy is to perform the following:

· monitor the level of daily subscriptions and redemptions relative to the liquid assets; and· redeem and issue units in accordance with the Trust Deed of the Fund.

The Manager monitors capital on the basis of the value of net assets attributable to unitholders.


35

5. Net gains on investments

2017 2016US$ US$

Change in unrealized gains/(losses) in value of investments 3,280,069 (2,331,446)Realized gains on sale of investments 1,454,764 2,393,623

4,734,833 62,177

6. Taxation

No provision for Hong Kong profits tax has been made as the Fund is authorized as a collective investmentscheme under Section 104 of the Hong Kong Securities and Futures Ordinance and is therefore exemptedfrom profits tax under Section 26A(1A) of the Hong Kong Inland Revenue Ordinance.

7. Transactions with Associates/Connected Persons/Related Parties

Associates and connected persons are those as defined in the Mandatory Provident Fund SchemesOrdinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commissionof Hong Kong.

Apart from the fees as disclosed below, the Fund allows the Manager and its associates/connected personsto subscribe for, and redeem, units in the Fund.

All transactions were entered into in the ordinary course of business and on normal commercial terms.

(a) Management fee

PineBridge Investments Hong Kong Limited, the Manager, is entitled to receive a management fee at1.00% per annum, with a permitted maximum of 1.00% per annum, of the net asset value of theStandard units - Accumulation & Standard units - Monthly Distribution, being calculated daily andpayable monthly in arrears.

No management fee is charged on the Provident Fund units.

No management fee is payable as at year end date (2016: Nil).

(b) Trustee’s fee

AIA Company (Trustee) Limited, the Trustee, is entitled to receive a trustee’s fee at a permittedmaximum of 0.05% per annum of the net asset value of the Fund, being calculated daily and payablemonthly in arrears.

Trustee’s fee payable as at year end amounted to US$6,883 (2016: US$8,396).

8. Custodian and administration fees

The Custodian and Administrator of the Fund is Citibank N.A., Hong Kong Branch and the Application andRedemption Agent of the Fund is Citicorp Financial Services Limited (collectively “Citibank”). Citibank isentitled to receive a custodian fee which comprises safekeeping and transaction fees of 0.025% per annumof the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a total permittedmaximum of 0.50% per annum. The safekeeping and transaction fee rate of 0.025% per annum is themaximum rate. Citibank is also entitled to receive an administrator fee of US$1,000 per month.

Custodian and administration fees payable as at year end amounted to US$9,415 (2016: US$9,224).


36

9. Soft commission arrangements

During the year, the Manager and its associates/connected persons did not enter into any soft commissionarrangements with brokers relating to dealing in the assets of the Fund (2016: Nil).

10. Distributions

No distribution was made during the year (2016: Nil).

11. Borrowings, contingent liabilities and commitments

The Fund had no borrowings, contingent liabilities and commitments as at 31 December 2017 and 2016.

12. Negotiability of assets

There were no statutory or contractual requirements restricting the free negotiability of assets held by theFund as at 31 December 2017 and 2016.

13. Approval of financial statements

The financial statements were approved by the Trustee and the Manager on 18 April 2018.

PINEBRIDGE ASIAN FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Asian Fund


Contents

Pages











PineBridge Asian Fund


1

Manager Trustee




Hong Kong



Legal Advisers


PineBridge Asian FundManager’s ReportFor the year ended 31 December 2017

2



2017 was an extraordinary year when the benchmark (of the fund) generated nearly 44% return driven by thesynchronized growth across the globe and a supportive yield environment. The year was also characterized by avery narrow breadth of returns, with technology and financials contributing around 68% of the returns. Thisyear was also different from other bull market years in another important aspect which is the concentration ofreturns. Almost 75% of benchmark return was contributed by just two markets, China and Korea. Another 13%was contributed by Taiwan. In recent memory, we haven’t seen such concentration of returns. Such extremelyconcentrated nature of the rally becomes apparent considering sector returns, not just in Asia but across theworld. The third feature of 2017 was highly correlated returns across asset classes which usually is an indicatorof liquidity conditions i.e., abundant liquidity signified by high returns and vice versa. Finally, 2017 alsocharacterized by low and declining volatility.

The rise in the equity market in 2017 has caused the overall market valuations to rise. In some cases we thinkthat valuations have far exceeded the fundamentals and it is to be established going forward if earnings will riseenough to justify the elevated stock prices for those companies/ sectors. Therefore, one should be prepared towitness some degree of volatility in the market. As mentioned above, delivery of earnings growth will be keyfrom here on.

The fund underperformed the benchmark amidst the above mentioned concentrated moves. In terms ofcountries, China, Hong Kong followed by Korea dragged the performance whereas Taiwan and Malaysiacontributed to the performance. Information technology and Industrials were the biggest detractors. Financialsand Consumer staples contributed to the performance.

2018 Market Outlook and Strategy

We remain optimistic on the back of stronger expected economic outlook for the region (better than 2017 formost countries barring a few exceptions), continued recovery in earnings and return ratios of the underlyingcompanies in the region, likelihood of stability in Asian currencies and supportive global environment.However, in light of the market re-rating in 2017 to a level above long-term averages, heightened stockdispersions and continued market volatility are to be expected. The delivery of earnings growth will be a keyfactor for performance.

Overall, we are sanguine about the prospects of our portfolio companies based on their business model andexpected earnings visibility and in other cases an increase in valuation based on the robust cash flows of thosebusinesses.

PineBridge Asian FundInvestment ReportAs at 31 December 2017

3

INVESTMENT PORTFOLIO

Holding Market % of netshares value assets

US$LISTED EQUITIES

HONG KONGAAC TECHNOLOGIES HOLDINGS INC 48,500 864,861 0.37%ANHUI CONCH CEMENT CO LTD 471,000 2,214,217 0.94%ASM PACIFIC TECHNOLOGY LTD 42,800 596,230 0.25%BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD 516,000 1,379,551 0.59%CHINA CONSTRUCTION BANK CORP 11,654,000 10,733,698 4.56%CHINA EVERBRIGHT INTERNATIONAL LTD 965,000 1,377,632 0.58%CHINA LIFE INSURANCE CO LTD 574,000 1,802,624 0.76%CHINA MOBILE LTD 369,000 3,740,826 1.59%CHINA OVERSEAS LAND & INVESTMENT LTD 650,000 2,091,189 0.89%CHINA PETROLEUM & CHEMICAL CORP 4,098,000 3,003,782 1.27%CHINA RESOURCES GAS GROUP LTD 172,000 623,768 0.26%CHINA VANKE CO LTD 752,900 3,004,926 1.28%CHINA YUHUA EDUCATION CORP LTD 1,902,000 953,759 0.40%CK ASSET HOLDINGS LTD 306,000 2,673,523 1.13%CNOOC LTD 1,930,000 2,770,078 1.18%CSPC PHARMACEUTICAL GROUP LTD 2,312,000 4,666,988 1.98%DONGFENG MOTOR GROUP CO LTD 848,000 1,026,193 0.44%GALAXY ENTERTAINMENT GROUP LTD 234,000 1,876,831 0.80%HONG KONG EXCHANGES AND CLEARING LTD 70,600 2,165,687 0.92%INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD 11,297,000 9,089,827 3.86%JOHNSON ELECTRIC HOLDINGS LTD 258,000 1,080,869 0.46%KINGSOFT CORP LTD 559,000 1,859,204 0.79%NEW WORLD DEVELOPMENT CO LTD 823,000 1,235,975 0.52%PETROCHINA CO LTD 4,936,000 3,441,228 1.46%PING AN INSURANCE GROUP CO OF CHINA LTD 684,500 7,123,163 3.02%SUNNY OPTICAL TECHNOLOGY GROUP CO LTD 154,000 1,968,013 0.83%TENCENT HOLDINGS LTD 422,600 21,948,122 9.31%TINGYI CAYMAN ISLANDS HOLDING CORP 1,060,000 2,061,063 0.87%YANGTZE OPTICAL FIBRE AND CABLE JOINT STOCK LTD

CO 285,500 1,311,120 0.56%ZHUZHOU CRRC TIMES ELECTRIC CO LTD 607,500 3,951,656 1.68%TOTAL HONG KONG 102,636,603 43.55%

INDONESIAPP PERSERO TBK PT 2,076,500 404,075 0.17%TOTAL INDONESIA 404,075 0.17%

MALAYSIASIME DARBY BHD 4,077,300 2,226,550 0.94%TENAGA NASIONAL BHD 388,100 1,463,409 0.62%TOTAL MALAYSIA 3,689,959 1.56%

PHILIPPINESMEGAWORLD CORP 21,655,500 2,238,423 0.95%METROPOLITAN BANK & TRUST CO 870,880 1,768,970 0.75%NICKEL ASIA CORP 13,321,400 1,689,188 0.72%SM INVESTMENTS CORP 92,850 1,841,372 0.78%TOTAL PHILIPPINES 7,537,953 3.20%

PineBridge Asian FundInvestment ReportAs at 31 December 2017

4

INVESTMENT PORTFOLIO (CONTINUED)


US$LISTED EQUITIES (CONTINUED)

SINGAPOREDBS GROUP HOLDINGS LTD 265,500 4,936,902 2.10%GUOCOLAND LTD 551,200 923,891 0.39%KEPPEL CORP LTD 300,900 1,654,905 0.70%VENTURE CORP LTD 365,600 5,599,994 2.38%TOTAL SINGAPORE 13,115,692 5.57%

SOUTH KOREAAMOREPACIFIC CORP 7,474 2,125,856 0.90%CJ CGV CO LTD 75,409 5,226,614 2.22%HANA FINANCIAL GROUP INC 99,522 4,629,582 1.96%HYUNDAI MOTOR CO 23,078 3,362,917 1.43%ING LIFE INSURANCE KOREA LTD 32,031 1,597,736 0.68%KOREA ZINC CO LTD 3,967 1,826,848 0.78%NAVER CORP 6,454 5,244,953 2.23%NETMARBLE GAMES CORP 6,913 1,217,226 0.52%POSCO 7,373 2,289,967 0.97%SAMSUNG ELECTRONICS CO LTD 7,932 18,878,849 8.00%SAMSUNG LIFE INSURANCE CO LTD 11,335 1,318,209 0.56%SK HYNIX INC 31,163 2,226,866 0.95%S-OIL CORP 29,514 3,225,576 1.37%TOTAL SOUTH KOREA 53,171,199 22.57%

TAIWANAIRTAC INTERNATIONAL GROUP 50,000 898,907 0.38%CATHAY FINANCIAL HOLDING CO LTD 2,521,000 4,532,289 1.92%FAR EASTONE TELECOMMUNICATIONS CO LTD 1,434,000 3,541,828 1.50%GOURMET MASTER CO LTD 496,300 7,254,784 3.08%HON HAI PRECISION INDUSTRY CO LTD 860,100 2,751,547 1.17%LARGAN PRECISION CO LTD 15,000 2,026,321 0.86%MEDIATEK INC 269,000 2,657,606 1.13%TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD 1,941,833 14,975,645 6.36%TONG HSING ELECTRONIC INDUSTRIES LTD 177,000 802,968 0.34%TOTAL TAIWAN 39,441,895 16.74%

THAILANDCENTRAL PATTANA PCL 843,900 2,207,483 0.94%TOA PAINT THAILAND PCL 2,687,300 2,679,856 1.14%WORKPOINT ENTERTAINMENT PCL 368,900 953,653 0.40%TOTAL THAILAND 5,840,992 2.48%

TOTAL INVESTMENTS* 225,838,368 95.84%

TOTAL INVESTMENTS, AT COST* 185,888,410

* Investments are accounted for on a trade date basis.

PineBridge Asian FundInvestment ReportFor the year ended 31 December 2017

5


Holdings

1 January 2017 Additions Deductions 31 December 2017Shares Shares Shares Shares

LISTED EQUITIES

CHINABAOSHAN IRON & STEEL CO LTD – 1,567,385 (1,567,385) –SHANGHAI INTERNATIONAL PORT GROUP CO LTD – 480,300 (480,300) –ZHENGZHOU YUTONG BUS CO LTD – 564,002 (564,002) –

HONG KONGAAC TECHNOLOGIES HOLDINGS INC – 129,000 (80,500) 48,500ALUMINUM CORP OF CHINA LTD – 3,232,000 (3,232,000) –ANHUI CONCH CEMENT CO LTD 766,500 – (295,500) 471,000ASM PACIFIC TECHNOLOGY LTD 144,200 182,400 (283,800) 42,800BANK OF CHINA LTD – 2,168,000 (2,168,000) –BOC HONG KONG HOLDINGS LTD – 934,500 (934,500) –BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD – 516,000 – 516,000BYD CO LTD – 215,500 (215,500) –CHINA COMMUNICATIONS CONSTRUCTION CO LTD 4,606,000 – (4,606,000) –CHINA CONSTRUCTION BANK CORP 7,847,000 11,654,000 (7,847,000) 11,654,000CHINA EVERBRIGHT INTERNATIONAL LTD – 965,000 – 965,000CHINA GALAXY SECURITIES CO LTD 1,569,500 – (1,569,500) –CHINA LIFE INSURANCE CO LTD 391,000 930,000 (747,000) 574,000CHINA LITERATURE LTD – 126,731 (126,731) –CHINA MERCHANTS BANK CO LTD 1,008,500 – (1,008,500) –CHINA MOBILE LTD 249,500 375,500 (256,000) 369,000CHINA OVERSEAS LAND & INVESTMENT LTD – 650,000 – 650,000CHINA PACIFIC INSURANCE GROUP CO LTD – 476,200 (476,200) –CHINA PETROLEUM & CHEMICAL CORP 7,902,000 4,850,000 (8,654,000) 4,098,000CHINA RESOURCES GAS GROUP LTD – 172,000 – 172,000CHINA SHENHUA ENERGY CO LTD 825,000 248,000 (1,073,000) –CHINA STATE CONSTRUCTION INTERNATIONAL

HOLDINGS LTD – 724,000 (724,000) –CHINA UNICOM HONG KONG LTD – 1,572,000 (1,572,000) –CHINA VANKE CO LTD – 752,900 – 752,900CHINA YUHUA EDUCATION CORP LTD – 1,902,000 – 1,902,000CK ASSET HOLDINGS LTD – 386,000 (80,000) 306,000CNOOC LTD – 1,930,000 – 1,930,000CSPC PHARMACEUTICAL GROUP LTD 1,480,000 1,008,000 (176,000) 2,312,000DONGFENG MOTOR GROUP CO LTD – 848,000 – 848,000FIT HON TENG LTD – 1,457,000 (1,457,000) –GALAXY ENTERTAINMENT GROUP LTD 334,000 75,000 (175,000) 234,000GUOTAI JUNAN SECURITIES CO LTD – 855,000 (855,000) –HONG KONG EXCHANGES AND CLEARING LTD – 70,600 – 70,600HSBC HOLDINGS PLC 318,000 – (318,000) –HUANENG POWER INTERNATIONAL INC – 2,872,000 (2,872,000) –I-CABLE COMMUNICATIONS LTD – 122,030 (122,030) –INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD 7,714,000 4,982,000 (1,399,000) 11,297,000JIANGXI COPPER CO LTD 670,000 – (670,000) –JOHNSON ELECTRIC HOLDINGS LTD – 487,500 (229,500) 258,000KIDSLAND INTERNATIONAL HOLDINGS LTD – 5,544,000 (5,544,000) –


6


Holdings


LISTED EQUITIES (CONTINUED)

HONG KONG (CONTINUED)KINGSOFT CORP LTD 1,126,000 1,285,000 (1,852,000) 559,000LEE & MAN PAPER MANUFACTURING LTD – 2,205,000 (2,205,000) –LENOVO GROUP LTD – 906,000 (906,000) –LUK FOOK HOLDINGS INTERNATIONAL LTD 636,000 – (636,000) –NEW WORLD DEVELOPMENT CO LTD – 823,000 – 823,000PETROCHINA CO LTD – 4,936,000 – 4,936,000PING AN INSURANCE GROUP CO OF CHINA LTD 905,500 193,500 (414,500) 684,500SANDS CHINA LTD 338,800 217,200 (556,000) –SEMICONDUCTOR MANUFACTURING

INTERNATIONAL CORP 843,600 – (843,600) –SHANGHAI ELECTRIC GROUP CO LTD – 2,838,000 (2,838,000) –SUNNY OPTICAL TECHNOLOGY GROUP CO LTD – 154,000 – 154,000TENCENT HOLDINGS LTD 335,500 306,900 (219,800) 422,600TIMES PROPERTY HOLDINGS LTD – 3,076,000 (3,076,000) –TINGYI CAYMAN ISLANDS HOLDING CORP – 1,060,000 – 1,060,000TONGDA GROUP HOLDINGS LTD – 14,680,000 (14,680,000) –VTECH HOLDINGS LTD 135,300 – (135,300) –WANT WANT CHINA HOLDINGS LTD – 1,562,000 (1,562,000) –WH GROUP LTD – 3,229,000 (3,229,000) –WHARF HOLDINGS LTD – 273,000 (273,000) –WUXI BIOLOGICS CAYMAN INC – 112,000 (112,000) –YANGTZE OPTICAL FIBRE AND CABLE JOINT STOCK

LTD CO – 285,500 – 285,500YIXIN GROUP LTD – 72,500 (72,500) –ZHONGAN ONLINE P&C INSURANCE CO LTD – 32,800 (32,800) –ZHUZHOU CRRC TIMES ELECTRIC CO LTD – 607,500 – 607,500

INDONESIAASTRA INTERNATIONAL TBK PT – 1,023,700 (1,023,700) –BANK DANAMON INDONESIA TBK PT 55,400 6,267,800 (6,323,200) –MATAHARI DEPARTMENT STORE TBK PT 1,683,400 601,500 (2,284,900) –MITRA ADIPERKASA TBK PT – 2,270,900 (2,270,900) –PP PERSERO TBK PT – 10,738,400 (8,661,900) 2,076,500PURADELTA LESTARI TBK PT 23,010,000 – (23,010,000) –TELEKOMUNIKASI INDONESIA PERSERO TBK PT 3,847,400 – (3,847,400) –UNITED TRACTORS TBK PT 551,200 – (551,200) –

MALAYSIAAIRASIA BHD – 2,659,600 (2,659,600) –CIMB GROUP HOLDINGS BHD 2,120,800 53,691 (2,174,491) –GAMUDA BHD – 1,864,200 (1,864,200) –IJM CORP BHD 2,475,700 – (2,475,700) –SIME DARBY BHD – 4,683,100 (605,800) 4,077,300SIME DARBY PLANTATION BHD – 1,538,900 (1,538,900) –SIME DARBY PROPERTY BHD – 1,538,900 (1,538,900) –TENAGA NASIONAL BHD – 388,100 – 388,100


7


Holdings



PHILIPPINESAYALA LAND INC – 2,647,500 (2,647,500) –BDO UNIBANK INC 719,840 437,003 (1,156,843) –MEGAWIDE CONSTRUCTION CORP 4,834,900 3,648,600 (8,483,500) –MEGAWORLD CORP – 21,655,500 – 21,655,500METROPOLITAN BANK & TRUST CO – 870,880 – 870,880NICKEL ASIA CORP – 15,707,200 (2,385,800) 13,321,400SM INVESTMENTS CORP – 92,850 – 92,850

SINGAPORECITY DEVELOPMENTS LTD – 142,700 (142,700) –DBS GROUP HOLDINGS LTD 190,800 226,300 (151,600) 265,500FIRST RESOURCES LTD 1,415,400 – (1,415,400) –GLOBAL LOGISTIC PROPERTIES LTD – 227,900 (227,900) –GUOCOLAND LTD – 1,325,500 (774,300) 551,200HRNETGROUP LTD – 633,000 (633,000) –JUMBO GROUP LTD 2,555,400 – (2,555,400) –KEPPEL CORP LTD – 300,900 – 300,900SEMBCORP MARINE LTD – 2,030,700 (2,030,700) –SINGAPORE EXCHANGE LTD 428,100 97,900 (526,000) –SINGAPORE TELECOMMUNICATIONS LTD 739,200 856,900 (1,596,100) –VENTURE CORP LTD – 398,700 (33,100) 365,600WILMAR INTERNATIONAL LTD – 476,300 (476,300) –

SOUTH KOREAAMOREPACIFIC CORP – 7,474 – 7,474BGF RETAIL CO LTD – 41,500 (41,500) –CJ CGV CO LTD – 88,393 (12,984) 75,409CJ E&M CORP – 32,666 (32,666) –HANA FINANCIAL GROUP INC – 179,625 (80,103) 99,522HYUNDAI MOTOR CO – 39,265 (16,187) 23,078ING LIFE INSURANCE KOREA LTD – 32,031 – 32,031KB FINANCIAL GROUP INC 44,657 74,368 (119,025) –KOREA ELECTRIC POWER CORP – 50,354 (50,354) –KOREA ZINC CO LTD – 3,967 – 3,967LG ELECTRONICS INC – 15,826 (15,826) –LOTTE CHEMICAL CORP 3,694 1,234 (4,928) –MANDO CORP 10,718 2,183 (12,901) –NAVER CORP – 6,454 – 6,454NETMARBLE GAMES CORP – 38,875 (31,962) 6,913POSCO 6,971 11,539 (11,137) 7,373SAMSUNG ELECTRONICS CO LTD 8,849 3,316 (4,233) 7,932SAMSUNG ENGINEERING CO LTD – 219,256 (219,256) –SAMSUNG LIFE INSURANCE CO LTD – 11,335 – 11,335SAMSUNG SDI CO LTD – 7,091 (7,091) –


8


Holdings



SOUTH KOREA (CONTINUED)SK HYNIX INC 175,920 57,450 (202,207) 31,163SK TELECOM CO LTD 12,031 4,235 (16,266) –S-OIL CORP – 29,514 – 29,514WONIK IPS CO LTD – 200,033 (200,033) –

TAIWANAIRTAC INTERNATIONAL GROUP 80,000 134,000 (164,000) 50,000BASSO INDUSTRY CORP 842,000 585,000 (1,427,000) –CATCHER TECHNOLOGY CO LTD – 89,000 (89,000) –CATHAY FINANCIAL HOLDING CO LTD 1,947,000 1,420,000 (846,000) 2,521,000CHILISIN ELECTRONICS CORP – 425,000 (425,000) –CHUNGHWA TELECOM CO LTD 783,000 – (783,000) –ENNOCONN CORP 172,000 – (172,000) –FAR EASTONE TELECOMMUNICATIONS CO LTD – 1,434,000 – 1,434,000GOURMET MASTER CO LTD – 496,300 – 496,300HON HAI PRECISION INDUSTRY CO LTD 1,296,100 849,000 (1,285,000) 860,100HOTA INDUSTRIAL MANUFACTURING CO LTD – 742,000 (742,000) –INVENTEC CORP – 2,854,000 (2,854,000) –LARGAN PRECISION CO LTD 36,000 7,000 (28,000) 15,000MEDIATEK INC – 326,000 (57,000) 269,000TAIWAN SEMICONDUCTOR MANUFACTURING CO

LTD 2,281,833 704,000 (1,044,000) 1,941,833TONG HSING ELECTRONIC INDUSTRIES LTD – 645,000 (468,000) 177,000UNI-PRESIDENT ENTERPRISES CORP – 525,000 (525,000) –

THAILANDADVANCED INFO SERVICE PCL – 426,700 (426,700) –AP THAILAND PCL 6,339,000 – (6,339,000) –CENTRAL PATTANA PCL – 843,900 – 843,900GULF ENERGY DEVELOPMENT PCL – 1,656,800 (1,656,800) –PTT PCL 342,000 – (342,000) –SINO-THAI ENGINEERING & CONSTRUCTION PCL 4,572,400 – (4,572,400) –TOA PAINT THAILAND PCL – 2,687,300 – 2,687,300WORKPOINT ENTERTAINMENT PCL – 1,642,000 (1,273,100) 368,900

UNLISTED RIGHTS

HONG KONGTENCENT HOLDINGS LTD RTS 31OCT2017 – 331 (331) –

PHILIPPINESBDO UNIBANK INC RTS 24JAN2017 – 141,283 (141,283) –


9

PineBridge Asian Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998, asamended, supplemented and restated. The Fund is managed in accordance with the distinct investment policy.There have been no changes to the investment policy during the year.


The Fund seeks long-term capital appreciation by investing in the equity securities of companies which areexpected to benefit from the development and growth of the Asian economies outside of Japan.

The equity securities in which the Fund may invest will include common stock, preferred stock and securitiesconvertible into or exchangeable for such equity securities, or which carry warrants to purchase such equitysecurities.

2017 2016 2015US$ US$ US$



Interest on bank deposits 58,626 19,791 8,617Dividend income (net of withholding tax) 4,018,599 3,839,948 2,584,013

Net foreign currency gains/(losses) 64,044 (223,190) (523,247)Net income excluding capital

appreciation/(depreciation) 2,064,943 1,455,451 391,807

Net appreciation/(depreciation) ofinvestments and derivative financialinstruments- realized and unrealized 51,922,455 2,258,377 (2,045,623)

Performance table


asset value value per unitUS$ US$

Provident Fund units2017 235,638,747 59.172016 152,227,422 43.532015 136,835,928 43.31


10


Performance record for the past 10 years

Highestissue price

per unitUS$


per unitUS$


return(Note 1)

%Standard units - Accumulation (Note 2)2011 36.25 35.59 –2010 36.50 27.53 12.572009 31.48 15.08 73.582008 40.33 14.45 (55.38)

Provident Fund units2017 60.61 43.81 35.932016 47.54 38.21 0.512015 53.75 41.12 (3.30)2014 47.37 40.32 2.972013 43.59 36.10 14.272012 38.16 30.51 21.342011 41.21 28.28 (20.29)2010 40.47 30.18 15.402009 34.17 17.51 66.462008 42.36 16.80 (51.89)

Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year endagainst the net asset value per unit at the beginning of the year.

Note 2: The “Standard units” have been renamed to “Standard units - Accumulation” with effect from 27 June2013. No Standard units were issued since the year ended 31 December 2011.



PineBridge Asian FundTrustee’s ReportFor the year ended 31 December 2017

11

We hereby confirm that, in our opinion, the Manager of the Fund has, in all material respects, managed theFund for the year ended 31 December 2017 in accordance with the provisions of the Trust Deed dated 10August 1998, as amended, supplemented and restated.


_________________________ _____________________________Director Director

18 April 2018

INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE ASIAN FUND (THE “FUND”)

12


OpinionWe have audited the financial statements of PineBridge Asian Fund (the “Fund”) set out on pages 15 to 35,which comprise the statement of net assets as at 31 December 2017, and the statement of comprehensiveincome, the statement of changes in equity and the statement of cash flows for the year then ended, and notes tothe financial statements, including a summary of significant accounting policies.










INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE ASIAN FUND (THE “FUND”)(CONTINUED)

13










INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE ASIAN FUND (THE “FUND”)(CONTINUED)

14





PineBridge Asian FundStatement of Net AssetsAs at 31 December 2017

15

2017 2016Note US$ US$

AssetsCurrent assetsInvestments 4(b) 225,838,368 150,356,836Interest receivable 1,284 512Dividends receivable 5,611 53,286Amounts receivable on subscription 49,367 69,707Amounts receivable from brokers – 3,758,525Cash and cash equivalents 9,883,151 11,319,537Total assets 235,777,781 165,558,403

LiabilitiesCurrent liabilitiesDerivative financial instruments 4(b), 7 – 1,778Amounts payable on redemption 85,883 12,432,889Amounts payable to brokers – 838,817Accounts payable and accrued expenses 53,151 57,497Total liabilities 139,034 13,330,981

EquityNet assets attributable to unitholders 3 235,638,747 152,227,422

On behalf of On behalf ofAIA Company (Trustee) Limited PineBridge Investments

Hong Kong Limited

________________________ _________________________ ________________________Director Director Director


PineBridge Asian FundStatement of Comprehensive IncomeFor the year ended 31 December 2017

16

2017 2016Note US$ US$

IncomeInterest on bank deposits 58,626 19,791Dividend income 4,558,581 4,388,535Net gains on investments and derivative financial

instruments 6 51,922,455 2,258,377Net foreign currency gains/(losses) 64,044 (223,190)Total investment income 56,603,706 6,443,513

ExpensesTrustee’s fee 9(b) 90,736 80,851Custodian and administration fees 10 62,784 82,057Audit fee 12,104 12,298Bank charges 163 195Legal and professional fees 9,269 7,174Other expenses 19,379 26,569Transaction costs 1,881,891 1,969,049Total operating expenses 2,076,326 2,178,193

Net profit before tax 54,527,380 4,265,320

Withholding tax 8(c) (539,982) (548,587)Capital gains tax 8(d) – (2,905)Total comprehensive income 53,987,398 3,713,828


PineBridge Asian FundStatement of Changes in EquityFor the year ended 31 December 2017

17

2017 2016Note US$ US$


Issue of units 3 76,137,812 88,829,199


Net increase from unit transactions 29,423,927 11,677,666


Balance at the end of the year 3 235,638,747 152,227,422


PineBridge Asian FundStatement of Cash FlowsFor the year ended 31 December 2017

18

2017 2016US$ US$



Adjustment for:Dividend income (4,558,581) (4,388,535)Interest on bank deposits (58,626) (19,791)Withholding tax 539,982 548,587Capital gains tax – 2,905

Operating profit/(loss) before working capital changes 49,910,173 (143,006)

Net increase in investments (75,481,532) (24,120,816)Net change in derivative financial instruments (1,778) (1,341)Net decrease/(increase) in amounts receivable from brokers 3,758,525 (2,613,815)Net (decrease)/increase in amounts payable to brokers (838,817) 279,560Net (decrease)/increase in accounts payable and accrued

expenses (4,346) 15,664Cash used in operations (22,657,775) (26,583,754)

Dividend income received 4,066,274 3,806,942Interest on bank deposits received 57,854 19,337Capital gains tax paid – (2,905)

Net cash used in operating activities (18,533,647) (22,760,380)


Proceeds from issue of units 76,158,152 88,856,407Payments on redemption of units (59,060,891) (64,752,595)

Net cash generated from financing activities 17,097,261 24,103,812





9,883,151 11,319,537


PineBridge Asian FundNotes to the Financial StatementsFor the year ended 31 December 2017

19

1. The Fund

PineBridge Asian Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998, asamended, supplemented and restated. The Fund has been authorized by the Securities and FuturesCommission of Hong Kong and approved by the Mandatory Provident Fund Schemes Authority of HongKong.





The preparation of financial statements in conformity with HKFRS requires the use of certain criticalaccounting estimates. It also requires the Trustee and Manager to exercise its judgment in the processof applying the Fund’s accounting policies. The areas involving a higher degree of judgment orcomplexity, or areas where assumptions and estimates are significant to the financial statements aredisclosed in note 5.







20





(b) Investments

All investments are classified as “financial assets at fair value through profit or loss”. These financialassets are classified as held for trading or designated by the Trustee and the Manager at fair valuethrough profit or loss at inception. Purchases and sales of investments are accounted for on a trade datebasis. Investments are initially recognized at fair value, excluding transaction costs which are expensedas incurred in the statement of comprehensive income, and are subsequently re-measured at fair value.Realized and unrealized gains and losses on investments are recognized in the statement ofcomprehensive income within “net gains/(losses) on investments and derivative financial instruments”in the period in which they arise. Investments are derecognized when the rights to receive cash flowsfrom the investments have expired or the Fund has transferred substantially all risks and rewards ofownership.


(i) Investments that are listed or traded on an exchange are fair valued based on last traded prices.


(c) Income

Dividends on equities are recognized in the statement of comprehensive income when the Fund’s rightto receive payments is established. The corresponding withholding taxes are recorded as a separateitem in the statement of comprehensive income.

Interest income is recognized on a time-proportionate basis using the effective interest method. Otherincome is accounted for on an accrual basis.



Items included in the Fund’s financial statements are measured using the currency of the primaryeconomic environment in which it operates (the “functional currency”). The financial statementsare presented in United States dollar, which is the Fund’s functional and presentation currency.





Foreign exchange gains and losses relating to the financial assets and liabilities carried at fairvalue through profit or loss are presented in the statement of comprehensive income within “netgains/(losses) on investments and derivative financial instruments”.


21


(e) Expenses


(f) Derivative financial instruments - foreign exchange contracts

Outstanding foreign exchange contracts are valued at the year end date by reference to the rate ofexchange applicable to the outstanding term of the contract. Unrealized gains or losses on outstandingcontracts and realized gains and losses on closed contracts are shown in the statement ofcomprehensive income within “net gains/(losses) on investments and derivative financial instruments”.

(g) Subscription and redemption of units


(h) Offsetting financial instruments


(i) Cash and cash equivalents


(j) Amounts receivable from/payable to brokers

Amounts receivable from/payable to brokers represent receivables from investments sold and payablesfor investments purchased that have been contracted for but not yet settled or delivered on the year enddate respectively.

(k) Transaction costs

Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profitor loss. They include fees and commissions paid to agents, advisers, brokers, and dealers. Transactioncosts, when incurred, are immediately recognized in the statement of comprehensive income as anexpense.

(l) Taxation

The tax expense for the year comprises of current tax. Tax is recognized in the statement ofcomprehensive income, except to the extent that it relates to items recognized in other comprehensiveincome or directly in equity. In such cases, the tax will be recognized in other comprehensive incomeor directly in equity, respectively.

The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted by theend of the period in the countries where the Fund operates and generates taxable income. Managementperiodically evaluates positions taken in tax returns with respect to situations in which applicable taxregulation is subject to interpretation. It established provisions where appropriate on the basis ofamounts expected to be paid to the tax authorities.


22




As at 31 December 2017, the Fund had US$235,638,747 (2016: US$152,227,422) of puttable financialinstruments classified as equity.

The Fund’s objectives and policies for managing its obligations to redeem these instruments are included innote 4(h) on capital risk management and note 4(e) on liquidity risk.



US$ US$


2017Standard

Units -Accumulation

2017Provident

Fund Units

2016Standard

Units -Accumulation

2016Provident

Fund UnitsUnits Units Units Units

Balance brought forward – 3,497,119 – 3,159,211Total issues – 1,381,040 – 2,062,701Total redemptions – (895,774) – (1,724,793)Balance carried forward – 3,982,385 – 3,497,119


23


The Fund offers two classes of units. Provident Fund units are offered to provident fund schemes approvedby the Mandatory Provident Fund Schemes Authority. Standard units - Accumulation are offered to allinvestors other than the provident fund schemes approved by the Mandatory Provident Fund SchemesAuthority. The Standard units have been renamed to “Standard units - Accumulation” with effect from 27June 2013. No Standard units - Accumulation were issued by the Fund for the years ended 31 December2017 and 2016.



The investment objective of the Fund is to achieve long term capital appreciation. The Fund seeks toachieve its investment objective through investing in the equity securities of companies which areexpected to benefit from the development and growth of the economies of countries located in Asiaoutside of Japan. The Fund may also, to a lesser extent, invest in Australia and New Zealand.

The Fund is exposed to market price risk, cash flow interest rate risk, credit and custody risk, liquidityrisk and currency risk.





As at year end, the overall market exposures were as follows.

2017 2016Fair value

US$CostUS$

% of netassets

Fair valueUS$

CostUS$

% of netassets

Held for trading:Listed equities 225,838,368 185,888,410 95.84 150,356,836 139,271,018 98.77

Derivativefinancialinstruments(note 7) – – – (1,778) – –


24





2017 2016US$ equivalent US$ equivalent

Markets exposed to

Hong Kong 102,636,603 62,027,990Indonesia 404,075 4,304,220Malaysia 3,689,959 3,898,143Philippines 7,537,953 3,062,673Singapore 13,115,692 9,290,519South Korea 53,171,199 28,222,558Taiwan 39,441,895 31,127,141Thailand 5,840,992 8,423,592

225,838,368 150,356,836

The following table shows net exposures to sectors as at 31 December 2017 and 2016:

2017 2016% %

Sectors exposed to

Basic Materials 4 2Communications 16 14Consumer, Cyclical 10 7Consumer, Non-cyclical 4 2Diversified 2 1Energy 6 7Financial 28 24Industrial 10 16Technology 19 27Utilities 1 –

100 100



25




2017 2016Change in


US$Change in


US$+/- +/- +/- +/-

MSCI MPF All Country FarEast ex Japan ex Hong KongIndex + China Unhedged NetIndex (prior to 1st October2017: MSCI All Country FarEast ex Japan ex Hong KongDTR (net)) 44% 91,570,658 7% 9,705,467

The Manager has used their view of what would be a “reasonable shift” in the MSCI MPF All CountryFar East ex Japan ex Hong Kong Index and China Unhedged Net Index (prior to 1st October 2017:MSCI All Country Far East ex Japan ex Hong Kong DTR (net)’), having regard to the historicalvolatility of the index, to estimate the change for use in the market price risk sensitivity analysis above.


(c) Cash flow interest rate risk


The majority of the Fund’s financial assets and liabilities are non-interest bearing, as the Fund investsmainly in listed equities. As a result, the Fund is not subject to significant amounts of risk due tofluctuations in the prevailing levels of market interest rates. Any excess cash and cash equivalents areinvested at short-term market interest rates.

As at 31 December 2017, the Fund had bank balances of US$9,883,151 (2016: US$11,319,537) and istherefore exposed to cash flow interest rate risk which is considered by the Manager to be minimal asthey are short-term instruments all with maturities less than one month.

As the Manager believes that the Fund has no significant interest rate risk exposure, no interest ratesensitivity analysis is disclosed.


26




The Fund’s financial assets which are potentially subject to concentrations of credit risk consistprincipally of cash and cash equivalents and assets held with the custodian. The table belowsummarizes the assets placed with banks and custodian at 31 December 2017 and 2016:

At 31 December 2017




At 31 December 2016




All derivative financial instruments represent outstanding foreign exchange contracts as disclosed innote 7. As at 31 December 2017, the Fund did not hold any derivative financial instruments. As at 31December 2016, the counterparty of these foreign exchange contracts is Citibank, N.A. The creditrating is P-1 (Moody’s).



All transactions in listed securities are settled/paid for upon delivery using approved and reputablebrokers. The risk of default is considered minimal since delivery of securities sold is only made whenthe broker has received payment. Payment is made on a purchase when the securities have beenreceived by the broker. The trade will fail if either party fails to meet its obligation.



27


(e) Liquidity risk






Amounts payable on redemption 85,883 – –Accounts payable and accrued expenses 23,166 – 29,985Total financial liabilities (excluding net

settled derivatives) 109,049 – 29,985



Amounts payable on redemption 12,432,889 – –Amounts payable to brokers 838,817 – –Accounts payable and accrued expenses 20,272 – 37,225Total financial liabilities (excluding net

settled derivatives) 13,291,978 – 37,225

All derivative financial instruments entered into by the Fund are settled on a net basis.

The table below analyzes the Fund’s derivative financial instruments in a loss position for which thecontractual maturities are considered to be essential to an understanding of the timing of cash flowsbased on the Fund’s investment strategy.

At 31 December 2017As at 31 December 2017, the Fund did not hold any derivative financial instruments.


US$ US$ US$At 31 December 2016Net settled derivativesForeign exchange contracts (1,778) – –

Units are redeemed on demand at the unitholder’s option. At 31 December 2017 and 2016, no ultimateindividual investor held more than 10% of the Fund’s units.


28



As at 31 December 2017, the Fund held cash and cash equivalents of US$9,883,151 (2016:US$11,319,537) and liquid investments of US$225,838,368 (2016: US$150,356,836) that are expectedto readily generate cash inflows within 1 month for managing liquidity risk.

(f) Currency risk


The Fund has both monetary and non-monetary assets and liabilities denominated in currencies otherthan United States dollar, the Fund’s functional and presentation currency. The Fund is thereforeexposed to currency risk, as the value of the assets and liabilities denominated in other currencies willfluctuate due to changes in foreign exchange rates. Details of foreign exchange contracts outstanding atthe year end are disclosed in note 7.

The table below summarizes the Fund’s net monetary and non-monetary exposure to different majorcurrencies:

2017 2016US$ equivalents US$ equivalents

Monetary itemsHong Kong Dollar 5,611 –Philippine Peso – 648,867Singapore Dollar – 53,286South Korean Won – 3,109,658Taiwanese Dollar 402,914 338,027

Non-monetary itemsHong Kong Dollar 102,636,603 62,027,990Indonesian Rupiah 404,075 4,304,220Malaysian Ringgit 3,689,959 3,898,143Philippine Peso 7,537,953 3,062,673Singapore Dollar 13,115,692 9,290,519South Korean Won 53,171,199 28,222,558Taiwanese Dollar 39,441,895 31,127,141Thai Baht 5,840,992 8,423,592

Gross exposures to currency risk on foreign exchange contracts outstanding at the year end aredisclosed in note 7.

The table below summarizes the impact on net assets attributable to unitholders as a result ofincreases/decreases of foreign exchange rates on the exposures tabled above, to which the Fund isexposed. The analysis is based on the assumption that the foreign exchange rates hadincreased/decreased by the respective percentage with all other variables held constant.


29


(f) Currency risk (Continued)

2017 2016Change in foreign

exchange rates ImpactChange in foreign

exchange rates Impact% US$ % US$+/- +/- +/- +/-

Monetary itemsHong Kong Dollar 0.5% 28 0.5% –Philippine Peso 6.0% – 4.0% 25,955Singapore Dollar 1.0% – 1.0% 533South Korean Won 3.0% – 2.0% 62,193Taiwanese Dollar 6.0% 24,175 2.0% 6,761

Non-monetary itemsHong Kong Dollar 0.5% 513,183 0.5% 310,140Indonesian Rupiah 1.0% 4,041 1.0% 43,042Malaysian Ringgit 4.0% 147,598 6.0% 233,889Philippine Peso 6.0% 452,277 4.0% 122,507Singapore Dollar 1.0% 131,157 1.0% 92,905South Korean Won 3.0% 1,595,136 2.0% 564,451Taiwanese Dollar 6.0% 2,366,514 2.0% 622,543Thai Baht 4.0% 233,640 3.0% 252,708

The Manager has used their view of what would be a “reasonable shift” in the foreign exchange rates,having regard to historical volatility of those rates, to estimate the change for use in the currency risksensitivity analysis above.

Disclosures above are shown in absolute terms, changes and impacts could be positive or negative.Changes in foreign exchange rates % are revised annually depending on the Manager’s current view ofmarket volatility and other relevant factors.







30










At 31 December 2017Level 1 Level 2 Level 3 Total

Assets US$ US$ US$ US$Held for trading:- Listed equities 225,838,368 – – 225,838,368Total investments 225,838,368 – – 225,838,368


Assets US$ US$ US$ US$Held for trading:- Listed equities 150,356,836 – – 150,356,836Total investments 150,356,836 – – 150,356,836

LiabilitiesHeld for trading:- Derivative financial instruments – (1,778) – (1,778)Total liabilities – (1,778) – (1,778)

Investments whose values are based on quoted market prices in active markets, and therefore classifiedwithin level 1, include active listed equities. The Fund does not adjust the quoted price for theseinstruments.


31



Financial instruments that trade in markets that are not considered to be active but are valued based onquoted market prices, dealer quotations or alternative pricing sources supported by observable inputsare classified within level 2. These include foreign exchange contracts. As level 2 investments includepositions that are not traded in active markets and/or are subject to transfer restrictions, valuations maybe adjusted to reflect illiquidity and/or non-transferability, which are generally based on availablemarket information.



Assets and liabilities included in the statement of net assets, except for investments and derivativefinancial instruments, are carried at amortized cost; their carrying values are a reasonableapproximation of fair value.


The capital of the Fund is represented by the net assets attributable to unitholders. The amount of netassets attributable to unitholders can change significantly on a daily basis as the Fund is subject todaily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective whenmanaging capital is to safeguard the Fund’s ability to continue as a going concern in order to providereturns for unitholders and benefits for other stakeholders and to maintain a strong capital base tosupport the development of the investment activities of the Fund.




5. Critical judgment

In preparing these financial statements, the Trustee and Manager have made certain judgment which isdependent on what might happen in the future. The judgment made by the Trustee and Manager may notequal the related actual results. Refer to note 8(b) to the financial statements.

6. Net gains on investments and derivative financial instruments

2017 2016US$ US$

Change in unrealized gains in value of investments andderivative financial instruments 28,865,918 9,029,878

Realized gains/(losses) on sale of investments andderivative financial instruments 23,056,537 (6,771,501)

51,922,455 2,258,377


32

7. Derivative financial instruments

At 31 December 2017

As at 31 December 2017, the Fund did not hold any derivative financial instruments.

Derivative financial instruments represent outstanding foreign exchange contracts and are summarizedbelow:

At 31 December 2016

Contract to deliver In exchange for Settlement date Fair valueUS$

Open contracts:

US$14,205 IDR190,912,590 3 January 2017 (33)US$826,390 IDR11,109,331,215 3 January 2017 (1,745)

(1,778)

8. Taxation

(a) No provision for Hong Kong profits tax has been made as the Fund is authorized as a collectiveinvestment scheme under Section 104 of the Hong Kong Securities and Futures Ordinance and istherefore exempted from profits tax under Section 26A(1A) of the Hong Kong Inland RevenueOrdinance.

(b) The Fund invests in shares of companies in the People's Republic of China ("PRC") listed on the HongKong Stock Exchange ("H-shares"). Under the PRC Corporate Income Tax Law, the Fund may beliable to pay PRC tax on the capital gains realized in the trading of H-shares. However, no provisionwas made for taxation from such gains in the financial statements as the Trustee and Manager believethat the Fund can sustain a position for not filing a tax return based on the existing tax regulations andthat the enforcement of China tax on capital gains is not probable.

(c) Withholding tax was charged on certain dividend income received during the year.

(d) Depending on the period for which India equity shares are held, the gains arising to the Fund on thetransfer of such shares would be taxable as short-term or long-term capital gains under the India taxlaws. The same is discussed below:

Type of instrument Period of holding immediately preceding the date oftransfer

Listed shares More than 12 months Long Term Capital Asset12 months or less Short Term Capital Asset

Unlisted shares sold on or before 31March 2016

More than 36 months Long Term Capital Asset36 months or less Short Term Capital Asset

Unlisted shares sold on or after1 April 2016

More than 24 months Long Term Capital Asset24 months or less Short Term Capital Asset


33

8. Taxation (Continued)

Under the current laws, the Fund is subject to the following rates of tax on the gains earned fromtransfer of shares

Nature of income Rates of tax (%)

Capital gains on sale of listed equity shares on-market(where securities transaction tax is paid)

Long-term Nil*

Short-term 15

Capital gains on sale of listed equity shares off-market(where securities transaction tax is not paid) or in caseof sale of unlisted shares

Long-term 10

Short-term 30

*For transfers/sale on or after 1 April 2018 the rate of tax shall be 10%

The aforementioned rates are to be increased by applicable surcharge and education cess.

Under current practice, capital gains tax is charged on net realized gains (i.e. realized gains offset byrealized losses subject to satisfying certain conditions) and is reported and settled on an ongoing basisi.e. whenever the sales are executed.

Prior to 1 April 2018, the long term capital gains arising from transfer of equity shares, units of equityoriented mutual funds, units of Real Estate Investment Trusts (REITs) and units of InfrastructureInvestment Trusts (INVITs) are exempt from tax provided the transactions are subject to securitiestransaction tax (STT) as prescribed. The Ministry of Finance of India has introduced the Finance Bill,2018 (FB 2018) in the Parliament on 1 February 2018 wherein, it is proposed to levy concessional taxat the rate of 10% (plus applicable surcharge and cess) on long-term capital gains exceeding INR100,000 from these securities. The change is to be implemented on transfers executed on or after 1April 2018. The capital gains shall be computed without any benefit of indexation or foreign currencyfluctuations and the transaction should have been subject to payment of Securities Transaction Tax asunder:

· In case of equity shares – at the time of acquisition and transfer (subject to the negative listprovided vide notification number 43/2017 dated 5 June 2017); and

· In case of units of equity oriented mutual fund/ REITs / INVITs – at the time of time transfer.

However, with a view to grandfather gains notionally realised by investors up to 31 January 2018, ithas been provided that taxable gains will be determined by considering the cost of acquisition to be thehigher of:

· actual cost of acquisition; or· lower of full value of consideration and Fair Market Value on 31 January 2018 (being the highest

price quoted on the stock exchange on 31 January 2018 or on the last traded date prior to such datein case of listed securities or net asset value in case of a unit which is unlisted).

The amendments proposed in the Finance Bill, 2018 have been approved by both the Houses of theParliament and have received the Presidential assent on 29 March 2018. Accordingly, the aboveamendments shall be effective from 1 April 2018.


34


Associates and connected persons are those as defined in the Mandatory Provident Fund SchemesOrdinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commissionof Hong Kong.



(a) Management fee

PineBridge Investments Hong Kong Limited, the Manager, is entitled to receive a management fee at1.25% per annum, with a permitted maximum of 1.50% per annum, of the net asset value of theStandard units - Accumulation, being calculated daily and payable monthly in arrears.


No management fee is payable as at year end (2016: Nil).

(b) Trustee’s fee




The Custodian and Administrator of the Fund is Citibank N.A., Hong Kong Branch and the Application andRedemption Agent of the Fund is Citicorp Financial Services Limited (collectively “Citibank”). Citibank isentitled to receive a custodian fee which comprises safekeeping and transaction fees of 0.025% per annumof the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a total permittedmaximum of 0.50% per annum. The safekeeping and transaction fee rate of 0.025% per annum is themaximum rate. Citibank is also entitled to receive an administrator fee of US$1,000 per month.



The Manager and its associates/connected persons have entered into soft commission arrangements withsome brokers under which certain goods and services used to support investment decision making areobtained from third parties and are paid for by the brokers out of the commissions they receive. These mayinclude, for example, research and advisory services; economic and political analysis; portfolio analysis,including valuation and performance measurement; market analysis, data and quotation services; clearing,registrar and custodial services and investment-related publications; computer hardware and softwareincidental to the above goods and services.

12. Distributions





35





PINEBRIDGE EUROPE EQUITY FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Europe Equity Fund


Contents

Pages











PineBridge Europe Equity Fund


1

Manager Trustee




Hong Kong



Legal Advisers


PineBridge Europe Equity FundManager’s ReportFor the year ended 31 December 2017

2


Asset Class Overview

During the period under review, the Europe large cap equity market as measured by the MSCI Europe DTR NetIndex returned 26.55%.

In Europe, equities gained slightly more than in the US to begin the year as a number of economic data pointedto accelerating global growth. While investor money broadly flowed out of Europe in 2016, the new year gaveway to renewed interest in European equities. With the US firmly in a policy normalization mindset, Europecontinued to be supportive of risk assets with an accommodative monetary policy. There were majordevelopments on the political front as late April French presidential elections were closely monitored byinvestors given the Brexit outcome. Concerns of a “Frexit” largely subsided as Macron was voted into the run-off election and subsequently won the French presidency. For the UK’s Theresa May, a miscalculated politicalmove to call for elections resulted in some support being lost for her Conservative Party. Over the final quarterof 2017, European markets experienced continued gains, capping off a strong year in which economic growthwas evident in improving data and a year rife with political volatility. On the political front, the quarter saw thedissolving of the Catalan parliament, heightening tensions in Spain as the government attempted to control asuccession attempt by Catalonia. Such political friction helped to highlight the fragility with which theEurozone is held together as a political entity. As demonstrated by the Brexit outcome, market concern for thefuture existence of the EU remains high, though market reaction to the Catalonia independence bid wasrelatively muted compared to Brexit. The risk will remain as long as individual country elections give way toopportunities for populist movements to take hold. Growth accelerated on net in 4Q and European markets lookto continue this momentum as we move into 2018.

Portfolio Overview

During the period, the Fund underperformed its benchmark index by 154 basis points, with a net return of25.01%. Our top contributing growth category to relative performance were High Stable Growth companieswhile Mature Cyclical names detracted from performance. The top contributing sectors to relative performancewere Consumer Discretionary and Financials while the top detracting sector was Industrials.

Portfolio Outlook

Despite a very strong 2017 for European equities, there remains a number of downside risks that face theEurozone in 2018 and beyond. We continue to believe that there will be regional opportunities, more so thanbroader European growth. It would seem like beyond 2018, the ECB would join the Fed on the path to policytightening but one downside risk would be decelerating growth that prompts extension or even expansion ofpolicy support. Spain continues to be a source of political risk as will other countries where a populistmovement takes hold, though for 2018, those risks seem relatively subdued compared to past years.

PineBridge Europe Equity FundInvestment ReportAs at 31 December 2017

3



HK$LISTED EQUITIES

BELGIUMSOLVAY SA 1,216 1,322,957 0.06%TOTAL BELGIUM 1,322,957 0.06%

DENMARKCARLSBERG A/S 26,214 24,622,276 1.11%DANSKE BANK A/S 92,762 28,255,673 1.28%H LUNDBECK A/S 17,940 7,124,783 0.32%NOVO NORDISK A/S 1,761 742,667 0.03%ORSTED A/S 48,582 20,745,753 0.94%VESTAS WIND SYSTEMS A/S 30,956 16,735,482 0.76%TOTAL DENMARK 98,226,634 4.44%

FINLANDUPM-KYMMENE OYJ 103,550 25,185,256 1.14%TOTAL FINLAND 25,185,256 1.14%

FRANCEARKEMA SA 22,305 21,262,338 0.96%AXA SA 70,446 16,356,753 0.74%BNP PARIBAS SA 66,024 38,580,694 1.74%BOUYGUES SA 57,410 23,340,201 1.06%CAPGEMINI SE 15,378 14,275,163 0.65%CIE DE SAINT-GOBAIN 62,147 26,823,657 1.21%CREDIT AGRICOLE SA 184,240 23,866,672 1.08%EIFFAGE SA 19,559 16,770,133 0.76%ENGIE SA 201,751 27,148,275 1.23%INGENICO GROUP SA 27,021 22,577,148 1.02%L'OREAL SA 14,985 26,015,965 1.18%PEUGEOT SA 151,514 24,114,564 1.09%SANOFI 6,293 4,244,371 0.19%TOTAL SA 87,685 37,899,775 1.71%TOTAL FRANCE 323,275,709 14.62%

GERMANYALLIANZ SE 24,286 43,656,973 1.98%BASF SE 2,159 1,859,260 0.08%BAYER AG 45,391 44,313,081 2.01%BEIERSDORF AG 25,423 23,363,524 1.06%COVESTRO AG 30,657 24,757,594 1.12%DEUTSCHE LUFTHANSA AG 82,319 23,738,329 1.07%DEUTSCHE TELEKOM AG 242,028 33,613,167 1.52%E.ON SE 269,798 22,947,940 1.04%FRESENIUS MEDICAL CARE AG & CO KGAA 32,255 26,577,950 1.20%FRESENIUS SE & CO KGAA 46,281 28,269,127 1.28%


4



HK$LISTED EQUITIES (CONTINUED)

GERMANY (CONTINUED)INNOGY SE 7,304 2,240,295 0.10%MERCK KGAA 25,187 21,219,725 0.96%MUENCHENER RUECKVERSICHERUNGS-GESELLSCHAFT AG

IN MUENCHEN 14,199 24,091,560 1.09%SAP SE 4,249 3,727,305 0.17%SIEMENS AG 2,091 2,279,828 0.10%VONOVIA SE 69,126 26,857,508 1.21%TOTAL GERMANY 353,513,166 15.99%

ITALYASSICURAZIONI GENERALI SPA 170,738 24,361,422 1.10%ATLANTIA SPA 95,067 23,487,918 1.06%ENEL SPA 393,730 18,960,279 0.86%ENI SPA 232,937 30,174,940 1.36%FIAT CHRYSLER AUTOMOBILES NV 181,468 25,398,411 1.15%INTESA SANPAOLO SPA 357,771 8,933,376 0.40%TELECOM ITALIA SPA/MILANO 1,338,708 7,489,640 0.34%TOTAL ITALY 138,805,986 6.27%

NETHERLANDSASML HOLDING NV 25,522 34,774,476 1.57%HEINEKEN HOLDING NV 31,438 24,343,615 1.10%ING GROEP NV 132,494 19,060,116 0.86%KONINKLIJKE VOPAK NV 1,630 559,553 0.03%TOTAL NETHERLANDS 78,737,760 3.56%

NORWAYSTATOIL ASA 166,310 27,847,836 1.26%TOTAL NORWAY 27,847,836 1.26%

PORTUGALEDP - ENERGIAS DE PORTUGAL SA 157,733 4,271,666 0.19%TOTAL PORTUGAL 4,271,666 0.19%

SPAINABERTIS INFRAESTRUCTURAS SA 140,338 24,437,009 1.10%ACS ACTIVIDADES DE CONSTRUCCION Y SERVICIOS SA 76,189 23,329,481 1.05%AMADEUS IT GROUP SA 50,012 28,219,532 1.28%BANCO SANTANDER SA 864,907 44,483,563 2.02%TOTAL SPAIN 120,469,585 5.45%

SWEDENATLAS COPCO AB B SHS 80,313 24,124,036 1.09%BOLIDEN AB 83,168 22,281,752 1.01%ELECTROLUX AB 90,980 22,958,764 1.04%


5




SWEDEN (CONTINUED)ICA GRUPPEN AB 76,917 21,877,528 0.99%SWEDBANK AB 113,830 21,508,391 0.97%TELIA CO AB 674,578 23,541,003 1.06%TOTAL SWEDEN 136,291,474 6.16%

SWITZERLANDCHOCOLADEFABRIKEN LINDT & SPRUENGLI AG 482 23,005,953 1.04%CHOCOLADEFABRIKEN LINDT & SPRUENGLI AG 10 5,654,223 0.26%LONZA GROUP AG 10,794 22,798,669 1.03%NESTLE SA 57,761 38,828,887 1.76%NOVARTIS AG 33,675 22,259,276 1.01%PARTNERS GROUP HOLDING AG 4,459 23,894,071 1.08%ROCHE HOLDING AG 30,872 61,046,097 2.77%SCHINDLER HOLDING AG 13,151 23,662,698 1.07%SCHINDLER HOLDING AG REG 12,868 22,761,237 1.03%SONOVA HOLDING AG 12,827 15,660,873 0.71%SWISS LIFE HOLDING AG 901 2,493,562 0.11%SWISS RE AG 33,308 24,381,344 1.10%TOTAL SWITZERLAND 286,446,890 12.97%

UNITED KINGDOMANGLO AMERICAN PLC 177,429 29,073,136 1.31%ASSOCIATED BRITISH FOODS PLC 79,595 23,736,167 1.07%BABCOCK INTERNATIONAL GROUP PLC 254,624 18,996,432 0.86%BAE SYSTEMS PLC 450,318 27,286,612 1.23%BARRATT DEVELOPMENTS PLC 346,511 23,726,435 1.07%BERKELEY GROUP HOLDINGS PLC 18,150 8,055,478 0.36%BHP BILLITON PLC 3,272 526,801 0.02%BP PLC 158,551 8,763,895 0.40%BRITISH AMERICAN TOBACCO PLC 25,124 13,331,995 0.60%BT GROUP PLC 987,655 28,377,269 1.28%BUNZL PLC 76,944 16,859,326 0.76%BURBERRY GROUP PLC 123,471 23,397,996 1.06%CARNIVAL PLC 46,019 23,806,707 1.08%CENTRICA PLC 1,190,165 17,280,385 0.78%DIRECT LINE INSURANCE GROUP PLC 304,002 12,270,840 0.55%GLENCORE PLC 912,079 37,616,013 1.70%HSBC HOLDINGS PLC 847,401 68,723,205 3.12%J SAINSBURY PLC 864,765 22,075,526 1.00%LEGAL & GENERAL GROUP PLC 643,444 18,596,280 0.84%LLOYDS BANKING GROUP PLC 5,052,204 36,362,063 1.64%MARKS & SPENCER GROUP PLC 673,776 22,429,829 1.01%ROYAL DUTCH SHELL PLC A SHS 44,074 11,558,723 0.52%ROYAL DUTCH SHELL PLC B SHS 23,138 6,137,841 0.28%


6*Investments are accounted for on a trade date basis.




UNITED KINGDOM (CONTINUED)SSE PLC 17,390 2,427,444 0.11%ST JAMES'S PLACE PLC 72,333 9,377,836 0.42%TUI AG 62,718 10,213,830 0.46%WM MORRISON SUPERMARKETS PLC 158,299 3,681,113 0.17%WORLDPAY GROUP PLC 392,661 17,688,991 0.80%TOTAL UNITED KINGDOM 542,378,168 24.50%

LISTED INVESTMENT FUNDS

UNITED STATES OF AMERICAISHARES EUROPE ETF 187,340 69,212,157 3.13%TOTAL UNITED STATES OF AMERICA 69,212,157 3.13%

TOTAL INVESTMENTS* 2,205,985,244 99.74%

TOTAL INVESTMENTS, AT COST* 2,008,106,692

PineBridge Europe Equity FundInvestment ReportFor the year ended 31 December 2017

7


Holdings


LISTED EQUITIES

BELGIUMANHEUSER-BUSCH INBEV SA/NV 362 641 (1,003) –PROXIMUS SADP 24,793 32,393 (57,186) –SOLVAY SA – 1,216 – 1,216UCB SA – 36,786 (36,786) –

DENMARKAP MOELLER - MAERSK A/S B – 1,027 (1,027) –CARLSBERG A/S 11,871 18,763 (4,420) 26,214CHR HANSEN HOLDING A/S – 19,285 (19,285) –DANSKE BANK A/S 41,289 164,959 (113,486) 92,762H LUNDBECK A/S – 17,940 – 17,940NOVO NORDISK A/S 42,872 69,409 (110,520) 1,761ORSTED A/S – 65,434 (16,852) 48,582VESTAS WIND SYSTEMS A/S – 30,956 – 30,956

FINLANDUPM-KYMMENE OYJ 49,332 61,590 (7,372) 103,550

FRANCEARKEMA SA – 22,305 – 22,305ATOS SE – 18,406 (18,406) –AXA SA – 70,446 – 70,446BNP PARIBAS SA 29,607 40,744 (4,327) 66,024BOUYGUES SA – 60,744 (3,334) 57,410CAPGEMINI SE – 15,378 – 15,378CARREFOUR SA 41,721 20,620 (62,341) –CASINO GUICHARD PERRACHON SA – 19,072 (19,072) –CHRISTIAN DIOR SE 5,536 11,505 (17,041) –CHRISTIAN DIOR SE – 8,179 (8,179) –CIE DE SAINT-GOBAIN 21,281 42,413 (1,547) 62,147CIE GENERALE DES ETABLISSEMENTS MICHELIN – 13,518 (13,518) –CREDIT AGRICOLE SA 96,288 103,633 (15,681) 184,240EIFFAGE SA – 19,559 – 19,559ELECTRICITE DE FRANCE SA – 250,401 (250,401) –ENGIE SA 87,041 128,994 (14,284) 201,751HERMES INTERNATIONAL – 1,573 (1,573) –INGENICO GROUP SA – 28,248 (1,227) 27,021L'OREAL SA 833 15,392 (1,240) 14,985ORANGE SA 95,984 43,394 (139,378) –PERNOD RICARD SA – 18,792 (18,792) –PEUGEOT SA – 154,263 (2,749) 151,514RENAULT SA – 14,700 (14,700) –SAFRAN SA 9,542 976 (10,518) –SANOFI 2,872 5,066 (1,645) 6,293


8


Holdings



FRANCE (CONTINUED)SOCIETE BIC SA – 12,355 (12,355) –SOCIETE GENERALE SA – 48,610 (48,610) –TOTAL SA 9,250 108,583 (30,148) 87,685VINCI SA 20,122 9,673 (29,795) –

GERMANYALLIANZ SE – 25,573 (1,287) 24,286BASF SE 13,925 35,568 (47,334) 2,159BAYER AG 20,818 26,886 (2,313) 45,391BAYERISCHE MOTOREN WERKE AG – 36,387 (36,387) –BAYERISCHE MOTOREN WERKE PFD – 37,509 (37,509) –BEIERSDORF AG 5,136 28,638 (8,351) 25,423CONTINENTAL AG – 5,402 (5,402) –COVESTRO AG – 31,087 (430) 30,657DAIMLER AG 12,159 – (12,159) –DEUTSCHE LUFTHANSA AG – 95,093 (12,774) 82,319DEUTSCHE POST AG 43,886 20,726 (64,612) –DEUTSCHE TELEKOM AG – 249,080 (7,052) 242,028E.ON SE 123,625 331,183 (185,010) 269,798EVONIK INDUSTRIES AG 2,532 1,269 (3,801) –FRESENIUS MEDICAL CARE AG & CO KGAA 14,973 19,983 (2,701) 32,255FRESENIUS SE & CO KGAA – 46,670 (389) 46,281HENKEL AG & CO KGAA 11,145 5,733 (16,878) –HENKEL AG & CO KGAA VORZUG 9,859 7,707 (17,566) –INNOGY SE – 7,304 – 7,304LINDE AG – 220 (220) –MERCK KGAA – 25,608 (421) 25,187MUENCHENER RUECKVERSICHERUNGS-

GESELLSCHAFT AG IN MUENCHEN 7,495 17,906 (11,202) 14,199OSRAM LICHT AG – 26,628 (26,628) –RWE AG 4,165 1,618 (5,783) –SAP SE 1,075 4,278 (1,104) 4,249SIEMENS AG 1,806 2,784 (2,499) 2,091VOLKSWAGEN AG – 10,914 (10,914) –VOLKSWAGEN AG–PREF – 14,076 (14,076) –VONOVIA SE – 69,126 – 69,126

ITALYASSICURAZIONI GENERALI SPA 78,067 101,086 (8,415) 170,738ATLANTIA SPA – 174,557 (79,490) 95,067ENEL SPA 334,370 382,066 (322,706) 393,730ENI SPA 68,627 179,383 (15,073) 232,937FERRARI NV 5,699 3,440 (9,139) –FIAT CHRYSLER AUTOMOBILES NV 130,242 157,016 (105,790) 181,468GEDI GRUPPO EDITORIALE SPA – 4,818 (4,818) –


9


Holdings



ITALY (CONTINUED)INTESA SANPAOLO SPA – 357,771 – 357,771LEONARDO SPA – 154,162 (154,162) –TELECOM ITALIA SPA/MILANO – 1,338,708 – 1,338,708

NETHERLANDSABN AMRO GROUP NV – 13,020 (13,020) –AKZO NOBEL NV 17,157 8,480 (25,637) –ARCELORMITTAL 135,857 83,151 (219,008) –ARCELORMITTAL – 90,624 (90,624) –ASML HOLDING NV 4,210 22,617 (1,305) 25,522COCA-COLA EUROPEAN PARTNERS PLC – 53,310 (53,310) –HEINEKEN HOLDING NV 15,694 19,718 (3,974) 31,438HEINEKEN NV 14,687 7,057 (21,744) –ING GROEP NV – 137,065 (4,571) 132,494KONINKLIJKE AHOLD DELHAIZE NV 62,189 34,711 (96,900) –KONINKLIJKE VOPAK NV – 3,432 (1,802) 1,630UNILEVER NV – 3,312 (3,312) –

NORWAYDNB ASA 75,183 68,582 (143,765) –STATOIL ASA 69,753 199,838 (103,281) 166,310

PORTUGALEDP - ENERGIAS DE PORTUGAL SA 271,864 186,721 (300,852) 157,733GALP ENERGIA SGPS SA 74,552 76,684 (151,236) –JERONIMO MARTINS SGPS SA – 123,214 (123,214) –

SPAINABERTIS INFRAESTRUCTURAS SA – 147,860 (7,522) 140,338ACS ACTIVIDADES DE CONSTRUCCION Y SERVICIOS

SA – 80,136 (3,947) 76,189AENA SA 7,923 10,687 (18,610) –AMADEUS IT GROUP SA 26,312 32,332 (8,632) 50,012BANCO BILBAO VIZCAYA ARGENTARIA SA 233,725 262,407 (496,132) –BANCO SANTANDER SA 384,897 628,168 (148,158) 864,907ENAGAS SA – 3,644 (3,644) –ENDESA SA 49,585 25,925 (75,510) –GAS NATURAL SDG SA 3,653 1,833 (5,486) –TELEFONICA SA 174,640 360,422 (535,062) –

SWEDENASSA ABLOY AB 65,878 35,859 (101,737) –ATLAS COPCO AB A SHS 40,627 41,680 (82,307) –ATLAS COPCO AB B SHS 40,930 57,049 (17,666) 80,313BOLIDEN AB 40,136 49,515 (6,483) 83,168


10


Holdings



SWEDEN (CONTINUED)ELECTROLUX AB 45,939 54,969 (9,928) 90,980ESSITY AB – 154,864 (154,864) –HEXAGON AB 16,196 11,350 (27,546) –ICA GRUPPEN AB – 77,303 (386) 76,917KINNEVIK AB 16,270 19,261 (35,531) –SWEDBANK AB 52,560 68,308 (7,038) 113,830SWEDISH MATCH AB 6,502 – (6,502) –TELIA CO AB – 674,578 – 674,578

SWITZERLANDABB LTD 69,777 61,423 (131,200) –ACTELION LTD – 8,640 (8,640) –ADECCO GROUP AG – 34,770 (34,770) –ARYZTA AG – 18,042 (18,042) –CHOCOLADEFABRIKEN LINDT & SPRUENGLI AG – 37 (27) 10CHOCOLADEFABRIKEN LINDT & SPRUENGLI AG – 493 (11) 482EMS-CHEMIE HOLDING AG – 3,793 (3,793) –GALENICA AG 890 439 (1,329) –LAFARGEHOLCIM LTD – 5,279 (5,279) –LONZA GROUP AG 6,111 18,170 (13,487) 10,794NESTLE SA 45,964 32,611 (20,814) 57,761NOVARTIS AG 14,970 20,023 (1,318) 33,675PARGESA HOLDING SA 5,157 – (5,157) –PARTNERS GROUP HOLDING AG – 4,636 (177) 4,459ROCHE HOLDING AG 5,106 29,312 (3,546) 30,872SCHINDLER HOLDING AG 5,933 27,628 (20,410) 13,151SCHINDLER HOLDING AG REG 2,169 22,570 (11,871) 12,868SONOVA HOLDING AG – 13,409 (582) 12,827SWATCH GROUP AG – 67,401 (67,401) –SWATCH GROUP AG/THE – 5,696 (5,696) –SWISS LIFE HOLDING AG – 1,081 (180) 901SWISS RE AG – 36,217 (2,909) 33,308UBS GROUP AG – 146,638 (146,638) –

UNITED KINGDOM3I GROUP PLC 126,690 113,766 (240,456) –ABERDEEN ASSET MANAGEMENT PLC 215,788 216,051 (431,839) –ADMIRAL GROUP PLC 46,091 – (46,091) –ANGLO AMERICAN PLC 15,576 170,411 (8,558) 177,429ANTOFAGASTA PLC – 100,127 (100,127) –ASSOCIATED BRITISH FOODS PLC – 90,129 (10,534) 79,595AVIVA PLC 216,919 263,342 (480,261) –BABCOCK INTERNATIONAL GROUP PLC – 256,480 (1,856) 254,624BAE SYSTEMS PLC – 480,608 (30,290) 450,318


11


Holdings



UNITED KINGDOM (CONTINUED)BARRATT DEVELOPMENTS PLC – 346,511 – 346,511BERKELEY GROUP HOLDINGS PLC – 18,150 – 18,150BHP BILLITON PLC 81,557 74,789 (153,074) 3,272BP PLC 129,539 146,519 (117,507) 158,551BRITISH AMERICAN TOBACCO PLC 42,422 35,373 (52,671) 25,124BT GROUP PLC 241,135 852,493 (105,973) 987,655BUNZL PLC – 76,944 – 76,944BURBERRY GROUP PLC – 132,800 (9,329) 123,471CARNIVAL PLC 21,667 29,127 (4,775) 46,019CENTRICA PLC 55,971 1,210,522 (76,328) 1,190,165COCA-COLA HBC AG 49,830 – (49,830) –COMPASS GROUP PLC 74,662 36,900 (111,562) –CRH PLC – 57,310 (57,310) –DCC PLC 12,471 6,163 (18,634) –DIAGEO PLC – 25,693 (25,693) –DIRECT LINE INSURANCE GROUP PLC – 315,432 (11,430) 304,002EASYJET PLC – 158,445 (158,445) –EXPERIAN PLC – 140,489 (140,489) –FRESNILLO PLC – 103,451 (103,451) –GKN PLC – 527,476 (527,476) –GLAXOSMITHKLINE PLC 28,582 20,862 (49,444) –GLENCORE PLC – 1,046,564 (134,485) 912,079HARGREAVES LANSDOWN PLC – 8,726 (8,726) –HIKMA PHARMACEUTICALS PLC 30,158 14,906 (45,064) –HSBC HOLDINGS PLC 143,680 1,078,575 (374,854) 847,401J SAINSBURY PLC – 894,249 (29,484) 864,765JOHNSON MATTHEY PLC 7,740 3,723 (11,463) –KINGFISHER PLC – 707,267 (707,267) –LEGAL & GENERAL GROUP PLC 294,206 378,489 (29,251) 643,444LLOYDS BANKING GROUP PLC 2,112,702 5,089,407 (2,149,905) 5,052,204MARKS & SPENCER GROUP PLC – 673,776 – 673,776MEDICLINIC INTERNATIONAL PLC 112,040 65,635 (177,675) –MEGGITT PLC – 327,094 (327,094) –MONDI PLC 52,725 50,236 (102,961) –RECKITT BENCKISER GROUP PLC – 17,084 (17,084) –ROYAL DUTCH SHELL PLC A SHS 18,898 113,274 (88,098) 44,074ROYAL DUTCH SHELL PLC B SHS 12,957 24,196 (14,015) 23,138SHIRE PLC 27,360 13,522 (40,882) –SSE PLC – 17,390 – 17,390ST JAMES'S PLACE PLC 85,966 90,860 (104,493) 72,333TUI AG – 176,268 (113,550) 62,718WILLIAM HILL PLC 216,856 104,230 (321,086) –WM MORRISON SUPERMARKETS PLC – 255,210 (96,911) 158,299WORLDPAY GROUP PLC – 398,835 (6,174) 392,661


12


Holdings



UNITED STATES OF AMERICAISHARES EUROPE ETF 52,293 1,206,495 (1,071,448) 187,340

LISTED RIGHTS ISSUE

SPAINBANCO BILBAO VIZCAYA ARGENTARIA SA RTS

19APR2017 – 342,836 (342,836) –BANCO SANTANDER SA–RIGHTS RTS 20JUL17 – 615,297 (615,297) –

SWITZERLANDLONZA GROUP AG RTS 10MAY2017 – 9,540 (9,540) –


13

PineBridge Europe Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998,as amended, supplemented and restated. The Fund is managed in accordance with the distinct investmentpolicy. There have been no changes to the investment policy during the year.


The Fund seeks to provide capital appreciation through a managed portfolio of shares in European Companies.

2017 2016 2015HK$ HK$ HK$


Total value of investments 2,205,985,244 791,138,822 1,690,069,096

Interest on bank deposits 11,861 8,203 5,018Dividend income (net of withholding tax) 36,988,344 46,098,620 35,735,896

Net foreign currency gains/(losses) 1,794,047 2,410,455 (1,687,297)Net income excluding capital

appreciation/(depreciation) 25,758,413 37,562,574 22,970,376

Net appreciation/(depreciation) of investmentsand derivative financial instruments- realized and unrealized 292,094,073 (31,835,758) (47,953,579)

Performance table


asset value value per unitHK$ HK$

Provident Fund units2017 2,211,811,329 25.742016 845,459,802 20.592015 1,707,707,376 19.93


14



Highestissue price

per unitHK$


per unitHK$


return(Note 1)

%Provident Fund units2017 25.75 20.69 25.012016 20.59 16.89 3.312015 22.45 18.62 (1.09)2014 22.66 18.88 (4.46)2013 21.10 16.59 27.062012 16.76 13.03 20.712011 17.97 12.57 (11.41)2010 16.41 12.30 1.012009 15.86 8.46 35.092008 21.15 9.30 (47.00)

Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year endagainst the net asset value per unit at the beginning of the year.

Note 2: No Standard units were issued by the Fund since the year ended 31 December 2003. The “Standardunits” have been renamed to “Standard units - Accumulation” with effect from 27 June 2013.



PineBridge Europe Equity FundTrustee’s ReportFor the year ended 31 December 2017

15

We hereby confirm that, in our opinion, the Manager of the Fund has, in all material respects, managed theFund for the year ended 31 December 2017 in accordance with the provisions of the Trust Deed dated 10August 1998, as amended, supplemented and restated.


_________________________ _____________________________Director Director

18 April 2018

INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE EUROPE EQUITY FUND (THE “FUND”)

16


OpinionWe have audited the financial statements of PineBridge Europe Equity Fund (the “Fund”) set out on pages 19 to40, which comprise the statement of net assets as at 31 December 2017, and the statement of comprehensiveincome, the statement of changes in equity and the statement of cash flows for the year then ended, and notes tothe financial statements, including a summary of significant accounting policies.










INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE EUROPE EQUITY FUND (THE “FUND”)(CONTINUED)

17










INDEPENDENT AUDITOR’S REPORTTO THE TRUSTEE OF PINEBRIDGE EUROPE EQUITY FUND (THE “FUND”)(CONTINUED)

18





PineBridge Europe Equity FundStatement of Net AssetsAs at 31 December 2017

19

2017 2016Note HK$ HK$

AssetsCurrent assetsInvestments 4(b) 2,205,985,244 791,138,822Derivative financial instruments 4(b), 6 – 49,805,452Interest receivable 345 197Dividends receivable 1,842,770 1,139,369Amounts receivable on subscription 407,841 342,351Amounts receivable from brokers – 390,750,894Cash and cash equivalents 5,335,911 6,084,178Total assets 2,213,572,111 1,239,261,263

LiabilitiesCurrent liabilitiesDerivative financial instruments 4(b), 6 548,802 6,947,974Amounts payable on redemption 806,498 386,401,766Accounts payable and accrued expenses 405,482 451,721Total liabilities 1,760,782 393,801,461

EquityNet assets attributable to unitholders 3 2,211,811,329 845,459,802

On behalf of On behalf ofAIA Company (Trustee) Limited PineBridge Investments

Hong Kong Limited

________________________ ________________________ ________________________Director Director Director


PineBridge Europe Equity FundStatement of Comprehensive IncomeFor the year ended 31 December 2017

20

2017 2016Note HK$ HK$

IncomeInterest on bank deposits 11,861 8,203Dividend income 46,055,009 58,227,294Net gains/(losses) on investments and derivative

financial instruments 5 292,094,073 (31,835,758)Net foreign currency gains 1,794,047 2,410,455Other income – 4,015Total investment income 339,954,990 28,814,209

ExpensesTrustee’s fee 8(b) 809,816 716,647Custodian and administration fees 9 523,065 549,870Audit fee 95,869 96,920Bank charges 1,250 1,250Legal and professional fees 35,632 20,043Other expenses 161,472 245,325Transaction costs 11,408,735 9,328,664Total operating expenses 13,035,839 10,958,719


Withholding tax 7(b) (9,066,665) (12,128,674)Total comprehensive income 317,852,486 5,726,816


PineBridge Europe Equity FundStatement of Changes in EquityFor the year ended 31 December 2017

21The notes on pages 23 to 40 are an integral part of these financial statements.

2017 2016Note HK$ HK$

Balance at the beginning of the year 845,459,802 1,707,707,376

Issue of units 3 1,208,696,039 397,525,657

Redemption of units 3 (160,196,998) (1,265,500,047)

Net increase/(decrease) from unit transactions 1,048,499,041 (867,974,390)


Balance at the end of the year 2,211,811,329 845,459,802

PineBridge Europe Equity FundStatement of Cash FlowsFor the year ended 31 December 2017

22

2017 2016HK$ HK$



Adjustment for:Dividend income (46,055,009) (58,227,294)Interest on bank deposits (11,861) (8,203)Withholding tax 9,066,665 12,128,674

Operating profit/(loss) before working capital changes 280,852,281 (40,380,007)

Net (increase)/decrease in investments (1,414,846,422) 898,930,274Net change in derivative financial instruments 43,406,280 (30,886,936)Net decrease/(increase) in amounts receivable from brokers 390,750,894 (390,750,894)Net decrease in amounts payable to brokers – (4,281,506)Net (decrease)/increase in accounts payable and accrued

expenses (46,239) 68,861Cash (used in)/generated from operations (699,883,206) 432,699,792

Dividend income received 36,284,943 45,723,625Interest on bank deposits received 11,713 8,077

Net cash (used in)/generated from operating activities (663,586,550) 478,431,494


Proceeds from issue of units 1,208,630,549 398,482,672Payments on redemption of units (545,792,266) (879,530,685)

Net cash generated from/(used in) financing activities 662,838,283 (481,048,013)

Net decrease in cash and cash equivalents (748,267) (2,616,519)




5,335,911 6,084,178


PineBridge Europe Equity FundNotes to the Financial StatementsFor the year ended 31 December 2017

23

1. The Fund

PineBridge Europe Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August1998, as amended, supplemented and restated. The Fund has been authorized by the Securities and FuturesCommission of Hong Kong and approved by the Mandatory Provident Fund Schemes Authority of HongKong.





The preparation of financial statements in conformity with HKFRS requires the Trustee and Managerto make judgements, estimates and assumptions that affect the application of policies and the reportedamounts of assets and liabilities, income and expenses. The estimates and associated assumptions arebased on historical experience and various other factors that are believed to be reasonable under thecircumstances, the results of which form the basis of making the judgements about carrying values ofassets and liabilities that are not readily apparent from other sources. Actual results may differ fromthese estimates.






24






(b) Investments

All investments are classified as “financial assets at fair value through profit or loss”. These financialassets are classified as held for trading or designated by the Trustee and the Manager at fair valuethrough profit or loss at inception. Purchases and sales of investments are accounted for on a trade datebasis. Investments are initially recognized at fair value, excluding transaction costs which are expensedas incurred in the statement of comprehensive income, and are subsequently re-measured at fair value.Realized and unrealized gains and losses on investments are recognized in the statement ofcomprehensive income within “net gains/(losses) on investments and derivative financial instruments”in the period in which they arise. Investments are derecognized when the rights to receive cash flowsfrom the investments have expired or the Fund has transferred substantially all risks and rewards ofownership.




(c) Income

Dividends on equities are recognized in the statement of comprehensive income when the Fund’s rightto receive payments is established. The corresponding withholding taxes are recorded as a separateitem in the statement of comprehensive income.

Interest income is recognized on a time-proportionate basis using the effective interest method. Otherincome is accounted for on an accrual basis.



Items included in the Fund’s financial statements are measured using the currency of the primaryeconomic environment in which it operates (the “functional currency”). The financial statementsare presented in Hong Kong dollar, which is the Fund’s functional and presentation currency.




25



(ii) Transactions and balances (Continued)



Foreign exchange gains and losses relating to the financial assets and liabilities carried at fairvalue through profit or loss are presented in the statement of comprehensive income within “netgains/(losses) on investments and derivative financial instruments”.

(e) Expenses



Outstanding foreign exchange contracts are valued at the year end date by reference to the rate ofexchange applicable to the outstanding term of the contract. Unrealized gains or losses on outstandingcontracts and realized gains and losses on closed contracts are shown in the statement ofcomprehensive income within “net gains/(losses) on investments and derivative financial instruments”.








Amounts receivable from/payable to brokers represent receivables from investments sold and payablesfor investments purchased that have been contracted for but not yet settled or delivered on the year enddate respectively.


Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profitor loss. They include fees and commissions paid to agents, advisers, brokers and dealers. Transactioncosts, when incurred, are immediately recognized in profit or loss as an expense.


26


(l) Structured entities

A structured entity is an entity that has been designed so that voting or similar rights are not thedominant factor in deciding who controls the entity, such as when any voting rights relate toadministrative tasks only and the relevant activities are directed by means of contractual arrangements.A structured entity often has some or all of the following features or attributes: (a) restricted activities,(b) a narrow and well-defined objective, such as to provide investment opportunities for investors bypassing on risks and rewards associated with the assets of the structured entity to investors, (c)insufficient equity to permit the structured entity to finance its activities without subordinated financialsupport and (d) financing in the form of multiple contractually linked instruments to investors thatcreate concentrations of credit or other risks (tranches).

The Fund considers all of its investments in other funds ("lnvestee Funds") to be investments inunconsolidated structured entities. The Fund invests in lnvestee Funds whose objectives range fromachieving medium to long term capital growth and whose investment strategy does not include the useof leverage. The lnvestee Funds apply various investment strategies to accomplish their respectiveinvestment objectives. The lnvestee Funds finance their operations by issuing exchange traded shareswhich are saleable at the holder's option and entitles the holder to a consideration that approximatesproportional stake in the respective fund's net assets. The Fund holds exchange traded shares in each ofits lnvestee Funds.

The change in fair value of each lnvestee Fund is included in the statement of comprehensive incomein "net gains/(losses) on investments and derivative financial instruments".




As at 31 December 2017, the Fund had HK$2,211,811,329 (2016: HK$845,459,802) of puttable financialinstruments classified as equity.

The Fund’s objectives and policies for managing its obligations to redeem these instruments are included innote 4(h) on capital risk management and note 4(e) on liquidity risk.



HK$ HK$



27


2017Standard

Units - Accumulation

2017Provident

Fund Units

2016Standard

Units -Accumulation

2016Provident

Fund UnitsUnits Units Units Units

Balance brought forward – 41,067,112 – 85,672,431Total issues – 51,519,702 – 20,581,500Total redemptions – (6,663,470) – (65,186,819)

Balance carried forward – 85,923,344 – 41,067,112

The Fund offers two classes of units. Provident Fund units are offered to provident fund schemes approvedby the Mandatory Provident Fund Schemes Authority. Standard units - Accumulation are offered to allinvestors other than the provident fund schemes approved by the Mandatory Provident Fund SchemesAuthority. The Standard units have been renamed to “Standard units - Accumulation” with effect from 27June 2013. No Standard units - Accumulation were issued by the Fund for the years ended 31 December2017 and 2016.



The investment objective of the Fund is to achieve capital appreciation. The Fund seeks to achieve itsinvestment objective through a managed portfolio of shares in European Companies.

The Fund is exposed to market price risk, cash flow interest rate risk, credit and custody risk, liquidityrisk and currency risk.






2017 2016

Fair valueHK$

CostHK$

% ofnet

assetsFair value

HK$CostHK$

% ofnet

assets

Held for trading:Listed equities 2,136,773,087 1,940,162,791 96.61 775,403,892 743,839,571 91.71Listed

investment funds 69,212,157 67,943,901 3.13 15,734,930 15,402,767 1.862,205,985,244 2,008,106,692 99.74 791,138,822 759,242,338 93.57

Derivativefinancialinstruments

(note 6) (548,802) – – 42,857,478 – –


28





2017 2016HK$ equivalent HK$ equivalent

Markets exposed to

Belgium 1,322,957 5,844,839Denmark 98,226,634 29,693,636Finland 25,185,256 9,415,789France 323,275,709 91,082,302Germany 353,513,166 97,788,565Italy 138,805,986 40,953,614Netherlands 78,737,760 47,032,508Norway 27,847,836 18,647,062Portugal 4,271,666 15,084,995Spain 120,469,585 66,848,564Sweden 136,291,474 63,854,233Switzerland 286,446,890 84,269,064United Kingdom 542,378,168 204,888,721United States of America 69,212,157 15,734,930

2,205,985,244 791,138,822


2017 2016% %

Sectors exposed to

Basic Materials 7 10Communications 4 5Consumer, Cyclical 10 8Consumer, Non-cyclical 27 26Energy 6 7Financial 24 21Funds 3 2Industrial 9 13Technology 5 2Utilities 5 6

100 100



29




2017 2016Change in


HK$Change in


HK$+/- +/- +/- +/-

MSCI Europe DTRNet (HKD) Return 27% 580,175,854 3% 23,111,090

The Manager has used their view of what would be a “reasonable shift” in the MSCI Europe DTR Net(HKD) Return, having regard to the historical volatility of the index, to estimate the change for use inthe market price risk sensitivity analysis above.


2017 2016

Listed investment funds

Number ofInvestee

Funds Fair value% of net

assets

Number ofInvestee

Funds Fair value% of net

assetsHK$ HK$

Equity long 1 69,212,157 3.13 1 15,734,930 1.86

The Fund's investments in lnvestee Funds are subject to the terms and conditions of the respectivelnvestee Fund's offering documentation and are susceptible to market price risk arising fromuncertainties about future values of those lnvestee Funds. All of the lnvestee Funds in the investmentportfolio are managed by portfolio managers who are compensated by the respective lnvestee Fundsfor their services. Such compensation generally consists of an asset based fee and is reflected in thevaluation of the Fund's investments in each of the lnvestee Funds.

The exposure to investments in lnvestee Funds at fair value by strategy employed is disclosed in theabove table. These investments are included in investments in the statement of net assets.

The Fund's holding in a third party lnvestee Fund, as a percentage of the lnvestee Fund's total net assetvalue, will vary from time to time dependent on the volume of subscriptions and redemptions at thelnvestee Fund level. It is possible that the Fund may, at any point in time, hold a majority of anlnvestee Fund's total units in issue.

The Fund's maximum exposure to loss from its interests in lnvestee Funds is equal to the total fairvalue of its investments in lnvestee Funds.

Once the Fund has disposed of its shares in an lnvestee Fund the Fund ceases to be exposed to any riskfrom that lnvestee Fund.

Total purchases in lnvestee Funds during the year ended 31 December 2017 was HK$417,134,331(2016: HK$398,339,764). As at 31 December 2017 and 2016 there were no capital commitmentobligations. There were no amounts due to lnvestee Funds for unsettled purchases as at 31 December2017 and 2016.


30



During the year ended 31 December 2017 total net gains incurred on investments in lnvestee Fundswere HK$1,268,256 (2016: gains of HK$332,163).



The majority of the Fund’s financial assets and liabilities are non-interest bearing, as the Fund investsmainly in listed equities. As a result, the Fund is not subject to significant amounts of risk due tofluctuations in the prevailing levels of market interest rates. Any excess cash and cash equivalents areinvested at short-term market interest rates.

As at 31 December 2017, the Fund had bank balances of HK$5,335,911 (2016: HK$6,084,178) and istherefore exposed to cash flow interest rate risk which is considered by the Manager to be minimal asthey are short-term instruments all with maturities less than one month.

As the Manager believes that the Fund has no significant interest rate risk exposure, no interest ratesensitivity analysis is disclosed.



The Fund’s financial assets which are potentially subject to concentrations of credit risk consistprincipally of cash and cash equivalents and assets held with the custodian. The table belowsummarizes the assets placed with banks and custodian at 31 December 2017 and 2016:

At 31 December 2017

HK$Creditrating

Source ofcredit rating

CustodianCitibank, N.A. 2,205,985,244 P-1 Moody's


At 31 December 2016

HK$Creditrating

Source ofcredit rating

CustodianCitibank, N.A. 791,138,822 P-1 Moody's



31



All derivative financial instruments represent outstanding foreign exchange contracts as disclosed innote 6. As at 31 December 2017, the counterparties of these foreign exchange contracts are State StreetBank, HK. The credit rating is P-1 (Moody’s). As at 31 December 2016, the counterparties of theseforeign exchange contracts are Citibank, N.A. and The Hongkong and Shanghai Banking CorporationLimited. The credit ratings are P-1(Moody’s) and P-1(Moody’s) respectively.



All transactions in listed securities are settled/paid for upon delivery using approved and reputablebrokers. The risk of default is considered minimal since delivery of securities sold is only made whenthe broker has received payment. Payment is made on a purchase when the securities have beenreceived by the broker. The trade will fail if either party fails to meet its obligation.


(e) Liquidity risk





HK$ HK$ HK$At 31 December 2017

Amounts payable on redemption 806,498 – –Accounts payable and accrued expenses 179,797 – 225,685Total financial liabilities (excluding net

settled derivatives) 986,295 – 225,685


HK$ HK$ HK$At 31 December 2016

Amounts payable on redemption 386,401,766 – –Accounts payable and accrued expenses 139,984 – 311,737Total financial liabilities (excluding net




32



The table below analyzes the Fund’s derivative financial instruments in a loss position for which thecontractual maturities are considered to be essential to an understanding of the timing of cash flowsbased on the Fund’s investment strategy.


HK$ HK$ HK$At 31 December 2017Net settled derivativesForeign exchange contracts – (548,802) –


HK$ HK$ HK$At 31 December 2016Net settled derivativesForeign exchange contracts (6,947,974) – –

Units are redeemed on demand at the unitholder’s option. At 31 December 2017 and 2016, no ultimateindividual investors held more than 10% of the Fund’s units.

As at 31 December 2017, the Fund held cash and cash equivalents of HK$5,335,911 (2016:HK$6,084,178) and liquid investments of HK$2,205,985,244 (2016: HK$791,138,822) that areexpected to readily generate cash inflows within 1 month for managing liquidity risk.

(f) Currency risk


The Fund has both monetary and non-monetary assets and liabilities denominated in currencies otherthan Hong Kong dollar, the Fund’s functional and presentation currency. The Fund is thereforeexposed to currency risk, as the value of the assets and liabilities denominated in other currencies willfluctuate due to changes in foreign exchange rates. Details of foreign exchange contracts outstandingat the year end are disclosed in note 6.

The table below summarizes the Fund’s net monetary and non-monetary exposure to different majorcurrencies:

2017 2016HK$ equivalent HK$ equivalent

Monetary itemsEuro 359,812 (335,306,365)Pound Sterling 1,498,361 (100,951,349)United States Dollar 66 (95,906)

Non-monetary itemsDanish Krone 98,226,634 29,693,636Euro 1,045,582,085 374,051,176Norway Krone 27,847,836 18,647,062Pound Sterling 542,378,168 204,888,721Swedish Krona 136,291,474 63,854,233Swiss Franc 286,446,890 84,269,064United States Dollar 69,212,157 15,734,930


33



The table below summarizes the impact on net assets attributable to unitholders as a result ofincreases/decreases of foreign exchange rates on the exposures tabled above, to which the Fund isexposed. The analysis is based on the assumption that the foreign exchange rates hadincreased/decreased by the respective percentage with all other variables held constant.

Gross exposures to currency risk on foreign exchange contracts outstanding at the year end aredisclosed in note 6.

2017 2016Change in foreign

exchange rates %Impact

HK$Change in foreignexchange rates %

ImpactHK$

+/- +/- +/- +/-Monetary items

Euro 3.0% 10,794 1.0% (3,353,064)Pound Sterling 4.0% 59,934 11.0% (11,104,648)United States Dollar 0.5% – 0.5% (480)

Non-monetary itemsDanish Krone 3.0% 2,946,799 1.0% 296,936Euro 3.0% 31,367,463 1.0% 3,740,512Norway Krone 1.0% 278,478 4.0% 745,882Pound Sterling 4.0% 21,695,127 11.0% 22,537,759Swedish Krona 1.0% 1,362,915 1.0% 638,542Swiss Franc 1.0% 2,864,469 2.0% 1,685,381United States Dollar 0.5% 346,061 0.5% 78,675

The Manager has used their view of what would be a “reasonable shift” in the foreign exchange rates,having regard to historical volatility of those rates, to estimate the change for use in the currency risksensitivity analysis above.

Disclosures above are shown in absolute terms, changes and impacts could be positive or negative.Changes in foreign exchange rates % are revised annually depending on the Manager’s current view ofmarket volatility and other relevant factors.







34











HK$ HK$ HK$ HK$AssetsHeld for trading:- Listed equities 2,136,773,087 – – 2,136,773,087- Listed investment funds 69,212,157 – – 69,212,157

Total assets 2,205,985,244 – – 2,205,985,244

LiabilitiesHeld for trading:- Derivative financial

instruments – (548,802) – (548,802)Total liabilities – (548,802) – (548,802)


35




HK$ HK$ HK$ HK$AssetsHeld for trading:- Listed equities 775,403,892 – – 775,403,892- Listed investment funds 15,734,930 – – 15,734,930- Derivative financial

instruments – 49,805,452 – 49,805,452

Total assets 791,138,822 49,805,452 – 840,944,274

LiabilitiesHeld for trading:- Derivative financial

instruments – (6,947,974) – (6,947,974)Total liabilities – (6,947,974) – (6,947,974)

Investments whose values are based on quoted market prices in active markets, and therefore classifiedwithin level 1, include active listed equities and investment funds. The Fund does not adjust the quotedprice for these instruments.

Financial instruments that trade in markets that are not considered to be active but are valued based onquoted market prices, dealer quotations or alternative pricing sources supported by observable inputsare classified within level 2. These include foreign exchange contracts. As level 2 investments includepositions that are not traded in active markets and/or are subject to transfer restrictions, valuations maybe adjusted to reflect illiquidity and/or non-transferability, which are generally based on availablemarket information.



Assets and liabilities included in the statement of net assets, except for investments and derivativefinancial instruments, are carried at amortized cost; their carrying values are a reasonableapproximation of fair value.


The capital of the Fund is represented by the net assets attributable to unitholders. The amount of netassets attributable to unitholders can change significantly on a daily basis as the Fund is subject todaily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective whenmanaging capital is to safeguard the Fund’s ability to continue as a going concern in order to providereturns for unitholders and benefits for other stakeholders and to maintain a strong capital base tosupport the development of the investment activities of the Fund.





36

5. Net gains/(losses) on investments and derivative financial instruments

2017 2016HK$ HK$

Change in unrealized gains in value of investments andderivative financial instruments 122,575,788 33,309,746

Realized gains/(losses) on sale of investments andderivative financial instruments 169,518,285 (65,145,504)

292,094,073 (31,835,758)


Derivative financial instruments represent outstanding foreign exchange contracts and are summarizedbelow:

At 31 December 2017

Contract to deliver In exchange for Settlement date Fair valueHK$

Open contracts:

GBP7,080,671 HK$74,409,355 21 March 2018 (548,802)

At 31 December 2016


Open contracts:

US$748,917 HK$5,808,784 3 January 2017 2,329EUR5,088,754 HK$43,090,042 5 January 2017 1,465,532EUR61,923,679 HK$540,203,598 5 January 2017 33,682,223GBP31,071,738 HK$309,700,091 5 January 2017 11,992,129HK$13,974,856 GBP1,474,907 5 January 2017 156,620HK$47,876,350 GBP5,041,367 5 January 2017 426,328HK$162,588,219 EUR20,131,523 5 January 2017 2,080,291

49,805,452

CHF167,774 HK$1,266,085 3 January 2017 (13,765)CHF191,369 HK$1,444,142 3 January 2017 (15,701)CHF507,792 HK$3,831,984 3 January 2017 (41,662)CHF527,817 HK$3,983,100 3 January 2017 (43,305)CHF533,722 HK$4,027,663 3 January 2017 (43,789)CHF551,941 HK$4,165,149 3 January 2017 (45,284)CHF590,995 HK$4,459,870 3 January 2017 (48,488)CHF755,575 HK$5,701,845 3 January 2017 (61,991)CHF1,668,545 HK$12,591,458 3 January 2017 (136,896)DKK3,571,902 HK$3,884,229 3 January 2017 (44,170)DKK4,390,951 HK$4,774,895 3 January 2017 (54,299)DKK5,436,953 HK$5,912,360 3 January 2017 (67,233)EUR17,866 HK$144,419 3 January 2017 (1,683)EUR24,155 HK$195,253 3 January 2017 (2,275)EUR32,092 HK$259,417 3 January 2017 (3,023)EUR35,783 HK$289,247 3 January 2017 (3,371)


37

6. Derivative financial instruments (Continued)

At 31 December 2016


Open contracts:EUR44,128 HK$356,708 3 January 2017 (4,157)EUR71,130 HK$574,974 3 January 2017 (6,700)EUR104,109 HK$841,555 3 January 2017 (9,806)EUR108,633 HK$878,131 3 January 2017 (10,233)EUR158,121 HK$1,278,157 3 January 2017 (14,894)EUR206,718 HK$1,670,992 3 January 2017 (19,472)EUR223,834 HK$1,809,346 3 January 2017 (21,084)EUR223,888 HK$1,809,782 3 January 2017 (21,089)EUR323,733 HK$2,616,872 3 January 2017 (30,494)EUR332,816 HK$2,690,293 3 January 2017 (31,349)EUR394,236 HK$3,186,777 3 January 2017 (37,135)EUR406,955 HK$3,289,595 3 January 2017 (38,333)EUR428,193 HK$3,461,269 3 January 2017 (40,333)EUR463,150 HK$3,743,843 3 January 2017 (43,626)EUR468,468 HK$3,786,826 3 January 2017 (44,127)EUR485,908 HK$3,927,807 3 January 2017 (45,770)EUR506,413 HK$4,093,551 3 January 2017 (47,701)EUR511,818 HK$4,137,242 3 January 2017 (48,210)EUR512,642 HK$4,143,907 3 January 2017 (48,288)EUR515,137 HK$4,164,071 3 January 2017 (48,523)EUR518,501 HK$4,191,268 3 January 2017 (48,840)EUR522,130 HK$4,220,602 3 January 2017 (49,182)EUR523,814 HK$4,234,217 3 January 2017 (49,340)EUR525,724 HK$4,249,654 3 January 2017 (49,520)EUR550,518 HK$4,450,070 3 January 2017 (51,855)EUR550,866 HK$4,452,889 3 January 2017 (51,888)EUR552,525 HK$4,466,294 3 January 2017 (52,045)EUR556,914 HK$4,501,772 3 January 2017 (52,458)EUR564,719 HK$4,564,864 3 January 2017 (53,193)EUR566,056 HK$4,575,676 3 January 2017 (53,319)EUR568,459 HK$4,595,100 3 January 2017 (53,545)EUR571,455 HK$4,630,469 3 January 2017 (42,679)EUR606,175 HK$4,899,971 3 January 2017 (57,098)EUR608,810 HK$4,921,274 3 January 2017 (57,346)EUR608,879 HK$4,921,827 3 January 2017 (57,353)EUR641,835 HK$5,188,230 3 January 2017 (60,457)EUR665,714 HK$5,381,249 3 January 2017 (62,706)EUR678,298 HK$5,482,971 3 January 2017 (63,892)EUR681,755 HK$5,510,916 3 January 2017 (64,217)EUR687,274 HK$5,555,528 3 January 2017 (64,737)EUR744,997 HK$6,022,133 3 January 2017 (70,174)EUR762,616 HK$6,164,553 3 January 2017 (71,834)EUR892,360 HK$7,213,329 3 January 2017 (84,055)EUR942,621 HK$7,619,608 3 January 2017 (88,789)EUR1,020,913 HK$8,252,479 3 January 2017 (96,164)GBP64,391 HK$610,563 3 January 2017 (6,315)GBP90,212 HK$855,396 3 January 2017 (8,847)GBP122,037 HK$1,157,170 3 January 2017 (11,968)GBP150,983 HK$1,431,637 3 January 2017 (14,806)GBP209,738 HK$1,988,757 3 January 2017 (20,568)GBP220,371 HK$2,089,577 3 January 2017 (21,611)GBP273,062 HK$2,589,202 3 January 2017 (26,778)GBP273,133 HK$2,589,877 3 January 2017 (26,785)


38


At 31 December 2016


Open contracts:GBP319,100 HK$3,025,742 3 January 2017 (31,293)GBP327,606 HK$3,106,395 3 January 2017 (32,127)GBP359,816 HK$3,411,811 3 January 2017 (35,286)GBP377,694 HK$3,581,330 3 January 2017 (37,039)GBP411,814 HK$3,904,864 3 January 2017 (40,385)GBP424,424 HK$4,024,434 3 January 2017 (41,622)GBP424,546 HK$4,025,586 3 January 2017 (41,634)GBP427,639 HK$4,054,912 3 January 2017 (41,937)GBP435,210 HK$4,126,709 3 January 2017 (42,680)GBP437,886 HK$4,152,076 3 January 2017 (42,942)GBP441,048 HK$4,182,063 3 January 2017 (43,252)GBP446,300 HK$4,231,865 3 January 2017 (43,767)GBP466,186 HK$4,420,423 3 January 2017 (45,717)GBP521,747 HK$4,947,254 3 January 2017 (51,166)GBP531,542 HK$5,040,139 3 January 2017 (52,127)GBP545,411 HK$5,171,642 3 January 2017 (53,487)GBP629,241 HK$5,966,525 3 January 2017 (61,708)GBP667,230 HK$6,326,743 3 January 2017 (65,433)GBP962,764 HK$9,129,021 3 January 2017 (94,415)NOK4,816,039 HK$4,299,856 3 January 2017 (38,052)NOK5,539,196 HK$4,945,505 3 January 2017 (43,765)SEK933,368 HK$791,179 3 January 2017 (5,390)SEK1,781,914 HK$1,510,457 3 January 2017 (10,290)SEK2,648,578 HK$2,245,094 3 January 2017 (15,295)SEK4,803,005 HK$4,071,315 3 January 2017 (27,736)SEK5,127,623 HK$4,346,481 3 January 2017 (29,610)SEK5,163,953 HK$4,377,277 3 January 2017 (29,820)SEK5,608,059 HK$4,753,727 3 January 2017 (32,385)SEK5,669,013 HK$4,805,395 3 January 2017 (32,737)SEK5,801,220 HK$4,917,462 3 January 2017 (33,500)EUR2,455,401 HK$19,926,321 5 January 2017 (157,924)HK$9,336,104 GBP967,051 5 January 2017 (70,531)HK$27,208,404 EUR3,319,110 5 January 2017 (59,296)HK$42,896,267 EUR4,991,130 5 January 2017 (2,070,645)HK$124,694,536 GBP12,961,145 5 January 2017 (510,358)

(6,947,974)

7. Taxation

(a) No provision for Hong Kong profits tax has been made as the Fund is authorized as a collectiveinvestment scheme under Section 104 of the Hong Kong Securities and Futures Ordinance and istherefore exempted from profits tax under Section 26A(1A) of the Hong Kong Inland RevenueOrdinance.

(b) Withholding tax was charged on certain dividend income received during the year.


39


Associates and connected persons are those as defined in the Mandatory Provident Fund SchemesOrdinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and FuturesCommission of Hong Kong.



(a) Management fee

PineBridge Investments Hong Kong Limited, the Manager, is entitled to receive a management fee at1.25% per annum, with a permitted maximum of 1.50% per annum, of the net asset value of theStandard units - Accumulation, being calculated daily and payable monthly in arrears.



(b) Trustee’s fee


Trustee’s fee payable as at year end amounted to HK$92,283 (2016: HK$50,264).


The Custodian and Administrator of the Fund is Citibank N.A., Hong Kong Branch and the Applicationand Redemption Agent of the Fund is Citicorp Financial Services Limited (collectively “Citibank”).Citibank is entitled to receive a custodian fee which comprises safekeeping and transaction fees of 0.025%per annum of the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a totalpermitted maximum of 0.50% per annum. The safekeeping and transaction fee rate of 0.025% per annum isthe maximum rate. Citibank is also entitled to receive an administrator fee of US$1,000 per month.

Custodian and administration fees payable as at year end amounted to HK$87,514 (2016: HK$89,721).


The Manager and its associates/connected persons have entered into soft commission arrangements withsome brokers under which certain goods and services used to support investment decision making areobtained from third parties and are paid for by the brokers out of the commissions they receive. These mayinclude, for example, research and advisory services; economic and political analysis; portfolio analysis,including valuation and performance measurement; market analysis, data and quotation services; clearing,registrar and custodial services and investment-related publications; computer hardware and softwareincidental to the above goods and services.

11. Distributions



40







PINEBRIDGE GLOBAL BOND FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Global Bond Fund

Reports and Financial Statements

For the year ended 31 December 2017

Contents

Pages













1

Manager Trustee

PineBridge Investments Hong Kong Limited AIA Company (Trustee) Limited

Level 31, Three Pacific Place, 1 Queen’s Road East 2nd Floor, AIA Building, 1 Stubbs Road,

Hong Kong Hong Kong


Citibank N.A., Hong Kong Branch Citicorp Financial Services Limited

50th Floor, Champion Tower Citi Tower, One Bay East

Three Garden Road, Central 83 Hoi Bun Road

Hong Kong Kwun Tong, Kowloon

Hong Kong


Ernst & Young 2nd Floor, AIA Building

22/F CITIC Tower 1 Stubbs Road,

1 Tim Mei Avenue Hong Kong

Central, Hong Kong

Legal Advisers

Deacons

5th Floor, Alexandra House

18 Chater Road

Central, Hong Kong


Manager’s Report


2


Asset Class Overview (2017)

2017 will be remember as probably the least volatile year on record when you consider the all-time or multi-

year lows reached on a number of measures of volatility across asset classes. Synchronized and firm global growth, inflation which has not accelerated as much as expected and has continually disappointed relative to

expectations, and global central bank liquidity which during the year was more or less at peak levels all help

explain this. In this environment, government bonds in G4 countries traded within narrow ranges for most of the

year and had modest returns. The flattening of the US curve was the main surprise as the spread between 2-10yr

UST decreased by 70bps. Credit markets had a strong year as spreads tightened in both the US and Europe

driven by the search for yield, strong technicals and better than expected results. Oil had a strong year with

returns of ~14% (Brent) while the USD had a year to forget as the DXY lost ~10%.

Outlook Ahead

We expect the major economies in 2018 to continue growing at a decent pace but similar to the previous year

inflation will remain below target in most of these countries. For this reason, we believe the Fed will only raise

twice this year, the ECB & BoJ will continue with QE for the entire year and the BoE will struggle raising rates

one more time. Trading ranges for 10yr interest rates should move slightly higher but we do not expect a rate

sell-off during 2018, but as the previous year, the shape of the curve will be important and we would not be

surprised by a flattening of the curve in Europe. In terms of positioning, we prefer the long-end in Europe, front-end in Canada and belly of the US. For credit markets, in general we have a positive outlook and we prefer

certain sectors such as banking, technology & basic materials where we have overweight allocations.


Investment Report

As at 31 December 2017

3


Nominal Market % of net

value value assets

Local currency US$


BONDS

AUSTRALIAN DOLLAR

AUSTRALIA GOVERNMENT BOND 4.25% 21APR2026 7,500,000 6,596,768 1.61%

FIRST ABU DHABI BANK PJSC 5% 7MAR2018 (formerly known as

NATIONAL BANK OF ABU DHABI PJSC 5% 7MAR2018) 750,000 589,112 0.14%

TOTAL AUSTRALIAN DOLLAR 7,185,880 1.75%

CANADIAN DOLLAR

CANADIAN GOVERNMENT BOND 1% 1SEP2022 7,500,000 5,756,312 1.40%

CANADIAN GOVERNMENT BOND 3.5% 1JUN2020 1,900,000 1,579,852 0.39%

CANADIAN GOVERNMENT BOND 3.75% 1JUN2019 1,000,000 821,613 0.20%

CANADIAN GOVERNMENT BOND 5% 1JUN2037 800,000 916,920 0.22%

CANADIAN GOVERNMENT BOND 8% 1JUN2027 6,000,000 7,223,413 1.76%

TOTAL CANADIAN DOLLAR 16,298,110 3.97%

EURO

BANK OF AMERICA CORP 1.625% 14SEP2022 1,500,000 1,898,737 0.46%

BP CAPITAL MARKETS PLC 2.972% 27FEB2026 4,500,000 6,224,888 1.52%

BUNDESREPUBLIK DEUTSCHLAND BUNDESANLEIHE 3.25%

4JUL2042 1,400,000 2,451,961 0.60%

COOPERATIEVE RABOBANK UA 2.5% 26MAY2026 1,000,000 1,272,543 0.31%

CREDIT SUISSE GROUP AG 1.25% 17JUL2025 2,000,000 2,426,685 0.59%

DAIMLER AG 1% 15NOV2027 4,000,000 4,733,602 1.15%

DANSKE BANK A/S 3.875% 4OCT2023 2,000,000 2,469,277 0.60%

ELECTRICITE DE FRANCE SA 1% 13OCT2026 3,400,000 4,006,218 0.98%

FRENCH REPUBLIC GOVERNMENT BOND OAT 4.5% 25APR2041 1,500,000 2,876,520 0.70%

GAS NATURAL FENOSA FINANCE BV 1.375% 19JAN2027 2,500,000 3,011,228 0.73%

GLENCORE FINANCE EUROPE LTD 1.75% 17MAR2025 2,500,000 3,040,630 0.74%

GOLDMAN SACHS GROUP INC 1.375% 15MAY2024 1,500,000 1,840,621 0.45%

GOODMAN AUSTRALIA FINANCE PTY LTD 1.375% 27SEP2025 3,550,000 4,252,899 1.04%

HBOS PLC 5.374% 30JUN2021 4,000,000 5,626,896 1.37%

HSBC HOLDINGS PLC 3% 30JUN2025 2,500,000 3,344,489 0.82%

IBERDROLA INTERNATIONAL BV 1.125% 21APR2026 1,000,000 1,205,576 0.29%

ITALY BUONI POLIENNALI DEL TESORO 1.2% 1APR2022 6,500,000 7,994,765 1.95%

ITALY BUONI POLIENNALI DEL TESORO 4.75% 1SEP2044 4,000,000 6,160,363 1.50%

ITALY BUONI POLIENNALI DEL TESORO 5.75% 1FEB2033 3,250,000 5,445,622 1.33%

LLOYDS BANKING GROUP PLC 1.5% 12SEP2027 1,500,000 1,809,621 0.44%

MORGAN STANLEY 1.75% 11MAR2024 1,450,000 1,830,266 0.45%

NATIONWIDE BUILDING SOCIETY 2% 25JUL2029 1,000,000 1,217,538 0.30%

NESTLE FINANCE INTERNATIONAL LTD 1.75% 2NOV2037 3,500,000 4,304,457 1.05%

NETHERLANDS GOVERNMENT BOND 2.75% 15JAN2047 3,850,000 6,297,740 1.54%

NETHERLANDS GOVERNMENT BOND 3.75% 15JAN2042 2,000,000 3,729,795 0.91%

PROCTER & GAMBLE CO/THE 0.5% 25OCT2024 2,600,000 3,100,519 0.76%

RTE RESEAU DE TRANSPORT D'ELECTRICITE SA 1.875%

23OCT2037 1,700,000 2,054,892 0.50%

SANTANDER ISSUANCES SAU 3.25% 4APR2026 1,000,000 1,323,647 0.32%


Investment Report


4



value value assets

Local currency US$


BONDS (CONTINUED)

EURO (CONTINUED)

SPAIN GOVERNMENT BOND 1.45% 31OCT2027 5,250,000 6,249,801 1.52%

SPAIN GOVERNMENT BOND 5.15% 31OCT2044 4,000,000 6,993,104 1.71%

STANDARD CHARTERED PLC 3.125% 19NOV2024 2,000,000 2,641,950 0.64%

SWEDBANK AB 1% 22NOV2027 3,000,000 3,595,685 0.88%

TELEFONICA EMISIONES SAU 2.932% 17OCT2029 600,000 802,299 0.20%

TOTAL SA 3.875% 29DEC2049 4,700,000 6,333,388 1.54%

TOYOTA MOTOR CREDIT CORP 0.625% 21NOV2024 5,000,000 5,977,642 1.46%

UBS GROUP AG 4.75% 12FEB2026 4,000,000 5,391,568 1.31%

VERIZON COMMUNICATIONS INC 1.875% 26OCT2029 1,500,000 1,797,167 0.44%

VOLKSWAGEN INTERNATIONAL FINANCE NV 1.875%

30MAR2027 3,500,000 4,345,094 1.06%

WELLS FARGO & CO 1.5% 12SEP2022 1,500,000 1,888,189 0.46%

TOTAL EURO 141,967,882 34.62%

JAPANESE YEN

EUROPEAN INVESTMENT BANK 1.9% 26JAN2026 500,000,000 5,147,335 1.26%

JAPAN GOVERNMENT THIRTY YEAR BOND 1.8% 20MAR2043 400,000,000 4,446,511 1.08%

JAPAN GOVERNMENT TWENTY YEAR BOND 0.6% 20DEC2036 385,000,000 3,469,097 0.85%

JAPAN GOVERNMENT TWENTY YEAR BOND 0.6% 20SEP2037 415,000,000 3,712,840 0.91%

JAPAN GOVERNMENT TWENTY YEAR BOND 2.1% 20MAR2027 265,000,000 2,804,073 0.68%

PROVINCE OF ONTARIO CANADA 1.65% 8JUN2020 120,000,000 1,108,193 0.27%

TOTAL JAPANESE YEN 20,688,049 5.05%

MEXICAN PESO

MEXICAN BONOS 7.75% 13NOV2042 10,000 50,854 0.01%

TOTAL MEXICAN PESO 50,854 0.01%

POUND STERLING

CREDIT SUISSE GROUP AG 2.125% 12SEP2025 2,250,000 3,027,069 0.74%

HSBC BANK PLC 5% 20MAR2023 3,000,000 4,095,549 1.00%

HSBC HOLDINGS PLC 2.256% 13NOV2026 3,000,000 4,080,875 1.00%

STANDARD CHARTERED BANK 7.75% 3APR2018 1,750,000 2,408,054 0.59%

UNITED KINGDOM GILT 3.5% 22JAN2045 1,500,000 2,772,556 0.68%

UNITED KINGDOM GILT 4.25% 7SEP2039 400,000 786,489 0.19%

TOTAL POUND STERLING 17,170,592 4.20%

UNITED STATES DOLLAR

AIR LIQUIDE FINANCE SA 2.5% 27SEP2026 2,000,000 1,918,354 0.47%

CREDIT AGRICOLE SA/LONDON 3.375% 10JAN2022 1,500,000 1,524,825 0.37%

DELL INT LLC / EMC CORP 6.02% 15JUN2026 (formerly known as

DIAMOND 1 FINANCE CORP / DIAMOND 2 FINANCE CORP

6.02% 15JUN2026) 1,350,000 1,490,968 0.36%

DELL INT LLC / EMC CORP 8.35% 15JUL2046 (formerly known as

DIAMOND 1 FINANCE CORP / DIAMOND 2 FINANCE CORP

8.35% 15JUL2046) 675,000 872,504 0.21%

ENTERPRISE PRODUCTS OPERATING LLC 6.5% 31JAN2019 3,000,000 3,135,732 0.76%


Investment Report


5


Nominal Market

% of net

value value

assets

Local currency US$


BONDS (CONTINUED)

UNITED STATES DOLLAR (CONTINUED)

GEORGIA-PACIFIC LLC 3.6% 1MAR2025 4,000,000 4,114,656

1.00%

GLENCORE FINANCE CANADA LTD 4.25% 25OCT2022 5,000,000 5,244,695

1.28%

GOLDMAN SACHS GROUP INC 2.35% 15NOV2021 4,000,000 3,942,972

0.96%

JOHNSON & JOHNSON 3.4% 15JAN2038 4,000,000 4,105,836

1.00%

LLOYDS BANKING GROUP PLC 3.75% 11JAN2027 2,000,000 2,034,936

0.50%

MEXICO GOVERNMENT INTERNATIONAL BOND 4.15%

28MAR2027 4,557,000 4,731,305

1.15%

MICHAEL KORS USA INC 4% 1NOV2024 2,000,000 2,021,034

0.49%

ORACLE CORP 3.25% 15NOV2027 5,000,000 5,091,105

1.24%

ORACLE CORP 4.375% 15MAY2055 1,000,000 1,120,951

0.27%

SANTANDER UK GROUP HOLDINGS PLC 3.571% 10JAN2023 2,000,000 2,030,714

0.50%

UBS GROUP FUNDING SWITZERLAND AG 4.253% 23MAR2028 1,500,000 1,583,553

0.39%

UNITED STATES TREASURY INFLATION INDEXED BONDS

0.125% 15APR2021 8,000,000 8,294,449

2.02%

UNITED STATES TREASURY NOTE/BOND 1.25% 31JUL2023 11,000,000 10,426,372

2.54%

UNITED STATES TREASURY NOTE/BOND 1.375% 30JUN2023 16,000,000 15,287,504

3.73%

UNITED STATES TREASURY NOTE/BOND 1.375% 30SEP2023 17,000,000 16,194,506

3.95%

UNITED STATES TREASURY NOTE/BOND 1.5% 28FEB2023 20,000,000 19,302,340

4.72%

UNITED STATES TREASURY NOTE/BOND 1.5% 31MAR2023 8,000,000 7,713,592

1.88%

UNITED STATES TREASURY NOTE/BOND 1.875% 31AUG2024 12,000,000 11,678,904

2.85%

UNITED STATES TREASURY NOTE/BOND 2% 15FEB2023 15,000,000 14,848,830

3.62%

UNITED STATES TREASURY NOTE/BOND 2.125% 29FEB2024 18,000,000 17,824,914

4.35%

UNITED STATES TREASURY NOTE/BOND 2.125% 30JUN2022 9,250,000 9,234,460

2.25%

UNITED STATES TREASURY NOTE/BOND 2.5% 15MAY2024 12,000,000 12,137,580

2.96%

UNITED STATES TREASURY NOTE/BOND 3.625% 15AUG2043 2,000,000 2,334,766

0.57%

WESTLAKE CHEMICAL CORP 3.6% 15AUG2026 2,000,000 2,015,162

0.49%

TOTAL UNITED STATES DOLLAR

192,257,519

46.88%

TOTAL INVESTMENTS*

395,618,886

96.48%

TOTAL INVESTMENTS, AT COST*

390,297,770



Investment Report


6


Nominal value

1 January 2017 Additions Deductions 31 December 2017

Local currency Local currency Local currency Local currency


BONDS

AUSTRALIAN DOLLAR

AUSTRALIA GOVERNMENT BOND 4.25%

21APR2026 – 7,500,000 – 7,500,000

FIRST ABU DHABI BANK PJSC 5% 7MAR2018

(formerly known as NATIONAL BANK OF ABU

DHABI PJSC 5% 7MAR2018) 750,000 – – 750,000

CANADIAN DOLLAR

CANADIAN GOVERNMENT BOND 1% 1SEP2022 – 7,500,000 – 7,500,000

CANADIAN GOVERNMENT BOND 3.5%

1JUN2020 1,900,000 – – 1,900,000

CANADIAN GOVERNMENT BOND 3.75%

1JUN2019 1,000,000 – – 1,000,000

CANADIAN GOVERNMENT BOND 5% 1JUN2037 800,000 – – 800,000

CANADIAN GOVERNMENT BOND 8% 1JUN2027 – 6,000,000 – 6,000,000

DANISH KRONE

DENMARK GOVERNMENT BOND 1.75%

15NOV2025 5,000,000 – (5,000,000) –

EURO

ALLIANZ SE 3.099% 6JUL2047 – 2,000,000 (2,000,000) –

AMGEN INC 1.25% 25FEB2022 1,000,000 – (1,000,000) –

ANHEUSER-BUSCH INBEV SA/NV 2.75%

17MAR2036 2,500,000 – (2,500,000) –

APPLE INC 0.875% 24MAY2025 – 1,490,000 (1,490,000) –

APPLE INC 1.375% 24MAY2029 – 5,540,000 (5,540,000) –

AT&T INC 2.35% 4SEP2029 – 3,000,000 (3,000,000) –

AT&T INC 3.15% 4SEP2036 – 4,500,000 (4,500,000) –

AUSTRIA GOVERNMENT BOND 3.15%

20JUN2044 2,000,000 – (2,000,000) –

BANK OF AMERICA CORP 1.625% 14SEP2022 1,500,000 – – 1,500,000

BANQUE FEDERATIVE DU CREDIT MUTUEL SA

0.375% 13JAN2022 – 2,000,000 (2,000,000) –

BARCLAYS BANK PLC 6.625% 30MAR2022 – 2,000,000 (2,000,000) –

BARCLAYS PLC 1.875% 8DEC2023 1,075,000 – (1,075,000) –

BELGIUM GOVERNMENT BOND 3.75%

22JUN2045 3,000,000 – (3,000,000) –

BERKSHIRE HATHAWAY INC 0.625% 17JAN2023 – 1,180,000 (1,180,000) –

BNP PARIBAS SA 1.125% 10OCT2023 – 1,500,000 (1,500,000) –

BNP PARIBAS SA 1.5% 17NOV2025 – 1,000,000 (1,000,000) –

BOUYGUES SA 1.375% 7JUN2027 2,000,000 – (2,000,000) –

BP CAPITAL MARKETS PLC 1.637% 26JUN2029 – 4,500,000 (4,500,000) –

BP CAPITAL MARKETS PLC 2.972% 27FEB2026 – 4,500,000 – 4,500,000

BPCE SA 1% 5OCT2028 500,000 – (500,000) –

BPCE SA 2.75% 30NOV2027 2,000,000 – (2,000,000) –

BUNDESREPUBLIK DEUTSCHLAND 2.5%

15AUG2046 3,225,000 1,350,000 (4,575,000) –

BUNDESREPUBLIK DEUTSCHLAND

BUNDESANLEIHE 0.5% 15AUG2027 – 3,500,000 (3,500,000) –

BUNDESREPUBLIK DEUTSCHLAND

BUNDESANLEIHE 3.25% 4JUL2042 – 3,400,000 (2,000,000) 1,400,000

COOPERATIEVE RABOBANK UA 2.5%

26MAY2026 1,000,000 – – 1,000,000

CREDIT AGRICOLE SA/LONDON 1.875%

20DEC2026 – 4,000,000 (4,000,000) –

CREDIT MUTUEL ARKEA SA 1.875% 25OCT2029 – 800,000 (800,000) –

CREDIT SUISSE GROUP AG 1.25% 17JUL2025 – 2,000,000 – 2,000,000


Investment Report


7


Nominal value




(CONTINUED)

BONDS (CONTINUED)

EURO (CONTINUED)

DAIMLER AG 0.85% 28FEB2025 – 4,000,000 (4,000,000) –

DAIMLER AG 1% 15NOV2027 – 8,000,000 (4,000,000) 4,000,000

DAIMLER AG 1.5% 3JUL2029 – 3,500,000 (3,500,000) –

DANSKE BANK A/S 3.875% 4OCT2023 2,000,000 – – 2,000,000

DEUTSCHE BANK AG 1% 18MAR2019 2,000,000 – (2,000,000) –

DEUTSCHE TELEKOM INTERNATIONAL

FINANCE BV 0.875% 30JAN2024 – 3,000,000 (3,000,000) –

EASTMAN CHEMICAL CO 1.5% 26MAY2023 760,000 – (760,000) –

ECOLAB INC 1% 15JAN2024 1,360,000 – (1,360,000) –

ELECTRICITE DE FRANCE SA 1% 13OCT2026 4,500,000 – (1,100,000) 3,400,000

ENEL FINANCE INTERNATIONAL NV 1.375%

1JUN2026 2,500,000 – (2,500,000) –

ENGIE SA 3.875% 10JUL2049 3,000,000 – (3,000,000) –

EUROPEAN INVESTMENT BANK 4.25%

15APR2019 – 2,750,000 (2,750,000) –

FIDELITY NATIONAL INFORMATION SERVICES

INC 1.1% 15JUL2024 – 2,000,000 (2,000,000) –

FINLAND GOVERNMENT BOND 2.625%

4JUL2042 1,500,000 – (1,500,000) –

FRENCH REPUBLIC GOVERNMENT BOND OAT

4.5% 25APR2041 4,000,000 6,500,000 (9,000,000) 1,500,000

GAS NATURAL FENOSA FINANCE BV 1.375%

19JAN2027 – 3,500,000 (1,000,000) 2,500,000

GENERAL ELECTRIC CO 1.5% 17MAY2029 – 2,575,000 (2,575,000) –

GENERAL ELECTRIC CO 2.125% 17MAY2037 – 1,385,000 (1,385,000) –

GLENCORE FINANCE EUROPE LTD 1.75%

17MAR2025 – 2,500,000 – 2,500,000

GLENCORE FINANCE EUROPE SA 2.75%

1APR2021 2,000,000 – (2,000,000) –

GLENCORE FINANCE EUROPE SA 3.75%

1APR2026 – 2,425,000 (2,425,000) –

GOLDMAN SACHS GROUP INC 1.375%

15MAY2024 – 1,500,000 – 1,500,000


27JUL2026 2,000,000 – (2,000,000) –

GOODMAN AUSTRALIA FINANCE PTY LTD

1.375% 27SEP2025 – 3,550,000 – 3,550,000

HBOS PLC 5.374% 30JUN2021 – 4,000,000 – 4,000,000

HEATHROW FUNDING LTD 1.875% 23MAY2022 1,600,000 – (1,600,000) –

HSBC HOLDINGS PLC 3% 30JUN2025 – 2,500,000 – 2,500,000

IBERDROLA INTERNATIONAL BV 1.125%

21APR2026 1,000,000 – – 1,000,000

IBERDROLA INTERNATIONAL BV 3%

31JAN2022 1,200,000 – (1,200,000) –

INTERNATIONAL BUSINESS MACHINES CORP

0.95% 23MAY2025 – 4,100,000 (4,100,000) –

INTERNATIONAL BUSINESS MACHINES CORP

1.5% 23MAY2029 – 2,610,000 (2,610,000) –

INTESA SANPAOLO SPA 1.375% 18JAN2024 – 3,000,000 (3,000,000) –

ITALY BUONI POLIENNALI DEL TESORO 1.2%

1APR2022 – 6,500,000 – 6,500,000


15SEP2022 – 5,000,000 (5,000,000) –


1MAR2047 – 2,000,000 (2,000,000) –


1MAR2026 1,375,000 – (1,375,000) –


1SEP2044 – 6,000,000 (2,000,000) 4,000,000


Investment Report


8


Nominal value




(CONTINUED)

BONDS (CONTINUED)

EURO (CONTINUED)


1FEB2033 – 3,250,000 – 3,250,000


1NOV2026 2,200,000 – (2,200,000) –

JOHNSON & JOHNSON 1.65% 20MAY2035 1,360,000 – (1,360,000) –

JOHNSON CONTROLS INTERNATIONAL PLC 1%

15SEP2023 – 2,850,000 (2,850,000) –

JPMORGAN CHASE & CO 2.625% 23APR2021 1,300,000 – (1,300,000) –

KINGDOM OF BELGIUM GOVERNMENT BOND

4.25% 28MAR2041 5,000,000 – (5,000,000) –

LLOYDS BANKING GROUP PLC 1.5% 12SEP2027 – 1,500,000 – 1,500,000

LVMH MOET HENNESSY LOUIS VUITTON SE

0.375% 26MAY2022 – 3,000,000 (3,000,000) –

MORGAN STANLEY 1.75% 11MAR2024 1,450,000 – – 1,450,000

NATIONWIDE BUILDING SOCIETY 0.625%

19APR2023 – 1,500,000 (1,500,000) –

NATIONWIDE BUILDING SOCIETY 2%

25JUL2029 – 1,500,000 (500,000) 1,000,000

NESTLE FINANCE INTERNATIONAL LTD 1.75%

2NOV2037 – 3,500,000 – 3,500,000

NETHERLANDS GOVERNMENT BOND 2.75%

15JAN2047 – 4,500,000 (650,000) 3,850,000

NETHERLANDS GOVERNMENT BOND 3.75%

15JAN2042 – 2,000,000 – 2,000,000

ORANGE SA 4% 29OCT2049 3,000,000 3,000,000 (6,000,000) –

PROCTER & GAMBLE CO/THE 0.5% 25OCT2024 – 2,600,000 – 2,600,000

RCI BANQUE SA 0.75% 12JAN2022 – 2,500,000 (2,500,000) –

ROYAL BANK OF SCOTLAND PLC 5.375%

30SEP2019 1,500,000 – (1,500,000) –

RTE RESEAU DE TRANSPORT D'ELECTRICITE

SA 1.875% 23OCT2037 – 1,700,000 – 1,700,000

SANTANDER ISSUANCES SAU 3.25% 4APR2026 – 2,000,000 (1,000,000) 1,000,000

SANTANDER UK PLC 0.875% 25NOV2020 750,000 – (750,000) –

SOCIETE GENERALE SA 0.75% 26MAY2023 1,000,000 – (1,000,000) –

SOCIETE GENERALE SA 1% 1APR2022 2,000,000 – (2,000,000) –

SPAIN GOVERNMENT BOND 1.45% 31OCT2027 – 5,250,000 – 5,250,000

SPAIN GOVERNMENT BOND 4.4% 31OCT2023 4,000,000 – (4,000,000) –

SPAIN GOVERNMENT BOND 4.7% 30JUL2041 – 1,000,000 (1,000,000) –

SPAIN GOVERNMENT BOND 5.15% 31OCT2028 – 5,000,000 (5,000,000) –

SPAIN GOVERNMENT BOND 5.15% 31OCT2044 – 4,000,000 – 4,000,000

SPAIN GOVERNMENT BOND 5.9% 30JUL2026 4,250,000 – (4,250,000) –

STANDARD CHARTERED PLC 3.125%

19NOV2024 2,000,000 – – 2,000,000

SUEZ 2.875% 31DEC2049 – 2,500,000 (2,500,000) –

SVENSKA HANDELSBANKEN AB 2.656%

15JAN2024 2,000,000 – (2,000,000) –

SWEDBANK AB 1% 22NOV2027 – 3,000,000 – 3,000,000

TELEFONICA EMISIONES SAU 1.715%

12JAN2028 – 2,700,000 (2,700,000) –

TELEFONICA EMISIONES SAU 1.93% 17OCT2031 4,000,000 – (4,000,000) –


17OCT2029 – 2,600,000 (2,000,000) 600,000

TEVA PHARMACEUTICAL FINANCE

NETHERLANDS II BV 1.875% 31MAR2027 – 1,500,000 (1,500,000) –

THERMO FISHER SCIENTIFIC INC 1.4%

23JAN2026 – 1,500,000 (1,500,000) –

THERMO FISHER SCIENTIFIC INC 1.45%

16MAR2027 – 940,000 (940,000) –


Investment Report


9


Nominal value




(CONTINUED)

BONDS (CONTINUED)

EURO (CONTINUED)

TOTAL SA 3.875% 29DEC2049 5,000,000 2,000,000 (2,300,000) 4,700,000

TOYOTA MOTOR CREDIT CORP 0.625%

21NOV2024 – 5,000,000 – 5,000,000

UBS GROUP AG 4.75% 12FEB2026 – 4,000,000 – 4,000,000

UBS GROUP FUNDING JERSEY LTD 1.5%

30NOV2024 600,000 2,000,000 (2,600,000) –

VERIZON COMMUNICATIONS INC 0.875%

2APR2025 1,110,000 – (1,110,000) –


26OCT2029 – 2,225,000 (725,000) 1,500,000


15JAN2038 – 2,500,000 (2,500,000) –

VOLKSWAGEN INTERNATIONAL FINANCE NV

1.125% 2OCT2023 – 2,200,000 (2,200,000) –


1.875% 30MAR2027 – 3,500,000 – 3,500,000


2.7% 29DEC2049 – 1,500,000 (1,500,000) –


3.875% 31DEC2049 – 5,000,000 (5,000,000) –

WELLS FARGO & CO 1.5% 12SEP2022 1,500,000 – – 1,500,000

WESTPAC BANKING CORP 0.875% 16FEB2021 1,500,000 – (1,500,000) –

XLIT LTD 3.25% 29JUN2047 – 2,100,000 (2,100,000) –

JAPANESE YEN


20JUN2017 100,000,000 – (100,000,000) –


26JAN2026 500,000,000 – – 500,000,000

GENERAL ELECTRIC CO 2% 22FEB2017 500,000,000 – (500,000,000) –

HSBC FINANCE CORP 2.54% 16FEB2021 200,000,000 – (200,000,000) –

JAPAN FINANCE ORGANIZATION FOR

MUNICIPALITIES 1.9% 22JUN2018 500,000,000 – (500,000,000) –

JAPAN GOVERNMENT FIVE YEAR BOND 0.1%

20MAR2018 1,285,000,000 – (1,285,000,000) –

JAPAN GOVERNMENT TEN YEAR BOND 0.1%

20DEC2026 – 800,000,000 (800,000,000) –


20DEC2025 – 750,000,000 (750,000,000) –


20MAR2021 5,000,000 – (5,000,000) –

JAPAN GOVERNMENT THIRTY YEAR BOND

1.8% 20MAR2043 600,000,000 – (200,000,000) 400,000,000

JAPAN GOVERNMENT TWENTY YEAR BOND

0.6% 20DEC2036 – 385,000,000 – 385,000,000


0.6% 20SEP2037 – 415,000,000 – 415,000,000


2.1% 20MAR2027 265,000,000 – – 265,000,000

JAPAN GOVERNMENT TWO YEAR BOND 0.1%

15JUN2017 400,000,000 – (400,000,000) –


15NOV2017 250,000,000 – (250,000,000) –


15OCT2017 150,000,000 – (150,000,000) –

POLAND GOVERNMENT INTERNATIONAL

BOND 1.05% 8NOV2017 200,000,000 – (200,000,000) –

PROVINCE OF ONTARIO CANADA 1.65%

8JUN2020 120,000,000 – – 120,000,000


Investment Report


10


Nominal value




(CONTINUED)

BONDS (CONTINUED)

MEXICAN PESO

MEXICAN BONOS 7.75% 13NOV2042 10,000 – – 10,000

POUND STERLING

AMERICAN HONDA FINANCE CORP 1.3%

21MAR2022 – 1,460,000 (1,460,000) –

AMGEN INC 4% 13SEP2029 1,500,000 – (1,500,000) –

AT&T INC 3.55% 14SEP2037 – 2,700,000 (2,700,000) –

CADENT FINANCE PLC 2.125% 22SEP2028

(formerly known as NATIONAL GRID GAS

FINANCE PLC 2.125% 22SEP2028) 3,000,000 – (3,000,000) –

CREDIT SUISSE GROUP AG 2.125% 12SEP2025 – 2,250,000 – 2,250,000

DAIMLER AG 1.5% 13JAN2022 – 1,500,000 (1,500,000) –

DEUTSCHE BANK AG 1.875% 28FEB2020 – 2,000,000 (2,000,000) –

HEATHROW FUNDING LTD 5.875% 13MAY2041 1,350,000 – (1,350,000) –

HSBC BANK PLC 5% 20MAR2023 – 3,000,000 – 3,000,000

HSBC HOLDINGS PLC 2.256% 13NOV2026 – 3,000,000 – 3,000,000

KONINKLIJKE KPN NV 5.75% 17SEP2029 1,100,000 600,000 (1,700,000) –

MARKS & SPENCER PLC 3% 8DEC2023 1,000,000 – (1,000,000) –

MORGAN STANLEY 2.625% 9MAR2027 – 2,600,000 (2,600,000) –

NEW YORK LIFE GLOBAL FUNDING 1%

15DEC2021 – 2,000,000 (2,000,000) –

STANDARD CHARTERED BANK 7.75%

3APR2018 – 1,750,000 – 1,750,000

UNITED KINGDOM GILT 3.5% 22JAN2045 1,000,000 1,500,000 (1,000,000) 1,500,000

UNITED KINGDOM GILT 4.25% 7MAR2036 2,000,000 – (2,000,000) –

UNITED KINGDOM GILT 4.25% 7SEP2039 – 1,100,000 (700,000) 400,000


2NOV2035 1,975,000 – (1,975,000) –

UNITED STATES DOLLAR

ABN AMRO BANK NV 4.4% 27MAR2028 – 5,000,000 (5,000,000) –

AIR LIQUIDE FINANCE SA 2.5% 27SEP2026 2,000,000 – – 2,000,000

AMAZON.COM INC 2.5% 29NOV2022 1,300,000 – (1,300,000) –

ANHEUSER–BUSCH INBEV FINANCE INC 3.3%

1FEB2023 2,000,000 – (2,000,000) –

AT&T INC 5.15% 14FEB2050 – 6,000,000 (6,000,000) –

BANK OF AMERICA CORP 4.1% 24JUL2023 1,000,000 – (1,000,000) –

BERKSHIRE HATHAWAY FINANCE CORP 1.3%

15AUG2019 3,000,000 – (3,000,000) –

BP CAPITAL MARKETS PLC 2.112% 16SEP2021 2,000,000 – (2,000,000) –

BPCE SA 2.5% 15JUL2019 2,000,000 – (2,000,000) –

BURLINGTON NORTHERN SANTA FE LLC 4.4%

15MAR2042 1,000,000 – (1,000,000) –

COOPERATIEVE RABOBANK UA 4.625%

1DEC2023 1,000,000 – (1,000,000) –

CREDIT AGRICOLE SA/LONDON 3.375%

10JAN2022 – 1,500,000 – 1,500,000

DAIMLER FINANCE NORTH AMERICA LLC 2.7%

3AUG2020 1,500,000 1,500,000 (3,000,000) –

DELL INT LLC / EMC CORP 6.02% 15JUN2026

(formerly known as DIAMOND 1 FINANCE CORP

/ DIAMOND 2 FINANCE CORP 6.02%

15JUN2026) 1,350,000 – – 1,350,000

DELL INT LLC / EMC CORP 8.35% 15JUL2046

(formerly known as DIAMOND 1 FINANCE CORP

/ DIAMOND 2 FINANCE CORP 8.35%

15JUL2046) 675,000 – – 675,000


Investment Report


11


Nominal value




(CONTINUED)

BONDS (CONTINUED)


ENTERPRISE PRODUCTS OPERATING LLC 6.5%

31JAN2019 3,000,000 – – 3,000,000

GEORGIA-PACIFIC LLC 3.6% 1MAR2025 4,000,000 – – 4,000,000

GLENCORE FINANCE CANADA LTD 4.25%

25OCT2022 5,000,000 – – 5,000,000

GOLDCORP INC 2.125% 15MAR2018 – 3,556,000 (3,556,000) –


15NOV2021 1,000,000 3,000,000 – 4,000,000


23OCT2019 2,500,000 – (2,500,000) –

HSBC HOLDINGS PLC 4.375% 23NOV2026 1,550,000 – (1,550,000) –

ING GROEP NV 3.15% 29MAR2022 – 2,000,000 (2,000,000) –

JOHNSON & JOHNSON 3.4% 15JAN2038 – 4,000,000 – 4,000,000

L3 TECHNOLOGIES INC 3.85% 15DEC2026 2,000,000 – (2,000,000) –

LLOYDS BANKING GROUP PLC 3.75%

11JAN2027 – 2,000,000 – 2,000,000

MEXICO GOVERNMENT INTERNATIONAL

BOND 3.6% 30JAN2025 2,000,000 – (2,000,000) –

MEXICO GOVERNMENT INTERNATIONAL

BOND 4.15% 28MAR2027 – 4,557,000 – 4,557,000

MICHAEL KORS USA INC 4% 1NOV2024 – 2,000,000 – 2,000,000

MORGAN STANLEY 4.1% 22MAY2023 2,000,000 – (2,000,000) –

ORACLE CORP 3.25% 15NOV2027 – 5,000,000 – 5,000,000

ORACLE CORP 4.375% 15MAY2055 – 1,000,000 – 1,000,000

PETROLEOS MEXICANOS 6.75% 21SEP2047 – 2,000,000 (2,000,000) –

PETROLEOS MEXICANOS 6.75% 21SEP2047 2,000,000 – (2,000,000) –

SANTANDER UK GROUP HOLDINGS PLC 3.571%

10JAN2023 – 2,000,000 – 2,000,000

SOCIETE GENERALE SA 3.25% 12JAN2022 – 3,000,000 (3,000,000) –

SSE PLC 4.75% 16SEP2077 – 2,500,000 (2,500,000) –


8MAR2027 – 2,000,000 (2,000,000) –

UBS GROUP FUNDING SWITZERLAND AG

4.253% 23MAR2028 – 1,500,000 – 1,500,000

UNITED STATES TREASURY INFLATION

INDEXED BONDS 0.125% 15APR2018 8,000,000 3,000,000 (11,000,000) –

UNITED STATES TREASURY INFLATION

INDEXED BONDS 0.125% 15APR2021 8,000,000 – – 8,000,000

UNITED STATES TREASURY NOTE/BOND

1.125% 30SEP2021 – 4,000,000 (4,000,000) –

UNITED STATES TREASURY NOTE/BOND 1.25%

29FEB2020 9,000,000 – (9,000,000) –


31JUL2023 11,000,000 – – 11,000,000


1.375% 30JUN2023 16,000,000 – – 16,000,000


1.375% 30SEP2023 – 17,000,000 – 17,000,000


1.375% 31AUG2020 7,000,000 – (7,000,000) –


28FEB2023 5,000,000 15,000,000 – 20,000,000


31MAR2023 8,000,000 – – 8,000,000


28FEB2022 7,000,000 – (7,000,000) –


30APR2022 7,000,000 – (7,000,000) –


Investment Report


12


Nominal value




(CONTINUED)

BONDS (CONTINUED)



30SEP2022 – 11,000,000 (11,000,000) –


31MAR2022 10,000,000 – (10,000,000) –


1.875% 30APR2022 – 3,000,000 (3,000,000) –


1.875% 31AUG2024 – 12,000,000 – 12,000,000


1.875% 31MAY2022 8,000,000 – (8,000,000) –

UNITED STATES TREASURY NOTE/BOND 2%

15FEB2023 3,000,000 12,000,000 – 15,000,000

UNITED STATES TREASURY NOTE/BOND 2%

30NOV2020 8,000,000 – (8,000,000) –


2.125% 29FEB2024 – 18,000,000 – 18,000,000


2.125% 30JUN2022 – 15,000,000 (5,750,000) 9,250,000


15MAY2024 – 12,000,000 – 12,000,000


3.625% 15AUG2043 – 12,000,000 (10,000,000) 2,000,000


6.125% 15NOV2027 – 15,000,000 (15,000,000) –


16MAR2027 – 5,000,000 (5,000,000) –

VULCAN MATERIALS CO 3.9% 1APR2027 – 5,000,000 (5,000,000) –

WESTLAKE CHEMICAL CORP 3.6% 15AUG2026 – 2,000,000 – 2,000,000

WESTLAKE CHEMICAL CORP 3.6% 15AUG2026 2,000,000 – (2,000,000) –

WESTPAC BANKING CORP 4.322% 23NOV2031 1,000,000 – (1,000,000) –


Investment Report


13

PineBridge Global Bond Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998, as

amended, supplemented and restated. The Fund is managed in accordance with the distinct investment policy.

There have been no changes to the investment policy during the year.


The Fund seeks a high level of return from a combination of current income and capital appreciation by

investing in a portfolio of debt securities denominated in US dollars and a variety of foreign currencies.

2017 2016 2015

US$ US$ US$



Interest on bank deposits 68,936 26,262 5,081

Interest on investments (net of withholding tax) 7,514,260 6,123,207 9,880,875

Net foreign currency gains/(losses) 201,392 (492,397) (80,167)

Net income excluding capital appreciation/(depreciation) 7,470,917 5,321,123 9,296,315

Net appreciation/(depreciation) of investments

and derivative financial instruments

- realized and unrealized 20,083,420 2,672,987 (25,495,990)

Performance table

Net asset value

Total net Net asset

asset value value per unit

US$ US$

Standard units - Accumulation (Note 2)

2017 – –

2016 – –

2015 10,385,726 17.78

Provident Fund units

2017 410,069,259 21.47

2016 361,852,333 20.00

2015 317,288,400 19.41


Investment Report


14



Highest

issue price

per unit

US$

Lowest

redemption price

per unit

US$

Annualized

investment

return

(Note 1)

%


2017 – – –

2016 18.02 17.81 –

2015 18.82 17.66 (5.17)

2014 19.70 18.67 (0.69)

2013 19.35 18.20 (2.83)

2012 19.56 18.56 3.85

2011 19.43 17.61 4.47

2010 18.82 16.44 3.35

2009 18.19 14.90 5.66

2008 16.91 14.59 5.77


2017 21.54 19.85 7.35

2016 21.13 19.44 3.04

2015 20.42 19.23 (4.62)

2014 21.27 20.22 0.20

2013 20.69 19.52 (2.26)

2012 20.90 19.74 4.48

2011 20.61 18.60 5.13

2010 19.86 17.31 3.90

2009 19.05 15.69 5.98

2008 17.60 15.35 6.12 Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year

end against the net asset value per unit at the beginning of the year.

Note 2: The “Standard units” have been renamed to “Standard units - Accumulation” with effect from 27 June

2013. The “Standard units - Accumulation” have been fully redeemed on 29 January 2016.


Based on the information received from the Manager of the Fund during the year, the Trustee of the Fund confirmed, to the best of its knowledge and belief, that the investment objectives and policies for the Fund were

complied with.


Trustee’s Report


15

We hereby confirm that, in our opinion, the Manager of the Fund has, in all material respects, managed the

Fund for the year ended 31 December 2017 in accordance with the provisions of the Trust Deed dated 10

August 1998, as amended, supplemented and restated.

On behalf of

AIA Company (Trustee) Limited

______________________________ ______________________________ Director Director

18 April 2018

INDEPENDENT AUDITOR’S REPORT

TO THE TRUSTEE OF PINEBRIDGE GLOBAL BOND FUND (THE “FUND”)

16


Opinion

We have audited the financial statements of PineBridge Global Bond Fund (the “Fund”) set out on pages 19 to

39, which comprise the statement of net assets as at 31 December 2017, and the statement of comprehensive

income, the statement of changes in net assets attributable to unitholders and the statement of cash flows for the

year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In our opinion, the financial statements give a true and fair view of the financial position of the Fund as at 31

December 2017, and of its financial transactions and its cash flows for the year then ended in accordance with

Hong Kong Financial Reporting Standards (“HKFRSs”) issued by the Hong Kong Institute of Certified Public

Accountants (“HKICPA”).

Basis for opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) and with reference

to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial

statements section of our report. We are independent of the Fund in accordance with the HKICPA’s Code of

Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical responsibilities in

accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

Other information included in the Reports and Financial Statements

The Manager and the Trustee of the Fund are responsible for the other information. The other information comprises the information included in the Reports and Financial Statements, other than the financial statements

and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not express any form of

assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and,

in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we

have performed, we conclude that there is a material misstatement of this other information, we are required to

report that fact. We have nothing to report in this regard.

Responsibilities of the Manager and Trustee and those charged with governance for the financial

statements

The Manager and the Trustee of the Fund are responsible for the preparation of the financial statements that give

a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control as the Manager and the Trustee determine is necessary to enable the preparation of financial statements that are free

from material misstatement, whether due to fraud or error.

In preparing the financial statements, the Manager and the Trustee of the Fund are responsible for assessing the

Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and

using the going concern basis of accounting unless the Manager and the Trustee of the Fund either intend to

liquidate the Fund or to cease operations or have no realistic alternative but to do so.

The Manager and the Trustee of the Fund are required to ensure that the financial statements have been properly

prepared in accordance with the relevant disclosure provisions of the constitutive documents of the Fund ("the

Constitutive Documents"), the Mandatory Provident Fund Schemes Ordinance ("the MPFSO"), the Mandatory

Provident Fund Schemes (General) Regulation ("the General Regulation"), the Code on MPF Investment Funds

("the MPF Code"), and Guidelines II.5 issued by the Mandatory Provident Fund Schemes Authority ("the

MPFA") and the Code on Unit Trusts and Mutual Funds ("the Code") issued by the Hong Kong Securities and

Futures Commission ("the SFC").




(CONTINUED)

17

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free

from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our

opinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility

towards or accept liability to any other person for the contents of this report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance

with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or

error and are considered material if, individually or in the aggregate, they could reasonably be expected to

influence the economic decisions of users taken on the basis of these financial statements. In addition, we are

required to assess whether the financial statements of the Fund have been properly prepared, in all material

respects, in accordance with the relevant disclosure provisions of the Constitutive Documents, the MPFSO, the

General Regulation, the MPF Code and Guidelines II.5 issued by the MPFA and the Code issued by the SFC.

As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional

skepticism throughout the audit. We also:

Identify and assess the risks of material misstatement of the financial statements, whether due to fraud

or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that

is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material

misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve

collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

effectiveness of the Fund’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting

estimates and related disclosures made by the Manager and the Trustee

Conclude on the appropriateness of the Manager and the Trustee’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to

events or conditions that may cast significant doubt on the Fund’s ability to continue as a going

concern. If we conclude that a material uncertainty exists, we are required to draw attention in our

auditor’s report to the related disclosures in the financial statements or, if such disclosures are

inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the

date of our auditor’s report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the

disclosures, and whether the financial statements represent the underlying transactions and events in a

manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and

timing of the audit and significant audit findings, including any significant deficiencies in internal control that

we identify during our audit.



(CONTINUED)

18

Report on matters under the relevant disclosure provisions of the Constitutive Documents, the MPFSO,

the General Regulation, the MPF Code, and Guidelines II.5 issued by the MPFA and the Code issued by

the SFC

(a) In our opinion, the financial statements have been properly prepared, in all material respects, in accordance with the relevant disclosure provisions of the Constitutive Documents, the MPFSO, the

General Regulation, the MPF Code and Guidelines II.5 issued by the MPFA and the Code issued by the

SFC; and

(b) We have obtained all the information and explanations which, to the best of our knowledge and belief,

are necessary for the purpose of our audit.

Certified Public Accountants Hong Kong 18 April 2018


Statement of Net Assets


19

2017 2016

Note US$ US$

Assets

Current assets

Investments 4(b) 395,618,886 348,790,045

Derivative financial instruments 4(b), 6 2,195 4,690,965

Interest receivable on investments 3,470,885 2,642,542

Bank interest receivable 1,426 289

Amounts receivable on subscription 1,024,019 767,164

Cash and cash equivalents 11,004,177 6,416,774

Total assets 411,121,588 363,307,779

Liabilities

Current liabilities

Derivative financial instruments 4(b), 6 5,070 81,001

Amounts payable on redemption 975,188 1,280,728

Accounts payable and accrued expenses 72,071 93,717

Total liabilities 1,052,329 1,455,446

Equity

Net assets attributable to unitholders 3 410,069,259 361,852,333

On behalf of On behalf of

AIA Company (Trustee) Limited PineBridge Investments Hong Kong

Limited

_________________________ _________________________ _________________________

Director Director Director



Statement of Comprehensive Income


20

2017 2016

Note US$ US$

Income

Interest on bank deposits 68,936 26,262

Interest on investments 7,516,699 6,157,065

Net gains on investments and derivative financial

instruments 5 20,083,420 2,672,987

Net foreign currency gains/(losses) 201,392 (492,397)

Other income – 2,533

Total investment income 27,870,447 8,366,450

Expenses

Management fee 8(a) – 4,347

Trustee’s fee 8(b) 191,989 179,289

Custodian and administration fees 9 74,893 81,461

Audit fee 13,791 14,059

Bank charges 162 273

Legal and professional fees 2,001 2,591

Other expenses 30,835 56,462

Total operating expenses 313,671 338,482


Withholding tax 7(b) (2,439) (33,858)




Statement of Changes in Equity


21

2017 2016*

Note US$ US$


Issue of units 3 118,155,025 142,287,729




Balance at the end of the year* 410,069,259 361,852,333

*During the period from 1 January 2016 to 28 January 2016, net assets attributable to unitholders are classified as liabilities. During the period from 29 January 2016 to 31 December 2016, the net assets attributable to

unitholders are classified as equity.



Statement of Cash Flows


22

2017 2016

US$ US$



Adjustment for:

Interest on investments (7,516,699) (6,157,065)

Interest on bank deposits (68,936) (26,262)

Withholding tax 2,439 33,858

Operating profit before working capital changes 19,971,141 1,844,641

Net increase in investments (46,828,841) (35,420,748)

Net change in derivative financial instruments 4,612,839 (3,173,852)

Net (decrease)/increase in accounts payable and accrued expenses (21,646) 25,586

Cash used in operations (22,266,507) (36,724,373)

Interest on investments received 6,685,917 6,319,038

Interest on bank deposits received 67,799 26,017



Proceeds from issue of units 117,898,170 142,717,794

Payments on redemption of units (97,797,976) (115,103,628)


Net increase/(decrease) in cash and cash equivalents 4,587,403 (2,765,152)

Cash and cash equivalents at the beginning of the year 6,416,774 9,181,926

Cash and cash equivalents at the end of the year 11,004,177 6,416,774


Cash at banks 573,377 233,774

Short-term deposits 10,430,800 6,183,000

11,004,177 6,416,774



Notes to the Financial Statements


23

1. The Fund

PineBridge Global Bond Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August

1998, as amended, supplemented and restated. The Fund has been authorized by the Securities and Futures

Commission of Hong Kong and approved by the Mandatory Provident Fund Schemes Authority of Hong

Kong.


The principal accounting policies applied in the preparation of the financial statements are set out below.

These policies have been consistently applied to all the years presented, unless otherwise stated.


The financial statements have been prepared in accordance with Hong Kong Financial Reporting

Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants

(“HKICPA”). The financial statements have been prepared under the historical cost convention, as

modified by the revaluation of financial assets and financial liabilities (including derivative financial

instruments) at fair value through profit or loss.

The preparation of financial statements in conformity with HKFRS requires the Trustee and Manager

to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are

based on historical experience and various other factors that are believed to be reasonable under the

circumstances, the results of which form the basis of making the judgments about carrying values of

assets and liabilities that are not readily apparent from other sources. Actual results may differ from

these estimates.


There are no standards, interpretations or amendments to existing standards that are effective for the

first time for the financial year beginning 1 January 2017 that would be expected to have a significant

impact on the Fund.

New standards, amendments and interpretations issued but not effective for the financial year

beginning 1 January 2017 and have not been early adopted

HKFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. It

replaces the guidance in HKAS 39 that relates to the classification and measurement of financial

instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three

primary measurement categories for financial assets: amortized cost, fair value through other

comprehensive income ("OCI") and fair value through profit or loss. The basis of classification depends

on the entity's business model and the contractual cash flow characteristics of the financial asset.

Investments in equity instruments are required to be measured at fair value through profit or loss with

the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39.

For financial liabilities there were no changes to classification and measurement except for the

recognition of changes in own credit risk in other comprehensive income, for liabilities designated at

fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by

replacing the bright line hedge effectiveness tests. It requires an economic relationship between the

hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management

actually use for risk management purposes.




24




beginning 1 January 2017 and have not been early adopted (Continued)

Contemporaneous documentation is still required but is different to that currently prepared under

HKAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early

adoption is permitted. The Fund plans to adopt the new standard on the required effective date. During

2017, the Fund has performed a high-level impact assessment of all three aspects of HKFRS 9. This

preliminary assessment is based on currently available information and may be subject to changes

arising from further detailed analysis or additional reasonable and supportable information being made

available to the Fund in the future. Overall, the Fund expects no significant impact on its statement of net assets.

There are no other standards, interpretations or amendments to existing standards that are not yet

effective that would be expected to have a significant impact on the Fund.

(b) Investments

All investments are classified as “financial assets at fair value through profit or loss”. These financial assets are classified as held for trading or designated by the Trustee and the Manager at fair value

through profit or loss at inception. Purchases and sales of investments are accounted for on a trade date

basis. Investments are initially recognized at fair value, excluding transaction costs which are expensed

as incurred in the statement of comprehensive income, and are subsequently re-measured at fair value.

Realized and unrealized gains and losses on investments are recognized in the statement of

comprehensive income within “net gains/(losses) on investments and derivative financial instruments”

in the period in which they arise. Investments are derecognized when the rights to receive cash flows

from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.



(ii) Investments which are not listed on an exchange or are thinly traded are valued by using quotes

from brokers.

(c) Income

Interest income is recognized on a time-proportionate basis using the effective interest method in the

statement of comprehensive income for all interest bearing instruments. Other income is accounted for

on an accrual basis.

The effective interest method is a method of calculating the amortized cost of an interest bearing asset and of allocating the interest income over the relevant period. The effective interest rate is the rate that

exactly discounts estimated future cash receipts throughout the expected life of the financial

instrument, or a shorter period where appropriate, to the net carrying amount of the financial

instrument. When calculating the effective interest rate, the Fund estimates cash flows considering all

contractual terms of the financial instrument (for example, prepayment options) but does not consider

future credit losses. The calculation includes all fees and points received between parties to the contract

that are an integral part of the effective interest rate, transaction costs and all other premiums or

discounts.




25




Items included in the Fund’s financial statements are measured using the currency of the primary

economic environment in which it operates (the “functional currency”). The financial statements are

presented in United States dollar, which is the Fund’s functional and presentation currency.


Foreign currency transactions are translated into the functional currency using the exchange rates

prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into the functional currency using the exchange rate prevailing at the year end date.

Foreign exchange gains and losses arising from translation are included in the statement of

comprehensive income.

Foreign exchange gains and losses relating to cash and cash equivalents are presented in the

statement of comprehensive income within “net foreign currency gains/(losses)”.

Foreign exchange gains and losses relating to the financial assets and liabilities carried at fair value

through profit or loss are presented in the statement of comprehensive income within “net

gains/(losses) on investments and derivative financial instruments”.

(e) Expenses



Outstanding foreign exchange contracts are valued at the year end date by reference to the rate of

exchange applicable to the outstanding term of the contract. Unrealized gains or losses on outstanding

contracts and realized gains and losses on closed contracts are shown in the statement of

comprehensive income within “net gains/(losses) on investments and derivative financial instruments”.


Proceeds and payments on the subscription and redemption of units are recorded in the statement of

changes in net assets attributable to unitholders. The price at which units are subscribed or redeemed is

calculated by reference to the net asset value per unit as at the close of business on the relevant dealing

day.


Financial assets and liabilities are offset and the net amount reported in the statement of net assets where the Fund currently has a legally enforceable right to set-off the recognized amounts and there is

an intention to settle on a net basis or realize the asset and liability simultaneously.

(i) Amounts receivable from/payable to brokers

Amounts receivable from/payable to brokers represent receivables from investments sold and payables

for investments purchased that have been contracted for but not yet settled or delivered on the year end

date respectively.

(j) Cash and cash equivalents

Cash and cash equivalents include cash at banks, deposits held with banks with original maturities of

three months or less and bank overdrafts, if any.




26



Prior to 29 January 2016, the Fund classified its puttable instruments as liabilities in accordance with

HKAS 32 (Amendment), ‘Financial instruments: Presentation’. However, the amendment requires puttable financial instruments that meet the definition of a financial liability to be classified as equity where certain

strict criteria are met. Those criteria include:

the puttable instruments must entitle the holder to a pro-rata share of net assets;

the puttable instruments must be the most subordinated class and class features must be identical;

there must be no contractual obligations to deliver cash or another financial asset other than the

obligation on the issuer to repurchase; and

the total expected cash flows from the puttable instrument over its life must be based substantially on the profit or loss of the issuer.

These conditions were met when Standard units - Accumulation became fully redeemed on 29 January

2016 and Provident Fund units became the sole unit class in the Fund.

For the period from 1 January 2016 to 28 January 2016, net assets attributable to unitholders represent a

liability in the statement of net assets, carried at the redemption amount that would be payable at the year

end date if the unitholders exercised the right to redeem the units in the Fund.

The Fund has no restrictions on the subscriptions of units. Pursuant to the Trust Deed and subject to the

conditions and procedures set out therein, the Manager is entitled, having regard to the interests of

unitholders, to limit the total number of units which unitholders are entitled to redeem on any dealing day to

10% of the units then in issue or deemed to be in issue. Subscriptions and redemptions of units during the

year are shown in the statement of changes in net assets attributable to unitholders. In order to achieve the

investment objectives, the Fund endeavors to invest its capital in accordance with the investment policies as

outlined in note 4, whilst maintaining sufficient liquidity to meet redemption requests. Such liquidity is augmented by the holding of liquid investments.

As at 31 December 2017, the Fund had US$410,069,259 (2016: US$361,852,333) of puttable financial

instruments classified as equity.

The Fund’s objectives and policies for managing its obligations to redeem these instruments are included in

note 4(h) on capital risk management and note 4(e) on liquidity risk.

Number of Net asset value

units in issue per unit

US$

2017 - Standard units - Accumulation – –

2017 - Provident Fund units 19,102,823 21.47

2016 - Standard units - Accumulation – –





27


2017

Standard

Units

- Accumulation

2017

Provident

Fund Units

2016

Standard

Units

- Accumulation

2016

Provident

Fund Units

Units Units Units Units

Balance brought forward – 18,093,538 584,048 16,344,271

Total issues – 5,696,545 66 6,920,534

Total redemptions – (4,687,260) (584,114) (5,171,267)


The Fund offers two classes of units. Provident Fund units are offered to provident fund schemes approved

by the Mandatory Provident Fund Schemes Authority. Standard units - Accumulation are offered to all

investors other than the provident fund schemes approved by the Mandatory Provident Fund Schemes Authority. The standard units have been renamed to “Standard units - Accumulation” with effect from 27

June 2013. No Standard units - Accumulation were issued by the Fund for the year ended 31 December

2017.



The investment objective of the Fund is to seek a high level of return from a combination of current

income and capital appreciation. The Fund seeks to achieve its investment objective through investing

in a portfolio of debt securities denominated in US dollars and a variety of foreign currencies.

The Fund is exposed to market price risk, cash flow and fair value interest rate risk, credit and custody

risk, liquidity risk and currency risk.

The risks and the respective risk management policies employed by the Fund to manage these risks are

discussed below.


Market price risk is the risk that the value of a financial instrument will fluctuate as a result of changes

in market prices, whether those changes are caused by factors specific to the individual instrument or

factors affecting all instruments in the market.

All investments present a risk of loss of capital. The Fund’s market price risk is managed through (i)

deliberate securities selection, and (ii) diversification of the investment portfolio.


2017 2016

Fair value

US$

Cost

US$

% of net

assets

Fair value

US$

Cost

US$

% of net

assets

Held for

trading:

Debt securities 395,618,886 390,297,770 96.48 348,790,045 365,488,554 96.39

Derivative

financial

instruments

(note 6) (2,875) – – 4,609,964 – –




28




The following table shows the net market exposure of the Fund to various markets, incorporating the

underlying market risk through all financial assets and liabilities held by the Fund as at 31 December.

2017 2016

US$ equivalent US$ equivalent

Markets exposed to

Australia 10,849,667 2,636,724

Austria – 3,084,880

Belgium – 16,206,859

Canada 22,650,998 9,406,894

Denmark 2,469,277 3,036,414

Finland – 2,159,949

France 18,714,197 35,509,347

Germany 7,185,563 6,913,849 Italy 19,600,750 5,256,975

Japan 14,432,521 31,682,924

Jersey 3,040,630 4,928,444

Luxembourg 4,304,457 2,237,774

Mexico 4,782,159 3,875,516

Netherlands 19,861,976 9,021,668

Poland – 1,723,972

Spain 15,368,851 15,508,492 Supra-National 5,147,335 5,929,758

Sweden 3,595,685 2,201,801

Switzerland 12,428,875 –

United Arab Emirates 589,112 553,592

United Kingdom 39,074,555 19,500,012

United States of America 191,522,278 167,414,201

395,618,886 348,790,045




29



The following table shows the net exposures to sectors as at 31 December 2017 and 2016 are as

follows: 2017 2016

% %

Sectors exposed to Basic Materials 4 5

Communications 1 4 Consumer, Cyclical 4 1 Consumer, Non-cyclical 3 3 Energy 4 4

Financial 17 13 Government 62 60 Industrial – 4

Technology 2 1 Utilities 3 5

100 100

There were no investments issued by the same issuer with market value exceeding 10% of the Fund’s

net asset value as at 31 December 2017 and 2016, except for the following issuers:

2017 2016

% of net % of net

assets assets

United States Treasury 35.44 31.31

The table below summarizes the impact on net assets attributable to unitholders as a result of

increases/decreases of the key index to which the Fund is exposed. The analysis is based on the

assumption that the index had increased/decreased by the respective percentage with all other variables

held constant and the Fund’s investments moved according to the historical correlation with the index.

2017 2016

Change in

market index % Impact

US$ Change in


US$

+/- +/- +/- +/-

Citi World Broad Investment Grade (ex-MBS) index in US$ 8.0% 30,599,370 2.0% 6,753,917

The Manager has used their view of what would be a “reasonable shift” in the Citi World Broad

Investment Grade (ex-MBS) index in US$, having regard to the historical volatility of the index, to

estimate the change for use in the market price sensitivity analysis above.

Disclosures above are shown in absolute terms, changes and impacts could be positive or negative.

Changes in market index % are revised annually depending on the Manager’s current view of market

volatility and other relevant factors.




30



Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in

market interest rates.

Interest rate risk arises from the effects of fluctuations in the prevailing levels of market interest rates

on the fair value of interest-bearing assets and liabilities and future cash flows. The Fund holds debt

securities that expose the Fund to fair value interest rate risk. The Fund also holds cash and cash

equivalents that expose the Fund to cash flow interest rate risk.

The table below summarizes the Fund’s exposure to interest rate risk. It includes the Fund’s assets and

liabilities at fair values, categorized by the earlier of contractual re-pricing or maturity dates.

At 31 December 2017

Up to 1 year

1-5 years

Over 5 years

Non-interest

bearing

Total

US$ US$ US$ US$ US$

Assets

Investments 2,997,166 58,051,690 334,570,030 – 395,618,886

Derivative financial

instruments – – – 2,195 2,195

Other assets – – – 4,496,330 4,496,330

Cash and cash

equivalents 11,004,177 – – – 11,004,177

Total assets 14,001,343 58,051,690 334,570,030 4,498,525 411,121,588

Liabilities


instruments – – – 5,070 5,070

Other liabilities – – – 1,047,259 1,047,259

Total liabilities – – – 1,052,329 1,052,329

Total interest

sensitivity gap 14,001,343 58,051,690 334,570,030

At 31 December 2016

Up to 1 year

1-5 years

Over 5 years

Non-interest

bearing

Total

US$ US$ US$ US$ US$

Assets

Investments 13,757,016 87,230,242 247,802,787 – 348,790,045


instruments – – – 4,690,965 4,690,965

Other assets – – – 3,409,995 3,409,995

Cash and cash

equivalents 6,416,774 – – – 6,416,774

Total assets 20,173,790 87,230,242 247,802,787 8,100,960 363,307,779

Liabilities


instruments – – – 81,001 81,001


Total liabilities – – – 1,455,446 1,455,446

Total interest

sensitivity gap 20,173,790 87,230,242 247,802,787




31



At 31 December 2017, should interest rates have lowered/risen by 50 basis points with all other

variables remaining constant, the increase/decrease in net assets attributable to unitholders for the year

would amount to approximately US$15.65 million (2016: US$12.63 million), arising substantially

from the increase/decrease in market values of debt securities.


The Fund is exposed to credit risk which is the risk that an issuer or counterparty will be unable or

unwilling to pay amounts in full when due.

The main concentration of credit risk to which the Fund is exposed arises from the Fund’s investments

in debt securities and derivative financial instruments. The Fund is also exposed to credit risk on cash

and cash equivalents and assets held with custodian. The table below summarizes the assets placed

with banks and custodian at 31 December 2017 and 2016:

At 31 December 2017

US$ Credit rating

Source of

credit rating

Custodian

Citibank, N.A. 395,618,886 P-1 Moody's

Banks Citibank, N.A. 573,377 P-1 Moody's

Dah Sing Bank Limited 10,430,800 P-2 Moody's

At 31 December 2016

US$ Credit rating

Source of

credit rating

Custodian


Banks

Citibank, N.A. 233,774 P-1 Moody's


All derivative financial instruments represent outstanding foreign exchange contracts as disclosed in

note 6. As at 31 December 2017, the counterparty of these foreign exchange contracts is JP Morgan

Chase & Co (2016: JP Morgan Chase & Co.). The credit rating is P-1 (Moody’s) [2016: P-1

(Moody’s)].

As the Fund holds debt securities, it is also exposed to the risk that the issuers may not be able to repay

the principal amount at maturity and interest. The credit risk is mitigated as the debt securities held are

subject to the requirements of (i) minimum credit rating, and (ii) maximum holding of 10% of net asset

value for any single issuer other than an exempt authority as defined in section 7(1) of Schedule 1 to

the Mandatory Provident Fund Schemes (General) Regulation (“Exempt Authority”), and/or (iii)

maximum holding of 30% of net asset value for any single issue that is issued by an Exempt Authority

(or unconditionally guaranteed by an Exempt Authority).




32




Portfolio by rating category

2017 2016

Rating

AAA/Aaa 48% 37%

AA/Aa 5% 11%

A/A 22% 27%

BBB/Baa 25% 25%

Total 100% 100%

The maximum exposure to credit risk at year end is the carrying amount of the financial assets as

shown on the statement of net assets.


All transactions in listed/quoted investments are settled/paid for upon delivery using approved and

reputable brokers. The risk of default is considered minimal since delivery of securities sold is only

made when the broker has received payment. Payment is made on a purchase when the securities have

been received by the broker. The trade will fail if either party fails to meet its obligation.

The Fund limits its exposure to credit risk by transacting the majority of its securities and contractual

commitment activities with broker-dealers, banks and regulated exchanges with high credit ratings and

that the Fund considers to be well established.

(e) Liquidity risk

Liquidity risk is the risk that an enterprise will encounter difficulty in settling a liability, including a

redemption request.

The Fund is exposed to daily cash redemptions of units in the Fund. The Fund invests the majority of

its assets in investments that are traded in an active market and can be readily disposed of.

The Fund may, from time to time, invest in foreign exchange contracts which are not traded in an

organized market and may be illiquid.

The table below analyzes the Fund’s non-derivative financial liabilities into relevant maturity

groupings based on the remaining period at the year end date to the contractual maturity date. The

amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months equal

their carrying balances, as the impact of discounting is not significant.

Less than 1-3 Over 3

1 month months months

US$ US$ US$

At 31 December 2017

Amounts payable on redemption 975,188 – –

Accounts payable and accrued expenses 30,608 – 41,463

Total financial liabilities (excluding net





33





US$ US$ US$

At 31 December 2016

Amounts payable on redemption 1,280,728 – –





The table below analyzes the Fund’s derivative financial instruments in a loss position for which the

contractual maturities are considered to be essential to an understanding of the timing of cash flows

based on the Fund’s investment strategy.



US$ US$ US$

At 31 December 2017

Net settled derivatives

Foreign exchange contracts – (5,070) –



US$ US$ US$

At 31 December 2016


Foreign exchange contracts (33,211) (47,790) –

Units are redeemed on demand at the unitholder’s option. However, the Manager does not envisage

that the contractual maturity disclosed in the table above will be representative of the actual cash

outflows, as the unitholders typically retain the units for the medium to long term. At 31 December

2017 and 2016, no ultimate individual investor held more than 10% of the Fund’s units.

The Fund manages its liquidity risk by investing predominantly in debt securities that it expects to be

able to liquidate within 1 month or less. The following table illustrates the expected liquidity of assets

held by the Fund:



US$ US$ US$

At 31 December 2017

Total assets 408,083,885 1,704,512 1,333,191



US$ US$ US$

At 31 December 2016

Total assets 359,898,098 2,151,560 1,258,121




34


(f) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign

exchange rates.

The Fund has monetary assets and liabilities denominated in currencies other than United States dollar,

the Fund’s functional and presentation currency. The Fund is therefore exposed to currency risk, as the

value of the assets and liabilities denominated in other currencies will fluctuate due to changes in

exchange rates. The Manager will enter into foreign exchange contracts from time to time to hedge

against the fluctuation in exchange rates. Details of foreign exchange contracts outstanding at the year

end are disclosed in note 6.

The table below summarizes the Fund’s net monetary exposure to different major currencies:

2017 2016


Australian Dollar 7,369,329 562,349

Canadian Dollar 16,609,715 3,256,262

Danish Krone – 801,225

Euro 143,665,573 13,592,074

Japanese Yen 14,671,800 36,434,446

Mexican Peso 55,328 48,350

Pound Sterling 14,987,261 10,011,670

Gross exposures to currency risk on foreign exchange contracts outstanding at the year end are

disclosed in note 6.


increases/decreases of foreign exchange rates on the exposures tabled above, to which the Fund is

exposed. The analysis is based on the assumption that the foreign exchange rates had

increased/decreased by the respective percentage with all other variables held constant.

2017 2016

Change in foreign

exchange rates Impact

Change in foreign

exchange rates Impact

% US$ % US$

+/- +/- +/- +/-

Monetary items

Australian Dollar 3.0% 221,080 1.0% 5,623

Canadian Dollar 2.0% 332,194 4.0% 130,250

Danish Krone 1.0% – 1.0% 8,012

Euro 2.0% 2,873,311 1.0% 135,921 Japanese Yen 3.0% 440,154 12.0% 4,372,134

Mexican Peso 1.0% 553 15.0% 7,253

Pound Sterling 5.0% 749,363 11.0% 1,101,284

The Manager has used their view of what would be a “reasonable shift” in the foreign exchange rates,

having regard to historical volatility of those rates, to estimate the change for use in the currency risk

sensitivity analysis above.


Changes in foreign exchange rates % are revised annually depending on the Manager’s current view of

market volatility and other relevant factors.




35



The fair value of financial assets and liabilities traded in active markets (such as trading securities) are

based on quoted market prices at the close of trading on the year end date. The Fund utilizes the last

traded market price as its fair valuation inputs for both financial assets and financial liabilities.

An active market is a market in which transactions for the asset or liability take place with sufficient

frequency and volume to provide pricing information on an ongoing basis.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and

regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory

agency, and those prices represent actual and regularly occurring market transactions on an arm’s

length basis.

The carrying value less impairment provision of other receivables and payables are assumed to

approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated

by discounting the future contractual cash flows at the current market interest rate that is available to

the Fund for similar financial instruments.

HKFRS 13 requires the Fund to classify fair value measurements using a fair value hierarchy that

reflects the significance of the inputs used in making the measurements. The fair value hierarchy has

the following levels:

Quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can

access at the measurement date (Level 1).

Inputs other than quoted prices included within level 1 that are observable for the asset or liability,

either directly or indirectly (Level 2).

Inputs for the asset or liability that are unobservable inputs (Level 3).

The level in the fair value hierarchy within which the fair value measurement is categorized in its

entirety is determined on the basis of the lowest level input that is significant to the fair value

measurement in its entirety. For this purpose, the significance of an input is assessed against the fair

value measurement in its entirety. If a fair value measurement uses observable inputs that require

significant adjustment based on unobservable inputs, that measurement is a level 3 measurement.

Assessing the significance of a particular input to the fair value measurement in its entirety requires

judgment, considering factors specific to the asset or liability.

The determination of what constitutes “observable” requires significant judgment by the Fund. The

Fund considers observable data to be that market data that is readily available, regularly distributed or

updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively

involved in the relevant market.




36



The following table analyzes within the fair value hierarchy the Fund’s investments (by class)

measured at fair value at 31 December 2017 and 2016:

At 31 December 2017

Level 1 Level 2 Level 3 Total

Assets US$ US$ US$ US$ Held for trading:

- Bonds 387,461,109 8,157,777 – 395,618,886

- Derivative financial

instruments – 2,195 – 2,195

Total assets 387,461,109 8,159,972 – 395,621,081

Liabilities

Held for trading:


instruments – (5,070) – (5,070)

Total liabilities – (5,070) – (5,070)

At 31 December 2016


Assets US$ US$ US$ US$

Held for trading:

- Bonds 334,479,804 14,310,241 – 348,790,045


instruments – 4,690,965 – 4,690,965

Total assets 334,479,804 19,001,206 – 353,481,010

Liabilities

Held for trading:

- Derivative financial instruments – (81,001) – (81,001)


Investments whose values are based on quoted market prices in active markets, and therefore classified

within level 1, include listed debt securities. The Fund 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

quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs

are classified within level 2. These include quoted debt securities and foreign exchange contracts. As

level 2 investments include positions that are not traded in active markets and/or are subject to transfer

restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are

generally based on available market information.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently.

As of 31 December 2017 and 2016, the Fund did not hold any investments classified in level 3.


Assets and liabilities included in the statement of net assets, except for investments and derivative financial instruments, are carried at amortized cost; their carrying values are a reasonable approximation of fair value.




37



The capital of the Fund is represented by the net assets attributable to unitholders. The amount of net

assets attributable to unitholders can change significantly on a daily basis as the Fund is subject to

daily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective when

managing capital is to safeguard the Fund’s ability to continue as a going concern in order to provide

returns for unitholders and benefits for other stakeholders and to maintain a strong capital base to

support the development of the investment activities of the Fund.


monitor the level of daily subscriptions and redemptions relative to the liquid assets; and

redeem and issue units in accordance with the Trust Deed of the Fund.



2017 2016

US$ US$

Change in unrealized gains in value of investments and derivative

financial instruments 17,102,243 1,796,011

Realized gains on sale of investments and derivative financial

instruments 2,981,177 876,976

20,083,420 2,672,987


Derivative financial instruments represent outstanding foreign exchange contracts and are summarized

below:

At 31 December 2017

Contract to deliver In exchange for Settlement date Fair value

US$

Open contracts:

GBP1,900,000 US$2,576,835 22 February 2018 2,195

JPY690,000,000 US$6,135,765 22 February 2018 (5,070)




38


At 31 December 2016


US$ Open contracts:

EUR64,000,000 US$70,167,616 13 January 2017 2,613,226

JPY1,200,000,000 US$11,284,559 13 January 2017 987,262

EUR36,250,000 US$39,192,594 17 March 2017 805,079

GBP11,650,000 US$14,709,057 17 March 2017 285,398

4,690,965

GBP1,700,000 US$2,068,178 13 January 2017 (33,211)

US$7,476,000 GBP6,000,000 17 March 2017 (47,790)

(81,001)

7. Taxation

(a) No provision for Hong Kong profits tax has been made as the Fund is authorized as a collective

investment scheme under Section 104 of the Hong Kong Securities and Futures Ordinance and is

therefore exempted from profits tax under Section 26A(1A) of the Hong Kong Inland Revenue

Ordinance.

(b) Withholding tax was charged on certain interest income received during the year.


Associates and connected persons are those as defined in the Mandatory Provident Fund Schemes

Ordinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission

of Hong Kong.

Apart from the fees as disclosed below, the Fund allows the Manager and its associates/connected persons

to subscribe for, and redeem, units in the Fund.


(a) Management fee

PineBridge Investments Hong Kong Limited, the Manager, is entitled to receive a management fee at

0.60% per annum, with a permitted maximum of 0.75% per annum, of the net asset value of the

Standard units - Accumulation, being calculated daily and payable monthly in arrears.


No management fee payable as at year end (2016: Nil).

(b) Trustee’s fee

AIA Company (Trustee) Limited, the Trustee, is entitled to receive a trustee’s fee at a permitted

maximum of 0.05% per annum of the net asset value of the Fund, being calculated daily and payable

monthly in arrears.





39


The Custodian and Administrator of the Fund is Citibank N.A., Hong Kong Branch and the Application and

Redemption Agent of the Fund is Citicorp Financial Services Limited (collectively “Citibank”). Citibank is

entitled to receive a custodian fee which comprises safekeeping and transaction fees of 0.025% per annum

of the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a total permitted maximum of 0.50% per annum. The safekeeping and transaction fee rate of 0.025% per annum is the

maximum rate. Citibank is also entitled to receive an administrator fee of US$1,000 per month.



During the year, the Manager and its associates/connected persons did not enter into any soft commission

arrangements with brokers relating to dealing in the assets of the Fund (2016: Nil).

11. Distributions





There were no statutory or contractual requirements restricting the free negotiability of assets held by the

Fund as at 31 December 2017 and 2016.



PINEBRIDGE GREATER CHINA EQUITY FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Greater China Equity Fund



Contents

Pages













1

Manager Trustee



Hong Kong Hong Kong






Hong Kong





Central, Hong Kong

Legal Advisers

Deacons


18 Chater Road

Central, Hong Kong


Manager’s Report


2


Market Overview

Hong Kong equity market rallied strongly in the year of 2017, driven by:- 1) the appreciation of RMB which

alleviated market concern on capital outflow; 2) better-than-expected macro-economic data from China; 3)

positive earnings revision from corporates; 4) strong property sales numbers in both Hong Kong and mainland

China; 5) strong liquidity which included inflow to emerging markets and the southbound; 6) less concern on

China’s debt default and hard landing. In terms of sector performance, information technology, consumer

discretionary, healthcare, and real estate were the best performing sectors, driven by structural growth trend,

improving consumption power, and strong revenue growth. Defensive sectors such as telecommunication

service, utilities underperformed on relative basis despite the positive absolute return.

Taiwan market rallied as well during the year on positive earnings revisions and currency movements. The tech

sector however, saw significantly pullback in 2H17 post the uninspiring launch of iPhone 8. For the full year,

Taiwan market therefore underperformed Hong Kong and China notably.

Market Outlook and Strategy

China’s macro-economic data continues to be largely solid and strong, with latest manufacturing PMIs

confirming constructive external demand conditions, domestic consumption remaining strong, and GDP growth

estimations being revised up. Hong Kong’s economy also continued to be supported by recovering retail sales

and buoyant trade activities. Having said that, given the much higher valuation multiples of equities now vs. a year ago, we believe market in 2018 will mainly be driven by earnings growth rather than multiple expansion.

With this backdrop, the fund will be primarily focused on industries with strong earnings support and are trading

at reasonable or attractive valuations.


Investment Report


3


Holding Market

% of net

shares value

assets

HK$

LISTED EQUITIES

CHINA

BAOSHAN IRON & STEEL CO LTD 6,309,843 65,444,222

0.78%

LAO FENG XIANG CO LTD 462,841 22,868,949

0.27%

TOTAL CHINA

88,313,171

1.05%

HONG KONG

AAC TECHNOLOGIES HOLDINGS INC 301,000 41,959,400

0.50%

AIA GROUP LTD 5,380,400 358,603,660

4.26%

ANHUI CONCH CEMENT CO LTD 3,895,000 143,141,250

1.70%

ASM PACIFIC TECHNOLOGY LTD 978,000 106,504,200

1.27%

BAIC MOTOR CORP LTD 4,161,000 42,358,980

0.50%

BANK OF CHINA LTD 32,986,000 126,666,240

1.50%

BOC HONG KONG HOLDINGS LTD 1,981,500 78,467,400

0.93%

BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD 1,048,000 21,903,200

0.26%

BYD CO LTD 272,000 18,523,200

0.22%

CHINA COMMUNICATIONS CONSTRUCTION CO LTD 8,051,000 71,492,880

0.85%

CHINA CONSTRUCTION BANK CORP 43,900,000 316,080,000

3.76%

CHINA GALAXY SECURITIES CO LTD 6,664,500 38,387,520

0.46%

CHINA LIFE INSURANCE CO LTD 5,702,000 139,984,100

1.66%

CHINA LITERATURE LTD 651,996 54,343,866 0.65%

CHINA LONGYUAN POWER GROUP CORP LTD 8,751,000 48,655,560 0.58%

CHINA MENGNIU DAIRY CO LTD 1,030,000 23,947,500 0.28%

CHINA MERCHANTS BANK CO LTD 1,739,500 54,098,450 0.64%

CHINA MERCHANTS PORT HOLDINGS CO LTD (formerly

known as CHINA MERCHANTS HOLDINGS

INTERNATIONAL CO LTD) 741,893 15,171,712

0.18%

CHINA MOBILE LTD 2,241,000 177,599,250

2.11%

CHINA OVERSEAS LAND & INVESTMENT LTD 3,084,000 77,562,600

0.92%

CHINA PACIFIC INSURANCE GROUP CO LTD 411,000 15,433,050

0.18%

CHINA PETROLEUM & CHEMICAL CORP 10,846,000 62,147,580

0.74%

CHINA RESOURCES GAS GROUP LTD 588,000 16,669,800

0.20%

CHINA RESOURCES LAND LTD 3,158,000 72,634,000

0.86%

CHINA SHENHUA ENERGY CO LTD 2,778,000 56,254,500

0.67%

CHINA STATE CONSTRUCTION INTERNATIONAL

HOLDINGS LTD 3,382,000 36,999,080 0.44%

CHINA TELECOM CORP LTD 6,036,000 22,453,920

0.27%

CHINA UNICOM HONG KONG LTD 6,570,000 69,379,200

0.82%

CHINA VANKE CO LTD 2,649,300 82,658,160

0.98%

CK ASSET HOLDINGS LTD (formerly known as CHEUNG

KONG PROPERTY HOLDINGS LTD) 2,131,304 145,568,063 1.73%

CK HUTCHISON HOLDINGS LTD 1,080,804 106,026,872

1.26%

CK INFRASTRUCTURE HOLDINGS LTD 341,000 22,898,150

0.27%

CNOOC LTD 5,878,000 65,951,160

0.78%

COUNTRY GARDEN HOLDINGS CO LTD 1,800,000 26,820,000

0.32%

CSPC PHARMACEUTICAL GROUP LTD 7,530,000 118,823,400

1.41%

FOSUN INTERNATIONAL LTD 3,532,000 61,174,240

0.73%

GALAXY ENTERTAINMENT GROUP LTD 2,323,000 145,652,100

1.73%

GEELY AUTOMOBILE HOLDINGS LTD 1,330,000 36,043,000

0.43%

GREAT EAGLE HOLDINGS LTD 361,000 14,782,950

0.18%


Investment Report


4


Holding Market

% of net

shares value

Assets

HK$


HONG KONG (CONTINUED)

GUANGDONG INVESTMENT LTD 3,894,000 40,731,240

0.48%

GUANGZHOU AUTOMOBILE GROUP CO LTD 1,780,000 32,965,600

0.39%

GUANGZHOU R&F PROPERTIES CO LTD 472,800 8,330,736

0.10%

GUOTAI JUNAN INTERNATIONAL HOLDINGS LTD 11,470,000 28,101,500

0.33%

HAITONG SECURITIES CO LTD 3,475,200 39,408,768

0.47%

HANERGY THIN FILM POWER GROUP LTD 4,746,000 –

0.00%

HANG SENG BANK LTD 310,900 60,314,600

0.72%

HENDERSON LAND DEVELOPMENT CO LTD 309,000 15,913,500

0.19%

HENGAN INTERNATIONAL GROUP CO LTD 301,500 26,155,125

0.31%

HONG KONG EXCHANGES AND CLEARING LTD 525,097 125,918,260

1.50%

HSBC HOLDINGS PLC 8,538,000 682,613,100

8.12%

HUANENG POWER INTERNATIONAL INC 9,718,000 47,618,200

0.57%

INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD 41,675,685 262,140,059

3.11%

JOHNSON ELECTRIC HOLDINGS LTD 876,000 28,689,000

0.34%

KINGSOFT CORP LTD 1,554,000 40,404,000

0.48%

LEE & MAN PAPER MANUFACTURING LTD 1,990,000 18,387,600

0.22%

LENOVO GROUP LTD 2,954,000 13,027,140

0.15%

LINK REIT 747,000 54,120,150

0.64%

LONGFOR PROPERTIES CO LTD 563,000 11,023,540

0.13%

LUK FOOK HOLDINGS INTERNATIONAL LTD 2,213,000 74,246,150 0.88%

PACIFIC BASIN SHIPPING LTD 9,362,000 15,821,780 0.19%

PETROCHINA CO LTD 16,632,000 90,644,400 1.08%

PING AN INSURANCE GROUP CO OF CHINA LTD 3,062,000 249,093,700 2.96%

SANDS CHINA LTD 2,277,200 91,885,020

1.09%

SHENZHOU INTERNATIONAL GROUP HOLDINGS LTD 365,000 27,156,000

0.32%

SINO BIOPHARMACEUTICAL LTD 1,491,000 20,665,260

0.25%

SINOPHARM GROUP CO LTD 506,000 17,102,800

0.20%

SUN HUNG KAI PROPERTIES LTD 953,000 124,271,200

1.48%

SUNNY OPTICAL TECHNOLOGY GROUP CO LTD 495,000 49,450,500

0.59%

TENCENT HOLDINGS LTD 1,935,000 785,610,000

9.34%

TINGYI CAYMAN ISLANDS HOLDING CORP 738,000 11,217,600

0.13%

UNI-PRESIDENT CHINA HOLDINGS LTD 7,750,000 50,685,000

0.60%

WANT WANT CHINA HOLDINGS LTD 2,873,000 18,818,150

0.22%

WH GROUP LTD 5,459,500 48,152,790

0.57%

WHARF HOLDINGS LTD 1,181,000 31,887,000

0.38%

WHARF REAL ESTATE INVESTMENT CO LTD 840,000 43,680,000

0.52%

WUXI BIOLOGICS CAYMAN INC 288,000 12,585,600

0.15%

YANGTZE OPTICAL FIBRE AND CABLE JOINT STOCK LTD

CO 465,500 16,711,450 0.20%

YUE YUEN INDUSTRIAL HOLDINGS LTD 396,000 12,157,200

0.14%

ZHUZHOU CRRC TIMES ELECTRIC CO LTD 3,092,100 157,233,285

1.87%

TOTAL HONG KONG

6,618,757,196

78.64%


Investment Report


5


Holding Market

% of net

shares value

Assets

HK$


TAIWAN

ADVANCED SEMICONDUCTOR ENGINEERING INC 4,592,168 46,021,571

0.55%

AIRTAC INTERNATIONAL GROUP 201,709 28,348,376

0.34%

BASSO INDUSTRY CORP 521,000 9,128,779

0.11%

CATCHER TECHNOLOGY CO LTD 313,000 26,969,153

0.32%

CATHAY FINANCIAL HOLDING CO LTD 8,653,000 121,610,092

1.44%

CHUNGHWA TELECOM CO LTD 2,048,000 57,027,581

0.68%

FORMOSA CHEMICALS & FIBRE CORP 806,000 21,808,279

0.26%

FORMOSA PLASTICS CORP 2,089,000 54,163,251

0.64%

GOURMET MASTER CO LTD 700,100 80,001,562

0.95%

HON HAI PRECISION INDUSTRY CO LTD 7,436,150 185,966,287

2.21%

HOTA INDUSTRIAL MANUFACTURING CO LTD 1,640,586 63,352,749

0.75%

INVENTEC CORP 9,281,000 57,903,860

0.69%

LARGAN PRECISION CO LTD 107,000 112,994,931

1.34%

MEDIATEK INC 604,000 46,648,040

0.55%

NANYA TECHNOLOGY CORP 729,000 14,592,565

0.17%

QUANTA COMPUTER INC 3,454,000 56,164,528

0.67%

TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD 10,209,447 615,508,478

7.31%

TOTAL TAIWAN

1,598,210,082

18.98%

TOTAL INVESTMENTS*

8,305,280,449

98.67%


6,168,800,253

*Investments are accounted for on a trade date basis.


Investment Report


6


Holdings


Shares Shares Shares Shares

LISTED EQUITIES

CHINA

BAOSHAN IRON & STEEL CO LTD – 10,894,143 (4,584,300) 6,309,843

LAO FENG XIANG CO LTD – 462,841 – 462,841

ZHENGZHOU YUTONG BUS CO LTD – 1,211,470 (1,211,470) –

HONG KONG

AAC TECHNOLOGIES HOLDINGS INC – 301,000 – 301,000

AGRICULTURAL BANK OF CHINA LTD – 12,873,000 (12,873,000) –

AIA GROUP LTD 3,952,600 1,427,800 – 5,380,400

ANHUI CONCH CEMENT CO LTD 7,504,000 – (3,609,000) 3,895,000

ASM PACIFIC TECHNOLOGY LTD 119,700 858,300 – 978,000

AVICHINA INDUSTRY & TECHNOLOGY CO LTD 11,214,000 – (11,214,000) –

BAIC MOTOR CORP LTD – 4,161,000 – 4,161,000

BANK OF CHINA LTD 35,817,000 5,683,000 (8,514,000) 32,986,000

BOC HONG KONG HOLDINGS LTD 1,981,500 – – 1,981,500

BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD – 1,048,000 – 1,048,000

BYD CO LTD – 272,000 – 272,000

CHINA COMMUNICATIONS CONSTRUCTION CO LTD 16,013,000 – (7,962,000) 8,051,000

CHINA CONSTRUCTION BANK CORP 55,619,000 7,238,000 (18,957,000) 43,900,000

CHINA GALAXY SECURITIES CO LTD 6,664,500 – – 6,664,500

CHINA JINMAO HOLDINGS GROUP LTD – 2,222,000 (2,222,000) –

CHINA LIFE INSURANCE CO LTD 5,702,000 – – 5,702,000

CHINA LITERATURE LTD – 737,596 (85,600) 651,996

CHINA LONGYUAN POWER GROUP CORP LTD 10,145,000 – (1,394,000) 8,751,000

CHINA MENGNIU DAIRY CO LTD – 1,030,000 – 1,030,000

CHINA MERCHANTS BANK CO LTD 4,082,000 – (2,342,500) 1,739,500

CHINA MERCHANTS PORT HOLDINGS CO LTD

(formerly known as CHINA MERCHANTS HOLDINGS

INTERNATIONAL CO LTD) – 741,893 – 741,893

CHINA MOBILE LTD 1,737,000 1,033,500 (529,500) 2,241,000

CHINA OVERSEAS LAND & INVESTMENT LTD 1,926,000 1,158,000 – 3,084,000

CHINA PACIFIC INSURANCE GROUP CO LTD – 863,400 (452,400) 411,000

CHINA PETROLEUM & CHEMICAL CORP 32,916,000 – (22,070,000) 10,846,000

CHINA RAILWAY GROUP LTD 3,625,000 – (3,625,000) –

CHINA RESOURCES GAS GROUP LTD – 588,000 – 588,000

CHINA RESOURCES LAND LTD 4,308,000 644,000 (1,794,000) 3,158,000

CHINA SHENHUA ENERGY CO LTD 5,008,500 – (2,230,500) 2,778,000


HOLDINGS LTD 6,020,000 – (2,638,000) 3,382,000

CHINA TELECOM CORP LTD – 9,730,000 (3,694,000) 6,036,000

CHINA UNICOM HONG KONG LTD 5,456,000 1,852,000 (738,000) 6,570,000

CHINA VANKE CO LTD – 2,649,300 – 2,649,300

CK ASSET HOLDINGS LTD (formerly known as CHEUNG

KONG PROPERTY HOLDINGS LTD) 2,257,304 – (126,000) 2,131,304

CK HUTCHISON HOLDINGS LTD 1,177,304 385,000 (481,500) 1,080,804


Investment Report


7


Holdings





CK INFRASTRUCTURE HOLDINGS LTD – 341,000 – 341,000

CNOOC LTD – 5,878,000 – 5,878,000

COUNTRY GARDEN HOLDINGS CO LTD – 1,800,000 – 1,800,000

CSPC PHARMACEUTICAL GROUP LTD 11,000,000 – (3,470,000) 7,530,000

DONGFENG MOTOR GROUP CO LTD – 3,010,000 (3,010,000) –

FOSUN INTERNATIONAL LTD – 4,248,000 (716,000) 3,532,000

GALAXY ENTERTAINMENT GROUP LTD 1,795,000 866,000 (338,000) 2,323,000

GEELY AUTOMOBILE HOLDINGS LTD – 1,330,000 – 1,330,000

GREAT EAGLE HOLDINGS LTD – 361,000 – 361,000

GUANGDONG INVESTMENT LTD 10,890,000 – (6,996,000) 3,894,000

GUANGZHOU AUTOMOBILE GROUP CO LTD 3,184,000 – (1,404,000) 1,780,000

GUANGZHOU R&F PROPERTIES CO LTD – 864,000 (391,200) 472,800

GUOTAI JUNAN INTERNATIONAL HOLDINGS LTD 24,738,000 – (13,268,000) 11,470,000

HAITONG SECURITIES CO LTD – 3,475,200 – 3,475,200

HANERGY THIN FILM POWER GROUP LTD 4,746,000 – – 4,746,000

HANG LUNG PROPERTIES LTD – 601,000 (601,000) –

HANG SENG BANK LTD 547,600 – (236,700) 310,900

HENDERSON LAND DEVELOPMENT CO LTD – 309,000 – 309,000

HENGAN INTERNATIONAL GROUP CO LTD 1,043,500 – (742,000) 301,500

HONG KONG EXCHANGES AND CLEARING LTD 443,600 264,697 (183,200) 525,097

HSBC HOLDINGS PLC 8,446,000 1,348,800 (1,256,800) 8,538,000

HUANENG POWER INTERNATIONAL INC – 9,942,000 (224,000) 9,718,000

I-CABLE COMMUNICATIONS LTD – 905,227 (905,227) –

INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD 40,992,685 4,272,000 (3,589,000) 41,675,685

JIANGXI COPPER CO LTD 2,762,000 – (2,762,000) –

JOHNSON ELECTRIC HOLDINGS LTD – 876,000 – 876,000

KINGSOFT CORP LTD 2,022,000 2,588,000 (3,056,000) 1,554,000

LEE & MAN PAPER MANUFACTURING LTD – 10,869,000 (8,879,000) 1,990,000

LENOVO GROUP LTD – 2,954,000 – 2,954,000

LINK REIT – 747,000 – 747,000

LONGFOR PROPERTIES CO LTD – 563,000 – 563,000

LUK FOOK HOLDINGS INTERNATIONAL LTD 3,305,000 – (1,092,000) 2,213,000

PACIFIC BASIN SHIPPING LTD – 9,362,000 – 9,362,000

PETROCHINA CO LTD 11,210,000 11,636,000 (6,214,000) 16,632,000

PING AN INSURANCE GROUP CO OF CHINA LTD 3,961,500 – (899,500) 3,062,000

POWER ASSETS HOLDINGS LTD 975,000 – (975,000) –

SANDS CHINA LTD 1,710,800 1,011,200 (444,800) 2,277,200

SEMICONDUCTOR MANUFACTURING

INTERNATIONAL CORP 4,931,600 – (4,931,600) –

SHANGHAI ELECTRIC GROUP CO LTD – 17,542,000 (17,542,000) –

SHENZHOU INTERNATIONAL GROUP HOLDINGS LTD – 365,000 – 365,000

SINO BIOPHARMACEUTICAL LTD – 1,491,000 – 1,491,000


Investment Report


8


Holdings





SINOPHARM GROUP CO LTD – 506,000 – 506,000

SUN HUNG KAI PROPERTIES LTD 1,207,000 – (254,000) 953,000

SUNNY OPTICAL TECHNOLOGY GROUP CO LTD – 495,000 – 495,000

SWIRE PROPERTIES LTD 1,271,600 – (1,271,600) –

TENCENT HOLDINGS LTD 2,380,300 – (445,300) 1,935,000

TIMES PROPERTY HOLDINGS LTD – 3,142,000 (3,142,000) –

TINGYI CAYMAN ISLANDS HOLDING CORP – 738,000 – 738,000

TONGDA GROUP HOLDINGS LTD – 61,190,000 (61,190,000) –

UNI-PRESIDENT CHINA HOLDINGS LTD 6,770,000 6,674,000 (5,694,000) 7,750,000

VTECH HOLDINGS LTD 540,900 – (540,900) –

WANT WANT CHINA HOLDINGS LTD – 2,873,000 – 2,873,000

WH GROUP LTD – 7,400,500 (1,941,000) 5,459,500

WHARF HOLDINGS LTD – 1,181,000 – 1,181,000

WHARF REAL ESTATE INVESTMENT CO LTD – 1,181,000 (341,000) 840,000

WUXI BIOLOGICS CAYMAN INC – 384,000 (96,000) 288,000

YANGTZE OPTICAL FIBRE AND CABLE JOINT STOCK

LTD CO – 465,500 – 465,500

YIXIN GROUP LTD – 381,000 (381,000) –

YUE YUEN INDUSTRIAL HOLDINGS LTD – 396,000 – 396,000

ZHONGAN ONLINE P&C INSURANCE CO LTD – 187,300 (187,300) –

ZHUZHOU CRRC TIMES ELECTRIC CO LTD 716,500 2,375,600 – 3,092,100

ZOOMLION HEAVY INDUSTRY SCIENCE AND

TECHNOLOGY CO LTD 9,529,600 – (9,529,600) –

TAIWAN

ADVANCED SEMICONDUCTOR ENGINEERING INC 4,776,000 2,196,168 (2,380,000) 4,592,168

ADVANTECH CO LTD 956,000 35,986 (991,986) –

AIRTAC INTERNATIONAL GROUP 911,000 40,709 (750,000) 201,709

BASSO INDUSTRY CORP 2,917,000 744,000 (3,140,000) 521,000

CATCHER TECHNOLOGY CO LTD – 313,000 – 313,000

CATHAY FINANCIAL HOLDING CO LTD 12,530,000 1,815,000 (5,692,000) 8,653,000

CHILISIN ELECTRONICS CORP – 1,831,000 (1,831,000) –

CHUNGHWA TELECOM CO LTD 4,069,000 – (2,021,000) 2,048,000

ENNOCONN CORP 705,000 – (705,000) –

FORMOSA CHEMICALS & FIBRE CORP – 806,000 – 806,000

FORMOSA PLASTICS CORP – 2,089,000 – 2,089,000

GOURMET MASTER CO LTD – 700,100 – 700,100

HON HAI PRECISION INDUSTRY CO LTD 7,122,150 3,152,000 (2,838,000) 7,436,150

HOTA INDUSTRIAL MANUFACTURING CO LTD – 1,640,586 – 1,640,586

INVENTEC CORP – 11,997,000 (2,716,000) 9,281,000

LARGAN PRECISION CO LTD 124,000 16,000 (33,000) 107,000

MEDIATEK INC – 604,000 – 604,000

NANYA TECHNOLOGY CORP – 729,000 – 729,000

QUANTA COMPUTER INC 5,022,000 – (1,568,000) 3,454,000

TAIWAN SEMICONDUCTOR MANUFACTURING CO

LTD 14,133,447 – (3,924,000) 10,209,447

TONG HSING ELECTRONIC INDUSTRIES LTD – 604,000 (604,000) –


Investment Report


9


Holdings



LISTED RIGHTS

HONG KONG

CHINA STATE CONSTRUCTION INT RTS 3OCT2017 – 752,500 (752,500) –

UNLISTED RIGHTS

HONG KONG

FOSUN INTERNATIONAL LTD RTS 8SEP2017 – 2,723 (2,723) –

TENCENT HOLDINGS LTD RTS 31OCT2017 – 1,796 (1,796) –

TAIWAN

ADVANCED SEMICONDUCTOR ENGINEERING INC

RTS 21MAR2017 – 211,168 (211,168) –

AIRTAC INTERNATIONAL GROUP RTS 9AUG2017 – 40,709 (40,709) –

HOTA INDUSTRIAL MANUFACTURING CO LTD RTS

16MAR2017 – 66,586 (66,586) –


Investment Report


10

PineBridge Greater China Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August

1998, as amended, supplemented and restated. The Fund is managed in accordance with the distinct investment

policy. There have been no changes to the investment policy during the year.


The Fund seeks to provide long-term capital appreciation by investing in the equity securities of companies with

exposure to the economies of countries within the Greater China Region, i.e. the People’s Republic of China,

Hong Kong and Taiwan.

2017 2016 2015

HK$ HK$ HK$


Total value of investments 8,305,280,449 6,267,457,321 6,577,468,499


Dividend income (net of withholding tax) 220,427,924 195,566,191 209,676,710

Net foreign currency gains/(losses) 3,212,492 899,838 (6,757,731)




- realized and unrealized 2,198,237,844 (187,724,357) (842,422,491)

Performance table

Net asset value

Total net Net asset


HK$ HK$


2017 8,417,490,616 28.63

2016 6,504,092,694 20.80

2015 6,744,050,617 20.89


Investment Report


11



Highest

issue price

per unit

HK$

Lowest

redemption price

per unit

HK$

Annualized

investment

return

(Note 1)

%


2017 28.97 20.87 37.64

2016 22.56 17.59 (0.43)

2015 27.40 19.51 (9.65)

2014 24.83 20.84 2.66

2013 21.53 18.17 14.80

2012 19.75 15.96 19.68

2011 21.87 14.47 (22.16)

2010 21.79 16.63 7.74

2009 19.71 10.60 64.36

2008 23.39 9.43 (49.53)

Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year end

against the net asset value per unit at the beginning of the year.

Note 2: No Standard units - Accumulation were issued by the Fund since inception. The “Standard units” have

been renamed to “Standard units - Accumulation” with effect from 27 June 2013.


Based on the information received from the Manager of the Fund during the year, the Trustee of the Fund

confirmed, to the best of its knowledge and belief, that the investment objectives and policies for the Fund were complied with.


Trustee’s Report


12




On behalf of


_________________________ _____________________________

Director Director

18 April 2018


TO THE TRUSTEE OF PINEBRIDGE GREATER CHINA EQUITY FUND (THE “FUND”)

13


Opinion

We have audited the financial statements of PineBridge Greater China Equity Fund (the “Fund”) set out on pages 16 to 34, which comprise the statement of net assets as at 31 December 2017, and the statement of

comprehensive income, the statement of changes in equity and the statement of cash flows for the year then

ended, and notes to the financial statements, including a summary of significant accounting policies.





Basis for opinion

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) and with reference to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the

financial statements section of our report. We are independent of the Fund in accordance with the HKICPA’s

Code of Ethics for Professional Accountants (the “Code”), and we have fulfilled our other ethical

responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient

and appropriate to provide a basis for our opinion.


The Manager and the Trustee of the Fund are responsible for the other information. The other information

comprises the information included in the Reports and Financial Statements, other than the financial statements





in doing so, consider whether the other information is materially inconsistent with the financial statements or

our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we




statements The Manager and the Trustee of the Fund are responsible for the preparation of the financial statements that

give a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control as

the Manager and the Trustee determine is necessary to enable the preparation of financial statements that are

free from material misstatement, whether due to fraud or error.





The Manager and the Trustee of the Fund are required to ensure that the financial statements have been properly prepared in accordance with the relevant disclosure provisions of the constitutive documents of the Fund ("the









(CONTINUED)

14

Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Our report is made solely to you, as a body, and for no other purpose. We do not assume responsibility towards or accept liability to any other person for the contents of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. In addition, we are required to assess whether the financial statements of the Fund have been properly prepared, in all material respects, in accordance with the relevant disclosure provisions of the Constitutive Documents, the MPFSO, the General Regulation, the MPF Code and Guidelines II.5 issued by the MPFA and the Code issued by the SFC. As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager and the Trustee

• Conclude on the appropriateness of the Manager and the Trustee’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.



(CONTINUED)

15

Report on matters under the relevant disclosure provisions of the Constitutive Documents, the MPFSO, the General Regulation, the MPF Code, and Guidelines II.5 issued by the MPFA and the Code issued by the SFC (a) In our opinion, the financial statements have been properly prepared, in all material respects, in

accordance with the relevant disclosure provisions of the Constitutive Documents, the MPFSO, the General Regulation, the MPF Code and Guidelines II.5 issued by the MPFA and the Code issued by the SFC; and


are necessary for the purpose of our audit. Certified Public Accountants Hong Kong 18 April 2018




16

2017 2016

Note HK$ HK$

Assets

Current assets

Investments 4(b) 8,305,280,449 6,267,457,321

Dividend receivable 281,788 –

Interest receivable 906 6,800

Amounts receivable on subscription – 3,540,557


Total assets 8,427,050,815 6,553,980,361

Liabilities

Current liabilities

Amounts payable on redemption 8,345,648 48,292,245

Accounts payable and accrued expenses 1,214,551 1,595,422


Equity

Net assets attributable to unitholders 3 8,417,490,616 6,504,092,694


AIA Company (Trustee) Limited PineBridge Investments

Hong Kong Limited

________________________ _________________________ ________________________






17

2017 2016

Note HK$ HK$

Income


Dividend income 240,132,895 212,724,328

Net gains/(losses) on investments and derivative

financial instruments 6 2,198,237,844 (187,724,357)

Net foreign currency gains 3,212,492 899,838

Total investment income 2,441,703,107 26,066,541

Expenses

Trustee’s fee 8(b) 3,832,014 3,252,371

Custodian and administration fees 9 1,456,392 1,336,348

Audit fee 145,325 142,298

Bank charges 1,337 1,250



Transaction costs 19,491,113 31,542,654

Total operating expenses 25,452,358 37,321,864

Net profit/(loss) before tax 2,416,250,749 (11,255,323)

Withholding tax 7(c) (19,704,971) (17,158,137)

Total comprehensive income/(loss) 2,396,545,778 (28,413,460)





18

2017 2016

Note HK$ HK$

Balance at the beginning of the year 6,504,092,694 6,744,050,617

Issue of units 3 314,470,815 485,345,715


Net decrease from unit transactions (483,147,856) (211,544,463)


Balance at the end of the year 8,417,490,616 6,504,092,694





19

2017 2016

HK$ HK$



Adjustment for:

Dividend income (240,132,895) (212,724,328)


Withholding tax 19,704,971 17,158,137

Operating profit/(loss) before working capital changes 2,175,997,978 (224,146,383)

Net (increase)/decrease in investments (2,037,823,128) 310,011,178

Net change in derivative financial instruments – (179)

Net decrease in amounts receivable from brokers – 3,299,224

Net decrease in amounts payable to brokers – (5,171,376)


Cash generated from operations 137,793,979 84,481,174

Dividend income received 220,146,136 195,566,191


Net cash generated from operating activities 358,065,885 280,208,573




Net cash used in financing activities (519,553,896) (167,815,421)





Cash at banks 107,703,372 76,134,583


121,487,672 282,975,683





20

1. The Fund

PineBridge Greater China Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10

August 1998, as amended, supplemented and restated. The Fund has been authorized by the Securities and

Futures Commission of Hong Kong and approved by the Mandatory Provident Fund Schemes Authority of

Hong Kong.










The preparation of financial statements in conformity with HKFRS requires the use of certain critical

accounting estimates. It also requires the Trustee and Manager to exercise its judgment in the process

of applying the Fund’s accounting policies. The areas involving a higher degree of judgment or

complexity, or areas where assumptions and estimates are significant to the financial statements are





impact on the Fund.



HKFRS 9, ‘Financial instruments’, addresses the classification, measurement and recognition of

financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. It replaces the guidance in HKAS 39 that relates to the classification and measurement of financial



comprehensive income ("OCI") and fair value through profit or loss. The basis of classification

depends on the entity's business model and the contractual cash flow characteristics of the financial

asset. Investments in equity instruments are required to be measured at fair value through profit or loss

with the irrevocable option at inception to present changes in fair value in OCI not recycling. There is

now a new expected credit losses model that replaces the incurred loss impairment model used in

HKAS 39. For financial liabilities there were no changes to classification and measurement except for

the recognition of changes in own credit risk in other comprehensive income, for liabilities designated

at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the









available to the Fund in the future. Overall, the Fund expects no significant impact on its statement of net assets.




21







(b) Investments

All investments are classified as “financial assets at fair value through profit or loss”. These financial assets are classified as held for trading or designated by the Trustee and the Manager at fair value through profit or loss at inception. Purchases and sales of investments are accounted for on a trade date basis. Investments are initially recognized at fair value, excluding transaction costs which are expensed as incurred in the statement of comprehensive income, and are subsequently re-measured at fair value. “Realized and unrealized gains and losses on investments” are recognized in the statement of comprehensive income within “net gains/(losses) on investments and derivative financial instruments” in the period in which they arise. Investments are derecognized when the rights to receive cash flows from the investments have expired or the Fund has transferred substantially all risks and rewards of ownership.

The following represent the basis of valuation for financial reporting purposes: (i) Investments which are listed or traded on an exchange are fair valued based on last traded prices.


from brokers.

(c) Income

Dividends on equities are recognized in the statement of comprehensive income when the Fund’s right to receive payments is established. The corresponding withholding taxes are recorded as a separate item in the statement of comprehensive income. Interest income is recognized on a time-proportionate basis using the effective interest method. Other income is accounted for on an accrual basis.




economic environment in which it operates (the “functional currency”). The financial statements

are presented in Hong Kong dollar, which is the Fund’s functional and presentation currency. (ii) Transactions and balances


prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into

the functional currency using the exchange rate prevailing at the year end date. Foreign exchange gains and losses arising from translation are included in the statement of






gains/(losses) on investments and derivative financial instruments”.




22


(e) Expenses



Outstanding foreign exchange contracts are valued at the year end date by reference to the rate of

exchange applicable to the outstanding term of the contract. Unrealized gains or losses on outstanding





changes in equity. The price at which units are subscribed or redeemed is calculated by reference to the

net asset value per unit as at the close of business on the relevant dealing day.


Financial assets and liabilities are offset and the net amount reported in the statement of net assets

where the Fund currently has a legally enforceable right to set-off the recognized amounts and there is








date respectively.


Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit

or loss. They include fees and commissions paid to agents, advisers, brokers and dealers. Transaction

costs, when incurred, are immediately recognized in profit or loss as an expense.




23







year are shown in the statement of changes in equity. In order to achieve the investment objectives, the

Fund endeavors to invest its capital in accordance with the investment policies as outlined in note 4, whilst

maintaining sufficient liquidity to meet redemption requests. Such liquidity is augmented by the holding of

liquid investments.

As at 31 December 2017, the Fund had HK$8,417,490,616 (2016: HK$6,504,092,694) of puttable financial instruments classified as equity.



2017 2016

Units Units


HK$ HK$


2017

Standard

Units -

Accumulation

2017

Provident

Fund Units

2016

Standard

Units -

Accumulation

2016

Provident

Fund Units


Balance brought forward – 312,762,284 – 322,782,606

Total issues – 12,756,129 – 24,431,717

Total redemptions – (31,457,889) – (34,452,039)





24


The Fund offers two classes of units. Provident Fund units are offered to provident fund schemes approved by the Mandatory Provident Fund Schemes Authority. Standard units - Accumulation are offered to all

investors other than the provident fund schemes approved by the Mandatory Provident Fund Schemes

Authority. The Standard units have been renamed to “Standard units - Accumulation” with effect from 27

June 2013. No Standard units - Accumulation were issued by the Fund for the years ended 31 December

2017 and 2016.



The investment objective of the Fund is to achieve capital appreciation. The Fund seeks to achieve its

investment objective through investing in the equity securities of companies with exposure to the

economies of countries within the Greater China Region, i.e. China, Hong Kong and Taiwan.

The Fund is exposed to market price risk, cash flow interest rate risk, credit and custody risk, liquidity

risk and currency risk.


discussed below.








2017 2016

Fair value

HK$

Cost

HK$

% of

net

assets

Fair value

HK$

Cost

HK$

% of

net

assets

Held for trading:

Listed equities 8,305,280,449 6,168,800,253 98.67 6,267,457,321 5,952,119,667 96.36




25






2017 2016 HK$ equivalent HK$ equivalent Markets exposed to China 88,313,171 –

Hong Kong 6,618,757,196 4,787,236,231

Taiwan 1,598,210,082 1,480,221,090

8,305,280,449 6,267,457,321


2017 2016

% %

Sectors exposed to

Basic Materials 2 1

Communications 14 13

Consumer, Cyclical 8 3

Consumer, Non-cyclical 4 3

Diversified 2 2

Energy 4 6

Financial 42 40

Industrial 11 14

Technology 12 15

Utilities 1 3

100 100

There were no investments issued by a single issuer with market value exceeding 10% of the Fund’s

net asset value as at 31 December 2017 and 2016.




26




The table below summarizes the impact on net assets attributable to unitholders as a result of increases/decreases of the key index to which the Fund is exposed. The analysis is based on the



2017 2016

Change in


HK$ Change in


HK$

+/- +/- +/- +/-

FTSE MPF Greater China Total Return Index 40% 3,203,164,054 7% 422,989,256

The Manager has used their view of what would be a “reasonable shift” in the FTSE MPF Greater China Total Return Index, having regard to the historical volatility of the index, to estimate the change for use in the market price risk sensitivity analysis above. Disclosures above are shown in absolute terms, changes and impacts could be positive or negative. Changes in market index % are revised annually depending on the Manager’s current view of market volatility and other relevant factors.




The majority of the Fund’s financial assets and liabilities are non-interest bearing, as the Fund invests

mainly in listed equities. As a result, the Fund is not subject to significant amounts of risk due to

fluctuations in the prevailing levels of market interest rates. Any excess cash and cash equivalents are

invested at short-term market interest rates.

As at 31 December 2017, the Fund had bank balances of HK$121,487,672 (2016: HK$282,975,683)

and is therefore exposed to cash flow interest rate risk which is considered by the Manager to be

minimal as they are short-term instruments all with maturities less than one month.

As the Manager believes that the Fund has no significant interest rate risk exposure, no interest rate

sensitivity analysis is disclosed.




27





The Fund’s financial assets which are potentially subject to concentrations of credit risk consist

principally of cash and cash equivalents and assets held with the custodian. The table below

summarizes the assets placed with banks and custodian at 31 December 2017 and 2016:

At 31 December 2017

HK$

Credit

rating

Source of

credit rating

Custodian

Citibank, N.A. 8,305,280,449 P-1 Moody's

Banks



At 31 December 2016

HK$

Credit

rating

Source of

credit rating

Custodian


Banks






All transactions in listed securities are settled/paid for upon delivery using approved and reputable

brokers. The risk of default is considered minimal since delivery of securities sold is only made when

the broker has received payment. Payment is made on a purchase when the securities have been

received by the broker. The trade will fail if either party fails to meet its obligation.







28


(e) Liquidity risk


redemption request.







Less than 1 - 3 Over 3


HK$ HK$ HK$

At 31 December 2017



Total financial liabilities 8,947,548 – 612,651



HK$ HK$ HK$

At 31 December 2016


Accounts payable and accrued expenses 490,491 – 1,104,931

Total financial liabilities 48,782,736 – 1,104,931

Units are redeemed on demand at the unitholder’s option. At 31 December 2017 and 2016, no ultimate

individual investor held more than 10% of the Fund’s units.

At 31 December 2017, the Fund held cash and cash equivalents of HK$121,487,672 and liquid

investments of HK$8,305,280,449 that are expected to readily generate cash inflows within 1 month

for managing liquidity risk.




29


(f) Currency risk


exchange rates.

The Fund has both monetary and non-monetary assets and liabilities denominated in currencies other

than Hong Kong dollar, the Fund’s functional and presentation currency. The Fund is therefore exposed

to currency risk, as the value of the assets and liabilities denominated in other currencies will fluctuate

due to changes in foreign exchange rates.

The table below summarizes the Fund’s net monetary and non-monetary exposure to different major currencies:

2017 2016

HK$ equivalent HK$ equivalent Monetary items

Taiwanese Dollar 107,623,369 75,976,336 United States Dollar – (507,955)

Non-monetary items

Chinese Offshore Yuan 88,313,171 – Taiwanese Dollar 1,598,210,082 1,480,221,090




increased/decreased by the respective percentage with all other variables held constant. 2017 2016

Change in foreign exchange rates %

Impact HK$


Impact HK$

+/- +/- +/- +/- Monetary items

Taiwanese Dollar 6.0% 6,457,402 1.0% 759,763 United States Dollar 0.5% – 0.5% (2,540)

Non-monetary items

Chinese Offshore Yuan 3.0% 2,649,395 5.0% – Taiwanese Dollar 6.0% 95,892,605 1.0% 14,802,211










30











length basis.



























31





At 31 December 2017


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 8,305,280,449 – – 8,305,280,449

Total assets 8,305,280,449 – – 8,305,280,449

At 31 December 2016


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 6,267,457,321 – – 6,267,457,321

Total assets 6,267,457,321 – – 6,267,457,321


within level 1, include active listed equities. The Fund does not adjust the quoted price for these

instruments.



are classified within level 2. As level 2 investments include positions that are not traded in active

markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity

and/or non-transferability, which are generally based on available market information.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. As at 31 December 2017 and 2016, level 3 instruments include listed equity securities that are

suspended from trading. As observable prices are not available for these securities, the Fund has used

valuation techniques including estimation of liquidation value, to derive the fair value of these level 3

investments.

As at 31 December 2017 and 2016, the Fund invested in one equity security which was suspended on

21 May 2015. The Manager has applied 100% discount to the last traded price before suspension to be

the best estimate of the fair value of this security. This investment was classified as level 3 due to

continual suspension of trading as at 31 December 2017 and 2016.

Transfers between levels of the fair value hierarchy are deemed to have occurred on the date of the

stock suspension and on the date the stock resumes trading.

There is no transfer between levels for the year ended 31 December 2017.

A sensitivity analysis for level 3 positions is not presented, as it is deemed that the impact of reasonable

changes in inputs would not be significant.




32



The following table presents the transfers between levels for the year ended 31 December 2016.

Hong Kong listed equity

Level 3

HK$

Opening balance 33,027,222

Transfer from Level 3 to Level 1 (14,470,362)

Total losses in the statement of comprehensive income (18,556,860)

Closing balance –

Total losses for the year included in the statement of comprehensive income

for financial assets held at the end of the year

(18,556,860)

The equity security transferred out of level 3 relates to position whose trading has resumed during the

year 2016. The valuation is based on quoted market prices in active markets and resulted in the

reclassification to level 1.

Assets and liabilities included in the statement of net assets, except for investments, are carried at

amortized cost; their carrying values are a reasonable approximation of fair value.



assets attributable to unitholders can change significantly on a daily basis as the Fund is subject to daily

subscriptions and redemptions at the discretion of unitholders. The Fund’s objective when managing

capital is to safeguard the Fund’s ability to continue as a going concern in order to provide returns for

unitholders and benefits for other stakeholders and to maintain a strong capital base to support the

development of the investment activities of the Fund.





5. Critical judgement

In preparing these financial statements, the Trustee and Manager have made certain judgement which is

dependent on what might happen in the future. The judgement made by the Trustee and Manager may not

equal the related actual results. Refer to note 7(b) to the financial statements.


2017 2016

HK$ HK$

Change in unrealized gains in value of investments

and derivative financial instruments 1,821,142,542 241,920,725

Realized gains/(losses) on sale of investments and

derivative financial instruments 377,095,302 (429,645,082)

2,198,237,844 (187,724,357)




33

7. Taxation

(a) No provision for Hong Kong profits tax has been made as the Fund is authorized as a collective investment scheme under Section 104 of the Hong Kong Securities and Futures Ordinance and is


Ordinance.

(b) The Fund invests in shares of companies in the People's Republic of China ("PRC") listed on the Hong

Kong Stock Exchange ("H-shares"). Under the PRC Corporate Income Tax Law, the Fund may be

liable to pay PRC tax on the capital gains realized in the trading of H-shares. However, no provision

was made for taxation from such gains in the financial statements as the Trustee and Manager believe

that the Fund can sustain a position for not filing a tax return based on the existing tax regulations and

that the enforcement of China tax on capital gains is not probable.





of Hong Kong.




(a) Management fee






(b) Trustee’s fee

AIA Company (Trustee) Limited, the Trustee, is entitled to receive a trustee’s fee at a permitted maximum of 0.05% per annum of the net asset value of the Fund, being calculated daily and payable

monthly in arrears.






of the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a total permitted

maximum of 0.50% per annum. The safekeeping and transaction fee rate of 0.025% per annum is the






34


The Manager and its associates/connected persons have entered into soft commission arrangements with

some brokers under which certain goods and services used to support investment decision making are obtained from third parties and are paid for by the brokers out of the commissions they receive. These may

include, for example, research and advisory services; economic and political analysis; portfolio analysis,

including valuation and performance measurement; market analysis, data and quotation services; clearing,

registrar and custodial services and investment-related publications; computer hardware and software

incidental to the above goods and services.

11. Distributions









PINEBRIDGE HONG KONG DOLLAR FIXED INCOME FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Hong Kong Dollar Fixed Income Fund



Contents

Pages








Statement of changes in net assets attributable to unitholders 20





1

Manager Trustee



Hong Kong Hong Kong






Hong Kong





Central, Hong Kong

Legal Advisers

Deacons


18 Chater Road

Central, Hong Kong


Manager’s Report


2



Investors’ confidence returns in 2017 reflected by a synchronized growth in major economies since global

financial crisis. China economy stabilized through favorable macro data, growth has been on track, SOE reform and financial deleveraging initiatives showing positive progress. The conclusion of the Chinese 19th National

Congress further consolidated Xi’s power to strengthen the implementation of his policies; a shift to quality of

growth will be a long-term benefit for China. Hong Kong will continue to build healthy economic momentum

on the back of China’s stability in growth. Fundamentals remain steady or improving within the region, S&P

upgraded Indonesia to investment grade while Moody’s upgraded India to Baa2. Despite China and Hong

Kong’s downgrade during the year, the action prompt small effects within the market. US leads with other major

economies following on plans of QE tapering, the trajectory to normalize is in place.

In Hong Kong, the abundance of liquidity within the market keeps property prices elevated. Despite the

government’s efforts in stabilizing property prices with housing policy restrictions, property prices continues to

surge in 2017 where the city’s property index is at 165 beating the previous year’s record by 13%. A rebound in

the number of tourists visiting Hong Kong in 2017, retail sales up 3.6% (yoy) per October figures. Hong Kong’s

inflation fluctuated in the 1% to 2% range in 2017 with the latest October figure at 1.5% (yoy). Growth in Hong

Kong expanded 3.6% (yoy) during the third quarter of 2017, government is now expecting its annual growth

forecast at 3.7%.

Investments boasted good results for the year of 2017, Hong Kong equities gained 36% while bonds gained

4.0% over previous year. Bond Connect also launched during July this year at the timing of Hong Kong SAR’s

20th anniversary. At the end of 2017, Hong Kong 10 year government yield is at 1.75% and US 10 year

Treasury at 2.406%, down 4bps and 17bps from previous year end respectively. IPO activities and year-end

funding needs pushed HIBOR rates higher. The 1-month HIBOR ended the year at 1.19% while the 3-month

HIBOR at 1.306%, both are at the highest level in 9 years. HKMA announced two rounds of exchange fund bills

issuance totaling HK$80 billion this year draining excess market liquidity significantly reducing the HKMA

Aggregate Closing balanced to HK$179 billion. Given the US raised policy rates 3 times in 2017, the interest rate differentials caused the HK$ to trade at the weaker end of the band at 7.81. The Hong Kong MPF

Prescribed Savings Rate remained flat at 0.007%.

We underperformed the benchmark for the period after accounting for expenses. Our defensive duration strategy

partially protected the performance of the portfolio, however, it was not enough to offset the detraction from

credit selection this year.

Yields are on the rise as major global economic growth is strengthening and these advanced economies are set

to tighten their monetary policy. We are expecting the Federal Reserve to raise rates three times in the year of 2018 and believe interest rate normalization continue at a gradual pace. Liquidity within Hong Kong is still

abundant, however, given the HKD peg with the USD, the Hong Kong interest rates is expected to move up

following US interest rates trajectory.

For our strategy, we continue to maintain defensive in our duration strategy due to rate hike expectations. We

continue to prefer corporates and financial names over governments for their extra carry.


Investment Report


3


Nominal Market

% of net

value value

assets

HK$ HK$


BONDS

HONG KONG DOLLAR

ADCB FINANCE CAYMAN LTD 2.46% 16MAR2020 1,000,000 996,942

0.20%

ADCB FINANCE CAYMAN LTD 2.84% 21NOV2023 2,000,000 1,971,350

0.40%

ADCB FINANCE CAYMAN LTD 2.86% 4MAY2021 2,000,000 2,020,580

0.41%

ADCB FINANCE CAYMAN LTD 3.2% 3FEB2022 1,000,000 1,005,205

0.20%

ASB FINANCE LTD 2.457% 25SEP2024 2,000,000 1,958,810

0.39%

ASB FINANCE LTD 2.63% 14DEC2021 2,000,000 2,004,020

0.40%

AUSNET SERVICES HOLDINGS PTY LTD 4.125% 16MAR2020 7,000,000 7,204,974

1.45%

BANK OF COMMUNICATIONS CO LTD/HONG KONG 3.2%

9APR2019 2,000,000 2,029,266

0.41%

BANK OF NOVA SCOTIA 2.74% 13FEB2023 2,000,000 2,000,950

0.40%

BNZ INTERNATIONAL FUNDING LTD/LONDON 2.5% 1MAR2021 2,000,000 1,999,660

0.40%

CANADIAN IMPERIAL BANK OF COMMERCE/CANADA 2.25%

28JUL2020 1,000,000 991,089

0.20%

CENTRICA PLC 3.68% 22FEB2022 3,000,000 2,997,798

0.60%

CITIGROUP INC 2.67% 6OCT2025 2,000,000 1,963,870

0.39%

CLP POWER HONG KONG FINANCING LTD 2.83% 20SEP2022 3,000,000 3,007,542

0.60%

CLP POWER HONG KONG FINANCING LTD 3.41% 4NOV2025 3,000,000 3,125,793

0.63%

CLP POWER HONG KONG FINANCING LTD 3.5% 28NOV2029 4,000,000 4,183,476

0.84%

CLP POWER HONG KONG FINANCING LTD 3.88% 5AUG2019 5,000,000 5,122,375

1.03%

COMMONWEALTH BANK OF AUSTRALIA 2.04% 24FEB2019 4,000,000 4,003,144

0.81%

COMMONWEALTH BANK OF AUSTRALIA 2.505% 21SEP2026 4,000,000 3,933,420

0.79%

COMMONWEALTH BANK OF AUSTRALIA 2.77% 27JAN2026 2,000,000 2,011,110

0.40%

COOPERATIEVE RABOBANK UA 4.98% 3SEP2019 5,000,000 5,214,895

1.05%

CORP ANDINA DE FOMENTO 2.89% 18MAR2026 2,000,000 1,981,920

0.40%

CORP ANDINA DE FOMENTO 3.265% 24MAR2027 2,000,000 2,012,438

0.40%

DBS GROUP HOLDINGS LTD 3.24% 19APR2026 5,000,000 4,993,175

1.00%

EMIRATES NBD PJSC 3.4% 13MAY2022 2,000,000 1,983,840

0.40%

ENGIE SA 2.63% 18OCT2027 2,000,000 1,989,920

0.40%

ENGIE SA 2.65% 26SEP2032 2,000,000 1,937,140

0.39%

EXPORT-IMPORT BANK OF KOREA 1.57% 11MAY2018 1,000,000 999,161

0.20%

EXPORT-IMPORT BANK OF KOREA 2.2% 15FEB2019 2,000,000 2,002,526

0.40%

FIRST GULF BANK PJSC 2.43% 17FEB2020 2,000,000 1,995,504

0.40%

HKCG FINANCE LTD 2.25% 22JUL2026 5,000,000 4,779,030

0.96%

HKCG FINANCE LTD 2.65% 3JUL2027 2,000,000 1,955,030

0.39%

HKCG FINANCE LTD 3.3% 16MAY2022 5,000,000 5,112,575

1.03%

HKCG FINANCE LTD 3.9% 3JUN2019 1,000,000 1,022,223

0.21%

HONG KONG GOVERNMENT BOND 0.55% 5DEC2022 500,000 474,292

0.10%

HONG KONG GOVERNMENT BOND 0.8% 27AUG2027 4,500,000 4,125,825

0.83%

HONG KONG GOVERNMENT BOND 1.09% 5JUN2023 7,000,000 6,794,543

1.37%

HONG KONG GOVERNMENT BOND 1.49% 22FEB2028 1,000,000 977,916

0.20%

HONG KONG GOVERNMENT BOND 1.51% 24FEB2027 9,000,000 8,832,708

1.78%


Investment Report


4



value value assets

HK$ HK$


BONDS (CONTINUED)

HONG KONG DOLLAR (CONTINUED)

HONG KONG GOVERNMENT BOND 1.73% 20FEB2024 6,000,000 6,019,164 1.21%

HONG KONG GOVERNMENT BOND 1.84% 9DEC2024 6,000,000 6,062,592 1.22%

HONG KONG GOVERNMENT BOND 1.94% 4DEC2023 5,000,000 5,075,915 1.02%

HONG KONG GOVERNMENT BOND 1.96% 3JUN2024 5,000,000 5,084,305 1.02%

HONG KONG GOVERNMENT BOND 2.07% 26AUG2026 5,000,000 5,138,930 1.03%


HONG KONG GOVERNMENT BOND 2.31% 21JUN2021 2,000,000 2,053,728 0.41%


HONG KONG GOVERNMENT BOND 2.48% 28FEB2029 5,000,000 5,338,645 1.07%


HONG KONG GOVERNMENT BOND PROGRAMME 0.91%

5NOV2020 2,500,000 2,456,762 0.49%


5FEB2020 2,000,000 1,985,944 0.40%


18MAY2022 8,000,000 7,824,600 1.56%


21JAN2026 12,000,000 11,905,944 2.39%


16JUL2030 14,000,000 14,357,476 2.88%


7AUG2024 7,000,000 7,209,594 1.45%

HONG KONG SCIENCE & TECHNOLOGY PARKS CORP 2.12%

11JUL2019 3,000,000 3,014,163 0.61%

HONG KONG SCIENCE & TECHNOLOGY PARKS CORP 3.2%

11JUL2024 3,000,000 3,176,640 0.64%

HONGKONG LAND NOTES CO LTD 3.86% 7MAR2022 7,000,000 7,296,247 1.46%

HONGKONG LAND NOTES CO LTD 3.95% 8JUN2020 5,000,000 5,165,510 1.04%

HONGKONG LAND NOTES CO LTD 4.1% 28JUL2025 1,000,000 1,070,018 0.22%

HONGKONG LAND NOTES CO LTD 4.24% 19MAR2020 1,000,000 1,037,380 0.21%

HYSAN MTN LTD 5.38% 2SEP2020 2,000,000 2,125,050 0.43%

IFC DEVELOPMENT CORPORATE TREASURY LTD 3.4%

26MAR2020 3,000,000 3,052,791 0.61%

KEB HANA BANK 2% 4MAR2018 1,000,000 1,000,511 0.20%

KOREA DEVELOPMENT BANK 4.42% 12APR2021 3,000,000 3,159,585 0.64%

KOREA EXPRESSWAY CORP 4% 2MAR2022 5,000,000 5,214,495 1.05%

KOREA LAND & HOUSING CORP 2.43% 28SEP2024 2,000,000 1,971,160 0.40%

KOREA LAND & HOUSING CORP 4.2% 18JAN2022 5,000,000 5,267,940 1.06%

KOREA NATIONAL OIL CORP 2.18% 29JAN2020 3,000,000 2,974,911 0.60%

KOREA NATIONAL OIL CORP 3.95% 10FEB2022 5,000,000 5,196,535 1.05%

KOREA NATIONAL OIL CORP 4.5% 4MAR2021 6,000,000 6,301,092 1.27%

KOWLOON-CANTON RAILWAY CORP 3.5% 29APR2019 4,000,000 4,090,744 0.82%

KOWLOON-CANTON RAILWAY CORP 4.13% 15MAY2024 500,000 545,269 0.11%

LINK FINANCE CAYMAN 2009 LTD 2.67% 4JUL2022 1,000,000 987,578 0.20%

LINK FINANCE CAYMAN 2009 LTD 3% 2MAR2026 2,000,000 1,963,982 0.39%

LINK FINANCE CAYMAN 2009 LTD 3.12% 28MAY2018 3,000,000 3,014,235 0.61%

LINK FINANCE CAYMAN 2009 LTD 3.14% 18MAY2018 2,000,000 2,008,542 0.40%

LINK FINANCE CAYMAN 2009 LTD 3.15% 2FEB2026 2,000,000 1,985,110 0.40%


Investment Report


5



value value assets

HK$ HK$


BONDS (CONTINUED)


LINK FINANCE CAYMAN 2009 LTD 3.2% 6SEP2021 3,000,000 3,038,949 0.61%

LINK FINANCE CAYMAN 2009 LTD 4.1% 24DEC2019 1,500,000 1,547,009 0.31%

LINK FINANCE CAYMAN 2009 LTD 4.4% 5AUG2019 5,000,000 5,154,350 1.04%

MACQUARIE BANK LTD 2.06% 12FEB2020 3,000,000 2,981,013 0.60%

MALAYAN BANKING BHD 2.295% 25MAY2022 2,000,000 1,968,150 0.40%

MALAYAN BANKING BHD 3.25% 20JUL2022 5,000,000 5,113,625 1.03%

MIZUHO BANK LTD 2.65% 22NOV2021 2,000,000 2,003,940 0.40%

MTR CORP CI LTD 4.28% 6JUL2020 5,000,000 5,265,800 1.06%

NATIONAL AUSTRALIA BANK LTD 3.73% 17MAY2026 5,000,000 5,029,800 1.01%

NATIONAL GRID NORTH AMERICA INC 2.62% 9JUN2025 2,000,000 1,955,300 0.39%

NATIONWIDE BUILDING SOCIETY 1.83% 29JUN2018 2,000,000 1,996,754 0.40%

NORDEA BANK AB 1.59% 25JUN2018 1,000,000 998,629 0.20%

OP CORPORATE BANK PLC 2.16% 18SEP2020 1,000,000 987,841 0.20%

OPTUS FINANCE PTY LTD 3.825% 10JUN2020 2,000,000 2,051,958 0.41%

ORIX CORP 2.3% 23AUG2022 1,500,000 1,476,608 0.30%

PLACES FOR PEOPLE TREASURY PLC 3.25% 30AUG2023 2,000,000 1,938,938 0.39%

PSA INTERNATIONAL PTE LTD 3.8% 26MAY2020 5,000,000 5,119,495 1.03%

QNB FINANCE LTD 2.51% 29APR2019 2,000,000 2,002,630 0.40%

QNB FINANCE LTD 2.65% 9MAY2019 2,000,000 2,006,190 0.40%

QNB FINANCE LTD 2.9% 2AUG2023 2,000,000 2,003,780 0.40%

ROYAL BANK OF CANADA 1.95% 24MAR2019 3,000,000 2,996,661 0.60%

SINGTEL GROUP TREASURY PTE LTD 3.32% 4APR2018 2,000,000 2,008,224 0.40%

SUMITOMO MITSUI BANKING CORP 2.92% 30APR2025 2,000,000 1,991,482 0.40%

SUN HUNG KAI PROPERTIES CAPITAL MARKET LTD 2.32%

26JUL2026 2,000,000 1,878,854 0.38%


5SEP2024 4,000,000 3,884,828 0.78%


15APR2026 1,000,000 970,310 0.20%


26JUN2027 2,000,000 1,933,606 0.39%


8MAY2023 5,000,000 5,001,330 1.01%


5DEC2022 6,000,000 6,109,176 1.23%


5DEC2022 4,000,000 4,073,004 0.82%

SWIRE PACIFIC MTN FINANCING LTD 2.85% 18JUL2022 1,000,000 1,003,359 0.20%

SWIRE PACIFIC MTN FINANCING LTD 2.9% 24JAN2023 7,000,000 7,021,511 1.41%

SWIRE PACIFIC MTN FINANCING LTD 3.15% 15NOV2022 2,000,000 2,029,158 0.41%

SWIRE PACIFIC MTN FINANCING LTD 3.78% 28FEB2022 6,000,000 6,248,574 1.26%

SWIRE PACIFIC MTN FINANCING LTD 4.2% 18DEC2018 5,000,000 5,094,045 1.02%

SWIRE PACIFIC MTN FINANCING LTD 4.236% 24SEP2018 5,000,000 5,073,675 1.02%

SWIRE PROPERTIES MTN FINANCING LTD 2.6% 5JUL2025 2,000,000 1,965,038 0.40%

SWIRE PROPERTIES MTN FINANCING LTD 2.65% 7JUN2027 5,000,000 4,858,275 0.98%

SWIRE PROPERTIES MTN FINANCING LTD 2.8% 26MAR2025 1,000,000 994,828 0.20%

SWIRE PROPERTIES MTN FINANCING LTD 2.8% 31MAY2027 2,000,000 1,969,608 0.40%


Investment Report


6


Nominal Market

% of net

value value

assets

HK$ HK$


BONDS (CONTINUED)


SWIRE PROPERTIES MTN FINANCING LTD 2.9% 23JAN2025 1,000,000 1,001,322

0.20%

SWIRE PROPERTIES MTN FINANCING LTD 3% 19MAR2025 3,000,000 3,023,568

0.61%

TOTAL CAPITAL INTERNATIONAL SA 3.088% 14SEP2026 3,000,000 3,038,028

0.61%

UNITED OVERSEAS BANK LTD 3.19% 26AUG2028 4,000,000 3,953,080

0.80%

UNITED UTILITIES WATER FINANCE PLC 2.37% 4OCT2027 2,000,000 1,967,860

0.40%

VODAFONE GROUP PLC 2.85% 28JUN2027 2,000,000 1,967,340

0.40%

WELLS FARGO & CO 3% 5JUN2025 3,000,000 2,962,374

0.60%

WESTPAC BANKING CORP 2.18% 15JUL2022 2,000,000 1,974,786

0.40%

WESTPAC BANKING CORP 4.55% 22JAN2020 7,000,000 7,335,216

1.48%

TOTAL HONG KONG DOLLAR

437,411,950

87.97%

CERTIFICATES OF DEPOSIT

HONG KONG DOLLAR

AGRICULTURAL BANK OF CHINA LTD/HONG KONG CD 1.18%

11MAY2018 2,000,000 1,995,962

0.40%

BANK OF CHINA LTD/HONG KONG CD 1.85% 25JUN2018 500,000 500,130

0.10%

BANK OF CHINA LTD/HONG KONG CD 2.05% 13MAR2018 2,000,000 2,001,402

0.40%

BANK OF CHINA LTD/HONG KONG CD 3.9% 31MAY2021 3,000,000 3,133,650

0.63%

BANK OF COMMUNICATIONS CO LTD/HONG KONG CD 1.95%

21MAY2018 5,000,000 5,004,605

1.01%

BANK OF COMMUNICATIONS CO LTD/HONG KONG CD 2%

17AUG2020 3,000,000 2,980,224

0.60%

BANK OF COMMUNICATIONS CO LTD/HONG KONG CD 2.5%

10MAR2020 2,000,000 2,014,188

0.41%

BANK OF TOKYO-MITSUBISHI UFJ LTD/HONG KONG CD 2.05%

17MAR2021 1,500,000 1,484,145

0.30%

BANK OF TOKYO-MITSUBISHI UFJ LTD/HONG KONG CD 2.48%

16MAY2022 5,000,000 4,951,010

1.00%

CHINA CONSTRUCTION BANK CORP/HONG KONG CD 4.05%

15JAN2020 3,000,000 3,110,436

0.63%

CHINA DEVELOPMENT BANK CORP/HONG KONG CD 3%

21FEB2019 5,000,000 5,056,020

1.01%

CHINA DEVELOPMENT BANK CORP/HONG KONG CD 3%

25JUN2018 3,000,000 3,016,413

0.61%

CHINA DEVELOPMENT BANK CORP/HONG KONG CD 3.2%

30SEP2019 3,000,000 3,056,235

0.61%

CHINA DEVELOPMENT BANK CORP/HONG KONG CD 3.91%

18MAY2020 1,000,000 1,038,116

0.21%

CHINA MERCHANTS BANK CO LTD/HONG KONG CD 1.5%

12APR2018 3,000,000 2,998,002

0.60%

CHINA MINSHENG BANKING CORP LTD/HONG KONG CD 1.5%

20APR2018 2,000,000 1,996,990

0.40%

DBS BANK HONG KONG LTD CD 3.92% 21JAN2020 5,000,000 5,180,960

1.03%

DBS BANK HONG KONG LTD CD 3.95% 20JAN2020 2,000,000 2,073,426

0.42%

FIRST ABU DHABI BANK/HONG KONG CD 4.6% 29JAN2021

(formerly known as NATIONAL BANK OF ABU DHABI PJSC CD

4.6% 29JAN2021) 1,000,000 1,053,990

0.21%

SUMITOMO MITSUI BANKING CORP/HONG KONG CD 2.7%

21FEB2022 2,000,000 2,019,724

0.41%

TOTAL HONG KONG DOLLAR

54,665,628

10.99%

TOTAL INVESTMENTS*

492,077,578

98.96%


497,396,359



Investment Report


7


Nominal value


HK$ HK$ HK$ HK$


BONDS

HONG KONG DOLLAR

ADCB FINANCE CAYMAN LTD 2.46% 16MAR2020 1,000,000 – – 1,000,000

ADCB FINANCE CAYMAN LTD 2.84% 21NOV2023 2,000,000 – – 2,000,000

ADCB FINANCE CAYMAN LTD 2.86% 4MAY2021 2,000,000 – – 2,000,000

ADCB FINANCE CAYMAN LTD 3.2% 3FEB2022 – 1,000,000 – 1,000,000

ASB FINANCE LTD 2.457% 25SEP2024 – 2,000,000 – 2,000,000

ASB FINANCE LTD 2.63% 14DEC2021 – 2,000,000 – 2,000,000

AUSNET SERVICES HOLDINGS PTY LTD 4.125%

16MAR2020 7,000,000 – – 7,000,000

BANK OF COMMUNICATIONS CO LTD/HONG KONG

3.2% 9APR2019 2,000,000 – – 2,000,000

BANK OF NOVA SCOTIA 2.74% 13FEB2023 2,000,000 – – 2,000,000

BNZ INTERNATIONAL FUNDING LTD/LONDON 2.5%

1MAR2021 2,000,000 – – 2,000,000

CANADIAN IMPERIAL BANK OF COMMERCE/CANADA

2.25% 28JUL2020 1,000,000 – – 1,000,000

CENTRICA PLC 3.68% 22FEB2022 3,000,000 – – 3,000,000

CITIGROUP INC 2.67% 6OCT2025 – 2,000,000 – 2,000,000

CLP POWER HONG KONG FINANCING LTD 2.83%

20SEP2022 3,000,000 – – 3,000,000


4NOV2025 3,000,000 – – 3,000,000


28NOV2029 4,000,000 – – 4,000,000


5AUG2019 5,000,000 – – 5,000,000


11JAN2017 2,000,000 – (2,000,000) –

COMMONWEALTH BANK OF AUSTRALIA 2.04%

24FEB2019 4,000,000 – – 4,000,000


21SEP2026 4,000,000 – – 4,000,000


27JAN2026 2,000,000 – – 2,000,000

COOPERATIEVE RABOBANK UA 4.98% 3SEP2019 5,000,000 – – 5,000,000

CORP ANDINA DE FOMENTO 2.89% 18MAR2026 2,000,000 – – 2,000,000

CORP ANDINA DE FOMENTO 3.265% 24MAR2027 – 2,000,000 – 2,000,000

DBS BANK LTD/HONG KONG 2.24% 30MAR2017 5,000,000 – (5,000,000) –

DBS GROUP HOLDINGS LTD 3.24% 19APR2026 5,000,000 – – 5,000,000

EMIRATES NBD PJSC 3.4% 13MAY2022 2,000,000 – – 2,000,000

ENGIE SA 2.63% 18OCT2027 – 2,000,000 – 2,000,000

ENGIE SA 2.65% 26SEP2032 – 2,000,000 – 2,000,000

EXPORT-IMPORT BANK OF KOREA 1.57% 11MAY2018 – 1,000,000 – 1,000,000

EXPORT-IMPORT BANK OF KOREA 2.2% 15FEB2019 – 2,000,000 – 2,000,000

FIRST GULF BANK PJSC 2.43% 17FEB2020 2,000,000 – – 2,000,000

HKCG FINANCE LTD 2.25% 22JUL2026 5,000,000 – – 5,000,000

HKCG FINANCE LTD 2.65% 3JUL2027 – 2,000,000 – 2,000,000

HKCG FINANCE LTD 3.3% 16MAY2022 5,000,000 – – 5,000,000

HKCG FINANCE LTD 3.9% 3JUN2019 1,000,000 – – 1,000,000

HONG KONG GOVERNMENT BOND 0.55% 5DEC2022 4,500,000 – (4,000,000) 500,000

HONG KONG GOVERNMENT BOND 0.8% 27AUG2027 – 4,500,000 – 4,500,000

HONG KONG GOVERNMENT BOND 1.09% 5JUN2023 7,000,000 – – 7,000,000

HONG KONG GOVERNMENT BOND 1.49% 22FEB2028 – 1,000,000 – 1,000,000

HONG KONG GOVERNMENT BOND 1.51% 24FEB2027 6,000,000 3,000,000 – 9,000,000

HONG KONG GOVERNMENT BOND 1.73% 20FEB2024 6,000,000 – – 6,000,000

HONG KONG GOVERNMENT BOND 1.84% 9DEC2024 4,000,000 3,000,000 (1,000,000) 6,000,000


Investment Report


8


Nominal value


HK$ HK$ HK$ HK$


BONDS (CONTINUED)


HONG KONG GOVERNMENT BOND 1.94% 4DEC2023 5,000,000 – – 5,000,000

HONG KONG GOVERNMENT BOND 1.96% 3JUN2024 5,000,000 – – 5,000,000

HONG KONG GOVERNMENT BOND 2.07% 26AUG2026 3,000,000 2,000,000 – 5,000,000

HONG KONG GOVERNMENT BOND 2.24% 27AUG2029 6,000,000 – – 6,000,000

HONG KONG GOVERNMENT BOND 2.31% 21JUN2021 – 2,000,000 – 2,000,000

HONG KONG GOVERNMENT BOND 2.39% 20AUG2025 6,000,000 – – 6,000,000

HONG KONG GOVERNMENT BOND 2.48% 28FEB2029 5,000,000 – – 5,000,000

HONG KONG GOVERNMENT BOND 2.6% 20AUG2024 6,000,000 4,000,000 (500,000) 9,500,000

HONG KONG GOVERNMENT BOND 4.65% 29AUG2022 2,000,000 – (2,000,000) –

HONG KONG GOVERNMENT BOND PROGRAMME

0.91% 5NOV2020 – 2,500,000 – 2,500,000


1.06% 5FEB2020 – 2,000,000 – 2,000,000


1.16% 18MAY2022 – 10,000,000 (2,000,000) 8,000,000


1.68% 21JAN2026 10,000,000 2,000,000 – 12,000,000


2.13% 16JUL2030 16,000,000 – (2,000,000) 14,000,000


2.22% 7AUG2024 5,500,000 4,000,000 (2,500,000) 7,000,000


2.46% 4AUG2021 3,500,000 – (3,500,000) –


2.93% 13JAN2020 1,400,000 – (1,400,000) –

HONG KONG SAR GOVERNMENT BOND 5.125%

23JUL2019 4,000,000 – (4,000,000) –

HONG KONG SCIENCE & TECHNOLOGY PARKS CORP

2.12% 11JUL2019 3,000,000 – – 3,000,000

HONG KONG SCIENCE & TECHNOLOGY PARKS CORP

3.2% 11JUL2024 3,000,000 – – 3,000,000

HONGKONG ELECTRIC FINANCE LTD 1.65% 20SEP2017 2,000,000 – (2,000,000) –

HONGKONG LAND NOTES CO LTD 3.86% 7MAR2022 7,000,000 – – 7,000,000

HONGKONG LAND NOTES CO LTD 3.95% 8JUN2020 5,000,000 – – 5,000,000

HONGKONG LAND NOTES CO LTD 4.1% 28JUL2025 – 1,000,000 – 1,000,000

HONGKONG LAND NOTES CO LTD 4.24% 19MAR2020 1,000,000 – – 1,000,000

HYSAN MTN LTD 5.38% 2SEP2020 2,000,000 – – 2,000,000

IFC DEVELOPMENT CORPORATE TREASURY LTD 3.4%

26MAR2020 3,000,000 – – 3,000,000

KEB HANA BANK 2% 4MAR2018 – 1,000,000 – 1,000,000

KOREA DEVELOPMENT BANK 4.42% 12APR2021 3,000,000 – – 3,000,000

KOREA EXPRESSWAY CORP 4% 2MAR2022 5,000,000 – – 5,000,000

KOREA GAS CORP 2.5% 20JUN2017 4,000,000 – (4,000,000) –

KOREA LAND & HOUSING CORP 2.43% 28SEP2024 – 2,000,000 – 2,000,000

KOREA LAND & HOUSING CORP 4.2% 18JAN2022 5,000,000 – – 5,000,000

KOREA NATIONAL OIL CORP 2.18% 29JAN2020 3,000,000 – – 3,000,000

KOREA NATIONAL OIL CORP 3.95% 10FEB2022 5,000,000 – – 5,000,000

KOREA NATIONAL OIL CORP 4.5% 4MAR2021 6,000,000 – – 6,000,000

KOWLOON-CANTON RAILWAY CORP 3.5% 29APR2019 5,000,000 – (1,000,000) 4,000,000

KOWLOON-CANTON RAILWAY CORP 3.88% 15JUN2021 4,000,000 – (4,000,000) –

KOWLOON-CANTON RAILWAY CORP 4.13%

15MAY2024 500,000 – – 500,000

LINK FINANCE CAYMAN 2009 LTD 2.67% 4JUL2022 1,000,000 – – 1,000,000

LINK FINANCE CAYMAN 2009 LTD 3% 2MAR2026 2,000,000 – – 2,000,000

LINK FINANCE CAYMAN 2009 LTD 3.12% 28MAY2018 3,000,000 – – 3,000,000

LINK FINANCE CAYMAN 2009 LTD 3.14% 18MAY2018 2,000,000 – – 2,000,000


Investment Report


9


Nominal value


HK$ HK$ HK$ HK$


BONDS (CONTINUED)


LINK FINANCE CAYMAN 2009 LTD 3.15% 2FEB2026 2,000,000 – – 2,000,000

LINK FINANCE CAYMAN 2009 LTD 3.2% 6SEP2021 3,000,000 – – 3,000,000

LINK FINANCE CAYMAN 2009 LTD 3.4125% 1APR2017 5,000,000 – (5,000,000) –

LINK FINANCE CAYMAN 2009 LTD 4.1% 24DEC2019 1,500,000 – – 1,500,000

LINK FINANCE CAYMAN 2009 LTD 4.4% 5AUG2019 5,000,000 – – 5,000,000

MACQUARIE BANK LTD 2.06% 12FEB2020 3,000,000 – – 3,000,000

MACQUARIE BANK LTD 3.55% 29AUG2017 4,000,000 – (4,000,000) –

MALAYAN BANKING BHD 2.295% 25MAY2022 – 2,000,000 – 2,000,000

MALAYAN BANKING BHD 3.25% 20JUL2022 5,000,000 – – 5,000,000

MIZUHO BANK LTD 2.65% 22NOV2021 2,000,000 – – 2,000,000

MTR CORP CI LTD 1.68% 15MAR2017 5,000,000 – (5,000,000) –

MTR CORP CI LTD 4.28% 6JUL2020 5,000,000 – – 5,000,000

MTR CORP CI LTD 4.9% 25JUN2018 8,500,000 – (8,500,000) –

NATIONAL AUSTRALIA BANK LTD 3.73% 17MAY2026 5,000,000 – – 5,000,000

NATIONAL GRID NORTH AMERICA INC 2.62%

9JUN2025 – 2,000,000 – 2,000,000

NATIONWIDE BUILDING SOCIETY 1.83% 29JUN2018 – 2,000,000 – 2,000,000

NORDEA BANK AB 1.59% 25JUN2018 1,000,000 – – 1,000,000

OP CORPORATE BANK PLC 2.16% 18SEP2020 – 1,000,000 – 1,000,000

OPTUS FINANCE PTY LTD 3.825% 10JUN2020 2,000,000 – – 2,000,000

ORIX CORP 2.3% 23AUG2022 – 1,500,000 – 1,500,000

OVERSEA-CHINESE BANKING CORP LTD 2.2%

19JAN2017 5,000,000 – (5,000,000) –

PLACES FOR PEOPLE TREASURY PLC 3.25%

30AUG2023 – 2,000,000 – 2,000,000

PSA INTERNATIONAL PTE LTD 3.8% 26MAY2020 5,000,000 – – 5,000,000

QNB FINANCE LTD 2.51% 29APR2019 2,000,000 – – 2,000,000

QNB FINANCE LTD 2.65% 9MAY2019 2,000,000 – – 2,000,000

QNB FINANCE LTD 2.9% 2AUG2023 2,000,000 – – 2,000,000

ROYAL BANK OF CANADA 1.95% 24MAR2019 – 3,000,000 – 3,000,000

SINGTEL GROUP TREASURY PTE LTD 3.32% 4APR2018 2,000,000 – – 2,000,000

SUMITOMO MITSUI BANKING CORP 2.92% 30APR2025 – 2,000,000 – 2,000,000

SUN HUNG KAI PROPERTIES CAPITAL MARKET LTD

2.32% 26JUL2026 2,000,000 – – 2,000,000


2.5% 5SEP2024 – 4,000,000 – 4,000,000


2.59% 15APR2026 1,000,000 – – 1,000,000


2.7% 26JUN2027 – 2,000,000 – 2,000,000


2.95% 8MAY2023 5,000,000 – – 5,000,000


3.25% 5DEC2022 4,000,000 – – 4,000,000


3.25% 5DEC2022 6,000,000 – – 6,000,000

SWIRE PACIFIC MTN FINANCING LTD 2.85% 18JUL2022 1,000,000 – – 1,000,000

SWIRE PACIFIC MTN FINANCING LTD 2.9% 24JAN2023 7,000,000 – – 7,000,000

SWIRE PACIFIC MTN FINANCING LTD 3.15%

15NOV2022 2,000,000 – – 2,000,000

SWIRE PACIFIC MTN FINANCING LTD 3.78% 28FEB2022 6,000,000 – – 6,000,000

SWIRE PACIFIC MTN FINANCING LTD 4.2% 18DEC2018 5,000,000 – – 5,000,000

SWIRE PACIFIC MTN FINANCING LTD 4.236%

24SEP2018 5,000,000 – – 5,000,000

SWIRE PROPERTIES MTN FINANCING LTD 2.35%

23AUG2017 5,000,000 – (5,000,000) –


Investment Report


10


Nominal value


HK$ HK$ HK$ HK$


BONDS (CONTINUED)



5JUL2025 – 2,000,000 – 2,000,000


7JUN2027 – 5,000,000 – 5,000,000


26MAR2025 – 1,000,000 – 1,000,000


31MAY2027 – 2,000,000 – 2,000,000


23JAN2025 – 1,000,000 – 1,000,000

SWIRE PROPERTIES MTN FINANCING LTD 3%

19MAR2025 3,000,000 – – 3,000,000

TOTAL CAPITAL INTERNATIONAL SA 3.088%

14SEP2026 2,000,000 1,000,000 – 3,000,000

UNITED OVERSEAS BANK LTD 2.2% 27MAR2017 5,000,000 – (5,000,000) –

UNITED OVERSEAS BANK LTD 3.19% 26AUG2028 4,000,000 – – 4,000,000

UNITED UTILITIES WATER FINANCE PLC 2.37%

4OCT2027 – 2,000,000 – 2,000,000

VODAFONE GROUP PLC 2.85% 28JUN2027 – 2,000,000 – 2,000,000

WELLS FARGO & CO 3% 5JUN2025 3,000,000 – – 3,000,000

WESTPAC BANKING CORP 2.18% 15JUL2022 2,000,000 – – 2,000,000

WESTPAC BANKING CORP 4.55% 22JAN2020 7,000,000 – – 7,000,000


HONG KONG DOLLAR

AGRICULTURAL BANK OF CHINA LTD/HONG KONG

CD 1.18% 11MAY2018 – 2,000,000 – 2,000,000

BANK OF CHINA LTD/HONG KONG CD 1.85%

25JUN2018 – 500,000 – 500,000


13MAR2018 2,000,000 – – 2,000,000


31MAY2021 3,000,000 – – 3,000,000


CD 1.95% 21MAY2018 5,000,000 – – 5,000,000


CD 2% 17AUG2020 – 3,000,000 – 3,000,000


CD 2.5% 10MAR2020 2,000,000 – – 2,000,000

BANK OF TOKYO-MITSUBISHI UFJ LTD/HONG KONG

CD 2.05% 17MAR2021 – 1,500,000 – 1,500,000

BANK OF TOKYO-MITSUBISHI UFJ LTD/HONG KONG

CD 2.48% 16MAY2022 – 5,000,000 – 5,000,000

CHINA CONSTRUCTION BANK CORP/HONG KONG CD

4.05% 15JAN2020 3,000,000 – – 3,000,000

CHINA DEVELOPMENT BANK CORP/HONG KONG CD

3% 21FEB2019 5,000,000 – – 5,000,000


3% 25JUN2018 3,000,000 – – 3,000,000


3.2% 30SEP2019 3,000,000 – – 3,000,000


3.91% 18MAY2020 1,000,000 – – 1,000,000

CHINA MERCHANTS BANK CO LTD/HONG KONG CD

1.5% 12APR2018 – 3,000,000 – 3,000,000

CHINA MINSHENG BANKING CORP LTD/HONG KONG

CD 1.5% 20APR2018 – 2,000,000 – 2,000,000

DBS BANK HONG KONG LTD CD 3.92% 21JAN2020 5,000,000 – – 5,000,000

DBS BANK HONG KONG LTD CD 3.95% 20JAN2020 2,000,000 – – 2,000,000


Investment Report


11


Nominal value


HK$ HK$ HK$ HK$


CERTIFICATES OF DEPOSIT (CONTINUED)


FIRST ABU DHABI BANK/HONG KONG CD 4.6%

29JAN2021 (formerly known as NATIONAL BANK OF

ABU DHABI PJSC CD 4.6% 29JAN2021) 1,000,000 – – 1,000,000

FUBON BANK HONG KONG LTD CD 1.18% 10AUG2017 3,000,000 – (3,000,000) –

MALAYAN BANKING BHD/HONG KONG CD 2.5%

5JUN2017 3,000,000 – (3,000,000) –

SHANGHAI PUDONG DEVELOPMENT BANK CO

LTD/HONG KONG CD 0% 12DEC2017 – 5,000,000 (5,000,000) –

SUMITOMO MITSUI BANKING CORP/HONG KONG CD

2.7% 21FEB2022 – 2,000,000 – 2,000,000


Investment Report


12

PineBridge Hong Kong Dollar Fixed Income Fund (the “Fund”) is a unit trust governed by its Trust Deed dated

10 August 1998, as amended, supplemented and restated. The Fund is managed in accordance with the distinct

investment policy. There have been no changes to the investment policy during the year.


The Fund is a fixed income fund that seeks to provide investors with a stable source of high recurring income

through a managed portfolio of bonds and other income yielding securities. The Fund's objective is to provide

security of capital as well as a comparatively high level of income by investing in a range of capital and money

market fixed and floating rate instruments, either denominated in Hong Kong dollars or, if they are not

denominated in Hong Kong dollars, the currency exposure shall be hedged back into Hong Kong dollars in order

to ensure that the Fund has an effective exposure of 100 percent to the Hong Kong dollars.

2017 2016 2015

HK$ HK$ HK$




Interest on investments 12,211,630 12,502,861 13,353,016

Net foreign currency losses – – (2)




- realized and unrealized 2,377,058 (11,637,100) 4,767,067

Performance table

Net asset value

Total net Net asset


HK$ HK$


2017 338,059,877 18.41

2016 318,912,728 17.98

2015 340,645,600 18.12


2017 159,165,405 20.83

2016 143,332,288 20.20

2015 172,230,233 20.20


Investment Report


13



Highest

issue price

per unit

HK$

Lowest

redemption price

per unit

HK$

Annualized

investment

return

(Note 1)

%


2017 18.77 17.98 2.39

2016 18.77 17.82 (0.77)

2015 18.20 17.61 2.72

2014 17.78 16.94 3.76

2013 17.73 16.70 (3.52)

2012 17.64 16.98 3.46

2011 17.28 16.17 4.67

2010 16.63 15.88 2.20

2009 16.11 15.44 0.44

2008 15.89 14.69 6.73


2017 21.18 20.19 3.12

2016 21.03 19.91 0.00

2015 20.26 19.49 3.43

2014 19.67 18.63 4.49

2013 19.10 18.01 (2.85)

2012 18.95 18.12 4.30

2011 18.40 17.14 5.34

2010 17.60 16.70 2.93

2009 16.93 16.20 1.15

2008 16.59 15.34 7.18

Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year end against the net asset value per unit at the beginning of the year.

Note 2: The “Standard units” have been renamed to “Standard units - Accumulation” with effect from 27

June 2013.

Note 3: No Standard units - Monthly Distribution were issued by the Fund since the year ended 31 December

2013.



confirmed, to the best of its knowledge and belief, that the investment objectives and policies for the Fund were

complied with.


Trustee’s Report


14




On behalf of


______________________________ ______________________________ Director Director

18 April 2018


TO THE TRUSTEE OF PINEBRIDGE HONG KONG DOLLAR FIXED INCOME FUND

(THE “FUND”)

15


Opinion

We have audited the financial statements of PineBridge Hong Kong Dollar Fixed Income Fund (the “Fund”) set

out on pages 18 to 37, which comprise the statement of net assets as at 31 December 2017, and the statement of comprehensive income, the statement of changes in net assets attributable to unitholders and the statement of

cash flows for the year then ended, and notes to the financial statements, including a summary of significant

accounting policies.





Basis for opinion


to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our responsibilities

under those standards are further described in the Auditor’s responsibilities for the audit of the financial



accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.





Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.







statements


a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control as the

Manager and the Trustee determine is necessary to enable the preparation of financial statements that are free


In preparing the financial statements, the Manager and the Trustee of the Fund are responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and






Provident Fund Schemes (General) Regulation ("the General Regulation"), the Code on MPF Investment Funds ("the MPF Code"), and Guidelines II.5 issued by the Mandatory Provident Fund Schemes Authority ("the






(THE “FUND”) (CONTINUED)

16








































17



the SFC



SFC; and



Certified Public Accountants Hong Kong 18 April 2018




18

2017 2016

Note HK$ HK$

Assets

Current assets

Investments 4(b) 492,077,578 457,844,689


Bank interest receivable 62 –

Amounts receivable on subscription 694,113 3,048,443

Amounts receivable from brokers – 8,373,758

Cash and cash equivalents 1,030,076 106,693

Total assets 498,450,642 473,899,786

Liabilities

Current liabilities



Liabilities (excluding net assets attributable to

unitholders) 1,225,360 11,654,770




Hong Kong Limited

_________________________ _________________________ _________________________






19

2017 2016

Note HK$ HK$

Income



Net gains/(losses) on investments 6 2,377,058 (11,637,100)

Other income – 2,000

Total investment income 14,594,455 872,654

Expenses

Management fee 8(a) 2,404,384 2,538,153

Trustee’s fee 8(b) 236,220 249,002


Audit fee 87,126 88,515





Increase/(decrease) in net assets attributable to

unitholders from operations 11,442,949 (2,494,174)



Statement of Changes in Net Assets Attributable to Unitholders


20

2017 2016

Note HK$ HK$

Net assets attributable to unitholders at 1 January 462,245,016 512,875,833

Issue of units 3 155,637,078 190,288,082


Net increase/(decrease) from unit transactions 23,537,317 (48,136,643)


unitholders from operations 11,442,949 (2,494,174)

Net assets attributable to unitholders at 31 December 497,225,282 462,245,016





21

2017 2016

HK$ HK$


Increase/(decrease) in net assets attributable to unitholders from

operations 11,442,949 (2,494,174)

Adjustment for:



Operating loss before working capital changes (774,448) (15,001,928)

Net (increase)/decrease in investments (34,232,889) 41,913,585

Net decrease/(increase) in amounts receivable from brokers 8,373,758 (8,373,758)

Net (decrease)/increase in accounts payable and accrued

expenses (23,696) 3,669

Cash (used in)/generated from operations (26,657,275) 18,541,568








Net increase/(decrease) in cash and cash equivalents 923,383 (7,847,913)

Cash and cash equivalents at the beginning of the year 106,693 7,954,606

Cash and cash equivalents at the end of the year 1,030,076 106,693


Cash at banks 80,076 106,693

Short-term deposits 950,000 –

1,030,076 106,693





22

1. The Fund

PineBridge Hong Kong Dollar Fixed Income Fund (the “Fund”) is a unit trust governed by its Trust Deed

dated 10 August 1998, as amended, supplemented and restated. The Fund has been authorized by the

Securities and Futures Commission of Hong Kong and approved by the Mandatory Provident Fund

Schemes Authority of Hong Kong.






Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The financial statements have been prepared under the historical cost convention, as






complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed in note 5.


The Fund applied for the first time certain amendments to the standards, which are effective for annual

periods beginning on or after 1 January 2017. The Fund has not early adopted any standards,

interpretations or amendments that have been issued but are not yet effective. The nature and the

impact of each amendment is described below:

Amendments to Hong Kong Accounting Standards (“HKAS”) 7, ‘Statement of Cash Flows: Disclosure

Initiative’, require entities to provide disclosure of changes in their liabilities arising from financing

activities, including both changes arising from cash flows and non-cash changes (such as foreign

exchange gains or losses). The amendments have had no impact on the financial statements of the

Fund.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2017 and have not been early adopted


financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. It




comprehensive income ("OCI") and fair value through profit or loss. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial

asset. Investments in equity instruments are required to be measured at fair value through profit or

loss with the irrevocable option at inception to present changes in fair value in OCI not recycling.

There is now a new expected credit losses model that replaces the incurred loss impairment model

used in HKAS 39. For financial liabilities there were no changes to classification and measurement

except for the recognition of changes in own credit risk in other comprehensive income, for liabilities

designated at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge

effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the

same as the one management actually use for risk management purposes.




23






HKAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018.

Early adoption is permitted. The Fund plans to adopt the new standard on the required effective date.

During 2017, the Fund has performed a high-level impact assessment of all three aspects of HKFRS

9. This preliminary assessment is based on currently available information and may be subject to

changes arising from further detailed analysis or additional reasonable and supportable information

being made available to the Fund in the future. Overall, the Fund expects no significant impact on its statement of net assets.



(b) Investments

All investments are classified as “financial assets at fair value through profit or loss”. These financial assets are classified as held for trading or designated by the Trustee and the Manager at fair value

through profit or loss at inception. Purchases and sales of investments are accounted for on a trade

date basis. Investments are initially recognized at fair value, excluding transaction costs which are

expensed as incurred in the statement of comprehensive income, and are subsequently re-measured at

fair value. Realized and unrealized gains and losses on investments are recognized in the statement of

comprehensive income within “net gains/(losses) on investments” in the period in which they arise.

Investments are derecognized when the rights to receive cash flows from the investments have expired

or the Fund has transferred substantially all risks and rewards of ownership.




from brokers.

(c) Income




The effective interest method is a method of calculating the amortized cost of an interest bearing asset

and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts throughout the expected life of the financial

instrument, or a shorter period where appropriate, to the net carrying amount of the financial

instrument. When calculating the effective interest rate, the Fund estimates cash flows considering all

contractual terms of the financial instrument (for example, prepayment options) but does not consider

future credit losses. The calculation includes all fees and points received between parties to the

contract that are an integral part of the effective interest rate, transaction costs and all other premiums

or discounts.





are presented in Hong Kong dollar, which is the Fund’s functional and presentation currency.




24




Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated

into the functional currency using the exchange rate prevailing at the year end date.





Foreign exchange gains and losses relating to the financial assets and liabilities carried at fair

value through profit or loss are presented in the statement of comprehensive income within “net

gains/(losses) on investments”.

(e) Expenses




changes in net assets attributable to unitholders. The price at which units are subscribed or redeemed

is calculated by reference to the net asset value per unit as at the close of business on the relevant

dealing day.





(h) Amounts receivable from/payable to brokers


for investments purchased that have been contracted for but not yet settled or delivered on the year

end date respectively.







25


The Fund’s capital is represented by the units in the Fund, and shown as “net assets attributable to

unitholders” in the statement of net assets.



unitholders, to limit the total number of units which unitholders are entitled to redeem on any dealing day

to 10% of the units then in issue or deemed to be in issue. Subscriptions and redemptions of units during

the year are shown in the statement of changes in net assets attributable to unitholders. In order to achieve

the investment objectives, the Fund endeavors to invest its capital in accordance with the investment

policies as outlined in note 4, whilst maintaining sufficient liquidity to meet redemption requests. Such

liquidity is augmented by the holding of liquid investments.

Net assets attributable to unitholders represent a liability in the statement of net assets, carried at the

redemption amount that would be payable at the year end date if the unitholders exercised the right to

redeem the units in the Fund.



HK$

2017 - Standard units - Accumulation 18,358,460 18.41







26


2017 2017 2017

Standard

Units

- Monthly

Distribution

Standard

Units

- Accumulation

Provident

Fund Units

Units Units Units

Balance brought forward – 17,734,101 7,096,765

Total issues – 7,196,571 1,082,915

Total redemptions – (6,572,212) (539,856)

Balance carried forward – 18,358,460 7,639,824

2016 2016 2016

Standard

Units

- Monthly

Distribution

Standard

Units

- Accumulation

Provident

Fund Units

Units Units Units

Balance brought forward – 18,802,136 8,526,654

Total issues – 9,160,064 1,030,051

Total redemptions – (10,228,099) (2,459,940)

Balance carried forward – 17,734,101 7,096,765

The Fund offers three classes of units. Provident Fund units are offered to provident fund schemes

approved by the Mandatory Provident Fund Schemes Authority. Standard units - Accumulation are offered

to all investors other than the provident fund schemes approved by the Mandatory Provident Fund Schemes Authority. The standard units have been renamed to “Standard units - Accumulation” with effect

from 27 June 2013. Standard units - Monthly Distribution are offered to all investors other than the

provident fund schemes approved by the Mandatory Provident Fund Schemes Authority with distribution

policy set out in this class. No Standard units - Monthly Distribution were issued by the Fund for the years

ended 31 December 2017 and 2016.



The investment objective of the Fund is to provide investors with a stable source of high recurring

income. The Fund seeks to achieve its investment objective through a managed portfolio of bonds and

other income yielding securities denominated either in Hong Kong dollars, or if they are not

denominated in Hong Kong dollars, the currency exposure shall be hedged back into Hong Kong

dollars in order to ensure that the class has an effective exposure of 100 percent.


risk, liquidity risk and currency risk.


discussed below.




27









2017 2016

Fair value

HK$

Cost

HK$

% of net

assets

Fair value

HK$

Cost

HK$

% of net

assets

Held for

trading:

Bonds 437,411,950 442,317,479 87.97 416,178,897 423,272,633 90.03

Certificates of

deposit 54,665,628 55,078,880 10.99 41,665,792 42,012,210 9.01

492,077,578 497,396,359 98.96 457,844,689 465,284,843 99.04

The investments above are valued with reference to one broker quote.




2017 2016 HK$ equivalent HK$ equivalent Markets exposed to Australia 36,525,421 40,204,306 British Virgin Islands 35,186,182 37,845,439 Canada 5,988,700 2,932,826 Cayman Islands 87,293,662 98,969,478 China 39,931,639 29,381,861 Finland 987,841 – France 6,965,088 1,948,060 Hong Kong 169,074,531 152,647,929 Japan 13,926,909 1,937,760 Malaysia 7,081,775 7,977,320 Netherlands 5,214,895 5,310,425 New Zealand 5,962,490 1,950,390 Singapore 16,073,974 30,762,559 South Korea 34,087,916 32,226,141 Supra-National 3,994,358 1,925,200 Sweden 998,629 993,971 United Arab Emirates 5,033,334 4,950,475 United Kingdom 10,868,690 2,979,642 United States of America 6,881,544 2,900,907

492,077,578 457,844,689




28





2017 2016 % % Sectors exposed to Communications 1 1 Consumer, Non-cyclical 1 1 Diversified 5 6 Energy 4 4 Financial 48 45 Government 29 26 Industrial 3 7 Utilities 9 10 100 100

There were no investments issued by the same issuer with market value exceeding 10% of the Fund’s net asset value as at 31 December 2017 and 2016 except for the following issuers: 2017 2016 % of net assets % of net assets Hong Kong Government 24.97 23.31



assumption that if the index had increased/decreased by the respective percentage with all other

variables held constant and the Fund’s investments moved according to the historical correlation with

the index. 2017 2016

Change in


HK$ Change in


HK$ +/- +/- +/- +/- Markit iBoxx ALBI Hong

Kong TRI (prior to 1 April 2016: HSBC Hong Kong Bond Index) 4.0% 17,434,870 4.0% 16,213,866

The Manager has used their view of what would be a “reasonable shift” in the Markit iBoxx ALBI Hong Kong TRI (prior to 1 April 2016: HSBC Hong Kong Bond Index), having regard to the historical volatility of the index, to estimate the change for use in the market price risk sensitivity analysis above. Disclosures above are shown in absolute terms, changes and impacts could be positive or negative. Changes in market index % are revised annually depending on the Manager’s current view of market volatility and other relevant factors.




29





Interest rate risk arises from the effects of fluctuations in the prevailing levels of market interest rates

on the fair value of interest-bearing assets and liabilities and future cash flow. The Fund holds bonds

and certificates of deposit that expose the Fund to fair value interest rate risk. The Fund also holds

cash and cash equivalents that expose the Fund to cash flow interest rate risk.

The table below summarizes the Fund’s exposure to interest rate risks. It includes the Fund’s assets

and liabilities at fair values, categorized by the earlier of contractual re-pricing or maturity dates. At 31 December 2017

Up to 1 year

1-5 years

Over 5 years

Non-interest

bearing

Total

HK$ HK$ HK$ HK$ HK$

Assets

Investments 39,707,280 230,033,121 222,337,177 – 492,077,578

Other assets – – – 5,342,988 5,342,988

Cash and cash

equivalents 1,030,076 – – – 1,030,076

Total assets 40,737,356 230,033,121 222,337,177 5,342,988 498,450,642

Liabilities


Liabilities

(excluding net

assets attributable

to unitholders) – – – 1,225,360 1,225,360

Total interest

sensitivity gap 40,737,356 230,033,121 222,337,177

At 31 December 2016

Up to 1 year

1-5 years

Over 5 years

Non-interest

bearing

Total

HK$ HK$ HK$ HK$ HK$

Assets

Investments 48,155,354 179,956,145 229,733,190 – 457,844,689

Other assets – – – 15,948,404 15,948,404

Cash and cash

equivalents 106,693 – – – 106,693

Total assets 48,262,047 179,956,145 229,733,190 15,948,404 473,899,786

Liabilities


Liabilities

(excluding net

assets attributable

to unitholders) – – – 11,654,770 11,654,770

Total interest

sensitivity gap 48,262,047 179,956,145 229,733,190

At 31 December 2017, should interest rates have lowered/risen by 25 basis points with all other variables remaining constant, the increase/decrease in net assets attributable to unitholders for the year would amount to approximately HK$5.74 million (2016: HK$5.34 million), arising substantially from the increase/decrease in market values of debt securities.




30





The Fund’s financial assets which are potentially subject to concentration of credit risk consist of cash and cash equivalents and assets held with custodian. The table below summarizes the assets placed with banks and custodian at 31 December 2017 and 2016:

At 31 December 2017

HK$ Credit rating

Source of

credit rating

Custodian

Citibank, N.A. 492,077,578 P-1 Moody’s

Banks

Citibank, N.A. 80,076 P-1 Moody’s

Dah Sing Bank Limited 950,000 P-2 Moody’s

At 31 December 2016

HK$ Credit rating

Source of

credit rating

Custodian


Banks


As the Fund holds debt securities, it is also exposed to risk that the issuers may not be able to repay

the principal amount at maturity and interest. The credit risk is mitigated as the debt securities held are

subject to the requirements of (i) minimum credit rating, and (ii) maximum holding of 10% of net

asset value for any single issuer other than an exempt authority as defined in section 7(1) of Schedule

1 to the Mandatory Provident Fund Schemes (General) Regulation (“Exempt Authority”), and/or (iii)

maximum holding of 30% of net asset value for any single issue that is issued by an Exempt Authority

(or unconditionally guaranteed by an Exempt Authority).




31




Portfolio by rating category of bonds:

Rating 2017 2016

AAA/Aaa – 19%

AA/Aa 49% 37%

A/A 47% 42%

BBB/Baa 3% 1%

NR 1% 1%

Total 100% 100%

Portfolio by rating category of the issuer of certificates of deposit:

Rating 2017 2016

AA/Aaa – 32%

AA/Aa 2% –

A/A 89% 61%

BBB/Baa 5% –

NR 4% 7%

Total 100% 100%











(e) Liquidity risk


redemption request.






32





amounts in the table are the contractual undiscounted cash flows. Balances due within 12 months

equal their carrying balances, as the impact of discounting is not significant.



HK$ HK$ HK$

At 31 December 2017



Net assets attributable to unitholders 497,225,282 – –




HK$ HK$ HK$

At 31 December 2016



Net assets attributable to unitholders 462,245,016 – –






The Fund manages its liquidity risk by investing predominantly in debt securities and money market

instruments that it expects to be able to liquidate within 1 month or less. The following table illustrates

the expected liquidity of assets held:



HK$ HK$ HK$

At 31 December 2017

Total assets 495,096,378 1,863,800 1,490,464



HK$ HK$ HK$

At 31 December 2016

Total assets 470,843,152 1,693,397 1,363,237




33


(f) Currency risk


exchange rates.

The Fund holds monetary assets and liabilities which are mainly denominated in Hong Kong dollar,

the Fund’s functional and presentation currency. The Fund’s own units are also denominated in Hong

Kong dollar and therefore there is no significant exposure to currency risk.










length basis.





HKFRS 13 requires the Fund to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:



Inputs other than quoted prices included within level 1 that are observable for the asset or

liability, either directly or indirectly (Level 2).











updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.




34





At 31 December 2017


Assets HK$ HK$ HK$ HK$

Held for trading:

- Bonds – 437,411,950 – 437,411,950

- Certificates of deposit – 54,665,628 – 54,665,628

Total assets – 492,077,578 – 492,077,578

At 31 December 2016


Assets HK$ HK$ HK$ HK$

Held for trading:

- Bonds – 416,178,897 – 416,178,897

- Certificates of deposit – 41,665,792 – 41,665,792

Total assets – 457,844,689 – 457,844,689

Investments whose values are based on quoted market prices in active markets, and therefore

classified within level 1. As of 31 December 2017 and 2016, the Fund did not hold any investments

classified in level 1.



are classified within level 2. These include bonds and certificates of deposit. As level 2 investments

include positions that are not traded in active markets and/or are subject to transfer restrictions,

valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based

on available market information.









35




assets attributable to unitholders can change significantly on a daily basis as the Fund is subject to daily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective when








5. Critical accounting estimates and assumptions

The Trustee and the Manager make estimates and assumptions concerning the future. The resulting

accounting estimates will, by definition, seldom equal the related actual results. Estimates are continually

evaluated and are based on historical experience and other factors, including expectations of future events

that are believed to be reasonable under the circumstances. The estimates and assumptions that have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the

next financial year are outlined below.

Fair value of investments

The Fund holds a number of unlisted debt securities that are valued by reference to broker quotes. In

determining the fair value of such investments, the Trustee and the Manager exercise judgments and

estimates on the sources of brokers and the quantity and quality of quotes used. Such quotes adopted to fair

value the investments may be indicative and not executable or legally binding. As such, broker quotes do

not necessarily indicate the price at which the security could actually be traded as of 31 December 2017

and 2016. Actual transacted prices may differ from the quotes provided by the brokers. The Trustee and the Manager consider that in the absence of any other reliable market sources, the broker quotes available

to them reflect the best estimate of fair value.

6. Net gains/(losses) on investments

2017 2016

HK$ HK$

Change in unrealized gains/(losses) in value of investments 1,870,004 (13,019,386)

Realized (losses)/gains on sale of investments 507,054 1,382,286

2,377,058 (11,637,100)

7. Taxation

No provision for Hong Kong profits tax has been made as the Fund is authorized as a collective investment

scheme under Section 104 of the Hong Kong Securities and Futures Ordinance and is therefore exempted

from profits tax under Section 26A(1A) of the Hong Kong Inland Revenue Ordinance.




36



Ordinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures

Commission of Hong Kong.

Apart from the fees as disclosed below, the Fund allows the Manager and its associates/connected persons to subscribe for, and redeem, units in the Fund.


(a) Management fee



Standard units - Accumulation & Standard units - Monthly Distribution, being calculated daily and

payable monthly in arrears.


Management fee payable as at year end amounted to HK$215,309 (2016: HK$212,491).

(b) Trustee’s fee



monthly in arrears.



The Custodian and Administrator of the Fund is Citibank N.A., Hong Kong Branch and the Application

and Redemption Agent of the Fund is Citicorp Financial Services Limited (collectively “Citibank”).

Citibank is entitled to receive a custodian fee which comprises safekeeping and transaction fees of 0.025%

per annum of the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a total

permitted maximum of 0.50% per annum. The safekeeping and transaction fee rate of 0.025% per annum

is the maximum rate. Citibank is also entitled to receive an administrator fee of US$1,000 per month.





11. Distributions





37








PINEBRIDGE HONG KONG DOLLAR MONEY MARKET FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Hong Kong Dollar Money Market Fund



Contents

Pages













1

Manager Trustee



Hong Kong Hong Kong






Hong Kong





Central, Hong Kong

Legal Advisers

Deacons


18 Chater Road

Central, Hong Kong


Manager’s Report


2



Investors’ confidence returns in 2017 reflected by a synchronized growth in major economies since global financial crisis. China economy stabilized through favorable macro data, growth has been on track, SOE reform

and financial deleveraging initiatives showing positive progress. The conclusion of the Chinese 19th National

Congress further consolidated Xi’s power to strengthen the implementation of his policies; a shift to quality of

growth will be a long-term benefit for China. Hong Kong will continue to build healthy economic momentum

on the back of China’s stability in growth. Fundamentals remain steady or improving within the region, S&P

upgraded Indonesia to investment grade while Moody’s upgraded India to Baa2. Despite China and Hong

Kong’s downgrade during the year, the action prompt small effects within the market. US leads with other major

economies following on plans of QE tapering, the trajectory to normalize is in place.

In Hong Kong, the abundance of liquidity within the market keeps property prices elevated. Despite the

government’s efforts in stabilizing property prices with housing policy restrictions, property prices continues to

surge in 2017 where the city’s property index is at 165 beating the previous year’s record by 13%. A rebound in

the number of tourists visiting Hong Kong in 2017, retail sales up 3.6% (yoy) per October figures. Hong

Kong’s inflation fluctuated in the 1% to 2% range in 2017 with the latest October figure at 1.5% (yoy). Growth

in Hong Kong expanded 3.6% (yoy) during the third quarter of 2017, government is now expecting its annual

growth forecast at 3.7%.

Investments boasted good results for the year of 2017, Hong Kong equities gained 36% while bonds gained

4.0% over previous year. Bond Connect also launched during July this year at the timing of Hong Kong SAR’s

20th anniversary. At the end of 2017, Hong Kong 10 year government yield is at 1.75% and US 10 year

Treasury at 2.406%, down 4bps and 17bps from previous year end respectively. IPO activities and year-end

funding needs pushed HIBOR rates higher. The 1-month HIBOR ended the year at 1.19% while the 3-month

HIBOR at 1.306%, both are at the highest level in 9 years. HKMA announced two rounds of exchange fund

bills issuance totaling HK$80 billion this year draining excess market liquidity significantly reducing the HKMA Aggregate Closing balanced to HK$179 billion. Given the US raised policy rates 3 times in 2017, the

interest rate differentials caused the HK$ to trade at the weaker end of the band at 7.81. The Hong Kong MPF

Prescribed Savings Rate remained flat at 0.007%.

In terms of performance, our decision to buy highly rated certificate of deposits and time deposits from diverse

banks led us to earn more than the prescribed savings rate.

For our strategy, we seek opportunities in high quality short term paper from various financial institutions that offer attractive spread and diversification.


Investment Report


3


Nominal Market

% of net

value value

assets

HK$ HK$



HONG KONG DOLLAR

AGRICULTURAL BANK OF CHINA LTD/HONG KONG CD 1.18%

11MAY2018 66,000,000 66,000,000 1.36%

BANK OF CHINA LTD/HONG KONG CD 0% 12JAN2018 100,000,000 99,966,950 2.06%

BANK OF CHINA LTD/HONG KONG CD 0% 5JAN2018 100,000,000 99,988,630 2.06%

BANK OF CHINA LTD/HONG KONG CD 2.05% 13MAR2018 8,000,000 8,009,386 0.16%

BANK OF CHINA LTD/MACAU CD 0% 12JAN2018 29,000,000 28,991,953 0.60%

BANK OF CHINA LTD/MACAU CD 1.91% 28SEP2018 70,000,000 70,000,000 1.44%

BANK OF CHINA LTD/SYDNEY CD 0% 29MAY2018 80,000,000 79,555,120 1.64%

CHINA CONSTRUCTION BANK CORP/HONG KONG CD 0% 28MAR2018 60,000,000 59,802,042 1.23%

CHINA DEVELOPMENT BANK CORP/HONG KONG CD 1.1% 14MAY2018 75,000,000 74,972,828 1.54%

CHINA DEVELOPMENT BANK CORP/HONG KONG CD 1.9% 10JAN2018 20,000,000 20,000,954 0.41%

CHINA DEVELOPMENT BANK CORP/HONG KONG CD 1.93% 11JAN2018 6,000,000 6,000,874 0.12%

CHINA MERCHANTS BANK CO LTD/HONG KONG CD 1.5% 12APR2018 119,000,000 119,058,369 2.44%

CHINA MERCHANTS BANK CO LTD/HONG KONG CD 1.5% 20JUL2018 82,500,000 82,539,913 1.70%

DAH SING BANK LTD CD 1.86% 2FEB2018 50,000,000 50,021,225 1.03%

INDUSTRIAL & COMMERCIAL BANK OF CHINA MACAU LTD CD 0%

12FEB2018 70,000,000 69,887,916 1.44%


17APR2018 50,000,000 49,835,205 1.03%


17MAY2018 60,000,000 59,680,074 1.23%


26FEB2018 40,000,000 39,911,596 0.82%


10APR2018 50,000,000 49,978,400 1.03%

INDUSTRIAL & COMMERCIAL BANK OF CHINA MACAU LTD CD

1.11625% 5JAN2018 20,000,000 19,999,796 0.41%

KOOKMIN BANK CD 0% 2MAY2018 156,000,000 155,418,338 3.19%

MITSUBISHI UFJ TRUST & BANKING CORP/HONG KONG CD 0%

19JAN2018 50,000,000 49,976,880 1.03%

SHANGHAI PUDONG DEVELOPMENT BANK CO LTD/HONG KONG CD

0% 14MAY2018 80,000,000 79,630,360 1.64%

SHANGHAI PUDONG DEVELOPMENT BANK CO LTD/HONG KONG CD

0% 16MAY2018 100,000,000 99,503,580 2.05%

SUMITOMO MITSUI TRUST BANK LTD/HONG KONG CD 0% 12JAN2018 30,000,000 29,993,562 0.62%

SUMITOMO MITSUI TRUST BANK LTD/HONG KONG CD 1.5%

18SEP2018 100,000,000 99,929,590 2.06%

TOTAL HONG KONG DOLLAR 1,668,653,541 34.34%

TOTAL INVESTMENTS*

1,668,653,541

34.34%


1,665,139,956



Investment Report


4


Nominal value


HK$ HK$ HK$ HK$


CERTIFICATE OF DEPOSIT

HONG KONG DOLLAR


CD 0% 17FEB2017 80,000,000 – (80,000,000) –


CD 1.05% 19JUL2017 20,000,000 – (20,000,000) –


CD 1.18% 11MAY2018 – 66,000,000 – 66,000,000

BANK OF CHINA LTD/HONG KONG CD 0%

12JAN2018 – 100,000,000 – 100,000,000

BANK OF CHINA LTD/HONG KONG CD 0% 5JAN2018 – 100,000,000 – 100,000,000


3OCT2017 – 19,500,000 (19,500,000) –


24FEB2017 4,000,000 – (4,000,000) –


13MAR2018 – 8,000,000 – 8,000,000


9OCT2017 – 150,000 (150,000) –


6JUN2017 – 100,000 (100,000) –


16MAY2017 – 2,000,000 (2,000,000) –


28APR2017 19,000,000 – (19,000,000) –

BANK OF CHINA LTD/MACAU CD 0% 12JAN2018 – 29,000,000 – 29,000,000

BANK OF CHINA LTD/MACAU CD 0% 17NOV2017 – 5,500,000 (5,500,000) –

BANK OF CHINA LTD/MACAU CD 1.91% 28SEP2018 – 70,000,000 – 70,000,000

BANK OF CHINA LTD/SYDNEY CD 0% 10OCT2017 – 80,000,000 (80,000,000) –

BANK OF CHINA LTD/SYDNEY CD 0% 29MAY2018 – 80,000,000 – 80,000,000

BANK OF CHINA LTD/SYDNEY CD 0% 5APR2017 60,000,000 – (60,000,000) –

BANK OF CHINA LTD/SYDNEY CD 1.1% 28SEP2017 – 31,500,000 (31,500,000) –

BANK OF CHINA LTD/SYDNEY CD 1.18% 26MAY2017 40,000,000 – (40,000,000) –

BANK OF CHINA LTD/SYDNEY CD 1.25% 17MAR2017 4,000,000 – (4,000,000) –

BANK OF CHINA LTD/TOKYO CD 0% 16MAR2017 80,000,000 – (80,000,000) –

CHINA CONSTRUCTION BANK ASIA CORP LTD CD

0.8% 8MAR2017 60,000,000 – (60,000,000) –

CHINA CONSTRUCTION BANK CORP/HONG KONG

CD 0% 28MAR2018 – 60,000,000 – 60,000,000


CD 0.75% 1MAR2017 – 30,000,000 (30,000,000) –


CD 0.8% 15MAY2017 – 25,000,000 (25,000,000) –


CD 2.5% 3JUL2017 – 4,000,000 (4,000,000) –

CHINA DEVELOPMENT BANK CORP/HONG KONG

CD 0% 13MAR2017 100,000,000 – (100,000,000) –


CD 0% 24MAY2017 100,000,000 – (100,000,000) –


CD 0% 9NOV2017 – 100,000,000 (100,000,000) –


CD 1.1% 14MAY2018 – 75,000,000 – 75,000,000


CD 1.2% 12JUL2017 – 20,000,000 (20,000,000) –


CD 1.9% 10JAN2018 – 20,000,000 – 20,000,000


Investment Report


5


Nominal value


HK$ HK$ HK$ HK$


CERTIFICATE OF DEPOSIT (CONTINUED)



CD 1.93% 11JAN2018 – 6,000,000 – 6,000,000


CD 2.1% 23JAN2017 39,000,000 – (39,000,000) –


1.5% 12APR2018 – 119,000,000 – 119,000,000


1.5% 20JUL2018 – 82,500,000 – 82,500,000

COOPERATIEVE RABOBANK UA/HONG KONG CD

0% 12MAY2017 100,000,000 – (100,000,000) –

COOPERATIEVE RABOBANK UA/HONG KONG CD

0% 7JUN2017 83,000,000 – (83,000,000) –

DAH SING BANK LTD CD 1.5% 6JUL2017 15,000,000 – (15,000,000) –

DAH SING BANK LTD CD 1.86% 2FEB2018 – 50,000,000 – 50,000,000

FUBON BANK HONG KONG LTD CD 1.18%

10AUG2017 – 12,000,000 (12,000,000) –

FUBON BANK HONG KONG LTD CD 2.15% 5JUN2017 4,000,000 – (4,000,000) –

INDUSTRIAL & COMMERCIAL BANK OF CHINA

LTD/SYDNEY CD 0% 20MAR2017 100,000,000 – (100,000,000) –


LTD/SYDNEY CD 0% 6JAN2017 100,000,000 – (100,000,000) –


LTD/SYDNEY CD 0.65% 27NOV2017 – 35,000,000 (35,000,000) –


LTD/SYDNEY CD 1.3% 21JUN2017 20,000,000 – (20,000,000) –


MACAU LTD CD 0% 10OCT2017 – 100,000,000 (100,000,000) –


MACAU LTD CD 0% 12FEB2018 – 70,000,000 – 70,000,000


MACAU LTD CD 0% 17APR2018 – 50,000,000 – 50,000,000


MACAU LTD CD 0% 17MAY2018 – 60,000,000 – 60,000,000


MACAU LTD CD 0% 19OCT2017 – 60,000,000 (60,000,000) –


MACAU LTD CD 0% 26FEB2018 – 40,000,000 – 40,000,000


MACAU LTD CD 0% 28APR2017 50,000,000 – (50,000,000) –


MACAU LTD CD 0% 5APR2017 55,000,000 – (55,000,000) –


MACAU LTD CD 1% 10APR2018 – 50,000,000 – 50,000,000


MACAU LTD CD 1.11625% 5JAN2018 – 20,000,000 – 20,000,000


MACAU LTD CD 1.2% 29SEP2017 – 65,000,000 (65,000,000) –

KOOKMIN BANK CD 0% 2MAY2018 – 156,000,000 – 156,000,000

MALAYAN BANKING BHD/HONG KONG CD 1%

1SEP2017 30,000,000 41,500,000 (71,500,000) –

MALAYAN BANKING BHD/HONG KONG CD 2.5%

5JUN2017 – 2,000,000 (2,000,000) –

MITSUBISHI UFJ TRUST & BANKING CORP/HONG

KONG CD 0% 10APR2017 50,000,000 – (50,000,000) –


KONG CD 0% 16JUN2017 – 20,000,000 (20,000,000) –


KONG CD 0% 19JAN2018 – 50,000,000 – 50,000,000


KONG CD 0% 6JAN2017 80,000,000 – (80,000,000) –

NATIONAL BANK OF ABU DHABI PJSC/HONG KONG

CD 0% 17FEB2017 20,000,000 200,000,000 (220,000,000) –


Investment Report


6


Nominal value


HK$ HK$ HK$ HK$


CERTIFICATE OF DEPOSIT (CONTINUED)


NATIONAL BANK OF ABU DHABI PJSC/HONG KONG

CD 0% 27JAN2017 70,000,000 – (70,000,000) –

OCBC WING HANG BANK LTD CD 2.1% 25APR2017 – 2,500,000 (2,500,000) –


LTD/HONG KONG CD 0% 12APR2017 100,000,000 – (100,000,000) –


LTD/HONG KONG CD 0% 12DEC2017 – 80,000,000 (80,000,000) –


LTD/HONG KONG CD 0% 14MAY2018 – 80,000,000 – 80,000,000


LTD/HONG KONG CD 0% 16MAY2018 – 100,000,000 – 100,000,000


LTD/HONG KONG CD 0% 25MAY2017 75,000,000 – (75,000,000) –


LTD/HONG KONG CD 0% 25SEP2017 – 90,000,000 (90,000,000) –


LTD/HONG KONG CD 0% 27APR2017 80,000,000 – (80,000,000) –


LTD/HONG KONG CD 0% 8NOV2017 – 80,000,000 (80,000,000) –


LTD/HONG KONG CD 1.05% 3FEB2017 80,000,000 – (80,000,000) –


LTD/HONG KONG CD 1.2% 22DEC2017 – 50,000,000 (50,000,000) –

SUMITOMO MITSUI BANKING CORP/HONG KONG

CD 1.1% 26JUN2017 13,000,000 – (13,000,000) –

SUMITOMO MITSUI BANKING CORP/HONG KONG

CD 1.2% 6OCT2017 30,000,000 – (30,000,000) –

SUMITOMO MITSUI TRUST BANK LTD/HONG KONG

CD 0% 12JAN2018 – 30,000,000 – 30,000,000

SUMITOMO MITSUI TRUST BANK LTD/HONG KONG

CD 1.5% 18SEP2018 – 100,000,000 – 100,000,000


Investment Report


7

PineBridge Hong Kong Dollar Money Market Fund (the “Fund”) is a unit trust governed by its Trust Deed dated

10 August 1998, as amended, supplemented and restated. The Fund is managed in accordance with the distinct

investment policy. There have been no changes to the investment policy during the year.


The Fund seeks to preserve principal value and maintain a high degree of liquidity while providing current

income by investing in short-term, high quality Hong Kong dollar denominated instruments in Hong Kong.

2017 2016 2015

HK$ HK$ HK$



Interest on bank deposits 30,510,860 18,174,027 12,546,884

Interest on investments (net of withholding

tax) 17,944,169 12,379,628 14,745,603

Net income excluding capital appreciation 46,062,414 28,087,221 23,697,165

Performance table

Net asset value

Total net Net asset


HK$ HK$


2017 563,438,430 13.81

2016 493,757,399 13.71

2015 412,912,050 13.65


2017 4,295,624,538 14.55

2016 3,735,242,945 14.40

2015 3,272,930,626 14.30


Investment Report


8



Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year

end against the net asset value per unit at the beginning of the year.

Note 2: The “Standard units” have been renamed to “Standard units - Accumulation” with effect from 27 June 2013.

Note 3: Issue prices and redemption prices of the Fund are rounded downward to the nearest cent.



confirmed, to the best of its knowledge and belief, that the investment objectives and policies for the Fund were complied with.

Highest

issue price

per unit

(Note 3)

HK$

Lowest

redemption price

per unit

(Note 3)

HK$

Annualized

investment

return

(Note 1)

%


2017 13.80 13.70 0.73

2016 13.70 13.64 0.44

2015 13.64 13.59 0.44

2014 13.65 13.55 0.22

2013 13.55 13.50 0.44

2012 13.50 13.40 0.75

2011 13.39 13.34 0.37

2010 13.34 13.33 0.07

2009 13.34 13.30 0.32

2008 13.30 13.00 2.27


2017 14.55 14.40 1.04

2016 14.40 14.29 0.70

2015 14.29 14.19 0.78

2014 14.19 14.04 1.07

2013 14.03 13.93 0.72

2012 13.93 13.78 1.02

2011 13.78 13.68 0.73

2010 13.68 13.64 0.37

2009 13.64 13.56 0.61

2008 13.56 13.23 2.50


Trustee’s Report


9




On behalf of


______________________________ ______________________________

Director Director

18 April 2018


TO THE TRUSTEE OF PINEBRIDGE HONG KONG DOLLAR MONEY MARKET FUND


10


Opinion

We have audited the financial statements of PineBridge Hong Kong Dollar Money Market Fund (the “Fund”)

set out on pages 13 to 29, which comprise the statement of net assets as at 31 December 2017, and the statement of comprehensive income, the statement of changes in net assets attributable to unitholders and the statement of







Basis for opinion



under those standards are further described in the Auditor’s responsibilities for the audit of the financial



accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.





Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.







statements



Manager and the Trustee determine is necessary to enable the preparation of financial statements that are free


In preparing the financial statements, the Manager and the Trustee of the Fund are responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and






Provident Fund Schemes (General) Regulation ("the General Regulation"), the Code on MPF Investment Funds ("the MPF Code"), and Guidelines II.5 issued by the Mandatory Provident Fund Schemes Authority ("the







11








































12



the SFC



SFC; and


are necessary for the purpose of our audit Certified Public Accountants Hong Kong 18 April 2018




13

2017 2016

Note HK$ HK$

Assets

Current assets

Investments 4(b) 1,668,653,541 1,757,631,345


Bank interest receivable 7,689,191 5,049,097

Other bank deposits 2,192,000,000 1,602,000,000


Total assets 4,867,601,307 4,250,149,507

Liabilities

Current liabilities


Amounts payable to brokers – 14,985,248


Total liabilities (excluding net assets attributable to

unitholders) 8,538,339 21,149,163


On behalf of On behalf of AIA Company (Trustee) Limited PineBridge Investments

Hong Kong Limited

_________________________ _________________________ _________________________






14

2017 2016

Note HK$ HK$

Income

Interest on bank deposits 30,510,860 18,174,027



Expenses

Management fee 6(a) 1,324,902 1,157,994

Trustee’s fee 6(b) 264,981 231,598


Audit fee 120,358 119,612





Taxation

Withholding tax (13) –

Increase in net assets attributable to unitholders

from operations 46,062,414 28,087,221





15

2017 2016

Note HK$ HK$

Net assets attributable to unitholders at 1 January 4,229,000,344 3,685,842,676

Issue of units 3 1,216,731,885 1,162,049,415



Increase in net assets attributable to unitholders from

operations 46,062,414 28,087,221

Net assets attributable to unitholders at 31 December 4,859,062,968 4,229,000,344





16

2017 2016

HK$ HK$


Increase in net assets attributable to unitholders from operations 46,062,414 28,087,221

Adjustment for:


Interest on bank deposits (30,510,860) (18,174,027)

Withholding tax 13 –

Operating loss before working capital changes (2,392,615) (2,466,434)

Net decrease in investments 88,977,804 45,318,955

Net increase in other bank deposits (590,000,000) (479,416,822)

Net (decrease)/increase in amounts payable to brokers (14,985,248) 14,985,248




Interest on bank deposits received 27,870,766 14,867,669



Proceeds from issue of units 1,216,731,885 1,162,049,415



Net increase in cash and cash equivalents 111,775,005 126,520,664




Cash at banks 4,414,382 1,039,377


995,114,382 883,339,377





17

1. The Fund

PineBridge Hong Kong Dollar Money Market Fund (the “Fund”) is a unit trust governed by its Trust Deed

dated 10 August 1998, as amended, supplemented and restated. The Fund has been authorized by the

Securities and Futures Commission of Hong Kong and approved by the Mandatory Provident Fund Schemes

Authority of Hong Kong.






Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”). The financial statements have been prepared under the historical cost convention, as modified by the

revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair

value through profit or loss.

The preparation of financial statements in conformity with HKFRS requires the Trustee and Manager to

make judgments, estimates and assumptions that affect the application of policies and the reported

amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are

based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of


these estimates.



periods beginning on or after 1 January 2017. The Fund has not early adopted any standards, interpretations or amendments that have been issued but are not yet effective. The nature and the





exchange gains or losses). The amendments have had no impact on the financial statements of the Fund.

New standards, amendments and interpretations issued but not effective for the financial year beginning

1 January 2017 and have not been early adopted





primary measurement categories for financial assets: amortized cost, fair value through other comprehensive income ("OCI") and fair value through profit or loss. The basis of classification depends

on the entity's business model and the contractual cash flow characteristics of the financial asset.


the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a

new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39.



fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item

and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use

for risk management purposes.




18



New standards, amendments and interpretations issued but not effective for the financial year beginning

1 January 2017 and have not been early adopted (Continued)

Contemporaneous documentation is still required but is different to that currently prepared under HKAS 39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early





available to the Fund in the future. Overall, the Fund expects no significant impact on its statement of

net assets.



(b) Investments

All investments are classified as “financial assets at fair value through profit or loss”. These financial

assets are classified as held for trading or designated by the Trustee and the Manager at fair value

through profit or loss at inception. Purchases and sales of investments are accounted for on a trade date basis. Investments are initially recognized at fair value, excluding transaction costs which are expensed









from brokers.

(c) Income




The effective interest method is a method of calculating the amortized cost of an interest bearing asset

and of allocating the interest income over the relevant period. The effective interest rate is the rate that

exactly discounts estimated future cash receipts throughout the expected life of the financial instrument,

or a shorter period where appropriate, to the net carrying amount of the financial instrument. When calculating the effective interest rate, the Fund estimates cash flows considering all contractual terms of

the financial instrument (for example, prepayment options) but does not consider future credit losses.

The calculation includes all fees and points received between parties to the contract that are an integral

part of the effective interest rate, transaction costs and all other premiums or discounts.




19




Items included in the Fund’s financial statements are measured using the currency of the primary economic environment in which it operates (the “functional currency”). The financial statements





the functional currency using the exchange rate prevailing at the year end date.



Foreign exchange gains and losses relating to cash and cash equivalents are presented in the statement of comprehensive income within “net foreign currency gains/(losses)”.




(e) Expenses



Proceeds and payments on the subscription and redemption of units recorded in the statement of



day.

(g) Cash and cash equivalents



(h) Other bank deposits

Other bank deposits include deposits held with banks with original maturities of more than three

months.




20





conditions and procedures set out therein, the Manager is entitled, having regard to the interests of unitholders, to limit the total number of units which unitholders are entitled to redeem on any dealing day to


year are shown in the statement of changes in net assets attributable to unitholders. In order to achieve the

investment objectives, the Fund endeavors to invest its capital in accordance with the investment policies as

outlined in note 4, whilst maintaining sufficient liquidity to meet redemption requests. Such liquidity is

augmented by the holding of liquid investments.

Net assets attributable to unitholders represent a liability in the statement of net assets, carried at the redemption amount that would be payable at the year end date if the unitholders exercised the right to




HK$





2017

Standard

Units

- Accumulation

2017

Provident

Fund Units

2016

Standard

Units

- Accumulation

2016

Provident

Fund Units


Balance brought forward 36,020,225 259,377,952 30,252,732 228,951,857

Total issues 31,794,607 53,846,819 28,305,605 54,047,601

Total redemptions (27,015,210) (18,024,340) (22,538,112) (23,621,506)

Balance carried forward 40,799,622 295,200,431 36,020,225 259,377,952




Authority. The standard units have been renamed to “Standard units - Accumulation” with effect from 27

June 2013.



The investment objective of the Fund is to preserve principal value and maintain a high degree of liquidity while providing current income by investing in short-term, high quality Hong Kong dollar

denominated instruments in Hong Kong.




21


(a) Financial risk factors (Continued)


risk and liquidity risk.


discussed below.








2017 2016

Fair value

HK$

Cost

HK$

% of net

assets

Fair value

HK$

Cost

HK$

% of net

assets Certificates of

deposit 1,668,653,541 1,665,139,956 34.34 1,757,631,345 1,754,492,249 41.56


The following table shows the net market exposure of the Fund to various markets, incorporating the underlying market risk through all financial assets and liabilities held by the Fund as at 31 December.

2017 2016 HK$ equivalent HK$ equivalent Markets exposed to

China 994,020,959 1,183,631,890

Hong Kong 50,021,225 98,895,895

Japan 179,900,032 172,874,056

Macao 289,292,987 –

Malaysia – 29,945,943

Netherlands – 182,355,474

South Korea 155,418,338 –

United Arab Emirates – 89,928,087

Total 1,668,653,541 1,757,631,345


2017 2016 % %

Sectors exposed to

Financial 100 100



The Fund mainly invests in certificates of deposit with maturity of less than 12 months. The price sensitivity of the investments would mainly be driven by interest rate movements. For details of fair value interest rate risk sensitivity analysis, please refer to note 4(c).




22





Interest rate risk arises from the effects of fluctuations in the prevailing levels of market interest rates on

the fair value of interest-bearing assets and liabilities and future cash flow. The Fund holds interest-

bearing investments that expose the Fund to fair value interest rate risk. The Fund also holds cash and

cash equivalents that expose the Fund to cash flow interest rate risk.

The table below summarizes the Fund’s exposure to interest rate risks. It includes the Fund’s assets and liabilities at fair values, categorized by the earlier of contractual re-pricing or maturity dates.

At 31 December 2017

Less than 3

months 3-6 months

Over 6

months

Non-interest

bearing Total

HK$ HK$ HK$ HK$ HK$

Assets

Investments 582,551,764 833,632,274 252,469,503 – 1,668,653,541

Other assets – – – 11,833,384 11,833,384

Other bank

deposits 1,946,000,000 158,000,000 88,000,000 – 2,192,000,000

Cash and cash

equivalents 995,114,382 – – – 995,114,382

Total assets 3,523,666,146 991,632,274 340,469,503 11,833,384 4,867,601,307

Liabilities


Liabilities

(excluding net

assets

attributable to

unitholders) – – – 8,538,339 8,538,339

Total interest

sensitivity gap 3,523,666,146 991,632,274 340,469,503

At 31 December 2016

Less than 3

months 3-6 months

Over 6

months

Non-interest

bearing Total

HK$ HK$ HK$ HK$ HK$

Assets

Investments 816,193,096 846,578,471 94,859,778 – 1,757,631,345

Other assets – – – 7,178,785 7,178,785

Other bank

deposits 1,285,000,000 297,000,000 20,000,000 – 1,602,000,000

Cash and cash

equivalents 883,339,377 – – – 883,339,377

Total assets 2,984,532,473 1,143,578,471 114,859,778 7,178,785 4,250,149,507

Liabilities


Liabilities

(excluding net

assets

attributable to

unitholders) – – – 21,149,163 21,149,163

Total interest

sensitivity gap 2,984,532,473 1,143,578,471 114,859,778




23



At 31 December 2017, should interest rates have lowered/risen by 25 basis points with all other variables remaining constant, the increase/decrease in net assets attributable to unitholders for the year would amount to approximately HK$1,162,274 (2016: HK$1,140,588), arising substantially from the increase/decrease in market values of debt securities.

In accordance with the internal monitoring process, the Manager monitors the Fund’s overall interest

sensitivity on a daily basis by monitoring the days to maturity of the portfolio, as days to maturity

increase, interest rate risk increases, and vice versa with shorter days to maturity.




The Fund’s financial assets which are potentially subject to concentrations of credit risk consist of cash and cash equivalents and assets held with custodian. The table below summarizes the assets placed with banks and custodian at 31 December 2017 and 2016.

At 31 December 2017

HK$ Credit rating

Source of

credit rating

Custodian

Citibank N.A. 1,668,653,541 P-1 Moody's

Banks

Citibank N.A. 4,414,382 P-1 Moody's

Agriculture Bank of China Limited, HK 313,000,000 P-1 Moody's

Bangkok Bank Public Company Limited 110,000,000 P-2 Moody's

Bank Of Communications Company Limited 380,000,000 P-2 Moody's

CIMB Bank Berhad 383,000,000 P-2 Moody's


Fubon Bank (Hong Kong) Limited 356,000,000 P-2 Moody's

Malayan Banking Berhad 387,000,000 P-2 Moody's

OCBC Wing Hang Bank Limited 336,000,000 P-1 Moody's

The Bank of East Asia Limited 386,000,000 P-2 Moody's

Wing Lung Bank Limited 388,000,000 P-2 Moody's




24



At 31 December 2016

HK$ Credit rating

Source of

credit rating

Custodian


Banks

Agriculture Bank of China Limited, HK 236,000,000 P-1 Moody's

Bangkok Bank Public Company Limited 227,000,000 P-2 Moody's

Bank Of China (Hong Kong) Limited 50,000,000 P-1 Moody's

Bank Of Communications Company Limited 30,000,000 P-1 Moody's

China Construction Bank Corporation 274,000,000 P-1 Moody's

CIMB Bank Berhad 329,000,000 P-2 Moody's



Fubon Bank (Hong Kong) Limited 328,000,000 P-2 Moody's

Malayan Banking Berhad 40,000,000 P-2 Moody's

OCBC Wing Hang Bank Limited 60,000,000 P-1 Moody's

Shanghai Commercial Bank 25,000,000 A-2 S&P

The Bank of East Asia Limited 262,000,000 P-2 Moody's

Wing Lung Bank Limited 335,000,000 P-2 Moody's

As the Fund holds debt securities and money market instruments, it is also exposed to risk that the

issuers may not be able to repay the principal amount at maturity and interest. The credit risk is

mitigated as the debt securities and money market instruments held are subject to the requirements of (i)

minimum credit rating, and (ii) maximum holding of 10% of net asset value for any single issuer other

than an exempt authority as defined in section 7(1) of Schedule 1 to the Mandatory Provident Fund

Schemes (General) Regulation (“Exempt Authority”), and/or (iii) maximum holding of 30% of net asset

value for any single issue that is issued by an Exempt Authority (or unconditionally guaranteed by an

Exempt Authority).


Portfolio by rating category of certificates of deposit:

Rating 2017 2016

A-1/P-1/F1 57% 51%

A-2/P-2/F2 26% 1%

NR 17% 48%

Total 100% 100%

The maximum exposure to credit risk at year end is the carrying amount of the financial assets as shown on the statement of net assets.





25










(e) Liquidity risk


redemption request.

The Fund is exposed to daily cash redemptions of units in the Fund. The Fund invests the majority of its

assets in investments that are traded in an active market and can be readily disposed of.

The table below analyzes the Fund’s non-derivative financial liabilities into relevant maturity groupings

based on the remaining period at the year end date to the contractual maturity date. The amounts in the

table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying

balances, as the impact of discounting is not significant.

Less than 1-3 Over

1 month months 3 months

HK$ HK$ HK$

At 31 December 2017



Net assets attributable to unitholders 4,859,062,968 – –

Total financial liabilities 4,867,195,214 – 406,093

Less than 1-3 Over

1 month months 3 months

HK$ HK$ HK$

At 31 December 2016


Amounts payable to brokers 14,985,248 – –




Units are redeemed on demand at the unitholder’s option. However, the Manager does not envisage that

the contractual maturity disclosed in the table above will be representative of the actual cash outflows,

as the unitholders typically retain the units for the medium to long term. At 31 December 2017 and

2016, no ultimate individual investor held more than 10% of the Fund’s units.




26



The Fund manages its liquidity risk by investing predominantly in investments that it expects to be able

to liquidate within 1 month or less. The following table illustrates the expected liquidity of assets held

by the Fund:



HK$ HK$ HK$

At 31 December 2017

Total assets 2,862,894,771 1,755,576,744 249,129,792


1 month months months HK$ HK$ HK$

At 31 December 2016

Total assets 2,868,805,609 1,063,033,005 318,310,893

(f) Currency risk


exchange rates.

The Fund holds monetary assets and liabilities which are mainly denominated in Hong Kong dollars, the Fund’s functional and presentation currency. The Fund’s own units are also denominated in Hong Kong dollars and therefore there is no significant exposure to currency risk.









agency, and those prices represent actual and regularly occurring market transactions on an arm’s length

basis.



by discounting the future contractual cash flows at the current market interest rate that is available to the

Fund for similar financial instruments.




27




















The following table analyzes within the fair value hierarchy the Fund’s investments (by class) measured

at fair value at 31 December 2017 and 2016:

At 31 December 2017


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Certificates of deposit – 1,668,653,541 – 1,668,653,541

Total assets – 1,668,653,541 – 1,668,653,541

At 31 December 2016


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Certificates of deposit – 1,757,631,345 – 1,757,631,345

Total assets – 1,757,631,345 – 1,757,631,345




28




within level 1. As of 31 December 2017 and 2016, the Fund did not hold any investments classified in

level 1.


quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are

classified within level 2. These include certificates of deposit. As level 2 investments include positions

that are not traded in active markets and/or are subject to transfer restrictions, valuations may be

adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market

information.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. As of 31 December 2017 and 2016, the Fund did not hold any investments classified in level 3.


Assets and liabilities included in the statement of net assets, except for investments and derivative financial instruments, are carried at amortized cost; their carrying values are a reasonable approximation of fair value.






unitholders and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Fund.





5. Taxation

No provision for Hong Kong profits tax has been made as the Fund is authorized as a collective investment scheme under Section 104 of the Hong Kong Securities and Futures Ordinance and is therefore exempted

from profits tax under Section 26A(1A) of the Hong Kong Inland Revenue Ordinance.


Associates and connected persons are those as defined in the Mandatory Provident Fund Schemes Ordinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission of Hong

Kong.

Apart from the fees as disclosed below, the Fund allows the Manager and its associates/connected persons to

subscribe for, and redeem, units in the Fund.





29

6. Transactions with Associates/Connected Persons/Related Parties (Continued)

(a) Management fee


0.25% per annum, with a permitted maximum of 1% per annum, of the net asset value of the Standard

units - Accumulation, being calculated daily and payable monthly in arrears.



(b) Trustee’s fee


maximum of 0.05% per annum of the net asset value of the Standard units - Accumulation, being

calculated daily and payable monthly in arrears.

No trustee’s fee is charged on the Provident Fund units.



The Custodian and Administrator of the Fund is Citibank N.A., Hong Kong Branch and the Application

and Redemption Agent of the Fund is Citicorp Financial Services Limited (collectively “Citibank”).

Citibank is entitled to receive a custodian fee which comprises safekeeping and transaction fees of 0.025%

per annum of the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a total

permitted maximum of 0.50% per annum. The safekeeping and transaction fee rate of 0.025% per annum is

the maximum rate. No administrator’s fee is charged on the Fund.





9. Distributions









PINEBRIDGE HONG KONG EQUITY FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Hong Kong Equity Fund



Contents

Pages













1

Manager Trustee



Hong Kong Hong Kong






Hong Kong





Central, Hong Kong

Legal Advisers

Deacons


18 Chater Road

Central, Hong Kong


Manager’s Report


2


2017 Market overview

Hong Kong equity market rallied strongly in the year of 2017, driven by:- 1) the appreciation of RMB which

alleviated market concern on capital outflow; 2) better-than-expected macro-economic data from China; 3)

positive earnings revision from corporates; 4) strong property sales numbers in both Hong Kong and mainland China; 5) strong liquidity which included inflow to emerging markets and the southbound; 6) less concern on

China’s debt default and hard landing. In terms of sector performance, information technology, consumer

discretionary, healthcare, and real estate were the best performing sectors, driven by structural growth trend,

improving consumption power, and strong revenue growth. Defensive sectors such as telecommunication

service, utilities underperformed on relative basis despite the positive absolute return.


China’s macro-economic data continues to be largely solid and strong, with latest manufacturing PMIs

confirming constructive external demand conditions, domestic consumption remaining strong, and GDP growth

estimations being revised up. Hong Kong’s economy also continued to be supported by recovering retail sales

and buoyant trade activities. Having said that, given the much higher valuation multiples of equities now vs. a

year ago, we believe market in 2018 will mainly be driven by earnings growth rather than multiple expansion.

With this backdrop, the fund will be primarily focused on industries with strong earnings support and are trading

at reasonable or attractive valuations.


Investment Report


3


Holding Market

% of net

shares value

assets

HK$

LISTED EQUITIES

HONG KONG

AAC TECHNOLOGIES HOLDINGS INC 467,500 65,169,500

0.67%

AGRICULTURAL BANK OF CHINA LTD 14,104,000 51,338,560

0.53%

AIA GROUP LTD 8,502,000 566,658,300

5.86%

ANGANG STEEL CO LTD 1,266,000 9,051,900

0.09%

ANHUI CONCH CEMENT CO LTD 4,606,000 169,270,500

1.75%

ASM PACIFIC TECHNOLOGY LTD 1,137,500 123,873,750

1.28%

BAIC MOTOR CORP LTD 4,720,000 48,049,600

0.50%

BANK OF CHINA LTD 53,598,000 205,816,320

2.13%

BOC HONG KONG HOLDINGS LTD 5,410,500 214,255,800

2.21%

BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD 1,772,000 37,034,800

0.38%

BYD CO LTD 422,500 28,772,250

0.30%

CHINA COMMUNICATIONS CONSTRUCTION CO LTD 10,041,000 89,164,080

0.92%

CHINA CONSTRUCTION BANK CORP 63,631,500 458,146,800

4.73%

CHINA GALAXY SECURITIES CO LTD 11,760,500 67,740,480

0.70%

CHINA LIFE INSURANCE CO LTD 8,981,000 220,483,550

2.28%

CHINA LITERATURE LTD 733,068 61,101,218

0.63%

CHINA LONGYUAN POWER GROUP CORP LTD 11,201,000 62,277,560

0.64%

CHINA MENGNIU DAIRY CO LTD 1,799,000 41,826,750

0.43%

CHINA MERCHANTS BANK CO LTD 2,855,500 88,806,050

0.92%

CHINA MERCHANTS PORT HOLDINGS CO LTD (formerly

known as CHINA MERCHANTS HOLDINGS

INTERNATIONAL CO LTD) 835,695 17,089,963

0.18%

CHINA MOBILE LTD 3,479,000 275,710,750

2.85%

CHINA OVERSEAS LAND & INVESTMENT LTD 5,238,000 131,735,700

1.36%

CHINA PACIFIC INSURANCE GROUP CO LTD 463,400 17,400,670

0.18%

CHINA PETROLEUM & CHEMICAL CORP 24,684,000 141,439,320

1.46%

CHINA RESOURCES GAS GROUP LTD 664,000 18,824,400

0.19%

CHINA RESOURCES LAND LTD 5,268,000 121,164,000

1.25%

CHINA SHENHUA ENERGY CO LTD 4,327,000 87,621,750

0.91%


HOLDINGS LTD 4,282,000 46,845,080

0.48%

CHINA TELECOM CORP LTD 9,552,000 35,533,440

0.37%

CHINA UNICOM HONG KONG LTD 9,124,000 96,349,440

1.00%

CHINA VANKE CO LTD 3,084,600 96,239,520

0.99%

CK ASSET HOLDINGS LTD (formerly known as CHEUNG KONG

PROPERTY HOLDINGS LTD) 3,102,361 211,891,256 2.19%

CK HUTCHISON HOLDINGS LTD 1,729,361 169,650,314

1.75%

CK INFRASTRUCTURE HOLDINGS LTD 385,500 25,886,325

0.27%

CNOOC LTD 9,580,000 107,487,600

1.11%

COUNTRY GARDEN HOLDINGS CO LTD 2,764,000 41,183,600

0.43%

CSPC PHARMACEUTICAL GROUP LTD 10,194,000 160,861,320

1.66%

FOSUN INTERNATIONAL LTD 4,300,500 74,484,660

0.77%

GALAXY ENTERTAINMENT GROUP LTD 3,483,000 218,384,100

2.26%

GEELY AUTOMOBILE HOLDINGS LTD 2,192,000 59,403,200

0.61%

GREAT EAGLE HOLDINGS LTD 408,000 16,707,600

0.17%

GUANGDONG INVESTMENT LTD 3,744,000 39,162,240

0.40%

GUANGZHOU AUTOMOBILE GROUP CO LTD 3,988,000 73,857,760

0.76%

GUANGZHOU R&F PROPERTIES CO LTD 524,000 9,232,880

0.10%

GUOTAI JUNAN INTERNATIONAL HOLDINGS LTD 14,238,000 34,883,100

0.36%

HAITONG SECURITIES CO LTD 3,052,800 34,618,752

0.36%

HANERGY THIN FILM POWER GROUP LTD 5,510,000 –

0.00%

HANG SENG BANK LTD 418,400 81,169,600

0.84%

HENDERSON LAND DEVELOPMENT CO LTD 352,000 18,128,000

0.19%

HENGAN INTERNATIONAL GROUP CO LTD 491,000 42,594,250

0.44%


Investment Report


4


Holding Market

% of net

shares value

assets

HK$



HONG KONG EXCHANGES AND CLEARING LTD 785,064 188,258,347

1.95%

HSBC HOLDINGS PLC 11,112,221 888,422,069

9.17%

HUANENG POWER INTERNATIONAL INC 16,450,000 80,605,000

0.83%

INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD 68,439,545 430,484,738

4.45%

JOHNSON ELECTRIC HOLDINGS LTD 1,053,000 34,485,750

0.36%

KINGSOFT CORP LTD 2,223,000 57,798,000

0.60%

LEE & MAN PAPER MANUFACTURING LTD 3,119,000 28,819,560

0.30%

LENOVO GROUP LTD 4,970,000 21,917,700

0.23%

LI & FUNG LTD 2,874,000 12,329,460

0.13%

LINK REIT 1,052,000 76,217,400

0.79%

LONGFOR PROPERTIES CO LTD 850,000 16,643,000

0.17%

LUK FOOK HOLDINGS INTERNATIONAL LTD 2,827,000 94,845,850

0.98%

PACIFIC BASIN SHIPPING LTD 10,596,000 17,907,240

0.19%

PETROCHINA CO LTD 17,394,000 94,797,300

0.98%

PING AN INSURANCE GROUP CO OF CHINA LTD 4,796,500 390,195,275

4.03%

SANDS CHINA LTD 3,193,200 128,845,620

1.33%

SHENZHEN EXPRESSWAY CO LTD 8,966,000 71,100,380

0.73%

SHENZHOU INTERNATIONAL GROUP HOLDINGS LTD 330,000 24,552,000

0.25%

SINO BIOPHARMACEUTICAL LTD 2,382,000 33,014,520

0.34%

SINOPHARM GROUP CO LTD 727,600 24,592,880

0.25%

SUN HUNG KAI PROPERTIES LTD 1,336,000 174,214,400

1.80%

SUNNY OPTICAL TECHNOLOGY GROUP CO LTD 595,000 59,440,500

0.61%

SWIRE PROPERTIES LTD 1,937,200 48,817,440

0.50%

TENCENT HOLDINGS LTD 2,180,400 885,242,400

9.15%

TINGYI CAYMAN ISLANDS HOLDING CORP 1,258,000 19,121,600

0.20%

UNI-PRESIDENT CHINA HOLDINGS LTD 12,329,000 80,631,660

0.83%

UNITED CO RUSAL PLC 1,698,000 9,305,040

0.10%

WANT WANT CHINA HOLDINGS LTD 4,073,000 26,678,150

0.28%

WH GROUP LTD 8,195,000 72,279,900

0.75%

WHARF HOLDINGS LTD 1,934,000 52,218,000

0.54%

WHARF REAL ESTATE INVESTMENT CO LTD 1,356,000 70,512,000

0.73%

WUXI BIOLOGICS CAYMAN INC 340,500 14,879,850

0.15%

YANGTZE OPTICAL FIBRE AND CABLE JOINT STOCK LTD

CO 528,000 18,955,200

0.20%

YUE YUEN INDUSTRIAL HOLDINGS LTD 597,000 18,327,900

0.19%

ZHUZHOU CRRC TIMES ELECTRIC CO LTD 3,611,800 183,660,030

1.90%

TOTAL INVESTMENTS*

9,564,494,517

98.83%


7,408,757,690



Investment Report


5


Holdings



LISTED EQUITIES

HONG KONG

AAC TECHNOLOGIES HOLDINGS INC – 467,500 – 467,500

AGRICULTURAL BANK OF CHINA LTD – 14,104,000 – 14,104,000

AIA GROUP LTD 7,944,600 869,200 (311,800) 8,502,000

ANGANG STEEL CO LTD – 1,266,000 – 1,266,000

ANHUI CONCH CEMENT CO LTD 9,283,000 – (4,677,000) 4,606,000

ASM PACIFIC TECHNOLOGY LTD 147,900 1,138,500 (148,900) 1,137,500

AVICHINA INDUSTRY & TECHNOLOGY CO LTD 14,211,000 – (14,211,000) –

BAIC MOTOR CORP LTD – 4,720,000 – 4,720,000

BANK OF CHINA LTD 61,528,000 4,602,000 (12,532,000) 53,598,000

BOC HONG KONG HOLDINGS LTD 4,059,500 1,351,000 – 5,410,500

BRILLIANCE CHINA AUTOMOTIVE HOLDINGS LTD – 1,772,000 – 1,772,000

BYD CO LTD – 422,500 – 422,500

CHEUNG KONG INFRASTRUCTURE HOLDINGS LTD 1,061,000 – (1,061,000) –

CHINA COMMUNICATIONS CONSTRUCTION CO LTD 19,997,000 – (9,956,000) 10,041,000

CHINA CONSTRUCTION BANK CORP 88,058,500 2,748,000 (27,175,000) 63,631,500

CHINA GALAXY SECURITIES CO LTD 11,760,500 – – 11,760,500

CHINA JINMAO HOLDINGS GROUP LTD – 2,514,000 (2,514,000) –

CHINA LIFE INSURANCE CO LTD 7,601,000 1,741,000 (361,000) 8,981,000

CHINA LITERATURE LTD – 829,868 (96,800) 733,068

CHINA LONGYUAN POWER GROUP CORP LTD 12,790,000 – (1,589,000) 11,201,000

CHINA MENGNIU DAIRY CO LTD – 1,799,000 – 1,799,000

CHINA MERCHANTS BANK CO LTD 6,867,000 – (4,011,500) 2,855,500

CHINA MERCHANTS PORT HOLDINGS CO LTD

(formerly known as CHINA MERCHANTS HOLDINGS

INTERNATIONAL CO LTD) – 835,695 – 835,695

CHINA MOBILE LTD 3,257,500 1,154,500 (933,000) 3,479,000

CHINA OVERSEAS LAND & INVESTMENT LTD 3,230,000 2,008,000 – 5,238,000

CHINA PACIFIC INSURANCE GROUP CO LTD – 973,800 (510,400) 463,400

CHINA PETROLEUM & CHEMICAL CORP 55,524,000 – (30,840,000) 24,684,000

CHINA RAILWAY GROUP LTD 4,566,000 – (4,566,000) –

CHINA RESOURCES GAS GROUP LTD – 664,000 – 664,000

CHINA RESOURCES LAND LTD 6,524,000 976,000 (2,232,000) 5,268,000

CHINA SHENHUA ENERGY CO LTD 6,282,000 1,432,000 (3,387,000) 4,327,000


HOLDINGS LTD 10,972,000 – (6,690,000) 4,282,000

CHINA TELECOM CORP LTD – 13,524,000 (3,972,000) 9,552,000

CHINA UNICOM HONG KONG LTD 6,722,000 5,586,000 (3,184,000) 9,124,000

CHINA VANKE CO LTD – 3,084,600 – 3,084,600

CK ASSET HOLDINGS LTD (formerly known as

CHEUNG KONG PROPERTY HOLDINGS LTD) 3,246,361 – (144,000) 3,102,361

CK HUTCHISON HOLDINGS LTD 2,058,861 305,000 (634,500) 1,729,361

CK INFRASTRUCTURE HOLDINGS LTD – 385,500 – 385,500

CNOOC LTD – 9,580,000 – 9,580,000

COUNTRY GARDEN HOLDINGS CO LTD – 2,764,000 – 2,764,000

CSPC PHARMACEUTICAL GROUP LTD 13,696,000 – (3,502,000) 10,194,000

DONGFENG MOTOR GROUP CO LTD – 2,636,000 (2,636,000) –

FOSUN INTERNATIONAL LTD – 5,113,000 (812,500) 4,300,500

GALAXY ENTERTAINMENT GROUP LTD 2,235,000 1,823,000 (575,000) 3,483,000

GEELY AUTOMOBILE HOLDINGS LTD – 2,192,000 – 2,192,000

GREAT EAGLE HOLDINGS LTD – 408,000 – 408,000

GUANGDONG INVESTMENT LTD 13,616,000 – (9,872,000) 3,744,000

GUANGZHOU AUTOMOBILE GROUP CO LTD 6,378,000 – (2,390,000) 3,988,000

GUANGZHOU R&F PROPERTIES CO LTD – 973,200 (449,200) 524,000


Investment Report


6


Holdings





GUOTAI JUNAN INTERNATIONAL HOLDINGS LTD 31,466,000 – (17,228,000) 14,238,000

HAITONG SECURITIES CO LTD – 3,052,800 – 3,052,800

HANERGY THIN FILM POWER GROUP LTD 5,510,000 – – 5,510,000

HANG LUNG PROPERTIES LTD – 682,000 (682,000) –

HANG SENG BANK LTD 679,400 – (261,000) 418,400

HENDERSON LAND DEVELOPMENT CO LTD – 352,000 – 352,000

HENGAN INTERNATIONAL GROUP CO LTD 1,312,500 – (821,500) 491,000

HONG KONG EXCHANGES AND CLEARING LTD 997,600 9,564 (222,100) 785,064

HSBC HOLDINGS PLC 12,379,421 1,972,800 (3,240,000) 11,112,221

HUANENG POWER INTERNATIONAL INC – 20,208,000 (3,758,000) 16,450,000

I-CABLE COMMUNICATIONS LTD – 1,482,396 (1,482,396) –

INDUSTRIAL & COMMERCIAL BANK OF CHINA LTD 69,567,545 3,228,000 (4,356,000) 68,439,545

JIANGXI COPPER CO LTD 3,408,000 – (3,408,000) –

JOHNSON ELECTRIC HOLDINGS LTD – 1,053,000 – 1,053,000

KINGSOFT CORP LTD 5,216,000 3,701,000 (6,694,000) 2,223,000

LEE & MAN PAPER MANUFACTURING LTD – 15,698,000 (12,579,000) 3,119,000

LENOVO GROUP LTD – 4,970,000 – 4,970,000

LI & FUNG LTD – 2,874,000 – 2,874,000

LINK REIT – 1,052,000 – 1,052,000

LONGFOR PROPERTIES CO LTD – 850,000 – 850,000

LUK FOOK HOLDINGS INTERNATIONAL LTD 4,069,000 – (1,242,000) 2,827,000

PACIFIC BASIN SHIPPING LTD – 10,596,000 – 10,596,000

PETROCHINA CO LTD 13,750,000 13,640,000 (9,996,000) 17,394,000

PING AN INSURANCE GROUP CO OF CHINA LTD 6,605,500 – (1,809,000) 4,796,500

POWER ASSETS HOLDINGS LTD 1,210,000 – (1,210,000) –

SANDS CHINA LTD 2,149,200 2,294,800 (1,250,800) 3,193,200

SEMICONDUCTOR MANUFACTURING

INTERNATIONAL CORP 6,042,900 – (6,042,900) –

SHANGHAI ELECTRIC GROUP CO LTD – 21,326,000 (21,326,000) –

SHENZHEN EXPRESSWAY CO LTD 11,524,000 – (2,558,000) 8,966,000

SHENZHOU INTERNATIONAL GROUP HOLDINGS

LTD – 330,000 – 330,000

SINO BIOPHARMACEUTICAL LTD – 2,382,000 – 2,382,000

SINOPHARM GROUP CO LTD – 727,600 – 727,600

SUN HUNG KAI PROPERTIES LTD 1,806,000 – (470,000) 1,336,000

SUNNY OPTICAL TECHNOLOGY GROUP CO LTD – 595,000 – 595,000

SWIRE PROPERTIES LTD 3,817,000 – (1,879,800) 1,937,200

TENCENT HOLDINGS LTD 3,760,000 104,000 (1,683,600) 2,180,400

TIMES PROPERTY HOLDINGS LTD – 3,677,000 (3,677,000) –

TINGYI CAYMAN ISLANDS HOLDING CORP – 1,258,000 – 1,258,000

TONGDA GROUP HOLDINGS LTD – 87,550,000 (87,550,000) –

UNI-PRESIDENT CHINA HOLDINGS LTD 8,513,000 10,530,000 (6,714,000) 12,329,000

UNITED CO RUSAL PLC – 1,698,000 – 1,698,000

VTECH HOLDINGS LTD 1,399,400 – (1,399,400) –

WANT WANT CHINA HOLDINGS LTD – 4,073,000 – 4,073,000

WH GROUP LTD – 10,383,500 (2,188,500) 8,195,000

WHARF HOLDINGS LTD – 1,934,000 – 1,934,000

WHARF REAL ESTATE INVESTMENT CO LTD – 1,934,000 (578,000) 1,356,000

WUXI BIOLOGICS CAYMAN INC – 450,000 (109,500) 340,500

YANGTZE OPTICAL FIBRE AND CABLE JOINT

STOCK LTD CO – 528,000 – 528,000

YIXIN GROUP LTD – 429,000 (429,000) –

YUE YUEN INDUSTRIAL HOLDINGS LTD – 597,000 – 597,000


Investment Report


7


Holdings





ZHONGAN ONLINE P&C INSURANCE CO LTD – 212,500 (212,500) –

ZHUZHOU CRRC TIMES ELECTRIC CO LTD 1,902,000 1,931,900 (222,100) 3,611,800

ZOOMLION HEAVY INDUSTRY SCIENCE AND

TECHNOLOGY CO LTD 12,598,800 – (12,598,800) –

LISTED RIGHTS

HONG KONG

CHINA STATE CONSTRUCTION INT RTS 3OCT2017 – 1,020,750 (1,020,750) –

UNLISTED RIGHTS

HONG KONG

FOSUN INTERNATIONAL LTD RTS 8SEP2017 – 3,277 (3,277) –

TENCENT HOLDINGS LTD RTS 31OCT2017 – 2,068 (2,068) –


Investment Report


8

PineBridge Hong Kong Equity Fund (the “Fund”), is a unit trust governed by its Trust Deed dated 10 August

1998, as amended, supplemented and restated. The Fund is managed in accordance with the distinct investment

policy. There have been no changes to the investment policy during the year.


The Fund seeks to provide capital appreciation through a managed portfolio of shares in companies listed on The

Stock Exchange of Hong Kong Limited. Hong Kong is in the Manager’s view well placed to prosper directly from economic activity in Asia and the economic emergence of the People’s Republic of China.

2017 2016 2015

HK$ HK$ HK$





Net foreign currency losses – – (165)

Net income excluding capital



- realized and unrealized 2,593,244,570 (418,553,318) (1,059,074,094)

Performance table

Net asset value

Total net

asset value

Net asset

value per unit

HK$ HK$


2017 424,860,480 38.16

2016 373,167,705 28.02

2015 407,143,477 29.24


2017 9,253,067,835 44.73

2016 7,654,575,513 32.44

2015 7,975,823,435 33.44


Investment Report


9



Highest

issue price

per unit

HK$

Lowest

redemption price

per unit

HK$

Annualized

investment

return

(Note 1)

%


2017 38.32 28.14 36.19

2016 30.57 23.72 (4.17)

2015 38.73 27.57 (10.17)

2014 34.54 29.29 1.02

2013 32.46 26.15 11.95

2012 28.87 23.53 19.32

2011 33.10 21.09 (23.50)

2010 33.83 25.39 8.20

2009 30.11 14.81 61.99

2008 35.51 13.71 (49.54)


2017 44.85 32.58 37.89

2016 35.26 27.16 (2.99)

2015 43.88 31.40 (9.01)

2014 38.95 32.90 2.00

2013 36.14 28.96 13.38

2012 31.76 25.72 20.82

2011 35.56 22.86 (22.54)

2010 36.26 27.06 9.55

2009 31.82 16.32 58.79

2008 36.67 15.15 (47.11) Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year end


Note 2: The “Standard units” have been renamed to “Standard units - Accumulation” with effect from 27 June

2013.




complied with.


Trustee’s Report


10




On behalf of


_________________________ _____________________________

Director Director

18 April 2018


TO THE TRUSTEE OF PINEBRIDGE HONG KONG EQUITY FUND (THE “FUND”)

11


Opinion

We have audited the financial statements of PineBridge Hong Kong Equity Fund (the “Fund”) set out on pages

14 to 32, which comprise the statement of net assets as at 31 December 2017, and the statement of

comprehensive income, the statement of changes in net assets attributable to unitholders and the statement of



In our opinion, the financial statements give a true and fair view of the financial position of the Fund as at 31 December 2017, and of its financial transactions and its cash flows for the year then ended in accordance with



Basis for opinion



under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report. We are independent of the Fund in accordance with the HKICPA’s Code of


accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.



comprises the information included in the Reports and Financial Statements, other than the financial statements and our auditor’s report thereon.





our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to



statements



Manager and the Trustee determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.





The Manager and the Trustee of the Fund are required to ensure that the financial statements have been properly prepared in accordance with the relevant disclosure provisions of the constitutive documents of the Fund ("the









(CONTINUED)

12






Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or






As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also:






Obtain an understanding of internal control relevant to the audit in order to design audit procedures that

are appropriate in the circumstances, but not for the purpose of expressing an opinion on the










date of our auditor’s report. However, future events or conditions may cause the Fund to cease to

continue as a going concern.

Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a







(CONTINUED)

13



the SFC

(a) In our opinion, the financial statements have been properly prepared, in all material respects, in

accordance with the relevant disclosure provisions of the Constitutive Documents, the MPFSO, the

General Regulation, the MPF Code and Guidelines II.5 issued by the MPFA and the Code issued by the SFC; and



Certified Public Accountants

Hong Kong

18 April 2018




14

2017 2016

Note HK$ HK$

Assets

Current assets

Investments 4(b) 9,564,494,517 7,598,500,354

Dividends receivable 379,610 –

Interest receivable 8,028 16,210

Amounts receivable on subscription 1,476,868 9,175,316


Total assets 9,688,529,496 8,100,824,459

Liabilities

Current liabilities


Accounts payable and accrued expenses 1,767,305 2,226,298

Liabilities (excluding net assets attributable to

unitholders) 10,601,181 73,081,241




Hong Kong Limited

________________________ _________________________ ________________________






15

2017 2016

Note HK$ HK$

Income


Dividend income 288,924,206 262,868,123

Net gains/(losses) on investments 6 2,593,244,570 (418,553,318)

Total investment income/(loss) 2,882,540,887 (155,279,561)

Expenses

Management fee 8(a) 5,119,526 4,679,095

Trustee’s fee 8(b) 4,475,477 4,043,064

Custodian and administration fees 9 1,310,490 1,331,573

Audit fee 156,208 156,497



Other expenses 578,980 1,156,931



Net profit/(loss) before tax 2,851,323,937 (199,340,691)

Withholding tax 7(c) (14,445,875) (11,169,849)


unitholders from operations 2,836,878,062 (210,510,540)





16

2017 2016

Note HK$ HK$

Net assets attributable to unitholders at 1 January 8,027,743,218 8,382,966,912

Issue of units 3 579,483,208 1,309,204,774

Redemption of units 3 (1,766,176,173) (1,453,917,928)

Net decrease from unit transactions (1,186,692,965) (144,713,154)

Increase/(decrease) in net assets attributable to unitholders from operations 2,836,878,062 (210,510,540)

Net assets attributable to unitholders at 31

December 9,677,928,315 8,027,743,218





17

2017 2016

HK$ HK$


Increase/(decrease) in net assets attributable to unitholders from

operations 2,836,878,062 (210,510,540)

Adjustment for:

Dividend income (288,924,206) (262,868,123)


Withholding tax 14,445,875 11,169,849

Operating profit/(loss) before working capital changes 2,562,027,620 (462,614,448)

Net (increase)/decrease in investments (1,965,994,163) 352,880,055

Net decrease in amounts receivable from brokers – 4,127,446

Net decrease in amounts payable to brokers – (4,150,164)


Cash generated from/(used in) operations 595,574,464 (109,248,057)





Proceeds from issue of units 587,181,656 1,303,410,370

Payments on redemption of units (1,828,197,240) (1,390,155,321)

Net cash used in financing activities (1,241,015,584) (86,744,951)





Cash at banks 80,073 80,079


122,170,473 493,132,579





18

1. The Fund

PineBridge Hong Kong Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10

August 1998, as amended, supplemented and restated. The Fund has been authorized by the Securities and

Futures Commission of Hong Kong and approved by the Mandatory Provident Fund Schemes Authority of

Hong Kong.





The financial statements have been prepared in accordance with Hong Kong Financial Reporting Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants







complexity, or areas where assumptions and estimates are significant to the financial statements are




periods beginning on or after 1 January 2017. The Fund has not early adopted any standards,

interpretations or amendments that have been issued but are not yet effective. The nature and the





exchange gains or losses). The amendments have had no impact on the financial statements of the

Fund.









depends on the entity's business model and the contractual cash flow characteristics of the financial asset. Investments in equity instruments are required to be measured at fair value through profit or loss





at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by


hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use for risk management purposes.




19











available to the Fund in the future. Overall, the Fund expects no significant impact on its statement of

net assets.



(b) Investments




basis. Investments are initially recognized at fair value, excluding transaction costs which are expensed as incurred in the statement of comprehensive income, and are subsequently re-measured at fair value.








from brokers.

(c) Income

Dividends on equities are recognized in the statement of comprehensive income when the Fund’s right to receive payments is established. The corresponding withholding taxes are recorded as a separate

item in the statement of comprehensive income.

Interest income is recognized on a time-proportionate basis using the effective interest method. Other

income is accounted for on an accrual basis.









20




Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign currency assets and liabilities are translated into









(e) Expenses






day.








date respectively.




(j) Transaction costs







21





conditions and procedures set out therein, the Manager is entitled, having regard to the interests of unitholders, to limit the total number of units which unitholders are entitled to redeem on any dealing day


the year are shown in the statement of changes in net assets attributable to unitholders. In order to achieve

the investment objectives, the Fund endeavors to invest its capital in accordance with the investment

policies as outlined in note 4, whilst maintaining sufficient liquidity to meet redemption requests. Such

liquidity is augmented by the holding of liquid investments.

Net assets attributable to unitholders represent a liability in the statement of net assets, carried at the redemption amount that would be payable at the year end date if the unitholders exercised the right to




HK$








22


2017

Standard

Units

- Accumulation

2017

Provident

Fund Units

2016

Standard

Units

- Accumulation

2016

Provident

Fund Units


Balance brought forward 13,315,967 235,930,684 13,922,338 238,540,091

Total issues 1,056,251 14,050,313 1,923,752 40,018,567

Total redemptions (3,237,306) (43,109,352) (2,530,123) (42,627,974)

Balance carried forward 11,134,912 206,871,645 13,315,967 235,930,684





June 2013.



The investment objective of the Fund is to achieve capital appreciation. The Fund seeks to achieve its

investment objective through a managed portfolio of shares in listed companies quoted on The Stock

Exchange of Hong Kong Limited.




discussed below.



in market prices, whether those changes are caused by factors specific to the individual instrument or factors affecting all instruments in the market.






23




2017 2016

Fair value

HK$

Cost

HK$

% of

net

assets

Fair value

HK$

Cost

HK$

% of

net

assets

Held for

trading:

Listed equities 9,564,494,517 7,408,757,690 98.83 7,598,500,354 7,578,336,501 94.65




2017 2016 HK$ equivalent HK$ equivalent Markets exposed to Hong Kong 9,564,494,517 7,598,500,354

The following table shows net exposures to sectors as at 31 December 2017 and 2016:

2017 2016

% % Sectors exposed to Basic Materials 1 1

Communications 14 16

Consumer, Cyclical 8 4

Consumer, Non-cyclical 6 4 Diversified 2 2 Energy 5 7

Financial 53 51

Industrial 8 10

Technology 2 2

Utilities 1 3

100 100






24





assumption that the index had increased/decreased by the respective percentage with all other variables held constant and the Fund’s investments moved according to the historical correlation with the index.

2017 2016

Change in

market index %

Impact HK$

Change in market index %

Impact HK$

+/- +/- +/- +/- FTSE MPF HK Index Total Return 43.0% 3,928,522,638 4.0% 290,749,530

The Manager has used their view of what would be a “reasonable shift” in the FTSE MPF HK Index

Total Return, having regard to the historical volatility of the index, to estimate the change for use in the

market price risk sensitivity analysis above.











As at 31 December 2017, the Fund had bank balances of HK$122,170,473 (2016: HK$493,132,579)

and is therefore exposed to cash flow interest rate risk which is considered by the Manager to be minimal as they are short-term instruments all with maturities less than one month.






25








At 31 December 2017

HK$ Credit rating

Source of

credit rating

Custodian Citibank, N.A. 9,564,494,517 P-1 Moody's

Banks



At 31 December 2016

HK$ Credit rating

Source of

credit rating

Custodian


Banks








the broker has received payment. Payment is made on a purchase when the securities have been received by the broker. The trade will fail if either party fails to meet its obligation.







26


(e) Liquidity risk


redemption request.









HK$ HK$ HK$

At 31 December 2017


Accounts payable and accrued expenses 1,079,143 – 688,162





HK$ HK$ HK$

At 31 December 2016


Accounts payable and accrued expenses 950,010 – 1,276,288


Total financial liabilities 8,099,548,171 – 1,276,288





As at 31 December 2017, the Fund held cash and cash equivalents of HK$122,170,473 (2016:

HK$493,132,579) and liquid investments of HK$9,564,494,517 (2016: HK$7,598,500,354) that are

expected to readily generate cash inflows within 1 month for managing liquidity risk.

(f) Currency risk


exchange rates.

The Fund is not exposed to significant currency risk because majority of the assets and liabilities are

denominated in Hong Kong dollar, the Fund’s functional and presentation currency, and United States

dollar which is linked with the Hong Kong dollar.




27











length basis.






reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:










significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires









28





At 31 December 2017


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 9,564,494,517 – – 9,564,494,517

Total assets 9,564,494,517 – – 9,564,494,517

At 31 December 2016


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 7,598,500,354 – – 7,598,500,354

Total assets 7,598,500,354 – – 7,598,500,354


within level 1 include active listed equities. The Fund does not adjust the quoted price for these

instruments.



are classified within level 2. These include foreign exchange contracts. As level 2 investments include

positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available

market information.


As at 31 December 2017 and 2016, level 3 instruments include listed equity securities that are

suspended from trading. As observable prices are not available for these securities, the Fund has used

valuation techniques including estimation of liquidation value, to derive the fair value of these level 3

investments.

As at 31 December 2017 and 2016, the Fund invested in one equity security which was suspended on

21 May 2015. The Manager has applied 100% discount to the last traded price before suspension to be

the best estimate of the fair value of this security. This investment was classified as level 3 due to

continual suspension of trading as at 31 December 2017 and 2016.




29



Transfers between levels of the fair value hierarchy are deemed to have occurred on the date of the

stock suspension and on the date the stock resumes trading.

A sensitivity analysis for level 3 positions is not presented, as it is deemed that the impact of reasonable changes in inputs would not be significant.

There is no transfer between levels for the year ended 31 December 2017.

The following table presents the transfers between levels for the year ended 31 December 2016.

Hong Kong listed equity

Level 3

HK$

Opening balance 38,675,678

Transfer from Level 3 to Level 1 (17,131,578)

Total losses in the statement of comprehensive income (21,544,100)

Closing balance –

Total losses for the year included in the statement of comprehensive income

for financial assets held at the end of the year (21,544,100)

The equity security transferred out of level 3 relates to position whose trading have resumed during the

year 2016. The valuation is based on quoted market prices in active markets and resulted in the

reclassification to level 1.






30





daily subscriptions and redemptions at the discretion of unitholders. The Fund’s objective when managing capital is to safeguard the Fund’s ability to continue as a going concern in order to provide







5. Critical judgment

In preparing these financial statements, the Trustee and Manager have made certain judgment which is

dependent on what might happen in the future. The judgment made by the Trustee and Manager may not

equal the related actual results. Refer to note 7(b) to the financial statements.

6. Net gains/(losses) on investments

2017 2016

HK$ HK$

Change in unrealized gains in value of investments 2,135,572,974 1,179,710

Realized gains/(losses) on sale of investments 457,671,596 (419,733,028)

2,593,244,570 (418,553,318)

7. Taxation




Ordinance.

(b) The Fund invests in shares of companies in the People's Republic of China (“PRC”) listed on the Hong

Kong Stock Exchange (“H-shares”). Under the PRC Corporate Income Tax Law, the Fund may be liable to pay PRC tax on the capital gains realized in the trading of H-shares. However, no provision

was made for taxation from such gains in the financial statements as the Trustee and Manager believe

that the Fund can sustain a position for not filing a tax return based on the existing tax regulations and

that the enforcement of China tax on capital gains is not probable.

(c) Withholding tax was charged on dividend income received from H-shares during the year.




31




of Hong Kong.



(a) Management fee


1.25% per annum, with a permitted maximum of 1.50% per annum, of the net asset value of the Standard units - Accumulation, being calculated daily and payable monthly in arrears.



(b) Trustee’s fee



monthly in arrears.












some brokers under which certain goods and services used to support investment decision making are

obtained from third parties and are paid for by the brokers out of the commissions they receive. These may

include, for example, research and advisory services; economic and political analysis; portfolio analysis,

including valuation and performance measurement; market analysis, data and quotation services; clearing, registrar and custodial services and investment-related publications; computer hardware and software





32

11. Distributions









PINEBRIDGE INDIA EQUITY FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge India Equity Fund



Contents

Pages













1

Manager Trustee



Hong Kong Hong Kong






Hong Kong





Central, Hong Kong

Legal Advisers

Deacons


18 Chater Road

Central, Hong Kong


Manager’s Report


2


Market overview

In 2017, four events – demonetization, implementation of Goods and Services tax (GST), Real Estate Regulation Act (RERA) and Bankruptcy Act – caused economic disruption and forced companies to change the

way they conduct business. The September 2017 quarter GDP growth rate came in at 6.3% down from little

over 9% in March 2016. The investment rate in the economy has dropped from 33.6% of GDP (FY 2011-FY

2014) to 30.6% (FY 2014-FY 2017). The last two quarterly readings (June & September) have seen a further

drop to 29.4%. For the economic growth rate to accelerate, it is imperative that the rate of investments go up.

Towards the end of the year we also witnessed inflation picking up on the back of rising crude/ commodity

prices further eroding India’s competitiveness.

Amidst polarized performance, Indian Equity markets had a good run. This was despite the slowdown in

economy and low earnings growth of companies. Instead of translating into investments due to the poor health

of bank balance sheet, extra liquidity which came into the banks as a result of demonetization, got routed to

equity markets. The market was excessively driven by strong domestic retail flows as well as foreign flows.

The fund outperformed the index for the year.

Portfolio Performance

The PineBridge India Equity MPF returned 44.33% net of fee and expenses, in 2017 (1st January 2017 to 31st

December 2017). Over the same period, the benchmark index, the MSCI India Net DTR returned 38.76% thus

outperforming the benchmark by 5.57%.

Portfolio Overview

Overweight in Health Care, Information Technology, Utilities, Materials and underweight in Consumer Staples helped the performance while underweight in Energy, Financials, Telecom and overweight Industrials dragged

the performance. Among stocks, Avanti Feeds, Bhansali Engineering and Divi’s Lab helped the performance

whereas Sun Pharmaceuticals and MPS Limited dragged the performance.

Outlook

For the economic growth rate of India to accelerate, it is imperative that the rate of investments go up. Building

blocks are being laid by the government for an investment cycle upturn. These include fresh laws, transparency, resolution of bad bank loans and political will.

We have started noticing shortages in some pockets of the economy due to lack of investments over the past

few years. We remain optimistic that the investment cycle will revive and therefore, we are maintaining our

overweight stance to some of the finest franchise in the relevant sectors. The path towards them eventually

doing well may be a bit bumpy; hence we have also ensured that none of our holding companies (non-financial

names) have any net debt which could have otherwise hurt. As the economy revives, we expect these names to

do very well as presently their valuations do not reflect any uptick in their current earnings growth rates.

We are sanguine about the prospects of our portfolio companies based on expected recovery in domestic

investments and in other cases an increase in valuation based on the robust cash flows of those businesses. The

risk to performance stems from any unexpected developments in the domestic financial sector which is under

considerable amount of stress.


Investment Report


3


Holding Market

% of net

shares value

assets

US$

LISTED EQUITIES

INDIA

AVANTI FEEDS LTD 48,685 1,932,918

4.44%

BAJAJ AUTO LTD 34,135 1,782,786

4.10%

BHANSALI ENGINEERING POLYMERS LTD 148,000 435,803

1.00%

BHARAT HEAVY ELECTRICALS LTD 2,605,759 3,776,259

8.68%

DIVI'S LABORATORIES LTD 172,392 2,966,496

6.82%

ELANTAS BECK INDIA LTD 28,194 993,749

2.28%

FDC LTD 254,247 1,005,780

2.31%

GABRIEL INDIA LTD 288,009 898,838

2.07%

GANDHI SPECIAL TUBES LTD 189,858 1,270,857

2.92%

HERO MOTOCORP LTD 23,000 1,363,945

3.14%

IGARASHI MOTORS INDIA LTD 12,000 161,458

0.37%

INDRAPRASTHA GAS LTD 170,000 894,366

2.06%

INFOSYS LTD 252,069 4,115,227

9.45%

KOTAK MAHINDRA BANK LTD 225,000 3,561,031

8.19%

KSB PUMPS LTD 45,494 645,292

1.48%

LAKSHMI MACHINE WORKS LTD 7,308 668,705

1.54%

LARSEN & TOUBRO LTD 107,000 2,109,291

4.85%

MPS LTD 162,000 1,634,126

3.76%

ORIENT REFRACTORIES LTD 404,000 1,053,540

2.42%

SHARDA CROPCHEM LTD 67,000 472,255

1.09%

SHREE CEMENT LTD 13,600 3,851,155

8.85%

STOVEC INDUSTRIES LTD 2,010 102,849

0.24%

SUN PHARMACEUTICAL INDUSTRIES LTD 173,000 1,548,040

3.56%

TATA CONSULTANCY SERVICES LTD 30,000 1,269,591

2.92%

WIPRO LTD 255,200 1,256,440

2.89%

TOTAL INDIA 39,770,797 91.43%

UNITED STATES OF AMERICA

HDFC BANK LTD ADR 8,000 813,360

1.87%

TOTAL UNITED STATES OF AMERICA 813,360 1.87%

TOTAL INVESTMENTS*

40,584,157

93.30%


32,550,862



Investment Report


4


Holdings



LISTED EQUITIES

INDIA

AIA ENGINEERING LTD 47,225 – (47,225) –

AVANTI FEEDS LTD 76,645 – (27,960) 48,685

BAJAJ AUTO LTD 28,416 11,000 (5,281) 34,135

BAYER CROPSCIENCE LTD – 19,900 (19,900) –

BHANSALI ENGINEERING POLYMERS LTD – 337,494 (189,494) 148,000

BHARAT HEAVY ELECTRICALS LTD 420,000 2,486,187 (300,428) 2,605,759

CUMMINS INDIA LTD 73,650 – (73,650) –

DIVI'S LABORATORIES LTD – 242,392 (70,000) 172,392

ELANTAS BECK INDIA LTD 28,194 – – 28,194

FDC LTD 135,870 118,377 – 254,247

GABRIEL INDIA LTD 552,622 – (264,613) 288,009

GANDHI SPECIAL TUBES LTD 189,858 – – 189,858

GOODYEAR INDIA LTD 26,000 8,280 (34,280) –

HAWKINS COOKERS LTD – 11,833 (11,833) –

HDFC BANK LTD – 19,000 (19,000) –

HERO MOTOCORP LTD 24,100 29,400 (30,500) 23,000

HUHTAMAKI PPL LTD 194,311 – (194,311) –

IGARASHI MOTORS INDIA LTD 12,000 – – 12,000

INDRAPRASTHA GAS LTD 59,500 136,000 (195,500) –

INDRAPRASTHA GAS LTD – 170,000 – 170,000

INFOSYS LTD 122,600 249,300 (119,831) 252,069

KIRLOSKAR OIL ENGINES LTD 153,845 – (153,845) –

KOTAK MAHINDRA BANK LTD – 225,000 – 225,000

KSB PUMPS LTD 40,513 4,981 – 45,494

LAKSHMI MACHINE WORKS LTD 12,673 – (5,365) 7,308

LARSEN & TOUBRO LTD – 107,000 – 107,000

MPS LTD 97,365 64,635 – 162,000

MUNJAL SHOWA LTD 258,321 – (258,321) –

NESTLE INDIA LTD – 5,200 (5,200) –

ORIENT REFRACTORIES LTD 404,000 – – 404,000

PETRONET LNG LTD – 216,000 (216,000) –

SANOFI INDIA LTD – 14,344 (14,344) –

SHARDA CROPCHEM LTD 67,000 – – 67,000

SHREE CEMENT LTD 7,581 10,352 (4,333) 13,600

STOVEC INDUSTRIES LTD – 2,010 – 2,010

SUN PHARMACEUTICAL INDUSTRIES LTD 80,000 286,000 (193,000) 173,000

TATA CONSULTANCY SERVICES LTD – 55,000 (25,000) 30,000

WIPRO LTD 187,143 445,143 (377,086) 255,200


HDFC BANK LTD ADR 12,700 – (4,700) 8,000


Investment Report


5

PineBridge India Equity Fund (the "Fund"), is a unit trust governed by its Trust Deed dated 10 August 1998, as




The Fund seeks to provide long-term capital appreciation by investing principally in equity and equity-related

securities of Indian companies.

2017 2016

Period from

15 January 2015

(date of

commencement

of operations) to

31 December

2015

US$ US$ US$



Interest on bank deposits 1,534 550 109

Dividend income (net of withholding tax) 346,424 321,069 151,861

Net foreign currency gains/(losses) 94,156 (4,510) (89,163)

Net (loss)/income excluding capital

appreciation (197,781) 124,865 (340,784)

Net appreciation of investments

- realized and unrealized 10,438,388 1,546,613 97,805

Performance table

Net asset value Total net Net asset


US$ US$


2017 43,496,342 15.40

2016 21,754,639 10.67

2015 24,371,852 9.96


Investment Report


6


Performance record since inception

Highest

issue price

per unit

US$

Lowest

redemption price

per unit

US$

Annualized

investment

return

(Note 1)

%


2017 15.41 10.60 44.33

2016 11.66 8.60 7.13

2015 10.70 9.28 (0.40)


against the net asset value per unit at the beginning of the year except for the first period where the

initial subscription price per unit is used. The Fund commenced operations on 15 January 2015.

Note 2: No Standard units - Accumulation were issued by the Fund since inception.


Based on the information received from the Manager of the Fund during the year ended 31 December 2017, the

Trustee of the Fund confirmed, to the best of its knowledge and belief, that the investment objectives and policies

for the Fund were complied with.


Trustee’s Report


7

We hereby confirm that, in our opinion, the Manager of the Fund has, in all material respects, managed the Fund

for the year ended 31 December 2017 in accordance with the provisions of the Trust Deed dated 10 August

1998, as amended, supplemented and restated.

On behalf of


_________________________ _____________________________ Director Director

18 April 2018


TO THE TRUSTEE OF PINEBRIDGE INDIA EQUITY FUND (THE “FUND”)

8


Opinion

We have audited the financial statements of PineBridge India Equity Fund (the “Fund”) set out on pages 11 to


income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to

the financial statements, including a summary of significant accounting policies.





Basis for opinion


to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the















statements

The Manager and the Trustee of the Fund are responsible for the preparation of the financial statements that

give a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control as the Manager and the Trustee determine is necessary to enable the preparation of financial statements that are
















(CONTINUED)

9










(CONTINUED)

10








11

2017 2016

Note US$ US$

Assets

Current assets

Investments 4(b) 40,584,157 21,033,742

Interest receivable 6 –

Amounts receivable on subscription 59,035 –

Amount receivable from brokers – 65,418

Cash and cash equivalents 17,733,907 720,602

Total assets 58,377,105 21,819,762

Liabilities

Current liabilities

Amounts payable to brokers 14,473,882 –


Total current liabilities 14,513,655 40,578

Non-current liabilities

Deferred tax liabilities 6 367,108 24,545

Total non-current liabilities 367,108 24,545

Total liabilities 14,880,763 65,123

Equity




Hong Kong Limited

________________________ ________________________ ________________________






12

2017 2016

Note US$ US$

Income

Interest on bank deposits 1,534 550

Dividend income 346,428 321,323

Net gains on investments 5 10,438,388 1,546,613

Net foreign currency gains/(losses) 94,156 (4,510)


Expenses

Trustee’s fee 7(b) 14,911 12,528


Audit fee 10,902 11,070

Bank charges 162 161


Preliminary expenses – 1,886


Transaction costs 150,146 75,271

Total operating expenses 249,680 189,854


Capital gains tax 6(b) (390,215) (2,390)

Withholding tax 6(c) (4) (254)






13

2017 2016

Note US$ US$


Issue of units 3 26,782,957 1,573,612









14

2017 2016

US$ US$



Adjustment for:

Dividend income (346,428) (321,323)

Withholding tax 4 254

Capital gains tax 390,215 2,390

Interest on bank deposits (1,534) (550)

Operating profit before working capital changes 10,282,864 1,352,249


Net decrease/(increase) in amount receivable from brokers 65,418 (65,418)

Net increase/(decrease) in amounts payable to brokers 14,473,882 (59,587)

Net (decrease)/increase in accounts payable and accrued expenses (805) 13,923

Cash generated from operations 5,270,944 3,176,797

Dividend income received 346,424 323,643

Interest on bank deposits received 1,528 550

Capital gains tax paid (47,652) (64,310)






Net increase/(decrease) in cash and cash equivalents 17,013,305 (852,011)

Cash and cash equivalents at the beginning of the year 720,602 1,572,613

Cash and cash equivalents at the end of the year 17,733,907 720,602


Cash at banks 17,691,807 720,602

Short-term deposits 42,100 –

17,733,907 720,602





15

1. The Fund

PineBridge India Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August


Commission of Hong Kong and approved by the Mandatory Provident Fund Schemes Authority of Hong Kong.











to make judgements, estimates and assumptions that affect the application of policies and the reported

amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the

circumstances, the results of which form the basis of making the judgements about carrying values of


these estimates.


There are no standards, interpretations or amendments to existing standards that are effective for the first time for the financial year beginning 1 January 2017 that would be expected to have a significant

impact on the Fund.




financial assets and financial liabilities. The complete version of HKFRS 9 was issued in July 2014. It replaces the guidance in HKAS 39 that relates to the classification and measurement of financial


primary measurement categories for financial assets: amortised cost, fair value through other





now a new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39. For financial liabilities there were no changes to classification and measurement except for


at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by







16



New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2017 and have not been early adopted (Continued)






arising from further detailed analysis or additional reasonable and supportable information being made available to the Fund in the future. Overall, the Fund expects no significant impact on its statement of

net assets.



(b) Investments


assets are classified as held for trading or designated by the Trustee and the Manager at fair value through profit or loss at inception. Purchases and sales of investments are accounted for on a trade date










from brokers.

(c) Income

Dividends on equities are recognized in the statement of comprehensive income when the Fund’s right

to receive payments is established. The corresponding withholding taxes are recorded as a separate

item in the statement of comprehensive income.







are presented in United States dollar, which is the Fund’s functional and presentation currency.




17














(e) Expenses




changes in equity. The price at which units are subscribed or redeemed is calculated by reference to the net asset value per unit as at the close of business on the relevant dealing day.








date respectively.




(j) Transaction costs







18


(k) Taxation

The tax expense for the year comprises current and deferred tax. Tax is recognized in the statement of comprehensive income, except to the extent that it relates to items recognized in other comprehensive

income or directly in equity. In such cases, the tax will be recognized in other comprehensive income

or directly in equity, respectively.

Current tax

The current tax charge is calculated on the basis of the tax laws enacted or substantively enacted by the

end of the period in the countries where the Fund operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax

regulation is subject to interpretation. It established provisions where appropriate on the basis of

amounts expected to be paid to the tax authorities.

Deferred tax

Deferred tax is recognized, using the liability method, on temporary differences arising between the tax

bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the end of

reporting period and are expected to apply when the related deferred tax asset is realized or the

deferred tax liability is settled.

Deferred tax assets are recognized only to the extent that it is probable that future taxable profit will be

available against which the temporary differences can be utilized.

Deferred tax assets are recognized on deductible temporary differences arising from investments in securities, only to the extent that it is probable the temporary difference will reverse in the future and

there is sufficient taxable profit available against which the temporary difference can be utilized.




19



The Fund has no restrictions on the subscriptions of units. Pursuant to the Trust Deed and subject to the conditions and procedures set out therein, the Manager is entitled, having regard to the interests of



the year are shown in the statement of changes in equity. In order to achieve the investment objectives, the



liquid investments.

As at 31 December 2017, the Fund had US$43,496,342 (2016: US$21,754,639) of puttable financial




2017 2016

Units Units


US$ US$

Net asset value per Provident Fund units 15.40 10.67

2017

Standard

Units -

Accumulation

2017

Provident

Fund Units

2016

Standard

Units -

Accumulation

2016

Provident

Fund Units


Balance brought

forward – 2,039,614 – 2,447,397

Total issues – 1,932,090 – 152,767

Total redemptions – (1,147,987) – (560,550)

Balance carried

forward – 2,823,717 – 2,039,614




Authority. No Standard units - Accumulation were issued by the Fund for the years ended 31 December

2017 and 2016.




20



The investment objective of the Fund is to achieve long-term capital appreciation. The Fund seeks to achieve its investment objective by investing principally in equity and equity-related securities of

Indian companies.




discussed below.





All investments present a risk of loss of capital. The Fund’s market price risk is managed through (i) deliberate securities selection, and (ii) diversification of the investment portfolio.


2017

Fair value

US$

Cost

US$

% of net

assets

Held for trading: Listed equities 40,584,157 32,550,862 93.30 2016

Fair value

US$

Cost

US$

% of net

assets Held for trading: Listed equities 21,033,742 19,729,771 96.69




2017 2016 US$ equivalent US$ equivalent Markets exposed to India 39,770,797 20,263,106 United States of America 813,360 770,636

40,584,157 21,033,742




21





2017 2016

% % Sectors exposed to

Basic Materials 5 6 Communications 4 5 Consumer, Cyclical 10 20 Consumer, Non-cyclical 18 8 Financial 11 4 Industrial 34 38 Technology 16 15 Utilities 2 4

100 100







2017 2016

Change in


US$ Change in


US$

+/- +/- +/- +/-

MSCI India Daily Total Return Net Index 39% 14,108,901 1% 198,980

The Manager has used their view of what would be a “reasonable shift” in the MSCI India Daily Total

Return Net Index, having regard to the historical volatility of the index, to estimate the change for use in the market price risk sensitivity analysis above.







22



Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.


only in listed equities. As a result, the Fund is not subject to significant amounts of risk due to



As at 31 December 2017, the Fund had bank balances of US$17,733,907 (2016: US$720,602) and is therefore exposed to cash flow interest rate risk which is considered by the Manager to be minimal as

they are short-term instruments all with maturities less than one month.









At 31 December 2017

US$ Credit rating

Source of

credit rating

Custodian


Banks


Dah Sing Bank Limited 42,100 P-2 Moody's

At 31 December 2016

US$ Credit rating

Source of

credit rating

Custodian


Banks





All transactions in listed securities are settled/paid for upon delivery using approved and reputable brokers. The risk of default is considered minimal since delivery of securities sold is only made when






23



The Fund limits its exposure to credit risk by transacting the majority of its securities and contractual commitment activities with broker-dealers, banks and regulated exchanges with high credit ratings and


(e) Liquidity risk


redemption request.









US$ US$ US$

At 31 December 2017






US$ US$ US$

At 31 December 2016

Amounts payable to brokers 10,716 – 29,862




As at 31 December 2017, the Fund held cash and cash equivalents of US$17,733,907 (2016:

US$720,602) and liquid investments of US$40,584,157 (2016: US$21,033,742) that are expected to readily generate cash inflows within 1 month for managing liquidity risk.

(f) Currency risk


exchange rates.

The Fund has both monetary and non-monetary assets and liabilities denominated in currencies other than United States dollar, the Fund’s functional and presentation currency. The Fund is therefore

exposed to currency risk, as the value of the assets and liabilities denominated in other currencies will

fluctuate due to changes in foreign exchange rates.




24




2017 2016


Monetary items

Indian Rupee 2,840,788 699,209

Non-monetary items

Indian Rupee 39,770,797 20,263,107



exposed. The analysis is based on the assumption that the foreign exchange rates had increased/decreased by the respective percentage with all other variables held constant.

2017 2016


Impact US$


Impact US$

+/- +/- +/- +/- Monetary items

Indian Rupee 3.0% 85,224 5.0% 34,960 Non-monetary items

Indian Rupee 3.0% 1,193,124 5.0% 1,013,155 The Manager has used their view of what would be a “reasonable shift” in the foreign exchange rates,















length basis.




25



The carrying value less impairment provision of other receivables and payables are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated
























At 31 December 2017


US$ US$ US$ US$

Assets

Held for trading:

- Listed equities 40,584,157 – – 40,584,157

Total assets 40,584,157 – – 40,584,157

At 31 December 2016


US$ US$ US$ US$

Assets

Held for trading:

- Listed equities 21,033,742 – – 21,033,742

Total assets 21,033,742 – – 21,033,742

Investments whose values are based on quoted market prices in active markets and therefore classified

within level 1 include active listed equities. The Fund does not adjust the quoted price for these

instruments.




26



Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs

are classified within level 2. As level 2 investments include positions that are not traded in active

markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity

and/or non-transferability, which are generally based on available market information. As of 31

December 2017 and 2016, the Fund did not hold any investments classified in level 2.

















5. Net gains on investments

2017 2016

US$ US$

Change in unrealized gains in value of investments 6,729,324 1,478,380

Realized gains on sale of investments 3,709,064 68,233

10,438,388 1,546,613

6. Taxation



therefore exempted from profits tax under Section 26A(1A) of the Hong Kong Inland Revenue Ordinance.




27


(b) Depending on the period for which India equity shares are held, the gains arising to the Fund on the

transfer of such shares would be taxable as short-term or long-term capital gains under the India tax

laws. The same is discussed below:

Type of instrument Period of holding immediately preceding the date of

transfer

Listed shares More than 12 months Long Term Capital Asset

12 months or less Short Term Capital Asset

Unlisted shares sold on or before 31

March 2016

More than 36 months Long Term Capital Asset


Unlisted shares sold on or after

1 April 2016

More than 24 months Long Term Capital Asset


Under the current laws, the Fund is subject to the following rates of tax on the gains earned from

transfer of shares.

Nature of income Rates of tax (%)

Capital gains on sale of listed equity shares on-market

(where securities transaction tax is paid)

Long-term Nil*

Short-term 15

Capital gains on sale of listed equity shares off-market

(where securities transaction tax is not paid) or in case of

sale of unlisted shares

Long-term 10

Short-term 30

*For transfers/sale on or after 1 April 2018 the rate of tax shall be 10%

The aforementioned rates are to be increased by applicable surcharge and education cess.

Under current practice, capital gains tax is charged on net realized gains (i.e. realized gains offset by

realized losses subject to satisfying certain conditions) and is reported and settled on an ongoing basis

i.e. whenever the sales are executed. To fairly reflect the taxation impact in the Fund’s daily valuation,

the Manager has engaged an independent tax advisor to calculate daily capital gains tax accruals at

prevailing tax rates. For this purpose, daily realized and unrealized gains are treated as taxable, and

daily realized and unrealized losses are treated as deductible. This practice of treating daily realized

and unrealized gains as taxable and daily realized and unrealized losses as deductible is followed

consistently by the independent tax advisor for the Fund as well as other foreign investors who have engaged them for calculating capital gains tax accruals.

Prior to 1 April 2018, the long term capital gains arising from transfer of equity shares, units of equity

oriented mutual funds, units of Real Estate Investment Trusts (REITs) and units of Infrastructure

Investment Trusts (INVITs) are exempt from tax provided the transactions are subject to securities

transaction tax (STT) as prescribed. The Ministry of Finance of India has introduced the Finance Bill,

2018 (FB 2018) in the Parliament on 1 February 2018 wherein, it is proposed to levy concessional tax

at the rate of 10% (plus applicable surcharge and cess) on long-term capital gains exceeding INR 100,000 from these securities. The change is to be implemented on transfers executed on or after 1

April 2018. The capital gains shall be computed without any benefit of indexation or foreign currency

fluctuations and the transaction should have been subject to payment of Securities Transaction Tax as

under:

In case of equity shares – at the time of acquisition and transfer (subject to the negative list

provided vide notification number 43/2017 dated 5 June 2017); and

In case of units of equity oriented mutual fund/ REITs / INVITs – at the time of time transfer.




28


(b) However, with a view to grandfather gains notionally realised by investors up to 31 January 2018, it has been provided that taxable gains will be determined by considering the cost of acquisition to be the

higher of:

actual cost of acquisition; or

lower of full value of consideration and Fair Market Value on 31 January 2018 (being the highest

price quoted on the stock exchange on 31 January 2018 or on the last traded date prior to such date

in case of listed securities or net asset value in case of a unit which is unlisted).

The amendments proposed in the Finance Bill, 2018 have been approved by both the Houses of the

Parliament and have received the Presidential assent on 29 March 2018. Accordingly, the above

amendments shall be effective from 1 April 2018.

The amount of taxation charged to the statement of comprehensive income represents:

2017 2016 US$ US$

Capital gains tax

Capital gains tax on realized gains 47,652 64,310

Deferred tax charge/(credit) on changes in unrealized

gains 342,563 (61,920)

390,215 2,390

The movement in capital gains tax payable during

the year is as follows:

At the beginning of the year – –

Capital gains tax charged to the statement of

comprehensive income 47,652 64,310

Capital gains tax paid (47,652) (64,310)

At the end of the year – –

The movement in deferred tax liabilities during

the year is as follows:

At the beginning of the year 24,545 86,465

Deferred tax assets/(liabilities) credited to the

statement of comprehensive income 342,563 (61,920)

At the end of the year 367,108 24,545



Associates and connected persons are those as defined in the Mandatory Provident Fund Schemes Ordinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission

of Hong Kong.







29


(a) Management fee

PineBridge Investments Hong Kong Limited, the Manager, is entitled to receive a management fee at 1.50% per annum, with a permitted maximum of 1.50% per annum, of the net asset value of the



No management fee is payable as at year end date (2016: Nil).

(b) Trustee’s fee



monthly in arrears.

Trustee’s fee payable as at year end amounted to US$1,322 (2016: US$915).












10. Distributions





There were no statutory or contractual requirements restricting the free negotiability of assets held by the Fund as at 31 December 2017 and 2016.



PINEBRIDGE JAPAN EQUITY FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge Japan Equity Fund



Contents

Pages













1

Manager Trustee



Hong Kong Hong Kong






Hong Kong





Central, Hong Kong

Legal Advisers

Deacons


18 Chater Road

Central, Hong Kong


Manager’s Report


2



The Japanese equity market gained 22.20% in CY2017 in local currencies, and 27.56% in HK dollars. During the first quarter, the equity market was almost flat as it remained sensitive to the Japanese yen’s strength as a

result of geopolitical risk concerns and fragile oil prices. Also, the decline of US bond yields led the Japanese

yen to strengthen, but it stabilized in the range of 110-115. With improving global macro outlooks and easing of

geopolitical risks, the market started to discount positive earnings revisions as the year progressed. Quarterly

earnings growth rate turned positive year-on-year since 1Q of CY2017 and FY2017 operating profit forecasts

had been revised up as a result of stabilization of the yen, firmer commodity prices and improvement in global

manufacturing sectors, with notable drivers of the strong semiconductor market on the back of on-going

structural change of industries amid accelerating development of technologies such as IoT and electric vehicle development. Domestic sectors also showed static earnings growth. In terms of sector performance, best

preforming sectors were global cyclical manufacturers and commodities on larger upward revisions in earnings.

Domestic sector performance was mixed as cyclical sectors such as commercial software, services and

consumption outperformed on stable earnings growth prospects, but financials and defensive sectors

underperformed. By style, small and growth outperformed. Emerging growth stock particularly performed

strongly on the back of risk appetite recovery.


We are bullish on the market due to the underlying structural changes of Japanese companies over the long-

term. Over 6-12 month time horizon, we are optimistic due to the strong earnings progress of domestic

businesses and continued improvement in the cyclical outlook of many global cyclical companies, especially

with the current Japanese yen level, around 110-115 yen/US dolar being favorable for most exporters.

Domestic businesses, especially cyclical ones, will continue to gain from the static recovery from a long

recession prior to Abenomics, and the domestic consumption would gradually recover as the strong labor

market would be supportive of consumption and 110-115l yen/US dollar level is good for tourism to Japan. Having said that, the high correlation of the Japanese equity market and the Japanese yen may have the market

get volatile depending on the direction of the currency market. In terms of valuation, price to earnings looks

attractive at 16x for Fy18 and the forward looking dividend yield is 1.88%, which is appealing when the 10 year

Japanese Government Bond yield is almost zero. In such environment, we continue to invest in diversified

investment themes such as IoT, labour saving technology and sector consolidation, and remain selective due to

the structural change of certain Japanese companies to be more shareholder oriented and to improve

profitability. We expect improvement among global cyclicals, domestic cyclicals and stable growth stocks

which the fund is overweight based on stock specific positive fundamental progress and reasonable valuation.


Investment Report


3


Holding Market

% of net

shares value

assets

HK$

LISTED EQUITIES

JAPAN

AI HOLDINGS CORP 53,100 10,033,882

1.04%

AJINOMOTO CO INC 45,200 6,652,822

0.69%

ASAHI GROUP HOLDINGS LTD 40,900 15,865,799

1.65%

BANDAI NAMCO HOLDINGS INC 41,500 10,612,371

1.10%

CAPCOM CO LTD 63,500 15,753,483

1.64%

CASIO COMPUTER CO LTD 87,600 9,854,031

1.03%

CYBERDYNE INC 34,800 4,687,396

0.49%

DAI-ICHI LIFE HOLDINGS INC 103,600 16,707,932

1.74%

DAIKIN INDUSTRIES LTD 16,100 14,898,609

1.55%

DAIKYO INC 50,300 7,623,378

0.79%

DISCO CORP 8,600 14,961,654

1.56%

DON QUIJOTE HOLDINGS CO LTD 51,900 21,213,361

2.21%

FERROTEC HOLDINGS CORP 22,800 3,639,062

0.38%

FUJI ELECTRIC CO LTD 327,000 19,265,588

2.00%

FUJITSU LTD 210,000 11,697,670

1.22%

GMO INTERNET INC 52,800 7,023,973

0.73%

HIS CO LTD 44,800 12,699,800

1.32%

HITACHI METALS LTD 53,000 5,950,880

0.62%

HOYA CORP 19,100 7,459,578

0.78%

ISUZU MOTORS LTD 156,000 20,427,881

2.13%

ITOCHU CORP 91,100 13,294,881

1.38%

JFE HOLDINGS INC 71,700 13,463,990

1.40%

KAO CORP 16,600 8,776,733

0.91%

KENKO MAYONNAISE CO LTD 28,000 7,917,945

0.82%

KEYENCE CORP 3,300 14,454,656

1.50%

KOITO MANUFACTURING CO LTD 31,800 17,477,492

1.82%

KOMATSU LTD 55,000 15,564,556

1.62%

KUBOTA CORP 56,400 8,647,686

0.90%

MATSUOKA CORP 26,000 6,910,332

0.72%

MEGACHIPS CORP 11,600 2,720,831

0.28%

MINEBEA MITSUMI CO LTD 130,300 21,366,577

2.22%

MITSUBISHI UFJ FINANCIAL GROUP INC 779,000 44,673,974

4.66%

MITSUI & CO LTD 104,100 13,234,362

1.38%

MITSUI FUDOSAN CO LTD 61,900 10,846,231

1.13%

MS&AD INSURANCE GROUP HOLDINGS INC 52,800 13,974,666

1.45%

NICHIAS CORP 72,000 7,499,633

0.78%

NIDEC CORP 19,400 21,284,351

2.21%

NINTENDO CO LTD 1,400 4,001,720

0.42%


Investment Report


4


Holding Market

% of net

shares value

assets

HK$


JAPAN (CONTINUED)

NIPPON TELEGRAPH & TELEPHONE CORP 55,300 20,342,754

2.12%

NITORI HOLDINGS CO LTD 10,500 11,705,685

1.22%

NTT URBAN DEVELOPMENT CORP 80,900 7,320,705

0.76%

OMRON CORP 41,700 19,446,084

2.02%

OTSUKA CORP 16,900 10,132,749

1.05%

PENTA-OCEAN CONSTRUCTION CO LTD 153,300 8,936,105

0.93%

PEPTIDREAM INC 30,400 8,143,061

0.85%

POLA ORBIS HOLDINGS INC 45,600 12,515,210

1.30%

RECRUIT HOLDINGS CO LTD 34,800 6,761,828

0.70%

SANKYU INC 35,900 12,120,042

1.26%

SCSK CORP 54,700 19,738,652

2.05%

SEKISUI CHEMICAL CO LTD 63,800 10,014,750

1.04%

SEKISUI PLASTICS CO LTD 68,200 7,028,095

0.73%

SEVEN & I HOLDINGS CO LTD 22,700 7,376,950

0.77%

SHIMADZU CORP 103,800 18,454,543

1.92%

SHIN-ETSU CHEMICAL CO LTD 25,400 20,182,085

2.10%

SHIONOGI & CO LTD 46,400 19,631,840

2.04%

SMS CO LTD 31,800 7,833,977

0.82%

SOFTBANK GROUP CORP 31,000 19,189,045

2.00%

SONY CORP 45,600 16,084,656

1.67%

SUMITOMO METAL MINING CO LTD 37,500 13,474,732

1.40%

SUMITOMO MITSUI FINANCIAL GROUP INC 102,100 34,490,789

3.60%

SUNDRUG CO LTD 35,200 12,799,729

1.33%

SUZUKI MOTOR CORP 43,100 19,542,639

2.03%

SYSMEX CORP 8,300 5,108,913

0.53%

TAISEI CORP 15,800 6,151,015

0.64%

TOKYO CENTURY CORP 13,900 5,276,294

0.55%

TOKYO TATEMONO CO LTD 52,500 5,544,990

0.58%

TOPCON CORP 64,400 10,891,012

1.13%

TORAY INDUSTRIES INC 183,900 13,559,307

1.41%

TOYOBO CO LTD 23,800 3,380,817

0.35%

TOYOTA MOTOR CORP 54,400 27,229,624

2.84%

W-SCOPE CORP 30,700 4,987,313

0.52%

YAMAHA MOTOR CO LTD 28,000 7,179,584

0.75%

YOKOGAWA ELECTRIC CORP 96,300 14,421,305

1.50%

ZENKOKU HOSHO CO LTD 28,900 9,716,692

1.01%

TOTAL INVESTMENTS*

939,853,337 97.79%


758,083,809



Investment Report


5


Holdings



LISTED EQUITIES

JAPAN

AI HOLDINGS CORP – 63,100 (10,000) 53,100

AJINOMOTO CO INC 52,200 20,600 (27,600) 45,200

ALPS ELECTRIC CO LTD 35,000 8,000 (43,000) –

ASAHI GROUP HOLDINGS LTD 40,000 30,000 (29,100) 40,900

BANDAI NAMCO HOLDINGS INC – 45,300 (3,800) 41,500

CAPCOM CO LTD 45,400 31,700 (13,600) 63,500

CASIO COMPUTER CO LTD 101,200 57,100 (70,700) 87,600

CYBERDYNE INC 27,200 11,500 (3,900) 34,800

DAICEL CORP 90,300 10,300 (100,600) –

DAI-ICHI LIFE HOLDINGS INC – 113,800 (10,200) 103,600

DAIKIN INDUSTRIES LTD 11,900 6,200 (2,000) 16,100

DAIKYO INC 341,000 151,700 (442,400) 50,300

DISCO CORP 6,900 3,300 (1,600) 8,600

DON QUIJOTE HOLDINGS CO LTD – 53,600 (1,700) 51,900

FERROTEC HOLDINGS CORP – 27,600 (4,800) 22,800

FUJI ELECTRIC CO LTD 293,000 117,000 (83,000) 327,000

FUJITSU LTD 102,000 138,000 (30,000) 210,000

GMO INTERNET INC 50,900 22,100 (20,200) 52,800

GMO PAYMENT GATEWAY INC 5,600 200 (5,800) –

HIS CO LTD – 49,800 (5,000) 44,800

HITACHI METALS LTD – 53,000 – 53,000

HOYA CORP – 21,100 (2,000) 19,100

IDOM INC 57,600 17,100 (74,700) –

IIDA GROUP HOLDINGS CO LTD 30,400 18,100 (48,500) –

INPEX CORP 72,400 300 (72,700) –

ISUZU MOTORS LTD 150,500 60,400 (54,900) 156,000

ITOCHU CORP 104,800 55,200 (68,900) 91,100

JFE HOLDINGS INC 68,700 40,400 (37,400) 71,700

KABU.COM SECURITIES CO LTD 166,200 49,800 (216,000) –

KAKAKU.COM INC 74,700 1,300 (76,000) –

KAO CORP 13,600 16,700 (13,700) 16,600

KDDI CORP 40,900 200 (41,100) –

KENKO MAYONNAISE CO LTD – 28,000 – 28,000

KEYENCE CORP 1,100 2,800 (600) 3,300

KOITO MANUFACTURING CO LTD 28,600 13,300 (10,100) 31,800

KOMATSU LTD 39,800 20,800 (5,600) 55,000

KUBOTA CORP 70,600 19,300 (33,500) 56,400

M3 INC 14,800 21,400 (36,200) –

MATSUOKA CORP – 26,000 – 26,000


Investment Report


6


Holdings




JAPAN (CONTINUED)

MEGACHIPS CORP 28,700 11,400 (28,500) 11,600

MINEBEA MITSUMI CO LTD 56,200 93,900 (19,800) 130,300

MISUMI GROUP INC 38,000 13,700 (51,700) –

MITSUBISHI UFJ FINANCIAL GROUP INC 261,600 597,200 (79,800) 779,000

MITSUI & CO LTD – 121,800 (17,700) 104,100

MITSUI FUDOSAN CO LTD 49,000 23,800 (10,900) 61,900

MIZUHO FINANCIAL GROUP INC 426,500 6,600 (433,100) –

MORINAGA & CO LTD 21,300 5,100 (26,400) –

MORINAGA MILK INDUSTRY CO LTD – 96,000 (96,000) –

MS&AD INSURANCE GROUP HOLDINGS INC 42,500 45,300 (35,000) 52,800

MURATA MANUFACTURING CO LTD 9,300 100 (9,400) –

NICHIAS CORP 90,000 38,000 (56,000) 72,000

NICHIREI CORP 46,600 4,200 (50,800) –

NIDEC CORP 14,500 9,600 (4,700) 19,400

NINTENDO CO LTD – 1,600 (200) 1,400

NIPPON TELEGRAPH & TELEPHONE CORP 20,800 41,200 (6,700) 55,300

NISSHA PRINTING CO LTD – 16,700 (16,700) –

NITORI HOLDINGS CO LTD 12,600 4,600 (6,700) 10,500

NTT DOCOMO INC – 55,300 (55,300) –

NTT URBAN DEVELOPMENT CORP 65,800 27,600 (12,500) 80,900

OBARA GROUP INC 9,200 1,800 (11,000) –

OMRON CORP – 46,300 (4,600) 41,700

OTSUKA CORP – 19,300 (2,400) 16,900

OUTSOURCING INC 14,500 4,200 (18,700) –

PENTA-OCEAN CONSTRUCTION CO LTD 119,000 67,200 (32,900) 153,300

PEPTIDREAM INC 11,900 20,900 (2,400) 30,400

POLA ORBIS HOLDINGS INC 16,300 66,200 (36,900) 45,600

RECRUIT HOLDINGS CO LTD 28,200 83,800 (77,200) 34,800

SANKYU INC – 40,000 (4,100) 35,900

SCSK CORP 26,600 36,000 (7,900) 54,700

SEIKAGAKU CORP 28,000 7,600 (35,600) –

SEKISUI CHEMICAL CO LTD – 112,500 (48,700) 63,800

SEKISUI PLASTICS CO LTD – 75,200 (7,000) 68,200

SEVEN & I HOLDINGS CO LTD – 29,900 (7,200) 22,700

SHIMADZU CORP 96,000 42,900 (35,100) 103,800

SHIN-ETSU CHEMICAL CO LTD 13,300 19,700 (7,600) 25,400

SHIONOGI & CO LTD – 57,700 (11,300) 46,400

SMS CO LTD 29,900 11,900 (10,000) 31,800

SOFTBANK GROUP CORP 21,600 13,800 (4,400) 31,000


Investment Report


7


Holdings




JAPAN (CONTINUED)

SONY CORP 37,600 18,400 (10,400) 45,600

SUBARU CORP (formerly known as FUJI HEAVY

INDUSTRIES LTD) 38,000 8,300 (46,300) –

SUMCO CORP 32,700 – (32,700) –

SUMITOMO METAL MINING CO LTD 52,000 75,000 (89,500) 37,500

SUMITOMO MITSUI FINANCIAL GROUP INC 39,200 72,000 (9,100) 102,100

SUMITOMO MITSUI TRUST HOLDINGS INC 41,900 1,100 (43,000) –

SUNDRUG CO LTD 18,900 57,400 (41,100) 35,200

SUZUKI MOTOR CORP 31,300 17,800 (6,000) 43,100

SYSMEX CORP – 8,800 (500) 8,300

T&D HOLDINGS INC 91,400 3,200 (94,600) –

TAISEI CORP 94,000 88,000 (166,200) 15,800

TOKIO MARINE HOLDINGS INC 28,200 7,900 (36,100) –

TOKYO CENTURY CORP – 14,400 (500) 13,900

TOKYO TATEMONO CO LTD 42,700 17,800 (8,000) 52,500

TOKYU CORP 101,000 2,000 (103,000) –

TOMY CO LTD 105,300 30,500 (135,800) –

TOPCON CORP 83,200 45,000 (63,800) 64,400

TORAY INDUSTRIES INC 120,000 94,500 (30,600) 183,900

TOYOBO CO LTD 267,000 106,000 (349,200) 23,800

TOYOTA BOSHOKU CORP – 40,400 (40,400) –

TOYOTA MOTOR CORP 17,400 43,700 (6,700) 54,400

W-SCOPE CORP 29,800 26,300 (25,400) 30,700

YAMAHA MOTOR CO LTD – 29,400 (1,400) 28,000

YASKAWA ELECTRIC CORP – 82,500 (82,500) –

YOKOGAWA ELECTRIC CORP – 119,000 (22,700) 96,300

ZENKOKU HOSHO CO LTD – 36,300 (7,400) 28,900


Investment Report


8

PineBridge Japan Equity Fund (the “Fund”), is a unit trust governed by its Trust Deed dated 10 August 1998, as




The Fund seeks to provide capital appreciation through a managed portfolio of shares in Japanese Companies.

2017 2016 2015

HK$ HK$ HK$





Net foreign currency (losses)/gains (212,334) 31,202 413,693

Net income excluding capital


Net appreciation/(depreciation) of investments and derivative financial instruments

- realized and unrealized 224,091,580 (134,449,731) 71,674,965

Performance table

Net asset value

Total net Net asset


HK$ HK$


2017 961,098,154 21.21

2016 563,879,940 15.86

2015 869,126,273 18.41


Investment Report


9



Highest

issue price

per unit

HK$

Lowest

redemption price

per unit

HK$

Annualized

investment

return

(Note 1)

%


2017 21.27 15.71 33.73

2016 17.94 14.29 (13.85)

2015 19.65 16.17 9.52

2014 18.38 15.71 (8.39)

2013 18.48 14.16 27.69

2012 14.67 12.61 8.90

2011 16.38 12.92 (13.86)

2010 15.34 13.05 9.19

2009 14.30 9.95 1.06

2008 22.74 11.81 (37.37)

Note 1: The annualized investment return is calculated by comparing the net asset value per unit at the year end against the net asset value per unit at the beginning of the year.

Note 2: No Standard units were issued by the Fund since the year ended 31 December 2003. The “Standard units”

have been renamed to “Standard units - Accumulation” with effect from 27 June 2013.




complied with.


Trustee’s Report


10




On behalf of AIA Company (Trustee) Limited


18 April 2018


TO THE TRUSTEE OF PINEBRIDGE JAPAN EQUITY FUND (THE “FUND”)

11


Opinion

We have audited the financial statements of PineBridge Japan Equity Fund (the “Fund”) set out on pages 14 to


income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to






Basis for opinion


to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the















statements


give a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control as the Manager and the Trustee determine is necessary to enable the preparation of financial statements that are
















(CONTINUED)

12










(CONTINUED)

13








14

2017 2016

Note HK$ HK$

Assets

Current assets

Investments 4(b) 939,853,337 548,221,541

Derivative financial instruments 4(b), 6 – 6,787,513

Interest receivable 682 679

Dividends receivable 777,740 383,289

Amounts receivable on subscription 257,983 1,454,410

Amounts receivable from brokers – 5,039,012


Total assets 961,755,347 587,903,881

Liabilities

Current liabilities

Derivative financial instruments 4(b), 6 1,478 224,923




Total liabilities 657,193 24,023,941

Equity




Hong Kong Limited

________________________ _________________________ ________________________






15

2017 2016

Note HK$ HK$

Income


Dividend income 12,859,522 13,604,919

Net gains/(losses) on investments and derivative

financial instruments 5 224,091,580 (134,449,731)

Net foreign currency (losses)/gains (212,334) 31,202

Total investment income/(loss) 236,754,008 (120,806,213)

Expenses

Trustee’s fee 8(b) 388,886 368,657


Audit fee 89,396 90,670




Transaction costs 436,426 569,905


Net profit/(loss) before tax 235,483,936 (122,619,555)

Withholding tax 7(b) (1,285,983) (1,360,492)

Total comprehensive income/(loss) 234,197,953 (123,980,047)





16

2017 2016

Note HK$ HK$


Issue of units 3 354,715,582 272,508,820









17

2017 2016

HK$ HK$



Adjustment for:

Dividend income (12,859,522) (13,604,919)


Withholding tax 1,285,983 1,360,492

Operating profit/(loss) before working capital changes 222,609,174 (136,231,871)


Net change in derivative financial instruments 6,564,068 (8,185,890)

Net decrease in amounts receivable from brokers 5,039,012 7,146,885

Net decrease in amounts payable to brokers (3,010,673) (8,496,140)


expenses (43,472) 26,175

Cash (used in)/generated from operations (160,473,687) 152,948,200












Cash at banks 10,489,805 5,352,037


20,865,605 26,017,437





18

1. The Fund

PineBridge Japan Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August



Kong.







(“HKICPA”). The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and financial liabilities (including derivative financial



to make judgements, estimates and assumptions that affect the application of policies and the reported



circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from

these estimates.




impact on the Fund.






instruments. HKFRS 9 retains but simplifies the mixed measurement model and establishes three primary measurement categories for financial assets: amortized cost, fair value through other







the recognition of changes in own credit risk in other comprehensive income, for liabilities designated at fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by







19










net assets.



(b) Investments







comprehensive income within “net gains/(losses) on investments and derivative financial instruments” in the period in which they arise. Investments are derecognized when the rights to receive cash flows

from the investments have expired or the Fund has transferred substantially all risks and rewards of

ownership.




from brokers.

(c) Income

Dividends on equities are recognized in the statement of comprehensive income when the Fund’s right to receive payment is established. The corresponding withholding taxes are recorded as a separate item

in the statement of comprehensive income.











20












value through profit or loss are presented in the statement of comprehensive income within “net gains/(losses) on investments and derivative financial instruments”.

(e) Expenses



Outstanding foreign exchange contracts are valued at the year end date by reference to the rate of exchange applicable to the outstanding term of the contract. Unrealized gains or losses on outstanding




Proceeds and payments on the subscription and redemption of units recorded in the statement of










Amounts receivable from/payable to brokers represent receivables from investments sold and payables for investments purchased that have been contracted for but not yet settled or delivered on the year end

date respectively.








21






the year are shown in the statement of changes in equity. In order to achieve the investment objectives, the



liquid investments.

As at 31 December 2017, the Fund had HK$961,098,154 (2016: HK$563,879,940) of puttable financial




2017 2016

Units Units


HK$ HK$


2017

Standard

Units

- Accumulation

2017

Provident

Fund Units

2016

Standard

Units

- Accumulation

2016

Provident

Fund Units



Total issues – 19,820,469 – 17,287,254








2017 and 2016.




22



The investment objective of the Fund is to achieve capital appreciation. The Fund seeks to achieve its investment objective through a managed portfolio of shares in Japanese companies.




discussed below.








2017 2016

Fair value

HK$

Cost

HK$

% of net

assets

Fair value

HK$

Cost

HK$

% of net

assets

Held for trading:

Listed equities 939,853,337 758,083,809 97.79 548,221,541 528,433,298 97.22

Derivative

financial

instruments

(note 6) (1,478)

–

– 6,562,590

–

–




23


(b) Market price risk (Continued) Net market exposures



2017 2016 HK$ equivalent HK$ equivalent Markets exposed to

Japan 939,853,337 548,221,541


2017 2016 % %

Sectors exposed to Basic Materials 7 7 Communications 6 10 Consumer, Cyclical 25 21 Consumer, Non-cyclical 14 17 Energy – 1 Financial 17 17 Industrial 24 22 Technology 7 5

100 100

There were no investments issued by a single issuer with market value exceeding 10% of the Fund’s






2017 2016

Change in


HK$ Change in


HK$

+/- +/- +/- +/-

TOPIX Index 28% 273,773,665 4% 22,728,606

The Manager has used their view of what would be a “reasonable shift” in the TOPIX Index, having regard to the historical volatility of the index, to estimate the change for use in the market price risk sensitivity analysis above. Disclosures above are shown in absolute terms, changes and impacts could be positive or negative. Changes in market index % are revised annually depending on the Manager’s current view of market volatility and other relevant factors.




24









As at 31 December 2017, the Fund had bank balances of HK$20,865,605 (2016: HK$26,017,437) and

is therefore exposed to cash flow interest rate risk which is considered by the Manager to be minimal

as they are short-term instruments all with maturities less than one month.









At 31 December 2017

HK$

Credit

rating

Source of

credit rating

Custodian


Banks



At 31 December 2016

HK$

Credit

rating

Source of

credit rating

Custodian


Banks




note 6. As at 31 December 2017, the counterparty of these foreign exchange contracts is State Street

Bank, Hong Kong (2016: The Hongkong and Shanghai Banking Corporation Limited). The credit rating is P-1 (Moody’s) (2016: P-1 (Moody’s)).




25













(e) Liquidity risk


redemption request.









HK$ HK$ HK$

At 31 December 2017



Total financial liabilities (excluding

net settled derivatives) 477,010 – 178,705



HK$ HK$ HK$

At 31 December 2016




Total financial liabilities (excluding

net settled derivatives) 23,578,958 – 220,060





26








HK$ HK$ HK$

At 31 December 2017


Foreign exchange contracts – (1,478) –



HK$ HK$ HK$

At 31 December 2016


Foreign exchange contracts (224,923) – –




HK$26,017,437) and liquid investments of HK$939,853,337 (2016: HK$548,221,541) that are


(f) Currency risk


exchange rates.


than Hong Kong dollar, the Fund’s functional and presentation currency. The Fund is therefore

exposed to currency risk, as the value of the assets and liabilities denominated in other currencies will

fluctuate due to changes in foreign exchange rates. Details of foreign exchange contracts outstanding at

the year end are disclosed in note 6.

The table below summarizes the Fund’s net monetary and non-monetary exposure to different major

currencies:

2017 2016

HK$ equivalents HK$ equivalents

Monetary items

Japanese Yen (269,052,580) (105,655,897)

United States Dollar – (51,047)

Non-monetary items

Japanese Yen 939,853,337 548,221,541

Gross exposures to currency risk on foreign exchange contracts outstanding at the year end are disclosed in note 6.




27





exposed. The analysis is based on the assumption that the foreign exchange rates had increased/decreased by the respective percentage with all other variables held constant.

2017 2016

Change in foreign

exchange rates %

Impact

HK$

Change in foreign

exchange rates %

Impact

HK$

+/- +/- +/- +/-

Monetary items

Japanese Yen 3.0% (8,071,577) 12.0% (12,678,708)

United States Dollar 0.5% – 0.5% (255)

Non-monetary items

Japanese Yen 3.0% 28,195,600 12.0% 65,786,585


having regard to historical volatility of those rates, to estimate the change for use in the currency risk sensitivity analysis above.






based on quoted market prices at the close of trading on the year end date. The Fund utilizes the last traded market price as its fair valuation inputs for both financial assets and financial liabilities.





agency, and those prices represent actual and regularly occurring market transactions on an arm’s length basis.














28





measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require



judgement, considering factors specific to the asset or liability.

The determination of what constitutes “observable” requires significant judgement by the Fund. The






At 31 December 2017


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 939,853,337 – – 939,853,337

Total assets 939,853,337 – – 939,853,337

Liabilities

Held for trading:


instruments – (1,478) – (1,478)


At 31 December 2016


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 548,221,541 – – 548,221,541


instruments – 6,787,513 – 6,787,513

Total assets 548,221,541 6,787,513 – 555,009,054

Liabilities

Held for trading:


instruments – (224,923) – (224,923)





29




within level 1, include active listed equities. The Fund does not adjust the quoted price for these

instruments.



are classified within level 2. These include foreign exchange contracts. As level 2 investments include

positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may

be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available

market information.




Assets and liabilities included in the statement of net assets, except for investments and derivative

financial instruments, are carried at amortized cost; their carrying values are a reasonable

approximation of fair value.





managing capital is to safeguard the Fund’s ability to continue as a going concern in order to provide returns for unitholders and benefits for other stakeholders and to maintain a strong capital base to







2017 2016

HK$ HK$

Change in unrealized gains/(losses) in value of investments and

derivative financial instruments 155,417,217 (41,938,316)

Realized gains/(losses) on sale of investments and derivative

financial instruments 68,674,363 (92,511,415)

224,091,580 (134,449,731)




30



below:

At 31 December 2017


HK$

Open contracts:

JPY4,027,870,000 HK$280,238,642 22 March 2018 (1,478)

At 31 December 2016


HK$

Open contracts:

JPY475,655,379 HK$34,253,227 10 January 2017 2,616,320

JPY640,000,000 HK$46,759,596 18 January 2017 4,171,193

6,787,513

JPY587,850,481 HK$38,889,288 18 January 2017 (224,923)

(224,923)

7. Taxation







Ordinance and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission of Hong Kong.







31


(a) Management fee






(b) Trustee’s fee



monthly in arrears.













11. Distributions









PINEBRIDGE US EQUITY FUND


FOR THE YEAR ENDED

31 DECEMBER 2017

PineBridge US Equity Fund



Contents

Pages













1

Manager Trustee



Hong Kong Hong Kong






Hong Kong





Central, Hong Kong

Legal Advisers

Deacons


18 Chater Road

Central, Hong Kong


Manager’s Report


2


Asset Class Overview

During the period under review, the U.S. large cap equity market as measured by the S&P 500 Total Return Index gained +22.84%.

The Trump presidency started off with a flurry of executive orders relatively consistent with Trump's rhetoric

during his campaign. Most relevant for US equity markets was the executive order signed by the President with

the intention to roll back regulation on Wall Street. The Fed has continued to signal interest rate normalization.

While many expectations coming into 2017 were of a June rate hike, the hawkish change in tone from the Fed

led to market expectations of a March rate hike to rise, ultimately resulting in a hike at the March FOMC. The

Trump administration had a bumpy second quarter that began with failure to pass a highly anticipated health care reform bill and continued with the firing of FBI Director James Comey amidst an investigation into

election tampering by Russia. While the firing set off a political firestorm, more relevant to markets was the

agenda, signaling that policy reform may face stiff opposition even with a Republican house majority. A strong

earnings season was a positive catalyst for markets despite continued weakness in the retail sector as consumer

purchasing habits shift online. The third quarter in the US was defined by steady upward movement in equities

despite various geopolitical hurdles and political volatility. Another strong earnings season from many key

companies included Boeing which boosted strength in the industrial sector. The US market continued its upward

trend to new all-time highs during the fourth quarter of 2017, capping off a strong year for US equities. The standout index in the US was the NASDAQ, as technology companies had a big year. The major themes of

artificial intelligence/machine learning as well as the shifting online retail landscape kept technology in the

forefront of investor focus for much of 2017 and this is only expected to continue as more of these technologies

are developed and utilized. What seemed unlikely at the end of the third quarter on the tax reform front saw the

passage of both the House and Senate versions of a revised tax bill within the quarter, prompting bullish

revisions to US-based company earnings. As the tax bill was signed into law in December, we would expect that

the number of analyst revisions would increase across the street as the implications of the tax cuts are factored

into company earnings analysis. Whether these revisions are on net positive or negative remains to be seen.

Portfolio Overview

During the period under review, the Fund outperformed its benchmark S&P 500 Total Return Index by 103

basis points, with a gross return of 23.87%. Our top contributing growth category to relative performance were

the Mature Cyclical companies. The worst performing growth category were the Mature Defensive names. The

top contributing sectors to relative performance were Energy and Health Care while the top detracting sectors

were Consumer Discretionary and Telecommunication Services.

Portfolio Outlook

Multiple rate hikes are expected in the year 2018 as the FOMC continues the path to policy normalization.

Many sell side analysts are updating their 2018 outlooks given the progress made with the Congressional tax

reform. We would expect rising inflation in 2018 as inflation expectations have been trending up in conjunction

with rising rates. As the job market remains strong and the US operating closer and closer to full employment,

we would expect this to only reaffirm the Fed’s case for increasing rates. One theme that is likely to continue in 2018 is the growth of consumer spending as tax relief and rising wages combine to support discretionary

spending. Based on these various factors, the US market seems poised for another strong year in 2018.


Investment Report


3


Holding Market

% of net

shares value

assets

HK$

LISTED EQUITIES


ABBVIE INC 11,927 9,016,973 0.16%

ADOBE SYSTEMS INC 53,488 73,273,639

1.29%

AES CORP 128,088 10,844,139

0.19%

ALLSTATE CORP 76,492 62,612,685

1.10%

ALPHABET INC CLASS A 2,606 21,459,810

0.38%

ALPHABET INC CLASS C 15,698 128,410,403 2.26%

ALTRIA GROUP INC 158,212 88,319,501 1.55%

AMAZON.COM INC 6,320 57,778,241

1.02%

AMERIPRISE FINANCIAL INC 46,839 62,052,402

1.09%

AMERISOURCEBERGEN CORP 3,705 2,659,400

0.05%

AMGEN INC 62,594 85,092,335

1.50%

ANTHEM INC 24,040 42,285,789

0.74%

APPLE INC 200,465 265,200,334

4.65%

ARCHER-DANIELS-MIDLAND CO 162,879 51,032,984

0.90%

AT&T INC 344,133 104,594,953

1.84%

AVALONBAY COMMUNITIES INC 43,282 60,364,925

1.06%

BANK OF AMERICA CORP 59,386 13,704,354

0.24%

BAXTER INTERNATIONAL INC 122,901 62,103,334

1.09%

BERKSHIRE HATHAWAY INC 23,597 36,564,734

0.64%

BOEING CO 41,292 95,194,876

1.67%

BROADCOM LTD 38,816 77,953,037

1.37%

CATERPILLAR INC 66,587 82,025,465

1.44%

CHARTER COMMUNICATIONS INC 22,706 59,632,959

1.05%

CHEVRON CORP 117,792 115,277,245

2.03%

CIGNA CORP 41,922 66,556,226

1.17%

CITIGROUP INC 141,079 82,063,839

1.44%

CLOROX CO 4,204 4,888,196

0.09%

COMERICA INC 88,532 60,079,760

1.06%

CONAGRA BRANDS INC 200,537 59,053,860

1.04%

CORNING INC 230,886 57,739,098

1.01%

CVS HEALTH CORP 103,369 58,585,006

1.03%

DR PEPPER SNAPPLE GROUP INC 49,939 37,891,193

0.67%

E*TRADE FINANCIAL CORP 150,585 58,352,409

1.03%

EAST WEST BANCORP INC 75,248 35,782,521

0.63%

ELI LILLY & CO 111,853 73,851,083

1.30%

ENTERGY CORP 90,121 57,339,672

1.01%

ESSEX PROPERTY TRUST INC 29,041 54,796,524

0.96%

EXPRESS SCRIPTS HOLDING CO 83,764 48,875,048

0.86%

EXXON MOBIL CORP 141,122 92,271,356

1.62%

FACEBOOK INC 112,632 155,369,663

2.73%

FIFTH THIRD BANCORP 221,756 52,595,563

0.92%

FIRSTENERGY CORP 215,333 51,543,503

0.91%

GENERAL DYNAMICS CORP 44,254 70,383,098

1.24%

GENERAL ELECTRIC CO 341,334 46,562,162

0.82%


Investment Report


4


Holding Market

% of net

shares value

assets

HK$


UNITED STATES OF AMERICA (CONTINUED)

GENERAL MILLS INC 142,419 66,009,666

1.16%

HOME DEPOT INC 46,191 68,437,397

1.20%

HP INC 337,463 55,425,596

0.97%

INGERSOLL-RAND PLC 82,980 57,855,913

1.02%

INTEL CORP 115,950 41,840,292

0.74%

INTERNATIONAL BUSINESS MACHINES CORP 73,274 87,879,997

1.54%

INTUIT INC 44,299 54,639,162

0.96%

INTUITIVE SURGICAL INC 21,270 60,680,215

1.07%

JOHNSON & JOHNSON 35,087 38,323,306

0.67%

JPMORGAN CHASE & CO 42,050 35,153,157

0.62%

KIMBERLY-CLARK CORP 64,984 61,295,405

1.08%

LAS VEGAS SANDS CORP 100,524 54,607,240

0.96%

LEAR CORP 38,845 53,645,279

0.94%

LEUCADIA NATIONAL CORP 275,589 57,069,227

1.00%

LINCOLN NATIONAL CORP 26,752 16,075,752

0.28%

LOEWS CORP 136,936 53,555,773

0.94%

LOWE'S COS INC 56,002 40,687,814

0.72%

LYONDELLBASELL INDUSTRIES NV 76,486 65,962,082

1.16%

MANPOWERGROUP INC 25,041 24,686,490

0.43%

MARATHON PETROLEUM CORP 15,529 8,009,658

0.14%

MERCK & CO INC 193,171 84,972,226

1.49%

MICROSOFT CORP 158,343 105,883,008

1.86%

OMNICOM GROUP INC 91,420 52,048,675

0.91%

PAYPAL HOLDINGS INC 87,171 50,167,909

0.88%

PRINCIPAL FINANCIAL GROUP INC 109,230 60,250,223

1.06%

PROCTER & GAMBLE CO 23,317 16,747,570

0.29%

PRUDENTIAL FINANCIAL INC 74,441 66,910,251

1.18%

REGIONS FINANCIAL CORP 6,638 896,683

0.02%

REPUBLIC SERVICES INC 114,313 60,417,773

1.06%

ROSS STORES INC 105,333 66,079,637

1.16%

ROYAL CARIBBEAN CRUISES LTD 61,975 57,788,620

1.02%

SCRIPPS NETWORKS INTERACTIVE INC 33,374 22,275,249

0.39%

SIMON PROPERTY GROUP INC 48,488 65,097,436

1.14%

SKYWORKS SOLUTIONS INC 66,683 49,495,789

0.87%

SPECTRUM BRANDS HOLDINGS INC 49,304 43,321,813

0.76%

SYSCO CORP 25,637 12,171,067

0.21%

TARGET CORP 79,454 40,527,931

0.71%

TEXAS INSTRUMENTS INC 100,631 82,159,314

1.44%

TIME WARNER INC 100,659 71,976,288

1.27%

TJX COS INC 114,850 68,647,298

1.21%

T-MOBILE US INC 113,101 56,152,192

0.99%

TWENTY-FIRST CENTURY FOX INC 225,634 60,905,887

1.07%

UNITED CONTINENTAL HOLDINGS INC 78,591 41,408,630

0.73%

UNITED RENTALS INC 9,190 12,350,223

0.22%


Investment Report


5


Holding Market

% of net

shares value

assets

HK$



UNITEDHEALTH GROUP INC 61,848 106,589,302

1.87%

US BANCORP 101,217 42,394,969

0.75%

VALERO ENERGY CORP 94,018 67,551,023

1.19%

VISA INC 119,016 106,082,694

1.86%

WALGREENS BOOTS ALLIANCE INC 124,574 70,719,928

1.24%

WELLS FARGO & CO 19,782 9,382,149

0.16%

ZEBRA TECHNOLOGIES CORP 20,202 16,392,677

0.29%

TOTAL UNITED STATES OF AMERICA

5,561,638,152

97.75%



SPDR S&P500 ETF TRUST 53,675 111,973,097 1.97%

TOTAL UNITED STATES OF AMERICA 111,973,097 1.97%

TOTAL INVESTMENTS* 5,673,611,249 99.72%

TOTAL INVESTMENTS, AT COST* 4,917,216,717

* Investments are accounted for on a trade date basis


Investment Report


6


Holdings



LISTED EQUITIES


3M CO – 36,810 (36,810) –

ABBVIE INC 138,476 11,927 (138,476) 11,927

ACCENTURE PLC – 79,501 (79,501) –

ACTIVISION BLIZZARD INC – 174,433 (174,433) –

ADOBE SYSTEMS INC 76,755 – (23,267) 53,488

AES CORP 156,341 – (28,253) 128,088

AETNA INC 59,844 – (59,844) –

AFLAC INC 108,815 3,039 (111,854) –

ALCOA UPSTREAM CORP – 131,942 (131,942) –

ALEXION PHARMACEUTICALS INC – 64,976 (64,976) –

ALLSTATE CORP – 153,746 (77,254) 76,492

ALPHABET INC CLASS A 14,686 1,730 (13,810) 2,606

ALPHABET INC CLASS C 18,253 1,012 (3,567) 15,698

ALTRIA GROUP INC – 193,300 (35,088) 158,212

AMAZON.COM INC 4,692 5,566 (3,938) 6,320

AMERICAN EXPRESS CO 113,879 – (113,879) –

AMERIPRISE FINANCIAL INC – 63,934 (17,095) 46,839

AMERISOURCEBERGEN CORP – 7,288 (3,583) 3,705

AMGEN INC – 76,662 (14,068) 62,594

ANTERO RESOURCES CORP – 276,727 (276,727) –

ANTHEM INC – 42,092 (18,052) 24,040

AON PLC 67,001 403 (67,404) –

APPLE INC 123,600 123,700 (46,835) 200,465

APPLIED MATERIALS INC 14,673 – (14,673) –

ARAMARK – 33,392 (33,392) –

ARCH CAPITAL GROUP LTD – 48,574 (48,574) –

ARCHER-DANIELS-MIDLAND CO 160,536 42,617 (40,274) 162,879

ASSOCIATED BANC-CORP – 177,196 (177,196) –

AT&T INC 369,426 73,331 (98,624) 344,133

AUTOZONE INC 3,559 – (3,559) –

AVALONBAY COMMUNITIES INC – 43,282 – 43,282

AVERY DENNISON CORP 36,286 – (36,286) –

BANK OF AMERICA CORP 74,310 29,918 (44,842) 59,386

BAXTER INTERNATIONAL INC 150,669 11,236 (39,004) 122,901

BB&T CORP – 176,422 (176,422) –

BERKSHIRE HATHAWAY INC 24,033 56,920 (57,356) 23,597

BIOGEN INC 30,176 – (30,176) –

BIOVERATIV INC – 15,088 (15,088) –

BOEING CO 61,452 518 (20,678) 41,292

BROADCOM LTD – 43,168 (4,352) 38,816

CARDINAL HEALTH INC 6,469 – (6,469) –

CATERPILLAR INC – 98,758 (32,171) 66,587

CBRE GROUP INC – 221,020 (221,020) –

CBS CORP 78,603 3,152 (81,755) –


Investment Report


7


Holdings





CENTURYLINK INC 184,535 – (184,535) –

CHARTER COMMUNICATIONS INC – 22,706 – 22,706

CHEVRON CORP 7,303 116,584 (6,095) 117,792

CHUBB LTD – 77,049 (77,049) –

CIGNA CORP 43,111 54,390 (55,579) 41,922

CINCINNATI FINANCIAL CORP 58,688 – (58,688) –

CISCO SYSTEMS INC 335,109 – (335,109) –

CITIGROUP INC 207,022 156,773 (222,716) 141,079

CITRIX SYSTEMS INC 35,976 – (35,976) –

CLOROX CO 46,675 6,232 (48,703) 4,204

COLGATE-PALMOLIVE CO 61,018 – (61,018) –

COMERICA INC 99,574 12,140 (23,182) 88,532

CONAGRA BRANDS INC – 242,958 (42,421) 200,537

CONOCOPHILLIPS – 203,763 (203,763) –

CONSOL ENERGY INC – 364,503 (364,503) –

CONTINENTAL RESOURCES INC/OK – 192,794 (192,794) –

CORNING INC 292,896 – (62,010) 230,886

CUMMINS INC – 49,016 (49,016) –

CVS HEALTH CORP 117,767 10,556 (24,954) 103,369

DANAHER CORP 48,544 – (48,544) –

DARDEN RESTAURANTS INC – 94,878 (94,878) –

DIAMOND OFFSHORE DRILLING INC 34,031 – (34,031) –

DISCOVER FINANCIAL SERVICES – 114,738 (114,738) –

DISCOVERY COMMUNICATIONS INC – 264,059 (264,059) –

DOW CHEMICAL CO 151,628 16,871 (168,499) –

DOWDUPONT INC – 142,663 (142,663) –

DR PEPPER SNAPPLE GROUP INC 75,788 – (25,849) 49,939

DXC TECHNOLOGY CO – 5,787 (5,787) –

E*TRADE FINANCIAL CORP 193,369 17,831 (60,615) 150,585

EAST WEST BANCORP INC 35,960 55,885 (16,597) 75,248

EASTMAN CHEMICAL CO – 47,167 (47,167) –

EATON VANCE CORP 104,295 – (104,295) –

ELI LILLY & CO – 119,275 (7,422) 111,853

EMERSON ELECTRIC CO – 144,826 (144,826) –

ENTERGY CORP – 102,843 (12,722) 90,121

ESSEX PROPERTY TRUST INC – 29,041 – 29,041

EVEREST RE GROUP LTD – 2,369 (2,369) –

EXPRESS SCRIPTS HOLDING CO 6,644 88,852 (11,732) 83,764

EXXON MOBIL CORP 85,362 94,491 (38,731) 141,122

FACEBOOK INC 124,180 25,014 (36,562) 112,632

FEDERATED INVESTORS INC 18,806 – (18,806) –

FIDELITY NATIONAL INFORMATION SERVICES INC – 9,375 (9,375) –

FIFTH THIRD BANCORP – 221,756 – 221,756

FIRSTENERGY CORP – 270,885 (55,552) 215,333


Investment Report


8


Holdings





FISERV INC 67,847 – (67,847) –

FREEPORT-MCMORAN INC 457,834 – (457,834) –

GENERAL DYNAMICS CORP – 44,254 – 44,254

GENERAL ELECTRIC CO 462,767 196,759 (318,192) 341,334

GENERAL MILLS INC 104,315 72,669 (34,565) 142,419

HARLEY-DAVIDSON INC – 77,124 (77,124) –

HARTFORD FINANCIAL SERVICES GROUP INC – 139,690 (139,690) –

HCA HEALTHCARE INC 78,902 – (78,902) –

HEWLETT PACKARD ENTERPRISE CO 67,370 – (67,370) –

HILTON WORLDWIDE HOLDINGS INC – 123,476 (123,476) –

HOLOGIC INC 158,919 – (158,919) –

HOME DEPOT INC 90,756 5,130 (49,695) 46,191

HONEYWELL INTERNATIONAL INC 81,730 – (81,730) –

HP INC 454,796 69,759 (187,092) 337,463

IDEXX LABORATORIES INC 9,024 – (9,024) –

ILLINOIS TOOL WORKS INC – 56,805 (56,805) –

INGERSOLL-RAND PLC – 82,980 – 82,980

INTEL CORP – 115,950 – 115,950

INTERNATIONAL BUSINESS MACHINES CORP – 74,767 (1,493) 73,274

INTERNATIONAL PAPER CO 41,925 – (41,925) –

INTUIT INC – 44,299 – 44,299

INTUITIVE SURGICAL INC 9,519 16,767 (5,016) 21,270

JETBLUE AIRWAYS CORP 192,693 – (192,693) –

JM SMUCKER CO 43,794 – (43,794) –

JOHNSON & JOHNSON 150,469 9,477 (124,859) 35,087

JPMORGAN CHASE & CO 63,389 151,883 (173,222) 42,050

KIMBERLY-CLARK CORP 62,535 76,414 (73,965) 64,984

KROGER CO – 267,172 (267,172) –

LAREDO PETROLEUM INC 80,048 – (80,048) –

LAS VEGAS SANDS CORP – 108,690 (8,166) 100,524

LEAR CORP – 38,845 – 38,845

LEUCADIA NATIONAL CORP 284,393 76,722 (85,526) 275,589

LINCOLN NATIONAL CORP – 27,541 (789) 26,752

LOCKHEED MARTIN CORP – 22,760 (22,760) –

LOEWS CORP – 165,883 (28,947) 136,936

LOGMEIN INC – 6,182 (6,182) –

LOWE'S COS INC 40,422 43,980 (28,400) 56,002

LPL FINANCIAL HOLDINGS INC 1,654 – (1,654) –

LYONDELLBASELL INDUSTRIES NV 77,528 28,936 (29,978) 76,486

M&T BANK CORP – 50,711 (50,711) –

MANPOWERGROUP INC – 25,041 – 25,041

MARATHON PETROLEUM CORP 150,541 17,098 (152,110) 15,529

MASTERCARD INC 60,157 – (60,157) –

MCDONALD'S CORP 76,041 – (76,041) –


Investment Report


9


Holdings





MCKESSON CORP 2,418 47,894 (50,312) –

MERCK & CO INC 200,185 37,687 (44,701) 193,171

MGM RESORTS INTERNATIONAL 224,245 – (224,245) –

MICROSOFT CORP 339,894 25,744 (207,295) 158,343

MOTOROLA SOLUTIONS INC – 45,893 (45,893) –

NABORS INDUSTRIES LTD 237,004 – (237,004) –

NIELSEN HOLDINGS PLC 52,184 – (52,184) –

NORTHROP GRUMMAN CORP 29,544 4,879 (34,423) –

NRG ENERGY INC 448,631 – (448,631) –

NXP SEMICONDUCTORS NV – 55,437 (55,437) –

OMNICOM GROUP INC 82,267 27,512 (18,359) 91,420

ONEOK INC 119,251 – (119,251) –

PACCAR INC – 4,227 (4,227) –

PAYPAL HOLDINGS INC – 106,399 (19,228) 87,171

PEPSICO INC 97,482 – (97,482) –

PFIZER INC 18,396 696 (19,092) –

PRICELINE GROUP INC – 5,984 (5,984) –

PRINCIPAL FINANCIAL GROUP INC – 118,604 (9,374) 109,230

PROCTER & GAMBLE CO 18,257 84,180 (79,120) 23,317

PRUDENTIAL FINANCIAL INC – 152,489 (78,048) 74,441

QUALCOMM INC 145,347 4,190 (149,537) –

REALOGY HOLDINGS CORP 248,592 – (248,592) –

REGAL ENTERTAINMENT GROUP – 116,123 (116,123) –

REGIONS FINANCIAL CORP – 6,834 (196) 6,638

REPUBLIC SERVICES INC 123,322 118,318 (127,327) 114,313

ROSS STORES INC – 129,459 (24,126) 105,333

ROYAL CARIBBEAN CRUISES LTD – 64,151 (2,176) 61,975

SCRIPPS NETWORKS INTERACTIVE INC – 40,735 (7,361) 33,374

SHERWIN-WILLIAMS CO 16,364 – (16,364) –

SIMON PROPERTY GROUP INC – 53,387 (4,899) 48,488

SKYWORKS SOLUTIONS INC – 78,621 (11,938) 66,683

SPECTRUM BRANDS HOLDINGS INC – 50,759 (1,455) 49,304

SPRINT CORP – 141,134 (141,134) –

STANLEY BLACK & DECKER INC – 18,667 (18,667) –

SYSCO CORP – 31,291 (5,654) 25,637

TARGET CORP 48,900 112,912 (82,358) 79,454

TEXAS INSTRUMENTS INC 120,488 9,188 (29,045) 100,631

THOMSON REUTERS CORP – 156,447 (156,447) –

TIME WARNER INC 95,081 100,659 (95,081) 100,659

TJX COS INC 103,146 85,573 (73,869) 114,850

T-MOBILE US INC 26,309 119,003 (32,211) 113,101

TRAVELERS COS INC 64,763 – (64,763) –

TWENTY-FIRST CENTURY FOX INC – 248,433 (22,799) 225,634

UNION PACIFIC CORP – 102,109 (102,109) –


Investment Report


10


Holdings





UNITED CONTINENTAL HOLDINGS INC 97,184 123,262 (141,855) 78,591

UNITED RENTALS INC – 63,283 (54,093) 9,190

UNITED TECHNOLOGIES CORP 19,549 – (19,549) –

UNITEDHEALTH GROUP INC 62,151 15,844 (16,147) 61,848

US BANCORP – 102,118 (901) 101,217

VALERO ENERGY CORP 112,037 100,426 (118,445) 94,018

VERIZON COMMUNICATIONS INC 9,601 254,631 (264,232) –

VISA INC – 124,013 (4,997) 119,016

WALGREENS BOOTS ALLIANCE INC – 140,648 (16,074) 124,574

WAL-MART STORES INC 137,985 15,604 (153,589) –

WALT DISNEY CO 38,775 113,753 (152,528) –

WELLS FARGO & CO 37,833 15,788 (33,839) 19,782

WESTERN ALLIANCE BANCORP 20,287 29,711 (49,998) –

WESTERN UNION CO 131,522 – (131,522) –

WESTROCK CO – 77,644 (77,644) –

WILLIAMS COS INC – 281,252 (281,252) –

YUM! BRANDS INC – 28,796 (28,796) –

ZEBRA TECHNOLOGIES CORP – 24,657 (4,455) 20,202



SPDR S&P500 ETF TRUST 60,433 412,808 (419,566) 53,675


Investment Report


11

PineBridge US Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998, as




The Fund seeks to provide capital appreciation through a managed portfolio of shares in US Companies.

2017 2016 2015

HK$ HK$ HK$





Net foreign currency gains 967,082 305,762 22,731




- realized and unrealized 1,113,399,215 328,008,506 (49,713,291)

Performance table

Net asset value

Total net Net asset


HK$ HK$


2017 5,689,661,023 29.37

2016 5,170,886,377 23.71

2015 3,189,823,889 21.36


Investment Report


12



Highest

issue price

per unit

HK$

Lowest

redemption price

per unit

HK$

Annualized

investment

return

(Note 1)

%


2017 29.52 23.93 23.87

2016 24.09 19.19 11.00

2015 22.46 19.41 (0.47)

2014 21.82 18.06 13.31

2013 18.94 14.41 34.02

2012 14.34 12.11 18.39

2011 12.62 10.27 4.33

2010 11.45 9.31 15.01

2009 10.07 5.98 25.99

2008 12.04 6.45 (35.20)



Note 2: No Standard units were issued by the Fund since the year ended 31 December 2003. The “Standard units” have been renamed to “Standard units - Accumulation” with effect from 27 June 2013.




complied with.


Trustee’s Report


13

We hereby confirm that, in our opinion, the Manager of the Fund has, in all material respects, managed the Fund

for the year ended 31 December 2017 in accordance with the provisions of the Trust Deed dated 10 August

1998, as amended, supplemented and restated.

On behalf of



18 April 2018


TO THE TRUSTEE OF PINEBRIDGE US EQUITY FUND (THE “FUND”)

(CONTINUED)

14


Opinion

We have audited the financial statements of PineBridge US Equity Fund (the “Fund”) set out on pages 17 to 39,

which comprise the statement of net assets as at 31 December 2017, and the statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year then ended, and notes to






Basis for opinion


to Practice Note 860.1 (Revised), The Audit of Retirement Schemes issued by the HKICPA. Our

responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the

















statements


give a true and fair view in accordance with HKFRSs issued by the HKICPA, and for such internal control as

the Manager and the Trustee determine is necessary to enable the preparation of financial statements that are



Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager and the Trustee of the Fund either intend to






("the MPF Code"), and Guidelines II.5 issued by the Mandatory Provident Fund Schemes Authority ("the MPFA") and the Code on Unit Trusts and Mutual Funds ("the Code") issued by the Hong Kong Securities and





(CONTINUED)

15










(CONTINUED)

16








17



Hong Kong Limited

________________________ _________________________ ________________________



2017 2016

Note HK$ HK$

Assets

Current assets

Investments 4(b) 5,673,611,249 5,147,792,388

Interest receivable 455 533

Dividends receivable 5,427,898 4,340,620

Amounts receivable on subscription 5,196,281 681,600,054


Total assets 5,692,168,768 5,850,372,211

Liabilities

Current liabilities

Derivative financial instruments 4(b), 6 265 609,656





Equity





18

2017 2016

Note HK$ HK$

Income


Dividend income 110,598,771 78,554,594

Net gains on investments and derivative financial instruments 5 1,113,399,215 328,008,506

Net foreign currency gains 967,082 305,762

Other income 204,892 –

Total investment income 1,225,197,327 406,878,113

Expenses

Trustee’s fee 8(b) 2,760,690 1,770,959


Audit fee 128,018 115,616






Net profit before tax 1,213,944,673 397,711,522

Withholding tax 7(b) (31,168,367) (22,578,892)

Total comprehensive income 1,182,776,306 375,132,630





19

2017 2016

Note HK$ HK$

Balance at the beginning of the year 5,170,886,377 3,189,823,889

Issue of units 3 1,000,766,606 2,213,213,006

Redemption of units 3 (1,664,768,266) (607,283,148)

Net (decrease)/increase from unit transactions (664,001,660) 1,605,929,858


Balance at the end of the year 5,689,661,023 5,170,886,377





20

2017 2016

HK$ HK$



Adjustment for:

Dividend income (110,598,771) (78,554,594)


Withholding tax 31,168,367 22,578,892

Operating profit before working capital changes 1,103,318,535 319,147,677

Net increase in investments (525,818,861) (1,965,519,188)

Net change in derivative financial instruments (609,391) 609,656

Net (decrease)/increase in amounts payable to brokers (676,952,215) 676,952,215


expenses (148,737) 346,193






Proceeds from issue of units 1,677,170,379 1,534,777,774

Payments on redemption of units (1,664,036,012) (606,847,300)






Cash at banks 1,005,785 440,816


7,932,885 16,638,616





21

1. The Fund

PineBridge US Equity Fund (the “Fund”) is a unit trust governed by its Trust Deed dated 10 August 1998, as

amended, supplemented and restated. The Fund has been authorized by the Securities and Futures


Kong.






Standards (“HKFRS”) issued by the Hong Kong Institute of Certified Public Accountants (“HKICPA”).

The financial statements have been prepared under the historical cost convention, as modified by the

revaluation of financial assets and financial liabilities (including derivative financial instruments) at fair

value through profit or loss.

The preparation of financial statements in conformity with HKFRS requires the Trustee and Manager to

make judgements, estimates and assumptions that affect the application of policies and the reported



circumstances, the results of which form the basis of making the judgements about carrying values of


these estimates.




impact on the Fund.

New standards, amendments and interpretations issued but not effective for the financial year beginning 1 January 2017 and have not been early adopted






comprehensive income ("OCI") and fair value through profit or loss. The basis of classification depends on the entity's business model and the contractual cash flow characteristics of the financial asset.


the irrevocable option at inception to present changes in fair value in OCI not recycling. There is now a

new expected credit losses model that replaces the incurred loss impairment model used in HKAS 39.



fair value through profit or loss. HKFRS 9 relaxes the requirements for hedge effectiveness by replacing

the bright line hedge effectiveness tests. It requires an economic relationship between the hedged item and hedging instrument and for the ‘hedged ratio’ to be the same as the one management actually use

for risk management purposes.




22




Contemporaneous documentation is still required but is different to that currently prepared under HKAS

39. The standard is effective for accounting periods beginning on or after 1 January 2018. Early





net assets.



(b) Investments All investments are classified as “financial assets at fair value through profit or loss”. These financial



basis. Investments are initially recognized at fair value, excluding transaction costs which are expensed as incurred in the statement of comprehensive income, and are subsequently re-measured at fair value.


comprehensive income within “net gains/(losses) on investments and derivative financial instruments”

in the period in which they arise. Investments are derecognized when the rights to receive cash flows

from the investments have expired or the Fund has transferred substantially all risks and rewards of

ownership. The following represent the basis of valuation for financial reporting purposes: (i) Investments which are listed or traded on an exchange are fair valued based on last traded prices. (ii) Investments which are not listed on an exchange or are thinly traded are valued by using quotes

from brokers.

(c) Income Dividends on equities are recognized in the statement of comprehensive income when the Fund’s right

to receive payments is established. The corresponding withholding taxes are recorded as a separate item

in the statement of comprehensive income. Interest income is recognized on a time-proportionate basis using the effective interest method. Other










23












through profit or loss are presented in the statement of comprehensive income within “net gains/(losses) on investments and derivative financial instruments”.

(e) Expenses



Outstanding foreign exchange contracts are valued at the year end date by reference to the rate of exchange applicable to the outstanding term of the contract. Unrealized gains or losses on outstanding

contracts and realized gains and losses on closed contracts are shown in the statement of comprehensive

income within “net gains/(losses) on investments and derivative financial instruments”.











24


(i) Amounts receivable from/payable to brokers

Amounts receivable from/payable to brokers represent receivables from investments sold and payables for investments purchased that have been contracted for but not yet settled or delivered on the year end

date respectively.

(j) Cash and cash equivalents




Transaction costs are costs incurred to acquire financial assets or liabilities at fair value through profit or

loss. They include fees and commissions paid to agents, advisers, brokers and dealers. Transaction


(l) Structured entities

A structured entity is an entity that has been designed so that voting or similar rights are not the

dominant factor in deciding who controls the entity, such as when any voting rights relate to

administrative tasks only and the relevant activities are directed by means of contractual arrangements.

A structured entity often has some or all of the following features or attributes: (a) restricted activities,

(b) a narrow and well-defined objective, such as to provide investment opportunities for investors by

passing on risks and rewards associated with the assets of the structured entity to investors, (c)

insufficient equity to permit the structured entity to finance its activities without subordinated financial

support and (d) financing in the form of multiple contractually linked instruments to investors that create concentrations of credit or other risks (tranches).

The Fund considers all of its investments in other funds ("lnvestee Funds") to be investments in

unconsolidated structured entities. The Fund invests in lnvestee Funds whose objectives range from

achieving medium to long term capital growth and whose investment strategy does not include the use

of leverage. The lnvestee Funds apply various investment strategies to accomplish their respective

investment objectives. The lnvestee Funds finance their operations by issuing exchange traded shares

which are saleable at the holder's option and entitles the holder to a consideration that approximates proportional stake in the respective fund's net assets. The Fund holds exchange traded shares in each of

its lnvestee Funds.

The change in fair value of each lnvestee Fund is included in the statement of comprehensive income in

"net gains/(losses) on investments and derivative financial instruments".




25


The Fund issues units, which are redeemable at the holder’s option and are classified as equity.




year are shown in the statement of changes in equity. In order to achieve the investment objectives, the Fund

endeavors to invest its capital in accordance with the investment policies as outlined in note 4, whilst


liquid investments.

As at 31 December 2017, the Fund had HK$5,689,661,023 (2016: HK$5,170,886,377) of puttable financial




2017 2016

Units Units


HK$ HK$


2017

Standard

Units -

Accumulation

2017

Provident

Fund Units

2016

Standard

Units -

Accumulation

2016

Provident

Fund Units



Total issues – 38,577,930 – 96,367,845








2017 and 2016.




26



The investment objective of the Fund is to achieve capital appreciation. The Fund seeks to achieve its investment objective through investing in a managed portfolio of shares in US Companies.




discussed below.







As at year end, the overall market exposures were as follows: 2017 2016

Fair value

HK$

Cost

HK$

% of net

assets

Fair value

HK$

Cost

HK$

% of net

assets

Held for trading:

Listed equities 5,561,638,152 4,807,023,410 97.75 5,043,058,410 4,797,945,608 97.53

Listed

investment funds 111,973,097 110,193,307 1.97 104,733,978 102,161,616 2.03

5,673,611,249 4,917,216,717 99.72 5,147,792,388 4,900,107,224 99.56

Derivative

financial

instruments

(note 6) (265) – – (609,656) – –

Net market exposures The following table shows the net market exposure of the Fund to various markets, incorporating the

underlying market risk through all financial assets and liabilities held by the Fund as at 31 December. 2017 2016 HK$ equivalent HK$ equivalent Markets exposed to United States of America 5,673,611,249 5,147,792,388




27



The following table shows the net exposures to sectors as at 31 December 2017 and 2016: 2017 2016 % % Sectors exposed to Basic Materials 1 4 Communications 14 15 Consumer, Cyclical 11 11 Consumer, Non-cyclical 21 26 Diversified 1 1 Energy 5 5 Financial 18 14 Funds 2 2 Industrial 9 9 Technology 16 12 Utilities 2 1

100 100

There were no individual investments with market value exceeding 10% of the Fund’s net asset value as at 31 December 2017 and 2016.





2017 2016

Change in


HK$ Change in


HK$ +/- +/- +/- +/-

S&P 500 Total Return Index 23% 1,302,010,257 12% 616,015,932

The Manager has used their view of what would be a “reasonable shift” in the S&P 500 Total Return Index, having regard to the historical volatility of the index, to estimate the change for use in the market price risk sensitivity analysis above. Disclosures above are shown in absolute terms, changes and impacts could be positive or negative. Changes in market index % are revised annually depending on the Manager’s current view of market volatility and other relevant factors.

2017 2016

Listed investment funds

Number of

Investee

Funds Fair value

% of net

assets

Number of

Investee

Funds Fair value

% of net

assets

HK$ HK$

Equity long 1 111,973,097

1.97 1 104,733,978

2.03




28


(b) Market price risk (Continued) The Fund's investments in lnvestee Funds are subject to the terms and conditions of the respective

lnvestee Fund's offering documentation and are susceptible to market price risk arising from uncertainties about future values of those lnvestee Funds. All of the lnvestee Funds in the investment

portfolio are managed by portfolio managers who are compensated by the respective lnvestee Funds for

their services. Such compensation generally consists of an asset based fee and is reflected in the

valuation of the Fund's investments in each of the lnvestee Funds. The exposure to investments in lnvestee Funds at fair value by strategy employed is disclosed in the

above table. These investments are included in investments in the statement of net assets.

The Fund's holding in a third party lnvestee Fund, as a percentage of the lnvestee Fund's total net asset

value, will vary from time to time dependent on the volume of subscriptions and redemptions at the

lnvestee Fund level. It is possible that the Fund may, at any point in time, hold a majority of an lnvestee

Fund's total units in issue.

The Fund's maximum exposure to loss from its interests in lnvestee Funds is equal to the total fair value

of its investments in lnvestee Funds.

Once the Fund has disposed of its shares in an lnvestee Fund the Fund ceases to be exposed to any risk

from that lnvestee Fund.

Total purchases in lnvestee Funds during the year ended 31 December 2017 was HK$778,024,907

(2016: HK$709,315,843). As at 31 December 2017 and 2016 there were no capital commitment

obligations. There were no amounts due to lnvestee Funds for unsettled purchases as at 31 December

2017 and 2016.

During the year ended 31 December 2017 total net gains incurred on investments in lnvestee Funds

were HK$1,779,790 (2016: gains of HK$2,572,362).








As at 31 December 2017, the Fund had bank balances of HK$7,932,885 (2016: HK$16,638,616) and is

therefore exposed to cash flow interest rate risk which is considered by the Manager to be minimal as

they are short-term instruments all with maturities less than one month.






29






principally of cash and cash equivalents and assets held with the custodian. The table below summarizes

the assets placed with banks and custodian at 31 December 2017 and 2016:

At 31 December 2017

HK$

Credit

rating

Source of

credit rating

Custodian

Citibank, N.A. 5,673,611,249 P-1 Moody’s

Banks


Dah Sing Bank Limited 6,927,100 P-2 Moody’s

At 31 December 2016

HK$

Credit

rating

Source of

credit rating

Custodian

Citibank, N.A. 5,147,792,388 P-1 Moody’s

Banks


Dah Sing Bank Limited 16,197,800 P-2 Moody’s


note 6. As at 31 December 2017, the counterparty of these foreign exchange contracts is Citibank, N.A.

(2016: Citibank, N.A.). The credit rating is P-1 (Moody’s) (2016: P-1 (Moody’s)).

The maximum exposure to credit risk at year end is the carrying amount of the financial assets as shown

on the statement of net assets.




the broker has received payment. Payment is made on a purchase when the securities have been received by the broker. The trade will fail if either party fails to meet its obligation.







30


(e) Liquidity risk Liquidity risk is the risk that an enterprise will encounter difficulty in settling a liability, including a

redemption request.

The Fund is exposed to daily cash redemptions of units in the Fund. The Fund invests the majority of its

assets in investments that are traded in an active market and can be readily disposed of.

The table below analyzes the Fund’s non-derivative financial liabilities into relevant maturity groupings

based on the remaining period at the year end date to the contractual maturity date. The amounts in the

table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying

balances, as the impact of discounting is not significant.



HK$ HK$ HK$

At 31 December 2017




settled derivatives) 2,124,855

–

382,625



HK$ HK$ HK$

At 31 December 2016





settled derivatives) 678,262,173

–

614,005




31









HK$ HK$ HK$

At 31 December 2017


Foreign exchange contracts (265) – –

At 31 December 2016


Foreign exchange contracts (609,656) – –




HK$16,638,616) and liquid investments of HK$5,673,611,249 (2016: HK$5,147,792,388) that are


(f) Currency risk

Currency risk is the risk that the value of financial instruments will fluctuate due to changes in foreign exchange rates.


than Hong Kong dollar, the Fund’s functional and presentation currency. The Fund is therefore exposed

to currency risk, as the value of the assets and liabilities denominated in other currencies will fluctuate

due to changes in foreign exchange rates. Details of foreign exchange contracts outstanding at the year

end are disclosed in note 6.


2017 2016

HK$ equivalent HK$ equivalent

Monetary items

United States Dollar 5,634,741 4,094,547

Non-monetary items United States Dollar 5,673,611,249 5,147,792,388

Gross exposures to currency risk on foreign exchange contracts outstanding at the year end are





32






increased/decreased by the respective percentage with all other variables held constant.

2017 2016

Change in foreign exchange

rates % Impact

HK$

Change in foreign exchange

rates % Impact

HK$

+/- +/- +/- +/-

Monetary items

United States Dollar 0.5% 28,174 0.5% 20,473

Non-monetary items United States Dollar 0.5% 28,368,056 0.5% 25,738,962















agency, and those prices represent actual and regularly occurring market transactions on an arm’s length

basis.



by discounting the future contractual cash flows at the current market interest rate that is available to the

Fund for similar financial instruments.


reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the

following levels:









33




entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair






Fund considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively


The following table analyzes within the fair value hierarchy the Fund’s investments (by class) measured

at fair value at 31 December 2017 and 2016:

At 31 December 2017


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 5,561,638,152 – – 5,561,638,152

- Listed investment funds 111,973,097 – – 111,973,097

Total assets 5,673,611,249 – – 5,673,611,249

Liabilities

Held for trading:


instruments –

(265)

–

(265)

Total liabilities – (265) – (265)

At 31 December 2016


HK$ HK$ HK$ HK$

Assets

Held for trading:

- Listed equities 5,043,058,410 – – 5,043,058,410

- Listed investment funds 104,733,978 – – 104,733,978

Total assets 5,147,792,388 – – 5,147,792,388

Liabilities

Held for trading:


instruments –

(609,656)

–

(609,656)



within level 1, include active listed equities and investment funds. The Fund does not adjust the quoted

price for these instruments.




34




quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are

classified within level 2. These include foreign exchange contracts. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may

be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available

market information.

Investments classified within level 3 have significant unobservable inputs, as they trade infrequently. As

of 31 December 2017 and 2016, the Fund did not hold any investments classified in level 3.


Assets and liabilities included in the statement of net assets, except for investments and derivative

financial instruments, are carried at amortized cost; their carrying values are a reasonable approximation

of fair value.






unitholders and benefits for other stakeholders and to maintain a strong capital base to support the

development of the investment activities of the Fund.






2017 2016

HK$ HK$

Change in unrealized gains in value of investments and

derivative financial instruments 509,318,759 131,176,758

Realized gains on sale of investments and derivative

financial instruments 604,080,456 196,831,748

1,113,399,215 328,008,506




35



below:

At 31 December 2017


HK$

Open contracts:

US$51,368 HK$401,293 2 January 2018 (265)

At 31 December 2016


HK$

Open contracts:

HK$60,914 US$7,850 3 January 2017 (55)

HK$98,897 US$12,764 3 January 2017 (67)

HK$353,699 US$45,579 3 January 2017 (318)

HK$477,982 US$61,595 3 January 2017 (430)

HK$486,000 US$62,628 3 January 2017 (437)

HK$500,197 US$64,457 3 January 2017 (450)

HK$531,431 US$68,482 3 January 2017 (478) HK$542,849 US$69,954 3 January 2017 (488)

HK$616,684 US$79,468 3 January 2017 (555)

HK$629,854 US$81,166 3 January 2017 (567)

HK$891,357 US$114,864 3 January 2017 (802)

HK$1,034,157 US$133,266 3 January 2017 (930)

HK$1,100,347 US$141,795 3 January 2017 (990)

HK$1,169,848 US$150,751 3 January 2017 (1,052)

HK$1,580,800 US$203,708 3 January 2017 (1,422) HK$1,589,608 US$204,843 3 January 2017 (1,430)

HK$1,627,246 US$209,693 3 January 2017 (1,464)

HK$1,720,165 US$221,667 3 January 2017 (1,547)

HK$1,888,109 US$243,309 3 January 2017 (1,698)

HK$1,900,026 US$244,845 3 January 2017 (1,709)

HK$2,168,268 US$279,412 3 January 2017 (1,950)

HK$2,231,329 US$287,538 3 January 2017 (2,007)


HK$2,661,200 US$342,933 3 January 2017 (2,394)

HK$2,933,770 US$378,057 3 January 2017 (2,639)

HK$2,962,810 US$381,800 3 January 2017 (2,665)




36


At 31 December 2016


HK$ Open contracts:

HK$2,997,176 US$386,228 3 January 2017 (2,696)

HK$3,356,796 US$432,570 3 January 2017 (3,019)

HK$3,689,309 US$475,419 3 January 2017 (3,318)

HK$3,750,977 US$483,366 3 January 2017 (3,374)

HK$3,929,211 US$506,334 3 January 2017 (3,534)


HK$4,147,712 US$534,491 3 January 2017 (3,731)

HK$4,189,347 US$539,856 3 January 2017 (3,768)

HK$4,400,795 US$567,104 3 January 2017 (3,958)

HK$4,544,438 US$585,614 3 January 2017 (4,088)

HK$4,581,411 US$590,379 3 January 2017 (4,121)

HK$4,596,719 US$592,352 3 January 2017 (4,135)


HK$5,680,091 US$731,959 3 January 2017 (5,109)

HK$5,785,119 US$745,494 3 January 2017 (5,204)

HK$5,804,904 US$748,043 3 January 2017 (5,221)

HK$5,816,969 US$749,598 3 January 2017 (5,232)

HK$6,013,092 US$774,871 3 January 2017 (5,409)

HK$6,118,180 US$788,413 3 January 2017 (5,503)


HK$6,461,133 US$832,607 3 January 2017 (5,812)

HK$6,569,182 US$846,531 3 January 2017 (5,909)

HK$6,675,164 US$860,188 3 January 2017 (6,004)

HK$6,676,477 US$860,357 3 January 2017 (6,005)

HK$6,689,013 US$861,973 3 January 2017 (6,017)

HK$6,845,543 US$882,144 3 January 2017 (6,157)


HK$6,981,793 US$899,702 3 January 2017 (6,280)

HK$7,046,980 US$908,102 3 January 2017 (6,339)

HK$7,080,011 US$912,359 3 January 2017 (6,368)

HK$7,097,854 US$914,658 3 January 2017 (6,384)

HK$7,102,102 US$915,205 3 January 2017 (6,388)

HK$7,125,296 US$918,194 3 January 2017 (6,409)


HK$7,394,330 US$952,863 3 January 2017 (6,651)

HK$7,403,287 US$954,017 3 January 2017 (6,659)

HK$7,423,375 US$956,606 3 January 2017 (6,677)

HK$7,534,123 US$970,877 3 January 2017 (6,777)

HK$7,542,284 US$971,929 3 January 2017 (6,784)

HK$7,722,718 US$995,180 3 January 2017 (6,946)

HK$7,753,750 US$999,179 3 January 2017 (6,974)




37


At 31 December 2016


HK$ Open contracts:

HK$7,850,778 US$1,011,683 3 January 2017 (7,062)

HK$7,868,730 US$1,013,996 3 January 2017 (7,078)

HK$7,970,587 US$1,027,122 3 January 2017 (7,169)

HK$7,985,286 US$1,029,016 3 January 2017 (7,183)

HK$8,047,773 US$1,037,068 3 January 2017 (7,239)

HK$8,190,282 US$1,055,432 3 January 2017 (7,367) HK$8,250,752 US$1,063,225 3 January 2017 (7,421)

HK$8,774,008 US$1,130,654 3 January 2017 (7,892)

HK$8,933,790 US$1,151,244 3 January 2017 (8,036)

HK$9,039,688 US$1,164,890 3 January 2017 (8,131)

HK$9,096,296 US$1,172,185 3 January 2017 (8,182)

HK$9,243,232 US$1,191,120 3 January 2017 (8,314)

HK$9,477,323 US$1,221,286 3 January 2017 (8,525)


HK$9,799,628 US$1,262,819 3 January 2017 (8,814)

HK$9,900,922 US$1,275,872 3 January 2017 (8,906)

HK$9,908,514 US$1,276,851 3 January 2017 (8,912)

HK$9,936,804 US$1,280,496 3 January 2017 (8,938)

HK$10,393,212 US$1,339,311 3 January 2017 (9,348)

HK$10,565,179 US$1,361,471 3 January 2017 (9,503)


HK$12,293,346 US$1,584,170 3 January 2017 (11,057)

HK$12,698,235 US$1,636,345 3 January 2017 (11,422)

HK$12,878,058 US$1,659,518 3 January 2017 (11,583)

HK$14,840,690 US$1,912,431 3 January 2017 (13,349)

HK$14,950,024 US$1,926,520 3 January 2017 (13,447)

HK$15,040,382 US$1,938,164 3 January 2017 (13,528)


HK$17,941,048 US$2,311,955 3 January 2017 (16,136)

HK$22,182,394 US$2,858,512 3 January 2017 (19,951)

US$24,480 HK$189,656 3 January 2017 (144)

(609,656)

7. Taxation








38


Associates and connected persons are those as defined in the Mandatory Provident Fund Schemes Ordinance

and the Code on Unit Trusts and Mutual Funds issued by the Securities and Futures Commission of Hong

Kong.



(a) Management fee






(b) Trustee’s fee



monthly in arrears.





entitled to receive a custodian fee which comprises safekeeping and transaction fees of 0.025% per annum of

the net asset value of the Fund and a transfer agency fee of US$1,500 per month, with a total permitted







39



some brokers under which certain goods and services used to support investment decision making are

obtained from third parties and are paid for by the brokers out of the commissions they receive. These may include, for example, research and advisory services; economic and political analysis; portfolio analysis,

including valuation and performance measurement; market analysis, data and quotation services; clearing,

registrar and custodial services and investment-related publications; computer hardware and software


11. Distributions







