Golden Dragon

THE NEXT FUND MANAGER
2010
GOLDEN DRAGON GREATER CHINA FUND
20th March 2010
Overview GOLDEN DRAGON GREATER CHINA FUND
1. Foundation
• Working Across Borders
• Common Goal
Shanghai World Financial Center

HT: 492m 2
2. Fund Introduction
• Investment Objective and Focus
• Investment Strategy and Approach
• Fund’s Original Investment Portfolio

HT: 492m 3
3. Market Outlook
(Greater China)
• Greater China: Trends and Opportunities
• Exchange Rate
• FSM market ratings
• Sector Outlook

HT: 492m 4
4. Managers’ Report
• Views on New York Landfall
• Changes made to investment portfolio

HT: 492m 5
1. Foundation GOLDEN DRAGON GREATER CHINA FUND
6
This is Ailin.
7
This is Hao Jie.
8
Both of them are currently interning in Shanghai.
9
And that leaves me here…..alone
I am Jiade.
10
Hao Jie and Ailin are

2,336 miles / 3,760 km
apart from Jiade….
11
But are tied by a

common passion and
drive…as well as Skype
12
2. Fund Intro GOLDEN DRAGON GREATER CHINA FUND
Investment
Objective and
Focus
Fund’s Original Investment

Investment Strategy and
Portfolio Approach
13
Investment
Objective and
Focus

Portfolio Approach
14
2.1 Investment Objective and Focus

• To achieve mid-long term capital appreciation by investing at least 75% of its assets in a
portfolio of securities and equity funds containing securities that:
– Principally traded in Greater China;
– Derive at least 50% of revenues from Greater China, or
– At least 50% of their assets in Greater China.
• The Fund will also invest in fixed income funds for diversification
• Fund Charges: 6% Expense ratio: 1.8%
15
Investment
Objective and
Focus

Portfolio Approach
16
2.2 Investment Strategy & Approach

• The Fund’s strategy is:
– Focus on Greater China equity funds and securities that are likely to provide higher
returns
– Diversify into fixed income funds to reduce equity and focus risk
– Possess sufficient liquid assets to prepare and take advantage of markets’ uncertainties
and changes
– Balance between risks, returns, flexibility and investment horizons
17
2.2 Investment Strategy & Approach

• The Fund’s investment approach involves both top down and bottom up approaches.
Golden Dragon Greater China Fund's Investment Approach
• Economic & Political Trends

Market • Current financial condition and future prospects (Sectors, Funds, Companies)
Outlook
Relative
• Compare Markets, Mutual funds, Companies to alternatives
Valuation
• Funds Charges, Securities Charges, Expense Ratio, Opportunity Costs

Costs
• To take advanatge of market changes

Liquidity • Defensive Purposes
• Fixed Income Funds

Diversify
• Qualitative (Geographical and Sector Allocation, Fund Risk)

Funds • Quantitative (Fund Charges, Sharpe Ratio, Fund Size, Expense Ratio, 3-yr annualized bid to bid return)
Selection
18
Investment
Objective and
Focus

Portfolio Approach
19
2.3 Fund’s Original Investment Portfolio

Golden Dragon Greater China Fund's Asset Allocation
Fixed Income Cash

Funds 5%
20%
Greater China/
Greater China China Equity
Securities Funds
15% 60%
20
2.3.1 Selection Criterion

• Qualitative and Quantitative selection criterion were used to identify the suitable funds
Selection Criteria – Qualitative
Investment Geographical
Approach Location
Fund Risk Market Sector
21
2.3.1 Selection Criterion

Selection Criteria – Quantitative
Sharpe
Ratio
Total Fund
Fund Size
Charges
3 year bid to Expense

bid return Ratio
22
2.3.2 Greater China/China Equity Funds

• The Fund will allocate 60% of its assets to Greater China/China funds with a mid-long term
investment horizon.
Allocation of Greater China/China Funds
Fidelity Gr
China
SGD 1 mln
First State
Reg China
DWS China SGD 3 mln
Eqty Fund CL
A
SGD 2 mln
23
2.3.2 Greater China Funds
FIRST STATE REG CHINA (SGD) FIDELITY GR CHINA (USD)
Total Returns of First State Reg China Comparison of potential funds’ Total
for the past 5 years Returns for past 3 years
Investment: Investment:
SGD 3mil SGD 1mil
Source: FSM Chart Centre

Source: First State Reg Fund FactSheet
• Alignment of investment objectives and market

outlook
• High Sharpe ratios 24
• Low expense ratios
2.3.2 China Funds Analysis (Conclusion)
DWS CHINA EQTY FUND CL A SGD

Comparison of DWS China Eqty Fund CL DWS China’s Total Returns against
A’s Total Returns for past 3 years MSCI Golden Dragon Index
Source: DWS China Factsheet
Source: FSM Charts Centre
• Alignment of investment objectives and market

outlook
• High Sharpe ratios
25
• Low expense ratios
• Consistently beaten the index over the past 3 years
2.3.3 Fixed Income Investment Funds
Allocation of Fixed Income Investment Funds
AIGIF Spore
Bonds Fund
SGD 0.2 mln
United Global
Emerging Templeton
Markets Bonds Global Bonds
SGD 0.3 mln SGD 1.5 mln
26
2.3.3 Fixed Income Investment Funds (Global – Conclusion)
FTIF-Templeton Glb Bond A (MDIS) (SGD)

Comparison of Templeton Glb Bond A Comparison of Templeton Glb Bond A
(MDIS) for past 3 years (MDIS) for past 3 years
Source: FTIF-Templeton Glb Bond A(mdis) (SGD) Factsheet

• Well diversified
• Diversify Fund’s focus risk
• Consistently outperform peers 27
2.3.3 Fixed Income Investment Funds (Emerging Mkts - Conclusion)
United Global Emerging Markets Portfolios (SGD)

Comparison of United Glb Emerging Mkts Comparison of United Glb Emerging Mkts
Portfolios for past 3 years Portfolios for past 3 years
Source: United Glb Emerging Mkts Portfolios (SGD) Factsheet

Factsheet
• Emerging markets have good potential for growth

• Consistently beaten its benchmark and peers
2.3.3 Fixed Income Investment Funds (Corporate Centric - Conclusion)
AIGIF SINGAPORE BOND FUND (SGD)
Comparison of Lion Global Bond for past 5 Comparison of AIG International Fund for
years past 5 years

Source: AIG International Funds Factsheet
• Capitalize on corporate bond fluctuations of bonds which

are likely garner better returns compared to government
bonds
• Consistently outperformed its peers and has shown 29
resilience
• Better Sharpe ratio and lower expense ratio among its
2.4 Stocks
HKSE Allocation TAIEX Allocation
Capital Real
Non-tech
Goods Estate
& Others
15% 15%
20%
Oil & Gas Technology

Hardware 80%
15%
HKS Insurance
20% TAIE
Consumer
E X
Discretionary 15%
Financials
20%
30
2.4 Stocks
Possible Stocks Picks
Country Sectors (Overweight) Possible Stock Picks
Real Estate • Renhe Commercial Holdings
• Bank of Chin. China Construction Bank, China

Financials
Life
HKSE
Consumer Discretionary • Anta Sports, Bawang, Wuliangye
Oil & Gas • Sinopec
Capital Goods • Haier
• Hon Hai, Acer, Austek, AUO, Catcher

Technology
Technology Hardware
TAIEX
 ChinaTrust FHC
Non-tech & Others
31
Greater China/China Equity

Funds
Fixed Income Funds
32
3. Market GOLDEN DRAGON GREATER CHINA FUND
Outlook
Greater China:
Trends and Opportunities
Exchange Rate
Sector Outlook
33
Outlook
3.1 Greater China: Trends & Opportunities
• The China market has recently corrected, following market worries on higher inflation and
policy tightening measures to cool down its domestic economy and speculative activity in
property.
• These measures will be beneficial in the long term
Return of China’s Inflation Inflation Risks due to monetary growth
Source: CEIC and CIMB-GK Source: CEIC and CIMB-GK estimates

estimates
34
Outlook
• Outlook of monetary policy of China
– Chinese monetary conditions still easy – heralding more tightening
35
Outlook
• Recent correction in Greater China Markets has made the markets more attractive again
Comparisons of Indexes
12M forward PER
MSCI China 12.6
MSCI World 14.2
MSCI Far east ex Japan 12.4
36
Outlook
• With improvement in global demand, consumer and business confidence, there is a gradual
broadening of China’s growth
• This is similar in Taiwan and Hong Kong, where exports had increased by 40% and 9.2% y/y
in December 2009.
December’s Trade Recovery Rebound in Industrial Production
Source: CEIC and CIMB-GK

Source: CEIC and CIMB-GK estimates estimates 37
Outlook
• Increase in Private industrial investment
Yoy growth of FAI within domestic enterprises
38
Outlook
• Domestic demand is expected to contribute in the coming two years as demand in advanced
economies may remain subdued.
• Forecast for Greater China is relatively higher than other markets, reflecting the positive
outlook and attractiveness.
Global Economic Outlook
Real GDP Growth (%)

Markets 2008 2009 2010E 2011E
China 9.0 8.3 9.3 8.3
Hong Kong 2.4 -3.2 4.6 3.7
Taiwan 0.7 -3.5 4.2 4.6
US 0.4 -2.5 2.5 1.4
UK 0.6 -4.7 0.7 0.8
Source: Euromonitor, 3 Feb 2010 39
Outlook
• Europe’s PIGS (Portugal, Ireland, Greece and Spain)
– Refers to troubled and heavily-indebted countries of Europe
– 2010 European sovereign debt crisis, lack of confidence in Euro and its countries
– Raise concerns and create instability in the region
– More risk
• United Kingdom
– The UK government spent £85.5bn last year on bailing out the banks. Now, Chancellor
Alistair Darling is predicting a record £178bn of borrowing in the current fiscal year
– Many economists have raised concerns that the UK could have its credit rating cut

Outlook
• United States
– High employment rate of 10.7% as for Feb 2010
– High Budget Deficit
– Lots of economic uncertainties and instability
• Japan
– Growth is less positive than China, economy in deflationary state

Outlook
3.2 Exchange Rate
• RMB/USD is expected to remain stable at 6.8 until mid-2010 before exports have shown
consistent recovery.
• HKD is linked to the USD and is dependent on the Fed’s policy, which is not expected to
make any drastic changes in the near term.
• For the TWD, the central bank is unlikely to favour a stronger exchange rate due to economic
weakness and building deflationary pressures.
42
Outlook
3.3 FSM Market Ratings
• Positive outlook on the Greater China and the estimated PE ratios generally fare better than
other markets
FSM Market Ratings Forecasted P/E
Markets Star Ratings 3 year view PE Ratio

China 4.5 Very Attractive 2010E 2011E
Hong Kong 4.5 Very Attractive China (HSCI) 12.4X 10.6X
Taiwan 4 Very Attractive Hong Kong (HSI) 12.7X 10.3X
Singapore 4 Very Attractive Taiwan (Taiwan weighted) 17.2X 14.3X
India 3.5 Attractive
Thailand 3.5 Attractive
Source: Fundsupermart, 28 Jan 2010
Malaysia 3.5 Attractive
Source: Fundsupermart, 28 Jan 2010
43
Outlook
3.4 Sector Outlook
• Real Estate
• Insurance
• Financials
China • Consumer Discretionary
• Oil & Gas
Hong • Capital Goods
Kong
• Technology Hardware
• Non-Tech & others
Taiwan
Source: Bloomberg, Reuters, UBS, CIMB

44
4. Manager’s GOLDEN DRAGON GREATER CHINA FUND
Report
Staying Firm in the face of Adversity
45
Report
4.1 Impact of NY Landfall
– Billions of dollars in damage
– Property values decimated
– Business Interrupted
– Major ports and traffics affected
– Minimal Loss of lives
What is the IMPACT to the Fund?
46
Report
4.2 New York State
• New York's gross state product in 2007 was $1.1 trillion
• Major agricultural producer, leading centre for financial

institutions
• 5 largest export markets: Canada, UK, Switzerland, Israel

and Hong Kong
47
Report
4.3 Fund’s Strategy
• Remains focus on Greater China region
• No drastic changes to the asset allocation despite the potential opportunities and threats that
arose from this disaster
• Investors should rest assured that our Fund remains Greater China centric and focus rather
than becoming a speculative fund that make drastic changes to Fund upon any market
movements
– Remains a tool for investors to diversify their portfolio
– Maintain Stability and Clarity in our Fund’s Strategy
• Slight Changes will be made to capitalize on this event
48
Report
4.4 Market Outlook
• New York is indeed a major state in the USA. While the loss of lives and damage to property
and infrastructure is regretted, it may not be too major an event to create a major negative
event for the rest of the world.
• Stock Markets
– Look at Case studies of Hurricane Katrina and 1989 San Francisco Earthquake
• Despite of a short dip in stocks markets following a natural disaster, but the stocks quickly
recover over the next couple of days as markets eventually realize that impact is not as
significant as first thought
• Markets tend to over react, good time for bargain hunting
– Investors should know that they should stay put and not sell down on our Fund as
recovery is not long in coming. In fact, selling off in the initial days is likely to be at
their disadvantage
49
•
2100
2120
2130
2140
2150
2160
2110
1200
22/08/2005
1120
1130
1140
1150
1160
1170
1180
1190
23/08/2005
22/08/2005
23/08/2005 24/08/2005
24/08/2005 25/08/2005
25/08/2005 26/08/2005
4.4 Market Outlook
26/08/2005 27/08/2005
27/08/2005
Nasdaq
28/08/2005
SSE
Report
28/08/2005 29/08/2005
29/08/2005
30/08/2005
30/08/2005
31/08/2005
31/08/2005
01/09/2005
01/09/2005
02/09/2005
02/09/2005
4. Manager’s
14600
14700
14800
14900
15000
15100
15200
15300
10
10.4
10.6
10.8
9.8
10.2 22/08/2005
22/08/20 23/08/2005
05
24/08/2005
24/08/20 25/08/2005
05
26/08/2005
Case Study 1: Hurricane Katrina, 26th August 2009 & 29th August 2009
26/08/20
27/08/2005
05
28/08/2005
28/08/20
Hang Seng
29/08/2005
05
Index (EWT)
30/08/2005
30/08/20
05 31/08/2005
iShares MSCI Taiwan
01/09/2005
01/09/20
05 02/09/2005
50
•
440
450
460
470
480
490
11/10/19
89
13/10/19
89
4.4 Market Outlook
15/10/19
89
Report
17/10/19
89
NASDAQ
19/10/19
89
21/10/19
89 COMPOSITE INDEX
23/10/19
89
4. Manager’s
Case Study 2: 1989 San Francisco Earthquake
2450
2500
2550
2600
2650
2700
2750
2800
2850
11/10/1989
12/10/1989
13/10/1989
14/10/1989
15/10/1989
16/10/1989
17/10/1989
18/10/1989
19/10/1989
20/10/1989
21/10/1989
22/10/1989
23/10/1989
HANG SENG INDEX
24/10/1989
Report
4.4 Market Outlook
• Financial Industries
– Interruption to NYSE may affect trading for a while but backup facilities that will allow
some form of recovery in the trading
– NY is not the only financial hub in the US
– Major banks in NY would definitely have backup facilities elsewhere in the US and some
disaster recovery plans
Report
4.4 Market Outlook
• Ports and Airports
– Can be disruptive but goods and international business can be routed to other states
(Boston & Penn) in the meantime
– This will also put markets to rest that the US can cope with a temporary disruption in NY
Report
4.4 Market Outlook
• Infrastructure
– Expect a temporary surge in infrastructure rebuilding in New York, creating growth in the
medium-long term
– Chinese Construction Companies

• Sounds attractive but…
• Unlikely they will have any part in reconstructing NY
• Chinese companies may be cheaper but the strong desire to use US domestic
companies (which will help US employment too) will overrule the cost
• No intention to go into China Construction companies

Report
4.4 Market Outlook
• Given the scenario, it is likely that there would have been warning signs
– If we had forecasted this landfall,

• We will decrease stocks from 15% to 5%, and increase cash from 5% to 15%
• Take the chance to bargain hunt when the markets overreact (2-5 days after the event)
• Good opportunity to get into the market at lower prices (good from a mid-long investment
horizon)
– If the event was not predicted,

• We will instead concentrate on making fund allocation in the bond funds
Report
4.5 Bonds Fund Allocation
• The more defensive bond funds are expected to appreciate in value while the emerging bond
funds will be hit as some flee to safety
• If we were aware of the event, we will move the bonds to the more defensive ones earlier and
reallocate again a week after the event to maximize our returns
• More defensive bond funds are FTIF-Templeton Global Bond, which contain the global
government bonds
• Fund Changes
– Reduce allocation in United Global Emerging Markets Bonds SGD 0.3 mln and allocate
to FTIF-Templeton Global Bond
Report
4.5 Cash
• We are maintaining a cash allocation of 5% with the view of investing in undervalued stocks
and defensive bond funds
– Use of dollar cost averaging to buy undervalued with huge potential to bring down our
cost per share and maximise returns
– Taking a conservative approach, having a pile of cash would allows the Fund to take
more defensive measures to protect the Fund’s value in case of the situation turn for the
worse
Fund’s Original Allocation Fund’s Current Allocation
Greater China/China Greater China/China

Equity Funds Equity Funds
Fixed Income Funds Fixed Income Funds
58
Conclusion GOLDEN DRAGON GREATER CHINA FUND
Q&A
59
2.3 Risk Profile Analysis

• The Fund is subjected to the following risks:
Golden Dragon Greater China Fund's Risk Profile
60

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THE NEXT FUND MANAGER

Shanghai World Financial Center

Shanghai World Financial Center

Shanghai World Financial Center

Shanghai World Financial Center

This is Hao Jie.

Both of them are currently interning in Shanghai.

And that leaves me here…..alone

Hao Jie and Ailin are

But are tied by a

Fund’s Original Investment

Fund’s Original Investment

2.1 Investment Objective and Focus

– Principally traded in Greater China;

– Derive at least 50% of revenues from Greater China, or

– At least 50% of their assets in Greater China.

• Fund Charges: 6% Expense ratio: 1.8%

Fund’s Original Investment

2.2 Investment Strategy & Approach

– Balance between risks, returns, flexibility and investment horizons

2.2 Investment Strategy & Approach

Golden Dragon Greater China Fund's Investment Approach

• Economic & Political Trends

• Funds Charges, Securities Charges, Expense Ratio, Opportunity Costs

• To take advanatge of market changes

• Fixed Income Funds

• Qualitative (Geographical and Sector Allocation, Fund Risk)

Fund’s Original Investment

2.3 Fund’s Original Investment Portfolio

Fixed Income Cash

2.3.1 Selection Criterion

Selection Criteria – Qualitative

Fund Risk Market Sector

2.3.1 Selection Criterion

3 year bid to Expense

2.3.2 Greater China/China Equity Funds

2.3.2 Greater China Funds

FIRST STATE REG CHINA (SGD) FIDELITY GR CHINA (USD)

Source: FSM Chart Centre

• Alignment of investment objectives and market

2.3.2 China Funds Analysis (Conclusion)

DWS CHINA EQTY FUND CL A SGD

Source: DWS China Factsheet

Source: FSM Charts Centre

• Alignment of investment objectives and market

2.3.3 Fixed Income Investment Funds

Allocation of Fixed Income Investment Funds

2.3.3 Fixed Income Investment Funds (Global – Conclusion)

FTIF-Templeton Glb Bond A (MDIS) (SGD)

Source: FTIF-Templeton Glb Bond A(mdis) (SGD) Factsheet

2.3.3 Fixed Income Investment Funds (Emerging Mkts - Conclusion)

United Global Emerging Markets Portfolios (SGD)

Source: FSM Charts Centre

Source: United Glb Emerging Mkts Portfolios (SGD) Factsheet

• Emerging markets have good potential for growth

2.3.3 Fixed Income Investment Funds (Corporate Centric - Conclusion)

AIGIF SINGAPORE BOND FUND (SGD)

Source: FSM Charts Centre

• Capitalize on corporate bond fluctuations of bonds which

Oil & Gas Technology