altus trust : alpha equity fund - hang seng index … · altus trust : alpha equity fund - hang...

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Lyxor Asset Management

A 100% SG subsidiary

ALTUS TRUST : ALPHA EQUITY FUND - HANG SENG INDEX

REPORTS AND FINANCIAL STATEMENTS

FOR THE PERIOD FROM FEBRUARY 2, 2005

(COMMENCEMENT OF OPERATIONS) TO JANUARY 31, 2006


CONTENTS

Pages

Administration 1 Report of the Manager 2 Report of the Trustee 3 Report of the Auditors 4 Balance sheet 5 Income statement 6 Statement of changes in net assets attributable to holders of redeemable participating units 7 Cash flow statement 8 Notes to the financial statements 9-15 Schedule of investments 16 Distribution statement 17 Statement of movements in schedule of investments 18 Performance table 19


1

ADMINISTRATION Trustee Manager

HSBC Trustee (Cayman) Limited Lyxor Asset Management

PO BOX 484 Tour Société Générale

Strathvale House, 17 Cours Valmy

North Church Street, 92987 Paris-La Défense

George Town, Grand Cayman France

Cayman Islands Custodian Registered Office

Société Générale HSBC Trustee (Cayman) Limited

29 boulevard Haussmann PO BOX 484

75009 Paris Strathvale House,

France North Church Street,

George Town, Grand Cayman

Cayman Islands

British West Indies

Guarantor Auditors Société Générale PricewaterhouseCoopers 29 boulevard Haussmann P.O. Box 258GT 75009 Paris Strathvale House France George Town

Cayman Islands


2

REPORT OF THE MANAGER

: 10.00 HKD: 10.00 HKD: 11.65 HKD

February 2, 2005 January 31, 2006

Investments

Listed/ quoted investments

Equities

BANK OF E ASIA 0.96% 0.84% -0.12%

BOC HONG KONG 6.35% 3.86% -2.49%CATHAY PAC AIR 1.31% 1.14% -0.17%CHEUNG KONG 6.67% 4.64% -2.03%

CHINA MER HOLD 0.89% 0.92% 0.03%CHINA MOBILE 8.36% 12.48% 4.13%CHINA RESOURCES 0.67% 0.76% 0.09%CHINA UNICOM 2.17% 2.05% -0.12%CITIC PACIFIC 1.35% 1.18% -0.16%CKI HOLDINGS 1.39% 1.28% -0.12%CLP HOLDINGS 5.04% 2.50% -2.54%CNOOC 6.78% 6.31% -0.47%COSCO PACIFIC 0.95% 0.72% -0.22%DENWAY MOTORS 0.58% 0.54% -0.03%ESPRIT HOLDINGS 1.51% 1.93% 0.42%HANG LUNG PPT 1.21% 1.27% 0.07%HANG SENG BANK 7.75% 4.65% -3.10%HENDERSON INV 0.85% 0.00% -0.85%HENDERSON LAND 1.81% 1.64% -0.17%HK & CHINA GAS 3.40% 2.26% -1.14%HONG KONG ELECTRIC HOLDINGS LTD 2.09% 1.87% -0.22%HSBC HOLDINGS HK 8.33% 6.90% -1.42%HUTCHISON 8.22% 7.82% -0.39%JOHNSON ELEC H 0.75% 0.64% -0.11%LEGEND GROUP 0.44% 0.51% 0.07%LI & FUNG 1.05% 0.95% -0.10%MTR CORPORATION 1.79% 2.05% 0.26%PCCW 0.65% 0.60% -0.04%SHK PPT 6.91% 4.60% -2.31%SWIRE PACIFIC A 1.53% 1.55% 0.02%WHARF HOLDINGS 1.71% 1.63% -0.08%WHEELOCK 0.64% 0.00% -0.64%YUE YUEN IND 0.93% 0.91% -0.02%NEW WORLD DEVELOPMENT CO LTD 0.00% 0.89% 0.89%SINO LAND CO LTD 0.00% 1.09% 1.09%

Total listed/ quoted investments 95.00% 82.98% -12.02%

Unlisted/ unquoted investment

SGA EMTN 5.13% 4.34% -0.79%Deposit 0.00% 12.69% 12.69%

Total unlisted/ unquoted investments 5.13% 17.03% 11.90%Total investments 100.13% 100.01% -0.12%

Other net assets -0.13% -0.01% 0.12%

Initial Level Level as of

Performance of theunderlying since

inception of the ALPHAEQUITY FUND - HANG

SENG INDEX up to

Performance of theunderlyings over

1 year up to

Performance of theunderlyings over

3 years up to

February 02, 2005 January 27, 2006 January 27, 2006 January 27, 2006 January 27, 2006

13555.80 15753.14 16.210% N/A N/A

Expenses :

Underlying of the Option

HANG SENG INDEX

As of January 31, 2006, the fund Net Asset Value per Unit was HK$ 11.65, returning aperformance of +16.5% from its initial offer value. The next payment will occur in February 2006

with an Annual Cash Payout equal to HK$10.00 x (Closing Index Price + Alpha) / Initial Index Price.

Explanation of NAV evolution

Investment Objectives and PolicyThe Alpha Equity Fund – Hang Seng Index:

- seeks to outperform the Index during the Investment Cycle (including the Investment Cycle ReviewDate) compared to the Initial Index Price; and

- guarantees to deliver the performance of the Index plus the Alpha recorded (if any) on theInvestment

Cycle Review Date, compared to the Initial Index Price (please refer to the formula below for details).Unitholders are entitled to request the realisation of their Units on each Dealing Day during an

InvestmentCycle at the then prevailing Realisation Price per Unit (calculated by reference to the applicable Net

AssetValue per Unit).

Unitholders who realize their Units on an Investment Cycle Review Date will be entitled to receive arealisation price per Unit calculated by reference to the Net Asset Value per Unit as at the relevant

Investment Cycle Review Date and which is guaranteed to be equal to:HK$10.00 x (Closing Index Price + Alpha) / Initial Index Price

This means that on the Investment Cycle Review Date,- if the Closing Index Price is equal to or above the Initial Index Price:

- investors receive the Initial Offer Price; plus- 100% of the best positive performance of the Index recorded on any quarterly Lock-in Date during

the Investment Cycle multiplied by the Initial Offer Price (i.e. the highest Lock-in Index Pricedivided by the Initial Index Price minus one).

- If the Closing Index Price is below the Initial Index Price:- investors receive the Initial Offer Price multiplied by the performance of the Index recorded on the

Investment Cycle Review Date; plus- 100% of the best positive performance of the Index recorded on any quarterly Lock-in Date during

the Investment Cycle multiplied by the Initial Offer Price (i.e. the highest Lock-in Index Pricedivided by the Initial Index Price minus one).

This report has been prepared by Lyxor Asset Management. This is neither an offer nor solicitation to purchase units of the fund. Investors should refer to the relevant Explanatory Memorandum and Fund Specific Memorandum (“the fund offering documents”) for detailedinformation.

Investments are not deposits or other obligations of, guaranteed or insured by the distributors of the fund, or any of their affiliates, or by any local governmental or insurance agency, and are subject to investment risks. Investors investing in funds denominated in non-localcurrency should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Past performance is not indicative of future performance, prices can go up or down. Distribution of this document may be restricted in certain jurisdictions; persons intowhose possession this publication come should inform themselves of and observe such restrictions. This document does not constitute the distribution of any information or the making of any offer or solicitation by anyone in any jurisdiction in which such distribution or offer isnot authorized or to any person to whom it is unlawful to distribute such a booklet or make such an offer or solicitation.

HKD 69,912,177.150

HKD 263,061.72Total Expenses charged to the fund since inception (including up front fees):

Total Net Asset Value in Amount as of January 31, 2006

NAV/Unit as of February 2, 2005

8 Years

Percentage holdings of net assets Variation over theperiod

NAV/Unit as of January 31, 2006

Initial NAV/Unit

STATEMENT OF MOVEMENTS IN INVESTMENT PORTFOLIO FOR THE YEAR ENDED 31ST JANUARY 2006

January 31, 2006

ALTUS TRUST: ALPHA EQUITY FUND - HANG SENG INDEX

MANAGEMENT REPORT FROM FEBRUARY 2, 2005 TO JANUARY 31, 2006

Cayman Fund offered in Hong Kong

Investment Cycle

- 2 -


3

REPORT OF THE TRUSTEE

In our opinion, the Manager, Lyxor Asset Management, has, in all material respects, managed the Altus

Trust : Alpha Equity Fund - Hang Seng Index for the period ended January 31, 2006 in accordance with

the provisions of the Trust Deed dated May 2, 2002, as amended.

For and on behalf of

HSBC Trustee (Cayman) Limited


4

We have audited the accompanying balance sheet, including the schedule of investments, of

Altus Trust : Alpha Equity Fund - Hang Seng Index (the “Fund”) as of January 31, 2006 and the

related statements of income, changes in net assets attributable to holders of redeemable participating

units and cash flows for the period from February 2, 2005 (commencement of operations) to January 31,

2006. These financial statements on pages 5 to 16 are the responsibility of the Fund’s management. Our

responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with International Standards on Auditing. Those Standards require

that we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free of material misstatement. An audit includes examining, on a test basis, evidence

supporting the amounts and disclosures in the financial statements. An audit also includes assessing the

accounting principles used and significant estimates made by management, as well as evaluating the

overall financial statement presentation. We believe that our audit provides a reasonable basis for our

opinion.

In our opinion, the accompanying financial statements give a true and fair view of the financial position

of the Fund as of January 31, 2006, and the results of its operations and its cash flows for the period from

February 2, 2005 (commencement of operations) to January 31, 2006, in accordance with International

Financial Reporting Standards and comply with the relevant disclosure provisions of the Trust Deed dated

May 2, 2002, as amended, and the relevant disclosure requirements set out in Appendix E of the Code on

Unit Trusts and Mutual Funds established by the Securities & Futures Commission of Hong Kong.

PricewaterhouseCoopers

Cayman Islands

May 22nd, 2006

AUDITORS’ REPORT TO THE UNITHOLDERS OF

ADEQUITY TRUST : ASIA TICK GUARANTEED FUND


5

BALANCE SHEET

AS AT JANUARY 31, 2006

Note JANUARY 31, 2006 HKD

Assets

Cash at bank 2(f) 15,320.02

Financial assets at fair value through profit or loss 2(c) 69,917,725.48

Total assets 69,933,045.50

Liabilities

Accrued expenses and other payables 2(d) 20,868.35

Liabilities (excluding net assets attributable to 20,868.35

holders of redeemable participating units)

Net assets attributable to holders of 69,912,177.15

redeemable participating units

Total Liabilities 69,933,045.50

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

HSBC Trustee (Cayman) Limited Lyxor Asset Management May 22nd, 2006


6

INCOME STATEMENT




Revenue

Interest Income 2(c) 218,646.07

Dividend Income 2(d) 2,787,815.95

Realised gain / (loss) on investments 2,006,379.92

Net change in unrealised gain / (loss) on investments 9,705,948.72

Net gain / (loss) on financial assets at 2(c) 11,712,328.64

fair value through profit or loss

Total Investment Income 14,718,790.66

Expenses

Management and other fees 3 (263,061.72)

Total Operating expenses (263,061.72)

Operating profit / (loss) 14,455,728.94

Increase / (decrease) in net assets attributable to 14,455,728.94

holders of redeemable participating units from operations



7

STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE

TO HOLDERS OF REDEEMABLE PARTICIPATING UNITS




Net assets attributable to holders of 0.00

redeemable participating units at 2 February

Proceeds from redeemable participating units issued 6 130,997,899.50

Redemptions of redeemable participating units 6 (75,541,451.29)

Total 55,456,448.21

Operating profit / (loss) 14,455,728.94

Net assets attributable to holders of 7 69,912,177.15

redeemable participating units at 31 January



8

CASH FLOW STATEMENT



JANUARY 31, 2006 HKD

Cash flows from operating activities

Purchase of financial assets (134,089,010.93)

Proceeds from sale of financial assets (including realized gains) 75,739,633.17

Amount received on financial assets 3,150,442.94

Operating expenses paid (242,193.37)

Net cash outflow from operating activities (55,441,128.19)

Cash flows from financing activities

Proceeds from redeemable participating units issued 130,997,899.50

Redemptions of redeemable participating units (75,541,451.29)

Net cash from financing activities 55,456,448.21

Net increase / (decrease) in cash and cash equivalents 15,320.02

Cash and cash equivalents at 2 February 0.00

Cash and cash equivalents at 31 January 15,320.02



9

NOTES TO THE FINANCIAL STATEMENTS Note to the attention of the reader

1 Fund’s principal activity

Altus Trust (the "Trust") was formed by a Trust Deed dated May 02, 2002 and registered as an exempted trust under the Trusts Law of the Cayman Islands on May 9, 2002. The Trust was registered as a mutual fund under the Mutual Funds Law of the Cayman Islands on May 15, 2002. Altus Trust: Alpha Equity Fund - Hang Seng Index (the "Fund") is a sub-fund of the Trust and was formed by a Supplemental Deed dated January 5, 2005. The Fund is a sub-fund of the Trust and accordingly under the law of the Cayman Islands does not require separate registration as a mutual fund since it falls under the umbrella registration of the Trust. The Fund commenced operations in February 2005. The Fund is authorised by the Securities and Futures Commission in Hong Kong and is required to comply with the Code on Unit Trusts and Mutual Funds established by the Securities & Futures Commission of Hong Kong. The Altus Trust : Alpha Equity Fund – Hang Seng Index:

− seeks to outperform the Index (Hang Seng Index) during the Investment Cycle (including the Investment Cycle Review Date) compared to the Initial Index Price; and

− guarantees to deliver the performance of the Index plus the Alpha (the highest Lock-in Index Price minus the Closing Index Price on the relevant Lock-in Date, capped at the highest Lock-in Index Price minus Initial Index Price) recorded (if any) on the Investment Cycle Review Date, compared to the Initial Index Price.

Unitholders are entitled to request the realisation of their Units on each Dealing Day during an Investment Cycle at the then prevailing Realisation Price per Unit (calculated by reference to the applicable Net Asset Value per Unit). Unitholders who realize their Units on an Investment Cycle Review Date will be entitled to receive a realisation price per Unit calculated by reference to the Net Asset Value per Unit as at the relevant Investment Cycle Review Date and which is guaranteed to be equal to: HK$10.00 x (Closing Index Price + Alpha) / Initial Index Price This means that on the Investment Cycle Review Date,

− if the Closing Index Price is equal to or above the Initial Index Price:

− investors receive the Initial Offer Price; plus

− 100% of the best positive performance of the Index recorded on any quarterly Lock-in Date during the Investment Cycle multiplied by the Initial Offer Price (i.e. the highest Lock-in Index Price divided by the Initial Index Price minus one).

− if the Closing Index Price is below the Initial Index Price:

− investors receive the Initial Offer Price multiplied by the performance of the Index recorded on the Investment Cycle Review Date; plus

− 100% of the best positive performance of the Index recorded on any quarterly Lock-in Date during the Investment Cycle multiplied by the Initial Offer Price (i.e. the highest Lock-in Index Price divided by the Initial Index Price minus one).


10

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) The terms definitions and the details of the investment objectives are set in the Fund Specific Memorandum. Investors should note that this does not amount to a capital guarantee in respect of an investor’s original investment in the Fund and the realisation price per Unit on the relevant Investment Cycle Review Date will be fully exposed to the performance, measured over the Investment Cycle Start Date to the Investment Cycle Review Date, of the Index. The deed of guarantee is conditional upon the Manager of the Fund not being removed at the request of Unitholders pursuant to Clause 25.1(c) of the Trust Deed, namely, Unitholders of not less than 50% in value of the Units in issue deliver a written request to the Trustee that the Manager should retire. This investment strategy is further enhanced by the Deed of Guarantee given by Société Générale. The Manager has also been appointed to act as the Guarantee Claims Agent in connection with the Deed of Guarantee executed by Société Générale.

2 Principal accounting policies

The principal accounting policies adopted in the preparation of the financial statements are set out below. (a) Basis of preparations

These financial statements have been prepared on the historical cost basis modified by the revaluation of financial assets and liabilities to fair value and in accordance with International Financial Reporting Standards. The preparation of financial statements in accordance with International Financial Reporting Standards requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates included in the financial statements. Principal accounting policies are as follows.

All references to net assets throughout this document refer to net assets attributable to holders of redeemable participating units unless otherwise stated.

(b) Functional currency

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’). This is the Hong-Kong Dollar (HKD), which reflects the Fund’s primary activity of investing in HK assets and the fact that the units are issued in HK dollars. The presentation currency is the same as the functional currency.


11

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) (c) Financial assets and liabilities at fair value through profit or loss

Financial assets and liabilities have been designated by management at fair value through profit or loss at inception. Regular-way purchases and sales of investments are recognised on trade date – the date on which the Fund commits to purchase or sell the asset. Investments are initially recognised at fair value, and transaction costs for all financial assets and financial liabilities carried at fair value through profit or loss are expensed as incurred. Gains and losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are included in the income statement in the period in which they arise.

Investments

Listed investments are valued at the official close of business bid price on the principal regulated market. The Euro Medium Term Note (EMTN) is valued at its fair market value as determined in good faith by the Manager. Deposits are valued at their nominal value plus accrued interests. Accrued interests are recognised in income statement. The resulting unrealised gains and losses on investments are recognised in the income statement. Security transactions are accounted for on the trade date (the date on which the order to buy or sell is executed). Realised gains and losses on sales of securities are calculated on an average cost basis and are recorded in the income statement. Foreign currency transactions are translated into HKD using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of assets and liabilities denominated in foreign currencies are recognised in the income statement and included in realised and unrealised gains / (loss) on investments.

(d) Income and expenses

Dividend income on equity is credited to Dividend Income in the Income statement when the security is quoted as ex-dividend. All expenses are accounted for on an accrual basis.

(e) Proceeds and payments on issue and redemption of units

The net asset value of the Fund is computed weekly. Prices for issues and redemptions are based on the latest available underlying prices on the day immediately preceding the valuation day (usually the underlying closing prices).

Proceeds and payments for units issued and redeemed during fund life are shown as movements in the statement of changes in net assets attributable to holders of redeemable participating units.


12

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) (f) Cash and cash equivalents

For the purpose of the cash flow statement, cash and cash equivalents comprise bank balances net of bank overdrafts.

(g) Pre-operation costs

Pre-operation costs have been included in the total of Management Fees in the income statement. The amount charged to the fund is described in Note 3.

3 Fees

Management fees The Manager is entitled to receive from the Fund a quarterly management fee (payable in arrears) accrued on and calculated as at each Valuation Day at the current rate of 0.30% per cent per annum of the Net Asset Value of the Fund. The maximum rate of management fee payable to the Manager pursuant to the Trust Deed is 3% per annum and any increase in the current rate up to the maximum permitted rate will only be implemented upon giving notless than 3 months’ notice to affected Unitholders. Any increase in the current rate of the management fee payable in respect of an Investment Cycle will be fixed prior to the relevant Investment Cycle Start Date and such rate will apply throughout the relevant Investment Cycle. The Manager is entitled to receive an initial sales charge on the issue of Units of up to 3% of the gross amount invested. The Manager is also entitled to receive a conversion charge of 1% if the investor elects to convert their Units into units of certain other funds of the Altus Trust. The Manager may share any fees it receives with distributors or agents procuring subscriptions in the Fund. The Manager and other companies within the Manager's group may with the prior written consent of the Trustee deal with the Fund, both as principal and agent, and, subject as provided above, may retain any benefit which they receive as a result Trustee's Fees, Hong Kong Representative Fees, Auditors’ Fees, Custodian Fees, Guarantor’s fees and Registrar’s Agent Fees The Trustee fees, Hong Kong Representative fees, Auditors' fees, Custodian fees, Guarantor’s fees and Registrar’s Agent fees will be paid by the Manager. Establishment Costs and Expenses The preliminary establishment expenses of the Fund, including the legal fees, the costs and expenses in obtaining authorisation of the Fund in Hong Kong and in the Cayman Islands, the preparation, the translation and the printing of the Explanatory Memorandum have been borne by the Fund over the first year of operation for an amount of USD 100,000.


13

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

4 Taxation

No provision for Hong Kong profits tax has been made as interest, dividend income and realised gains on disposal of investments of the Fund are excluded from the charge to profits tax under either sections 14, 26 or 26A of the Inland Revenue Ordinance. Under Cayman Islands Law, there is no income, withholding, or capital gains taxes payable by the Fund.

5 Bank loans, overdrafts and other borrowings

There are no bank loans, overdrafts and other borrowings.

6 Units in issue

For the period from February 2, 2005

(Commencement of operations) to January 31, 2006 Units outstanding at the beginning of the period 0.000 Units issued 12,752,185.740 Units redeemed (6,751,461.930)

Units outstanding at the end of the period 6,000,723.810

7 Net asset value per unit

As at January 31, 2006

Net assets attributable to holders of 69,912,177.15 Redeemable participating units Number of units in issue 6,000,723.810 Net asset value per unit 11.65

8 Transactions with Manager and its connected persons

(a) Investment transactions with connected persons of the Manager The following is a summary of the transactions entered into during the year between the Fund and the Manager and its connected persons, in addition to those disclosed in note 3. Connected persons of the Manager are those as defined in the Code on Unit Trusts and Mutual Funds established by the Securities & Futures Commission of Hong Kong. All such transactions were entered into in the ordinary course of business and on normal commercial terms.


14

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Investment transactions with connected persons of the Manager:

Aggregate % of the value of % of the Fund's total Average purchases and Fund's total commission rate of Name of company sales of securities transactions paid in the year commission HKD % Period ended January 31, 2006 Société Générale 205,312,226.68 100.00 0.00 0.00 (b) The Fund utilises the brokerage, custodian, agency and banking services of

Société Générale, connected persons of the Manager.

9 Soft commission arrangements

During the year, the Manager and its connected persons did not enter into any soft commission arrangements with brokers.

10 Stock lending arrangements

There are no stock-lending arrangements.

11 Commitments

There are no commitments.

12 Negotiability of assets

All assets are negotiable.

13 Contingent liabilities

There are no contingent liabilities.

14 Post-balance sheet event

There are no post-balance sheet events.

15 Risk factors

The Fund is subject to market fluctuations and to the risks inherent in all investments. The Realisation Price of Units and the income from them may go down as well as up.


15

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) Investors’ attention is drawn to the following risk factors: The performance of the Fund is subject to a number of risk factors, including those set out below: (a) Political, economic and social risks - All financial markets may at times be adversely affected by

changes in political, economic and social conditions. (b) Diversification risk - On the Launch Date and thereafter on each Investment Cycle Start Date,

the Fund’s assets will be mainly invested in the Index Shares. This means that investors realizing their Units as at the relevant Investment Cycle Review Date will be fully exposed to the performance, measured over the relevant Investment Cycle Start Date to the Investment Cycle Review Date, of the Index which could result in them receiving a Realisation Price per Unit as at an Investment Cycle Review Date below the issue price per Unit as at the relevant Investment Cycle Start Date.

(c) Market risk - The Fund’s investments are subject to the risks inherent in all securities,

including the fact that the value of holdings may go down as well as up. (d) No capital guarantee - Investors should note that the guarantee provided by Société Générale

concerning the calculation of the Realisation Price per Unit on an Investment Cycle Review Date does not amount to a capital guarantee in respect of an investor’s original investment in the Fund. The Realisation Price per Unit on an Investment Cycle Review Date will be fully exposed to the performance, measured over the Investment Cycle Start Date to the Investment Cycle Review Date, of the Index.

(e) Guarantor risk - Investors should note that Société Générale will act as the Guarantor

(concerning the Realisation Price per Unit on the Maturity Date, as described in the Fund Specific Memorandum). As a result, investors will be exposed to the credit risk of Société Générale.

(f) Licence to use the Hang Seng Index may be terminated - The Manager has been granted a

licence by Hang Seng Data Services Limited and HSI Services Limited (“HSI”) to the use of and reference to the Index in connection with the Fund. The Fund may not be able to fulfil its objections and may be terminated if such licence is revoked. In addition, the Fund may also be terminated if the Index ceases to be complied or published and there is no replacement index which, in the opinion of the Manager adopts the same or substantially the same formula and methodology as used in calculating the Index.

(g) Liability Risk - In accordance with the Trust Deed, the assets and liabilities of the sub fund are

segregated from the asset and liabilities of the other sub-funds of the Altus Trust.

16 Approval of financial statements

The financial statements were approved by the Trustee and the Manager on May 22, 2006.


16

SCHEDULE OF INVESTMENTS AS AT JANUARY 31, 2006

Numbers of Securities Market Value in HKD % of Net Assets

Financial assets at fair value through profit or loss Listed / quoted financial assets Equities Hong Kong BANK OF EAST ASIA 24,200.00 584,430.00 0.84% BOC HONG KONG HLDS 173,500.00 2,697,925.00 3.86% CATHAY PACIFIC 56,000.00 795,200.00 1.14% CHEUNG KONG HOLD 39,000.00 3,246,750.00 4.64% CHEUNG KONG INFRA 37,000.00 891,700.00 1.28% CHINA MERCHANTS 32,000.00 644,800.00 0.92% CHINA MOBILE 231,500.00 8,727,550.00 12.48% CHINA RESOURCES EN 32,000.00 528,000.00 0.76% CHINA UNICOM 208,000.00 1,435,200.00 2.05% CITIC PACIFIC LTD 36,000.00 828,000.00 1.18% CLP HOLDING LTD 39,500.00 1,747,875.00 2.50% CNOOC LTD 673,000.00 4,408,150.00 6.31% COSCO PACIFIC LTD 32,000.00 505,600.00 0.72% DENWAY MOTORS LTD 120,000.00 381,000.00 0.54% ESPRIT HOLDING LTD 20,000.00 1,349,000.00 1.93% HANG LUNG PROPERTI 59,000.00 890,900.00 1.27% HANG SENG BANK LTD 31,400.00 3,249,900.00 4.65% HENDERSON LAND DEV 29,000.00 1,144,050.00 1.64% HK& CHINA GAS 93,000.00 1,581,000.00 2.26% HONGKONG ELECTRIC 35,000.00 1,305,500.00 1.87% HSBC HOLDINGS PLC 37,200.00 4,824,840.00 6.90% HUTCHINSON WHAMPOA 69,000.00 5,468,250.00 7.82% JOHNSON ELECTRIC 59,000.00 448,400.00 0.64% LEGEND GROUP 114,000.00 356,250.00 0.51% LI & FUNG 46,000.00 662,400.00 0.95% MTR CORPORATION 88,000.00 1,434,400.00 2.05% NEW WORLD DEV 55,000.00 624,250.00 0.89% PCCW LTD 81,000.00 421,200.00 0.60% SINO LAND CO 70,000.00 759,500.00 1.09% SUN HUNG KAI PROP 40,000.00 3,214,000.00 4.60% SWIRE PACIFIC A 15,000.00 1,083,750.00 1.55% WHARF HOLDINGS LTD 38,000.00 1,136,200.00 1.63% YUE YUEN INDUSTRIA 26,500.00 637,325.00 0.91% Total listed / quoted financial assets 58,013m295.00 82.98% Unlisted / unquoted financial assets DEPOSIT 8,872,192.80 12.69% EMTN ALPHA 3,032,237.68 4.34% Total unlisted / unquoted financial assets 11,904,430.48 17.03%

Total Financial assets at fair value through profit or loss 69,917,725.48 100.01% Total financial assets at purchase date 60,113,564.31


17

DISTRIBUTION STATEMENT (UNAUDITED)



JANUARY 31, 2006 HKD Undistributed income/(loss) brought forward 0.00

Operating profit / (loss) 14,455,728.94 Interim distributions to holders of redeemable participating units 0.00 Final distributions to holders of redeemable participating units 0.00

Increase / (decrease) in net assets attributable to 14,455,728.94 holders of redeemable participating units from operations

Undistributed income/(loss) carried forward 14,455,728.94



18

STATEMENT OF MOVEMENTS IN SCHEDULE OF INVESTMENTS (UNAUDITED)

FOR THE PERIOD FROM FEBRUARY 2, 2005 TO JANUARY 31, 2006

% of Net Assets

Financial assets at fair value through profit or loss Listed / quoted financial assets Equities Hong Kong BANK OF EAST ASIA 0.84% BOC HONG KONG HLDS 3.86% CATHAY PACIFIC 1.14% CHEUNG KONG HOLD 4.64% CHEUNG KONG INFRA 1.28% CHINA MERCHANTS 0.92% CHINA MOBILE 12.48% CHINA RESOURCES EN 0.76% CHINA UNICOM 2.05% CITIC PACIFIC LTD 1.18% CLP HOLDING LTD 2.50% CNOOC LTD 6.31% COSCO PACIFIC LTD 0.72% DENWAY MOTORS LTD 0.54% ESPRIT HOLDING LTD 1.93% HANG LUNG PROPERTI 1.27% HANG SENG BANK LTD 4.65% HENDERSON LAND DEV 1.64% HK& CHINA GAS 2.26% HONGKONG ELECTRIC 1.87% HSBC HOLDINGS PLC 6.90% HUTCHINSON WHAMPOA 7.82% JOHNSON ELECTRIC 0.64% LEGEND GROUP 0.51% LI & FUNG 0.95% MTR CORPORATION 2.05% NEW WORLD DEV 0.89% PCCW LTD 0.60% SINO LAND CO 1.09% SUN HUNG KAI PROP 4.60% SWIRE PACIFIC A 1.55% WHARF HOLDINGS LTD 1.63% YUE YUEN INDUSTRIA 0.91% Total listed / quoted financial assets 82.98% Unlisted / unquoted financial assets DEPOSIT 12.69% EMTN ALPHA 4.34% Total unlisted / unquoted financial assets 17.03% Total Financial assets at fair value through profit or loss 100.01%


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PERFORMANCE TABLE (UNAUDITED)



Net asset values for last 3 years Total net asset value Net asset value per unit HKD HKD As at January 31, 2006 69,912,177.15 11.65 Performance record for last 3 years Highest issue price Lowest redemption price

per unit per unit HKD HKD

From February 2, 2005 to January 31, 2006 11.65 9.76

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