OCTOBER 2009

VOLUME 4

CSO CSOs Message

Greetings from HwangDBS Investment IM)! Management (HwangDBS IM)!

Passion & Perspective

5 things you should know about Small Cap Stocks and the HwangDBS Asia Quantum Fund The [1] The Manager behind the success of the HwangDBS Asia Quantum Fund (AQF) what makes him tick Manager, Tan Ming Han, Assistant Fund Manager took on the management of AQF when he joined HwangDBS IM in May 2007. To Ming Han, his passion in the stock markets drives his interest and involvement in the investment industry. To him, it is an evolving space where there are new challenges and opportunities all the time. Satisfaction comes from being ahead of the market, generating returns and making money for clients. Understanding investor psychology is another common challenge faced by most fund managers and where he is now, Ming Han understands that he is managing a product that few fund managers or investors have the stomach for. Buying small caps and micro-cap equities itself is a challenge. Being contrarian and investing when markets are trading at all time bearish sentiments, takes a lot of mental effort but the overall returns can be very rewarding. [2] Why Small Caps? Most Fund managers are asked this question: When is a good time to invest? This question is a little harder to answer when you are a small cap champion. In a sustained economic recovery period, large cap stocks tend to lead the way in the stock price recovery. Smaller caps, on the other hand, tend to lag large caps under normal circumstances and it has not been any different this year. However, there will come a point where investors and fund managers will switch and start looking for laggards and low valuations. Small caps will usually fit the bill and then the discounted valuations will narrow. When that happens, small caps will potentially outperform due to higher growth and cheaper (sometimes bombed-out) valuations. As risk aversion declines, investors will naturally seek a bigger bang for their buck. Asia's fast growth is expected to continue in the foreseeable future and investors should not miss the opportunity to invest in small cap fund such as AQF. The attraction and potential of this proposition is investing early, way ahead of the assets peak. The outlook is promising as the funds objective is to tap on this growth story by investing in Asias growth companies based on a 3 to 5 year horizon in anticipation that one day, these growth companies would become large cap

companies. HwangDBS [3] Why the HwangDBS Asia Quantum Fund? AQFs difference and advantage over other local small cap funds is its position to invest in Asian growth companies with a market capitalisation of up to USD 3 billion across the Asian region. This may look huge, but in developed markets like Hong Kong and Singapore, the value is relatively small. Most other funds focus on Malaysian small cap companies and the definition of a Malaysian small cap company varies across the different fund houses with most funds having market capitalisation restriction of between RM750mil to RM1bil. [4] [4] Why Asia? The Asian market has been growing steadily because the governments of countries like Japan, China and India have shifted their focus from consuming imported goods to exploiting local and domestic products. This has given small, growing companies in these countries room and opportunity to grow. From an investor's point of view, this is extremely good news. The Asian economy is set for robust growth and expansion in the long-run and this will provide lucrative returns for foreign investors. Overall, AQF has benefited from its focus in Asia, especially in China and Indonesia, two of the year's best-performing stock markets. In summary Ming Hans advice: You must understand two main things: 1) Why there is a need invest in small cap funds or equities and 2) Why have small caps and mid cap equities done better? Frankly speaking, small and mid-cap equities have the ability to produce greater returns through more agile and dynamic businesses that tend to be more growth oriented compared to larger conglomerates. Also, investors typically seek small cap equities not only for their return potential but also for their diversification benefits. In any given market cycle, environments which favour larger cap equities do not always favor small cap equities, and vice versa. In general, having an allocation in both asset classes lowers the overall volatility and smoothes investment returns over time. Finally, keep in mind that when fund managers invest in smaller companies, they work very hard to ensure that the small- and mid-cap companies are financially sound and have healthy management teams or at least, that is what we ensure in HwangDBS!

Thank you for all your hard work and support! We are running the last leg of what started out to be a really difficult year and I am really pleased to share that despite market challenges, the Unit Trust Consultant (UTC) channel has recorded double digit growth in many areas. Amongst which is the UTC channels total asset under management (AUM) growth to date is up by 50 per cent from RM266 million end 2008 to RM398 million this year. Our EPF-related investment AUM has also been growing steadily and has recorded a 54 per cent growth in 2009! I hope continue to build up this momentum and start 2010 with a bang! The past year has been difficult but we think that the worst has past. However, we will be rolling out several activities all around Malaysia to help build publicity and awareness on the ground. In all these, your feedback and input will certainly help us skew our choice of events and marketing materials to support your marketing efforts. Once again, HwangDBS IM would like to thank you for your tremendous effort and confidence in the company. Your support is critical to another successful year and I hope you are looking forward to what we have planned for the 2010 New Year! Best Wishes,

Esther Thye Chief Sales Officer