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Monetary Authority of Singapore Financial Sector Development Fund Annual Report 2017/2018 0 CONTENTS 02 Establishment and Objects of the Fund 03 Highlights of the Year 06 07 Looking Ahead Financial Statements 1 Establishment and Objects of the Fund The Financial Sector Development Fund (“FSDF” or the “Fund”) was established under Section 30A1 of the Monetary Authority of Singapore Act (Cap.

186, 1999 Revised Edition).
It is controlled and administered by the Monetary Authority of Singapore (“MAS”), and shall be used for the objects and purposes set out in Section 30B1 of the Act, namely: a. b. c. d. the promotion of Singapore as a financial centre; the development and upgrading of skills and expertise required by the financial services sector; the development and support of educational and research institutions, research and development programmes and projects relating to the financial services sector; and the development of infrastructure to support the financial services sector in Singapore.
1 Section 30A and Section 30B of the Monetary Authority of Singapore Act were renumbered to Section 127 and Section 128 respectively when Section 9 of the Monetary Authority of Singapore (Amendment) Act 2017 came into operation on 4 June 2018.

2 Highlights of the Year For the financial year ended 31 March 2018, FSDF saw an increase in grant expenses and commitments to support a range of initiatives across talent development, innovation and technology, as well as business strategies and consumer education.
Grant expenses totalled $50 million, while outstanding commitments stood at $91 million.

Talent Development MAS continued to partner the Institute of Banking and Finance (“IBF”) to promote competency development and support the training needs of the industry via the Financial Training Scheme and IBF Standards Training Scheme.

The schemes supported around 20,000 trainees over the past year.
MAS also supported the building of talent pipeline in specialist areas such as quantitative finance, risk management, actuarial science, and specialty insurance through 17 scholarships awarded under the Finance Scholarship Programme.

Since 2013, MAS introduced various initiatives, including Finance Associate Management Scheme and International Posting Programme, to develop a strong core of Singaporean leaders in finance.
In the past year, financial institutions had developed structured programmes to provide more than 500 Singaporeans with opportunities for cross-functional and overseas exposure for future specialist and leadership roles.

At the senior management level, the Asian Financial Leadership Scheme was introduced in 2015 to encourage financial institutions to develop a stronger pipeline of Singaporean finance leaders for regional and global roles.
FSDF had since supported over 70 leaders through curated programmes that provided opportunities to engage regional policymakers and corporate leaders, and to develop deeper insights into Asian markets.

3 Innovation and Technology In June 2015, MAS launched the Financial Sector Technology and Innovation (“FSTI”) Scheme, which committed $225 million over 5 years to support the creation of a vibrant ecosystem for innovation.
Since its launch, there has been healthy take-up of the scheme, supporting 13 innovation labs, 15 industry infrastructure, institutional-specific or proof-of-concept projects, and 57 FinTech Awardees.

In the past year, FSDF funded 7 industry infrastructure projects, including PayNow and Project Ubin, and 4 proof-of-concept projects, which were designed to promote more experimentation within the financial sector and innovative the development and dissemination of nascent accelerate technologies.
The FSTI scheme was also enhanced to introduce a new track – Artificial Intelligence (“AI”) & Data Analytics (“DA”) – to promote the adoption and integration of AI & DA in financial institutions and support research institutions in generating applied research in AI & DA for the financial sector.

4 Business Strategies and Consumer Education FSDF had supported initiatives to grow key financial sector activities.
These included schemes to support the development of the bond market, including the Asian Bond Grant Scheme, Green Bond Grant Scheme, and the SGD Credit Rating Grant Scheme.

These new schemes were well-received by the industry and FSDF had provided funding support to 18 new bond issuances in Singapore over the past year.

FSDF continued to co-fund consumer education initiatives.
These included MoneySENSE’s efforts to provide financial education to the general public through mass media outreach efforts, financial education seminar series, as well as financial literacy workshops conducted by schools and the community.

These efforts helped equip Singaporeans with financial knowledge and capabilities to make informed financial decisions in their daily lives.

Financial Statement Highlights For the financial year ended 31 March 2018, FSDF recorded an overall net surplus of $81 million.
The net surplus arose mainly from dividend income and gains from the investment portfolio, as global markets continued its rally from the previous year.

These investment gains were offset partially by foreign exchange losses, largely due to the strengthening of the Singapore Dollar against the US Dollar.

The total expenditure of FSDF increased by $16 million from the previous financial year to $56 million, mainly from the increase in grant expenses.
The overall net surplus for the financial year increased FSDF’s net assets to $1,531 million.

5 Looking Ahead MAS launched the Financial Services Industry Transformation Map in October 2017, outlining the growth strategies by business lines, programmes for upgrading skills, and an agenda for continuous innovation and technology adoption.

In the years to come, FSDF will seek to support these growth strategies amidst the ongoing financial sector transformation.
6 Financial Statements 08 09 12 13 14 Statement by Management Auditor’s Report Statement of Comprehensive Income Balance Sheet Statement of Changes in Equity 15 Cash Flow Statement 16 Notes to the Financial Statements 7 Statement by Management For the financial year ended 31 March 2018 In the opinion of the Management, the financial statements of the Fund as set out on pages 12 to 37 are drawn up so as to present fairly the state of affairs of the Fund as at 31 March 2018, the results and changes in equity of the Fund for the financial year ended on that date, and of the cash flows of the Fund for the financial year then ended.
THARMAN SHANMUGARATNAM Minister-in-charge Financial Sector Development Fund RAVI MENON Managing Director Monetary Authority of Singapore 21 June 2018 8 Independent Auditor’s Report on the Audit of the Financial Statements of the Financial Sector Development Fund For the financial year ended 31 March 2018 Opinion The financial statements of the Financial Sector Development Fund (the Fund), set out on pages 12 to 37, have been audited under my direction.
These financial statements comprise the balance sheet as at 31 March 2018, and the statement of comprehensive income, statement of changes in equity, and cash flow statement for the financial year then ended, and notes to the financial statements, including a summary of significant accounting policies.

In my opinion, the accompanying financial statements are properly drawn up in accordance with the provisions of the Monetary Authority of Singapore Act (Cap.
186, 1999 Revised Edition) (the Act) and Singapore Financial Reporting Standards (FRSs) so as to present fairly, in all material respects, the state of affairs of the Fund as at 31 March 2018 and the results, changes in equity and cash flows of the Fund for the financial year ended on that date.

Basis for Opinion The audit was conducted in accordance with Singapore Standards on Auditing (SSAs).
The responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of this report.

As the Auditor-General, I am independent of the Fund and I exercise my duties and powers in accordance with the Constitution of the Republic of Singapore (1999 Revised Edition) and the Audit Act (Cap.

17, 1999 Revised Edition).


Ethical requirements that are relevant to the audit and in line with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities (ACRA Code) have been fulfilled.

I believe that the audit evidence obtained is sufficient and appropriate to provide a basis for my opinion.

Other Information The management of the Monetary Authority of Singapore is responsible for the other information.
The other information comprises the information included in the Fund’s Annual Report, but does not include the financial statements and my auditor’s report thereon.

9 My opinion on the financial statements does not cover the other information and I do not express any form of assurance conclusion thereon.
In connection with the audit of the financial statements, the auditor’s responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or the knowledge obtained in the audit, or otherwise appears to be materially misstated.

If, based on the work performed, there is a material misstatement of this other information, that fact will be reported.

I have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Financial Statements The management of the Monetary Authority of Singapore is responsible for the preparation and fair presentation of the financial statements in accordance with the provisions of the Act and FRSs, and for such internal controls as management determines are necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
The Fund is constituted based on the Act and its dissolution requires Parliament’s approval.

In preparing the financial statements, management is 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 there is intention to wind up the Fund or for the Fund to cease operations.
Those charged with governance are responsible for overseeing the Fund’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements My 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 my opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs 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.
As part of an audit in accordance with SSAs, professional judgement is exercised and professional scepticism is maintained throughout the audit.

An audit also includes: • Identifying and assessing the risks of material misstatement of the financial statements, whether due to fraud or error, designing and performing audit procedures responsive to those risks, and obtaining audit evidence that is sufficient and appropriate to provide a basis for my opinion.
The risk of not detecting a 10 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 controls.

• Obtaining an understanding of internal controls 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 controls.
• Evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Concluding on the appropriateness of management’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 I conclude that a material uncertainty exists, I will draw attention in my auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, modify my opinion.

My conclusion is based on the audit evidence obtained up to the date of my auditor’s report.

However, future events or conditions may cause the Fund to cease to continue as a going concern.
• Evaluating 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.

Among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal controls identified during the audit are communicated to those charged with governance.
TAN YOKE MENG WILLIE AUDITOR-GENERAL SINGAPORE 22 June 2018 11 Statement of Comprehensive Income For the year ended 31 March Note Interest Income Dividend Income Gain / (Loss) from Financial Instruments at Fair Value through Profit or Loss Foreign Exchange Gain / (Loss) Other Income Total Income Less: Investment Expenses Grants Other Expenses Total Expenditure Net Surplus and Total Comprehensive Income for the Year 9 3 2018 $'000 36,004 73,571 78,178 (51,100) 179 2017 $'000 32,795 73,920 35,112 22,841 305 136,832 164,973 6,302 49,735 191 6,160 33,981 131 56,228 40,272 80,604 124,701 The accompanying notes form an integral part of these financial statements.
12 Balance Sheet As at 31 March Note ACCUMULATED FUND Capital Account Accumulated Surplus 4 5 Represented by: ASSETS Bank Balances and Deposits Financial Assets at Fair Value through Profit or Loss Loans and Receivables Less: LIABILITIES Financial Liabilities at Fair Value through Profit or Loss Accruals and Other Liabilities 2018 $'000 2017 $'000 471,635 1,059,008 1,530,643 471,635 978,404 1,450,039 170,199 1,371,978 46,588 1,588,765 173,298 1,298,097 30,284 1,501,679 15,753 42,369 58,122 6,480 45,160 51,640 NET ASSETS OF THE FUND 1,530,643 1,450,039 The accompanying notes form an integral part of these financial statements.
13 Statement of Changes in Equity Capital Account $’000 Accumulated Surplus $’000 Total $’000 Balance as at 1 April 2016 471,635 853,703 1,325,338 Total Comprehensive Income for the Year - 124,701 124,701 Balance as at 31 March 2017 471,635 978,404 1,450,039 Total Comprehensive Income for the Year - 80,604 80,604 Balance as at 31 March 2018 471,635 1,059,008 1,530,643 The accompanying notes form an integral part of these financial statements.
14 Cash Flow Statement For the year ended 31 March Note 2018 $’000 2017 $’000 Cash Flows from Operating Activities Surplus for the Year Adjustments for: Interest Income Dividend Income (Gain) / Loss from Financial Instruments at Fair Value through Profit or Loss Foreign Exchange (Gain) / Loss 80,604 124,701 (36,004) (73,571) (78,178) (32,795) (73,920) (35,112) 51,100 (22,841) Operating Cash Flows before Changes in Working Capital (56,049) (39,967) Changes in operating assets and liabilities Decrease / (Increase) in Loans and Receivables Increase / (Decrease) in Accruals and Other Liabilities (688) 8,065 573 1,055 Dividends Received on Singapore Exchange Limited Shares 69,998 69,998 Interest Received from Bank Balances and Deposits Net Cash generated from Operating Activities Cash Flows from Investing Activities Net Increase in Financial Instruments Dividends Received Interest Received Net Cash used in Investing Activities 954 898 22,280 32,557 (58,937) (92,983) 3,422 34,137 4,078 31,501 (21,378) (57,404) Net Increase / (Decrease) in Cash and Cash Equivalents 902 (24,847) Cash and Cash Equivalents as at beginning of the year 110,419 134,570 Effect of Exchange Rate Changes on Cash and Cash Equivalents (131) 696 Cash and Cash Equivalents as at end of the year 5 111,190 110,419 The accompanying notes form an integral part of these financial statements.
15 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 March 2018 These notes form an integral part of and should be read in conjunction with the accompanying financial statements.

1 GENERAL 1.1 The Financial Sector Development Fund (the “Fund”) is established under Section 30A of the Monetary Authority of Singapore Act (Cap.

186, 1999 Revised Edition).


It is controlled and administered by the Monetary Authority of Singapore (“MAS” or the “Authority”), located at 10 Shenton Way, MAS Building, Singapore 079117.

The Authority provides administrative and accounting support to the Fund.
The Fund shall be used for the objects and purposes set out in Section 30B of the Act, namely, a) the promotion of Singapore as a financial centre; b) the development and upgrading of skills and expertise required by the financial services sector; c) the development and support of educational and research institutions, research and development programmes and projects relating to the financial services sector; and d) the development of infrastructure to support the financial services sector in Singapore.
1.2 The Fund shall be deemed not to be a fund of the Authority for the purposes of any written law.

1.3 Section 30A and Section 30B of the Monetary Authority of Singapore Act were renumbered to Section 127 and Section 128 respectively when Section 9 of the Monetary Authority of Singapore (Amendment) Act 2017 came into operation on 4 June 2018.
2 SIGNIFICANT ACCOUNTING POLICIES 2.1 Basis of Preparation a) b) c) The financial statements have been prepared in accordance with the provisions of the Monetary Authority of Singapore Act and the Singapore Financial Reporting Standards (“FRS”) and on an accrual basis.

Amendments to FRSs applicable in the current financial year do not have a significant impact on the Fund’s financial statements.
The preparation of financial statements in conformity with FRS requires management to exercise its judgement in the process of applying the Fund’s 16 accounting policies.

It also requires the use of accounting 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 income and expenditure during the financial year.
Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from these estimates.

d) The financial statements are presented in Singapore dollars, the Fund’s functional currency, and rounded to the nearest thousand, unless otherwise stated.

2.2 Income Recognition a) Interest income Interest income is recognised on a time-proportionate basis using the effective interest method.
The effective interest rate is the rate that discounts estimated future cash payments or receipts through the expected life of the financial instrument or, where appropriate, a shorter period to the net carrying amount.

b) Dividend income Dividend income, including dividend income from shares held by SEL Holdings Pte Ltd (“SEL”) for the benefit of the Fund, is recognised when the right to receive payment is established.
2.3 Financial Assets a) Classification The Fund’s investments in financial assets are classified as financial assets at fair value through profit or loss and loans and receivables.
i) Financial assets at fair value through profit or loss are financial derivatives or financial assets other than loans and receivables, designated by management as such on initial recognition as it results in more relevant information, because they are managed and their performance evaluated on a fair value basis, in accordance with a documented risk management or investment strategy, and information is provided internally on that basis to MAS management.
They include fixed income securities, equities, commodities and an infrastructure fund.

ii) Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.

b) Recognition and Derecognition Purchases and sales of investments are recognised on the date when the Fund commits to purchase or sell the asset.
Investments are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the Fund has transferred substantially all risks and rewards of ownership.

c) Initial and Subsequent Measurements Financial assets at fair value through profit or loss are initially recognised and subsequently measured at fair value with changes in fair value and profit/loss on 17 disposal included in the statement of comprehensive income in the period in which they arise.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Transaction costs for financial assets at fair value through profit or loss are recognised as expenses on the transaction dates.

Loans and receivables are carried at amortised cost.
d) Impairment The Fund assesses at each balance sheet date whether there is objective evidence that an impairment loss on loans and receivables has been incurred.

The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the financial asset’s original effective interest rate.

Impairment losses, if any, are recognised in the statement of comprehensive income for the period.
Reversal of impairment losses recognised in prior years is recorded when there is an indication that the impairment losses recognised for loans and receivables no longer exist or have decreased.

The reversal, if any, is recognised in the statement of comprehensive income.
However, the increase in the carrying amount of loans and receivables due to a reversal of an impairment is recognised to the extent that it does not exceed the carrying amount that would have been determined (net of amortisation) had no impairment losses been recognised for the loans and receivables in prior years.

2.4 Financial Liabilities The Fund classifies its financial liabilities in the following categories: (a) financial derivatives and (b) accruals and other liabilities.
Financial derivatives - liabilities, classified as fair value through profit or loss, are carried at fair value, with changes in fair value recognised in fair value gain/loss through profit or loss in the statement of comprehensive income.

Accruals and other liabilities are carried at amortised cost using the effective interest method.

A financial liability is derecognised from the balance sheet when the obligation specified in the contract is discharged, cancelled or expired.
2.5 Offsetting of Financial Assets/Liabilities and Income/Expenditure Financial assets and liabilities are set off and the net amount is presented in the balance sheet when, and only when, there is a legally enforceable right to set off the amounts and an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Income and expenditure are netted only when permitted by the accounting standards.
2.6 Foreign Currency Translation Transactions in a foreign currency are measured using the exchange rate prevailing at the date of the transaction.

Foreign exchange gain/loss resulting from the settlement of such transactions and the translation of assets and liabilities denominated in foreign currencies, into Singapore dollars, at the exchange rate prevailing at the balance sheet date, are recognised in the statement of comprehensive income.
18 3 INCOME AND EXPENDITURE 3.1 Net Income/(Loss) from a) Financial Assets at Fair Value through Profit or Loss Held for Trading - Financial Derivatives Financial Assets Designated as Fair Value through Profit or Loss at Initial Recognition 2018 $'000 2017 $'000 65,428 5,271 11,350 73,441 b) Loans and Receivables (8,048) 173 c) Accruals and Other Liabilities 33 (31) d) Singapore Exchange Limited Shares held by 69,998 69,998 SEL for the benefit of the Fund 132,682 154,931 3.2 Interest Income/(Expense) from Financial Assets or Liabilities not at Fair Value through Profit or Loss a) Bank Balances and Deposits 1,869 1,334 b) Accruals and Other Liabilities (41) - Total Net Income from Financial Assets and 134,510 156,265 Liabilities 3.3 Grants (49,735) (33,981) 3.4 Other Net Income / (Expenditure) (4,171) 2,417 Total Comprehensive Income for the Year 80,604 124,701 19 4 CAPITAL AND ACCUMULATED SURPLUS 4.1 The capital and accumulated surplus of the Fund comprise: Capital Account Accumulated Surplus 2018 $’000 471,635 1,059,008 2017 $’000 471,635 978,404 Accumulated Fund as at 31 March 1,530,643 1,450,039 4.2 The Fund’s Capital Account consists of the net sale proceeds of the Singapore Exchange Limited’s (SGX) shares, in accordance with Section 30A (2) of the Monetary Authority of Singapore Act.
4.3 As at 31 March 2018, SEL holds 249,991,184 SGX shares for the benefit of the Fund as stipulated under Section 11(2) of the Exchanges (Demutualisation and Merger) Act (Cap.

99B, 2000 Revised Edition).

These SGX shares have a market valuation of $1.84 billion as at 31 March 2018 (31 March 2017: $1.93 billion).
In the event of a sale, net sale proceeds of these shares (after deducting expenses allowed under Section 10(1) and the par value of those shares) shall be paid by SEL into the Fund under Section 10(2) of the Exchanges (Demutualisation and Merger) Act.

4.4 4.5 The Fund seeks to generate good long-term returns subject to liquidity and risk parameters in support of its objects and purpose under Section 30B of the Monetary Authority of Singapore Act.
The liquidity and risk parameters set for the Fund takes into account its long term investment horizon and ability to ride through short-term volatility in market valuations.

Periodic reviews are conducted on the adequacy of the Fund’s capital and its grant commitments, taking into consideration the risks applicable to the Fund and its expected returns.

Regular updates are provided to the MAS management and the Minister-in-charge.
5 BANK BALANCES AND DEPOSITS 5.1 These comprise the following: Cash and Cash Equivalents Bank Balances and Deposits held by Singapore Exchange Limited in trust for the Fund Note 5.2 2018 $’000 111,190 59,009 2017 $’000 110,419 62,879 170,199 173,298 20 5.2 Included in bank balances and deposits of $170.2 million as at 31 March 2018 is US$45.0 million ($59.0 million) (31 March 2017: US$45.0 million [$62.9 million]) held by Singapore Exchange Ltd, in trust for a Fund-supported market infrastructure project.
The Fund reserves the right, to vary or change the amount for the project or withdraw any part of or the entire amount for this project, and recover in full, or part, any moneys disbursed if specified terms and conditions, including satisfying the project’s key performance indicators, are not met or upon the occurrence of specified events.

6 FINANCIAL RISK MANAGEMENT 6.1 6.2 The MAS Markets and Investment Committee manages the Fund’s investment and risk management strategies.
The Fund’s investments are mainly in financial instruments, which are exposed to various specific risks outlined below.

These risks are managed by establishing specific controls at the aggregate and individual portfolio levels, through diversification and regular monitoring.

The Fund is managed by external fund managers, who assess the macroeconomic outlook and market developments in formulating investment strategies.
6.3 Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices and includes currency, interest rate, equity, commodity and other price risks.

Market risks are managed through the diversification of the Fund’s investments across various asset classes, countries, regions and sectors.
Sensitivity analysis is performed for reasonably possible movements in each key variable with all other variables held constant, to demonstrate the impact on profit or loss and equity resulting from the change in each key variable.

The correlation of variables will have a significant effect in determining the ultimate fair values and/or amortised costs of financial assets.
21 Change in Market Risk: a) Foreign Currency USD by 5% BRL by 5% HKD by 5% ZAR by 5% b) Interest Rate by 1% c) Equity by 10% d) Commodity by 10% 6.3a) Currency Risk Profit or Loss and Equity Impact 2018 $’000 31,844 2,764 990 2,491 39,160 61,576 5,698 2017 $’000 32,114 2,704 1,690 2,423 35,829 45,841 4,618 i) Currency risk is the risk of loss from foreign assets and liabilities due to changes in foreign exchange rates.
The table below summarises the Fund’s currency risk exposure based on the net carrying amounts of the foreign currency denominated assets and liabilities.
At 31 March Singapore Dollar US Dollar Brazilian Real Hong Kong Dollar South African Rand Others Total $’000 537,004 636,872 55,278 19,802 49,818 231,869 1,530,643 2018 % 35.1 41.6 3.6 1.3 3.3 15.1 100.0 $’000 465,576 642,960 54,088 33,800 48,465 205,150 1,450,039 2017 % 32.1 44.4 3.7 2.3 3.3 14.2 100.0 ii) Other currencies include mainly Indonesian Rupiah, Japanese Yen, Mexican Peso and Russian Ruble (31 March 2017: Other currencies include mainly British Pound, Indonesian Rupiah, Malaysian Ringgit and Swedish Krona).
22 6.3b) Interest Rate Risk i) Interest rate risk is the risk of loss from a financial instrument due to changes in market interest rates.

The Fund manages interest rate risks by setting duration limits on its investments.

The table below summarises the Fund's financial instruments that have exposure to interest rate re-pricing risks, categorised by the earlier of contractual re-pricing or maturity dates.
As at 31 March Earlier of Repricing/Contractual Maturity Date 2018 Total Non- Interest Bearing Up to 3 months $’000 $’000 Over 3 months and up to 1 year $’000 Over 1 year and up to 5 years $’000 62,311 59,370 48,518 15,807 625 - - - Over 5 years $’000 $’000 - - 170,199 16,432 - 442,012 76,751 242,298 429,506 1,190,567 134,754 30,225 - - - - - - - - 134,754 30,225 180,786 442,637 76,751 242,298 429,506 1,371,978 15,829 2,500 28,259 - - - - - - - 44,088 2,500 18,329 261,426 28,259 530,266 - 125,269 - 242,298 - 429,506 46,588 1,588,765 15,753 34,561 7,533 42,094 57,847 - - 275 275 275 - - - - - - - - - - - - - - - 15,753 34,561 7,808 42,369 58,122 ASSETS Bank Balances and Deposits Financial Assets at Fair Value through Profit or Loss Financial Derivatives Receivable Fixed Income Securities Equities Infrastructure Fund (Unquoted) Loans and Receivables Other Receivables Receivables from SEL Holdings Pte Ltd TOTAL ASSETS LIABILITIES Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives Payable Accruals and Other Liabilities Accounts Payable - Grants Other Payables TOTAL LIABILITIES NET ASSETS 203,579 529,991 125,269 242,298 429,506 1,530,643 23 6.3b) Interest Rate Risk (continued) As at 31 March Earlier of Repricing/Contractual Maturity Date 2017 Total Non- Interest Bearing Up to 3 months $’000 $’000 Over 3 months and up to 1 year $’000 Over 1 year and up to 5 years $’000 74,420 54,165 44,713 6,925 25 71 - - Over 5 years $’000 $’000 - - 173,298 7,021 - 115,642 289,926 237,003 406,292 1,048,863 207,829 34,384 - - - - - - - - 207,829 34,384 249,138 115,667 289,997 237,003 406,292 1,298,097 14,873 2,500 12,911 - 17,373 12,911 - - - - - - - - - 27,784 2,500 30,284 ASSETS Bank Balances and Deposits Financial Assets at Fair Value through Profit or Loss Financial Derivatives Receivable Fixed Income Securities Equities Infrastructure Fund (Unquoted) Loans and Receivables Other Receivables Receivables from SEL Holdings Pte Ltd TOTAL ASSETS 340,931 182,743 334,710 237,003 406,292 1,501,679 LIABILITIES
 Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives Payable Accruals and Other Liabilities Accounts Payable - Grant Other Payables TOTAL LIABILITIES 6,465 15 26,447 18,713 45,160 51,625 - - - 15 - - - - - - - - - - - - - - - 6,480 26,447 18,713 45,160 51,640 NET ASSETS 289,306 182,728 334,710 237,003 406,292 1,450,039 ii) iii) The carrying amounts of loans and receivables and accruals and other liabilities approximate their fair value.
The carrying amounts of financial assets pledged as collateral for financial derivatives amounted to $25.3 million as at 31 March 2018 (31 March 2017: $11.9 million).

24 6.4 Credit Risk a) b) c) d) e) f) Credit risk is the risk of loss arising from a party’s failure to discharge an obligation under a financial contract and includes counterparty and issuer credit risk.

The Fund’s credit risks are managed by transacting with entities of acceptable creditworthiness within assigned limits.
Credit risks are also mitigated by diversifying credit exposures across counterparties and issuers.

The Fund enters into master netting arrangements with counterparties where it is appropriate and feasible to do so to mitigate counterparty risk.

The credit risk associated with favourable contracts is reduced by a master netting arrangement to the extent that if an event of default occurs, all amounts with the counterparty are settled on a net basis.
Master netting arrangements do not result in an offset of financial assets and liabilities on the balance sheet, as the legal right to set off the transactions is conditional upon default.

These netting arrangements include derivative master agreements such as International Swaps and Derivatives Association (ISDA) Master Agreement and Global Master Repurchase Agreements (GMRA).

The collateral received and posted under these agreements are subject to terms that are in accordance with market practice.
In these agreements, the counterparty is typically allowed to sell or re-pledge non-cash collateral (i.e.

securities) transferred, but has an obligation to return the securities at maturity.

If the securities received decrease in certain circumstances, call for additional collateral.

the Fund may, in value, The Fund manages issuer credit risk by imposing minimum credit rating requirements on the investment of its fixed income securities.
Single issuer limits are placed to control the credit exposure to any one issuer and to mitigate the extent of loss resulting from a default.

The total carrying amounts of bank balances, deposits, financial derivatives, fixed income securities, loans and receivables and infrastructure fund represent the Fund’s maximum credit exposure.
The credit exposure by rating of the fixed income securities held by the Fund is analysed below: As at 31 March AAA AA+ to BBB- Unrated and Others 2018 $’000 103,688 932,005 154,874 2017 $’000 454,385 528,574 65,904 1,190,567 1,048,863 25 6.4g) Credit Risk (continued) The disclosures set out in the tables below pertain to financial assets and liabilities that are not offset in the Fund's balance sheet but are subject to enforceable master netting arrangement or similar agreement that covers similar financial instruments.
The disclosures enable the evaluation of the potential effect of netting arrangements on the Fund's financial position.
Gross amounts subject to netting arrangements but not set off in the balance sheet $’000 (A) Gross amounts on balance sheet $’000 1,371,978 Related amounts not set off Net amount Financial instruments Cash collateral $’000 (B) $’000 (C) $’000 (A)-(B)-(C)=(D) Loans and Receivables Repurchase Agreements 46,588 5,335 786 16,522 21,857 16,522 17,308 275 - 275 4,274 - 4,274 As at 31 March 2018 Financial Assets Financial Assets at Fair Value through Profit or Loss Financial Derivatives Financial Liabilities Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives As at 31 March 2017 Financial Assets Financial Assets at Fair Value through Profit or Loss Financial Derivatives Loans and Receivables Repurchase Agreements 30,284 Financial Liabilities Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives 6,480 15,753 10,498 10,498 786 786 9,712 9,712 - - Gross amounts subject to netting arrangements but not set off in the balance sheet $’000 (A) Gross amounts on balance sheet $’000 1,298,097 Related amounts not set off Net amount Financial instruments Cash collateral $’000 (B) $’000 (C) $’000 (A)-(B)-(C)=(D) 4,828 2,443 12,715 17,543 12,715 15,158 - - - 2,385 - 2,385 2,923 2,923 2,443 2,443 196 196 284 284 26 6.4h) Securities Pledged and Transferred The Fund enters into transactions like repurchase agreements where financial assets are sold or transferred to counterparties under terms that are in accordance with normal market practice.
The Fund retains substantially all the risks and rewards of these securities and has not derecognised them.

In these transactions, the counterparty is typically allowed to sell or re-pledge those securities transferred, but has an obligation to return securities at maturity.

For repurchase agreements, the securities transferred are classified as “fair value through profit or loss”.
i) Financial Assets that are neither past due nor impaired The Fund’s balances and deposits with banks, receivables and other investments that are neither past due nor impaired, are mainly with banks and financial institutions with high credit-ratings assigned by international credit- rating agencies.

j) Financial Assets that are past due and/or impaired There is no other class of financial assets that is past due except for loans and receivables.
The age analysis of loans and receivables past due but not impaired is as follows: As at 31 March Up to 3 months past due $’000 Over 3 and up to 6 months past due $’000 Over 2018 Total 6 months past due $’000 $’000 Loans and Receivables Receivables As at 31 March - - - - Up to 3 months past due $’000 Over 3 and up to 6 months past due $’000 Over 2017 Total 6 months past due $’000 $’000 Loans and Receivables Receivables 150 - - 150 27 6.5 Liquidity Risk Liquidity risk is the risk that the Fund will encounter difficulty in selling a financial asset at close to its fair value at short notice to meet liabilities when they fall due.
Limits are imposed on investments to ensure adequate diversification of cash flow sources.

The table below analyses the financial assets and liabilities of the Fund based on undiscounted cash flows by remaining contractual maturities.
As at 31 March ASSETS Bank Balances and Deposits Financial Assets at Fair Value through Profit or Loss Financial Derivatives Receivable Net Settled Gross Settled Outflow Inflow Fixed Income Securities Equities Infrastructure Fund (Unquoted) Loans and Receivables Other Receivables Receivables from SEL Holdings Pte Ltd Contractual Maturity Date 2018 Total No Specific Maturity Up to 3 months $’000 $’000 Over 3 months and up to 1 year $’000 Over 1 year and up to 5 years $’000 Over 5 years $’000 $’000 62,310 48,880 - 59,009 - 170,199 - 6,828 2,283 417 29 9,557 - - 46,055 134,754 30,225 (947,355) 954,597 361,078 - - 136,299 - - 335,475 - - 604,361 (947,355) 954,597 1,483,268 - - - - - - - - 134,754 30,225 211,034 375,148 138,582 335,892 604,390 1,665,046 13,543 2,500 22,252 - 16,043 22,252 - - - - - - - - - 35,795 2,500 38,295 TOTAL ASSETS 289,387 446,280 138,582 394,901 604,390 1,873,540 LIABILITIES Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives Payable Net Settled Gross Settled Outflow Inflow Accruals and Other Liabilities Accounts Payable - Grants Other Payables TOTAL LIABILITIES - - - - 12,446 640,734 (637,581) 15,599 34,561 410 34,971 34,971 - 7,398 7,398 22,997 349 - - 349 - - - 36 - - 36 - - - (390) - - (390) - - - 349 36 (390) 12,441 640,734 (637,581) 15,594 34,561 7,808 42,369 57,963 28 6.5 Liquidity Risk (continued) As at 31 March Contractual Maturity Date 2017 Total ASSETS Bank Balances and Deposits Financial Assets at Fair Value through Profit or Loss Financial Derivatives Receivable Net Settled Gross Settled Outflow Inflow Fixed Income Securities Equities Infrastructure Fund (Unquoted) Loans and Receivables Other Receivables Receivables from SEL Holdings Pte Ltd No Specific Maturity Up to 3 months $’000 $’000 Over 3 months and up to 1 year $’000 Over 1 year and up to 5 years $’000 Over 5 years $’000 $’000 74,420 35,999 - 62,879 - 173,298 - 2,663 126 49 (89) 2,749 - - 48,483 207,829 34,384 (707,373) 711,527 43,124 (5,002) 5,102 314,297 - - 356,196 - - 547,200 - - - - - - -
 - (712,375) 716,629 1,309,300 207,829 34,384 290,696 49,941 314,523 356,245 547,111 1,558,516 1,782 2,500 18,301 - 4,282 18,301 - - - - - - - - - 20,083 2,500 22,583 TOTAL ASSETS 369,398 104,241 314,523 419,124 547,111 1,754,397 LIABILITIES Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives Payable Net Settled Gross Settled Outflow Inflow Accruals and Other Liabilities Accounts Payable - Grants Other Payables TOTAL LIABILITIES - - - - 2,797 504,877 (502,220) 5,454 26,448 251 26,699 26,699 - 18,461 18,461 23,915 763 112 (112) 763 - - - 1,327 - - 1,327 - - - (808) - - (808) - - - 763 1,327 (808) 4,079 504,989 (502,332) 6,736 26,448 18,712 45,160 51,896 29 6.6 Concentration Risk Concentration risk is the risk of loss arising due to a disproportionate exposure to specific countries, regions and sectors.
Investment limits are set to provide diversification of financial assets across countries, regions and sectors to mitigate concentration risk.

The table below summarises the Fund's exposure to concentration risk.
As at 31 March FIXED INCOME SECURITIES Government Government Related Corporates Others Total EQUITIES Consumer Discretionary Consumer Staples Financials Industrials Information Technology Telecommunication Services Utilities Energy Healthcare Total As at 31 March FIXED INCOME SECURITIES Government Government Related Corporates Others Total EQUITIES Consumer Discretionary Consumer Staples Financials Industrials Information Technology Telecommunication Services Utilities Energy Total Americas $'000 473,822 20,762 205,264 5,940 705,788 2,173 6,884 6,912 6,035 5,531 - 1,749 1,986 - 31,270 Americas $'000 388,393 15,427 189,680 10,863 604,363 - 15,765 10,032 12,113 2,104 4,327 2,153 281 46,775 Asia & Oceania $'000 63,158 72,432 75,146 - 210,736 6,676 7,620 19,118 3,503 28,547 7,623 4,445 - 695 78,227 Asia & Oceania $'000 143,552 27,217 41,154 - 211,923 11,092 13,044 28,745 9,606 41,688 14,067 8,536 - 126,778 30 2018 Europe, the Middle East & Africa (EMEA) $'000 Others $'000 Total $'000 111,613 2,887 110,676 85 225,261 - 2,790 - 45,992 48,782 648,593 98,871 391,086 52,017 1,190,567 2,291 2,538 10,110 - 3,519 6,799 - - - 25,257 - - - - - - - - - - 11,140 17,042 36,140 9,538 37,597 14,422 6,194 1,986 695 134,754 2017 Europe, the Middle East & Africa (EMEA) $'000 Others $'000 Total $'000 108,735 3,861 71,448 84 184,128 - - - 48,449 48,449 640,680 46,505 302,282 59,396 1,048,863 3,042 5,244 11,851 - 4,822 9,317 - - 34,276 - - - - - - - - - 14,134 34,053 50,628 21,719 48,614 27,711 10,689 281 207,829 6.7 Fair Values of Financial Assets and Liabilities a) The Fund assesses and classifies its financial assets and liabilities measured at fair value into three levels of fair value hierarchy based on the availability of observable market prices, data or inputs: i) ii) iii) Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities that can be accessed at the measurement date; Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
 directly (i.e.
as prices) or indirectly (i.e.

derived from prices).

Where the fair value of the financial instrument is measured by a valuation technique that uses independently sourced broker, dealer quotes and observable market parameters such as foreign exchange rates, yield curves and volatilities, it is disclosed at this level; and Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).
Where no market data can be observed and judgement is required, the valuation of the financial instrument takes into account factors such as the illiquidity and price volatility of the asset class as well as adjustments for uncertainties in the input parameters and valuation modelling methods.

31 6.7b) Assets and Liabilities Measured at Fair Value The following table summarises the financial assets and liabilities recorded at fair value by level of the fair value hierarchy.
As at 31 March Financial Assets at Fair Value through Profit or Loss Financial Derivatives Receivable Fixed Income Securities Equities Infrastructure Fund (Unquoted) Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives Payable As at 31 March Financial Assets at Fair Value through Profit or Loss Financial Derivatives Receivable Fixed Income Securities Equities Infrastructure Fund (Unquoted) Financial Liabilities at Fair Value through Profit or Loss Financial Derivatives Payable Level 1 Level 2 Level 3 $'000 $'000 $'000 2018 Total $'000 8,672 7,760 - 16,432 430,583 134,754 - 759,984 - - - - 30,225 1,190,567 134,754 30,225 574,009 767,744 30,225 1,371,978 3,467 3,467 12,286 12,286 - - 15,753 15,753 Level 1 Level 2 Level 3 $'000 $'000 $'000 2017 Total $'000 2,058 4,963 - 7,021 442,125 207,829 - 606,738 - - - - 34,384 1,048,863 207,829 34,384 652,012 611,701 34,384 1,298,097 2,759 2,759 3,721 3,721 - - 6,480 6,480 32 6.7c) Transfers from/to Level 1 and 2 There are no transfers from/to Level 1 and 2 within the fair value hierarchy during the financial years ended 31 March 2018 and 2017. d) Assets Measured at Fair Value under Level 3 Movements in the Fund's Level 3 financial assets are as follows: As at 31 March Financial Assets at Fair Value through Profit or Loss Balance as at 1 April - Gain/(Loss) from Financial Instruments at Fair Value through Profit or Loss - Foreign Exchange Gain/(Loss) Total Unrealised Gains or Losses recognised in Profit/(Loss) Purchases Balance as at 31 March 2018 Infrastructure Fund (Unquoted) $'000 2017 Infrastructure Fund (Unquoted) $'000 34,384 (3,968) (1,998) (5,966) 1,807 30,225 24,449 1,664 850 2,514 7,421 34,384 Financial assets are transferred into Level 3 when their valuation inputs are no longer based on observable market data.
Transfers of financial assets out of Level 3 are made when their valuation inputs can be based on observable market data.
e) Effect of Changes in Significant Unobservable Inputs of Level 3 Financial Instruments Financial Assets at Fair Value through Profit or Loss Infrastructure Fund (Unquoted) Total Fair Value as at 31 March 2018 $'000 Fair Value as at 31 March 2017 $'000 Valuation Technique Unobservable Input Range of Inputs 30,225 30,225 34,384 34,384 Net asset value Adjusted net asset value of the Fund N/A The fair value of the investment in the unquoted infrastructure fund has been estimated by the Fund's share of the net asset value of the infrastructure fund.
33 7 FINANCIAL DERIVATIVES Derivative financial instruments are financial instruments whose values fluctuate in response to changes in the values of the underlying assets, interest or exchange rates or indices.

These include forwards, swaps, futures and options.

Forward foreign exchange contracts are agreements to purchase or sell fixed amounts of currency at agreed rates of exchange on a specified future date.
Foreign exchange futures are exchange-traded agreements to purchase or sell a standard amount of a specified currency at an agreed rate of exchange on a specified future date.

Currency options give the buyer the right, but not the obligation, to purchase or sell specified amounts of currency at agreed rates of exchange on or before a specified future date.
Interest rate futures are typically exchange-traded agreements to purchase or sell a standard amount of a specified fixed income security or time deposit at an agreed interest rate on a specified future date.

Interest rate swaps are agreements that involve the exchange of interest obligations with a counterparty for a specified period without exchanging the underlying (or notional) principal.
Interest rate forwards are contracts to purchase or sell an underlying fixed income security at an agreed price on a specified future date.

Equity-related futures are typically exchange-traded agreements to purchase or sell a standard amount of a specified equity index at an agreed price or level on a specified future date.

Equity-related swaps are agreements to exchange payments based on an equity-linked return against a reference interest rate for a specified period.
Commodity-related futures are exchange-traded agreements to purchase or sell a standard amount of a specified commodity or commodity index at an agreed price on a specified future date.

Credit default swaps involve the transfer of credit risk of a reference asset from the protection buyer to the protection seller.
The protection buyer makes one or more payments to the seller in exchange for the seller’s obligation to make a payment to the buyer contingent upon the occurrence of a pre-defined credit event related to a specified reference entity or an underlying pool of liquid corporate issuers.
7.1 The notional amounts of certain types of financial instruments provide a basis for comparison with instruments recognized on the balance sheet but do not necessarily indicate the amounts of future cash flows involved or the current fair value of the instrument and, therefore, do not indicate the Fund’s exposure to credit or price risks.
The fair values of derivative instruments are normally zero or negligible at inception and the subsequent change in value is favourable 34 (derivative assets) or unfavourable (derivative liabilities) as a result of fluctuations in market interest rates or foreign exchange rates relative to their terms.
The aggregate notional amount of derivative financial instruments, the extent to which the instruments are favourable and unfavourable and, thus the aggregate fair values of derivative financial assets and liabilities can fluctuate significantly from time to time.

7.2 The notional amounts of the derivative financial instruments and their corresponding gross positive (derivative receivable) and negative (derivative payable) fair values at balance sheet date, are analysed below.
The following table summarises the notional amounts of derivative financial instruments held at the balance sheet date: Notional Amount $’000 Receivable $’000 2018 Fair Value Payable $’000 Notional Amount $’000 Receivable $’000 2017 Fair Value Payable $’000 1,606,615 14,694 6,981 86 2,862 6 1,218,961 - 4,137 - 2,598 - 197,712 21,715 7,245 815 625 54 1,089 - 34 118,970 16,071 - 141,546 401,143 2,214 - 1,284 9,273 147,118 362,524 103 96 - 823 709 554 15 - 418 420 Foreign exchange contracts Forwards Options Interest rate contracts Futures Swaps Forwards Equity-related contracts Futures Swaps Commodity- related contracts Futures 101,328 5,643 1,093 89,342 1,132 1,786 Other derivatives Credit default swaps 3,002 14 112 38,806 21 689 2,495,000 16,432 15,753 1,991,792 7,021 6,480 8 RELATED PARTY TRANSACTIONS 8.1 The Fund maintains a non-interest bearing current account with the Authority to facilitate grant disbursements.
The Fund’s current account balance with the Authority as at 31 March 2018 was $0.6 million (31 March 2017: $0.1 million).

35 8.2 The Fund also placed deposits with the Authority, in the ordinary course of business and at arm’s length, earning interest income disclosed below: Interest Income 2018 $’000 323 2017 $’000 289 The Fund’s deposit balance with the Authority as at 31 March 2018 was $48.9 million (31 March 2017: $36.0 million).
9 OTHER EXPENSES Other expenses include audit fees amounting to $0.12 million (31 March 2017: $0.13 million) payable by the Fund.

10 COMMITMENTS 10.1 The Fund has outstanding grant commitments, totalling $90.9 million as at 31 March 2018 (31 March 2017: $76.9 million).

10.2 As at 31 March 2018, the Fund has a remaining commitment to invest up to US$22.9 million ($30.0 million) (31 March 2017: US$24.3 million [$34.0 million]) in an infrastructure fund.
11 NEW OR REVISED ACCOUNTING STANDARDS AND INTERPRETATIONS New or revised accounting standards and interpretations to existing standards have been issued that are relevant for the Fund’s accounting periods beginning after 1 April 2017 or later periods and which the Fund has not early adopted.

The following new or revised accounting standards that are applicable, are not expected to have a significant impact on the Fund’s financial statements.
Effective for the Fund’s accounting periods beginning on or after 1 April 2018 FRS 109 Financial Instruments FRS 109 replaces the existing guidance in FRS 39 Financial Instruments: the Recognition and Measurement.

classification and measurement of financial instruments and introduces a new expected credit loss model for impairment of financial assets as well as new requirements for general hedge accounting.
includes revised guidance on It Classification and measurement FRS 109 contains three principal classification categories for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or loss (FVTPL).

Classification of 36 financial assets under FRS 109 is generally based on the business model in which a flow is managed and characteristics.
FRS 109 largely retains the existing requirements in FRS 39 for the classification of financial liabilities.

its contractual cash financial asset The Fund expects the current measurement approach for most of its financial assets and liabilities to remain unchanged upon the adoption of FRS 109, and does classification and application measurement requirements under FRS 109 to have a significant impact on its financial statements.
expect the not the of Impairment FRS 109 replaces the incurred loss model in FRS 39 with an expected credit loss model.

The new impairment model applies to financial assets measured at amortised cost, debt instruments measured at FVOCI, lease receivables, and certain loan commitments and financial guarantee contracts.

Under the expected credit loss model, it will no longer be necessary for a credit event to have occurred before credit losses are recognised.
Instead, at each reporting date, an entity is required to measure either a 12-month expected credit loss or a lifetime expected credit loss, depending on the changes in credit risk since initial recognition.

The Fund does not expect the application of the expected credit loss model under FRS 109 to have a significant impact on its financial statements.

FRS 109 also introduces expanded disclosure requirements and changes in presentation.
These are expected to change the nature and extent of the Fund’s disclosures about its financial instruments in the financial statements.

12 AUTHORISATION OF FINANCIAL STATEMENTS The financial statements for the year ended 31 March 2018 were authorised by the Minister-in-charge for issuance and signed by the Minister and Managing Director of Monetary Authority of Singapore on 21 June 2018.

37