Speeches

1.Statutory Boards keep some surpluses for future capital expenditures and as a buffer against unanticipated spending needs or budget shortfalls. They manage and invest these funds in financial assets to earn an appropriate return within acceptable risk limits, after taking into account their cashflow and liquidity needs. Each Statutory Board has to ensure that an appropriate investment management structure is in place for proper oversight of its financial investments with prudent risk management.

2. As of 31 October 2008, there were no Statutory Boards holding Lehman Minibond notes and other credit-linked notes for which early redemption has been triggered. (e.g. Merrill Lynch Jubilee Series 3 LinkEarner Notes, DBS High Notes 5, Morgan Stanley Pinnacle Series 9, 10 Notes).

3. Four Statutory Boards had credit-linked notes in their investment portfolio which are unrelated to Lehman. None of the underlying entities and assets referenced to by these credit-linked notes have defaulted or had early redemption triggered. On a marked-to-market basis, these credit-linked notes held by the four Statutory Boards have not performed very differently from the performance of global markets generally this year. The four Statutory Boards are nevertheless monitoring the situation on all their investments, and will take the necessary steps to minimize any losses in these investments.

4. Only one Statutory Board has financial products, other than credit-linked notes, which are linked to collateralized debt obligations (CDOs) and credit default swaps (CDSs). These products comprise around 0.1% of the statutory board's portfolio, and have in fact made a net gain over the year.