The market environment in 2008 was one of the most difficult faced by investors in the last 50 years. It was a period when losses and bankruptcies flooded the markets. Governments all over the world launched unprecedented rescue plans and stimulus packages. Like all large institutional investors around the world, GIC found its portfolio impacted by the severe downturn in the world’s economic and financial markets in 2008.

Despite the financial landscape being more challenging, I am confident GIC will be able to deliver sustainable investment returns to the Government over the long term. GIC’s investment horizon of 20 years enables us to stay focused and not be distracted by volatile short-term movements. We have weathered many crises and will continue to stay on course to invest Singapore’s foreign reserves prudently and with a long-term orientation.

The deep pool of investment expertise and experience we have developed over the years is a critical factor in managing our portfolio and sustaining performance. In addition to the strong relationships we have built in the industry over time, we have established a sound investment infrastructure, with strong risk controls and well-coordinated operations.

On 30 June 2009, Dr Richard Hu and Mr Lee Ek Tieng retired as Chairman of GIC Real Estate and Chairman of GIC Asset Management respectively. Dr Hu and Mr Lee will continue to serve GIC as advisers to the Group Executive Committee. I would like to express my appreciation to both Dr Hu and Mr Lee for ably steering GIC Real Estate and GIC Asset Management all these years.

I have assumed the role of Chairman of GIC Real Estate in addition to my existing role as Chairman of GIC Special Investments and Mr Lim Siong Guan has taken over as Chairman of GIC Asset Management. Mr Lim has also been appointed Group President with eff ect from 1 July 2009. He will lead the organizational development of these three subsidiaries, which are responsible for public markets, real estate, private equity and infrastructure investments.

GIC participated actively in developing a set of Generally Accepted Principles and Practices for Sovereign Wealth Funds (SWFs) known as the Santiago Principles. This was published in October 2008 by the International Working Group of Sovereign Wealth Funds (IWG) made up of 23 member countries including Singapore. GIC supports efforts to enhance trust and the understanding of SWFs as financially-oriented investors. We adhere to the spirit of the Santiago Principles and consult the Singapore Government in areas where they have the prerogative as owner of the funds. GIC continues to support the objectives of the Santiago Principles through the International Forum of Sovereign Wealth Funds established by the IWG to contribute to the development and maintenance of an open and stable investment environment. Singapore is a member of the subcommittee working on recipient country relationships to maintain an open international financial environment for cross-border investments.

The past year has been extremely demanding. I would like to convey my deep appreciation to our dedicated staff for their hard work that has enabled us to ride out the tumultuous markets. I also wish to thank our counterparts and business associates for their continued support in a year of signifi cant market turmoil. With careful anticipation, we will be alert to opportunities while cautiously managing the risks in a changing financial landscape.

Dr Tony Tan Keng Yam
Deputy Chairman & Executive Director
September 2009