Report - Nikko AM Asia Limited

ANNUAL REPORT 

For the financial year ended 31 December 2013 

Nikko AM Shenton 

Eight Portfolios 

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MANAGERS 

Nikko Asset Management Asia Limited 

8 Cross Street PWC Building #08-01 

Singapore 048424 

Company Registration No. 198202562H 

DIRECTORS 

Charles John Sherard Beazley 

Frederick Reidenbach 

Blair Chilton Pickerell 

Lim Say Boon 

V Arivazhagan 

Seet Oon Hui Eleanor 

Andrew Ross Long (appointed on 3 February 2014) 

TRUSTEE 

BNP Paribas Trust Services Singapore Limited 

20 Collyer Quay, #01-01 


AUDITORS 

PricewaterhouseCoopers LLP 

8 Cross Street, #17-00 PWC Building 


REGISTRAR 




SOLICITORS TO THE MANAGERS 

Allen & Gledhill LLP 

One Marina Boulevard #28-00 


SOLICITORS TO THE TRUSTEE 

Tan Peng Chin LLC 

30 Raffles Place, #11-00 Chevron House 


CUSTODIAN 

BNP Paribas Securities Services, Singapore Branch 



This report is also available on our website (www.nikkoam.com.sg) 

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PERFORMANCE SUMMARY 

Since 

Returns (%) 3 Mth 6 Mth 1 Yr 3 Yr 5 Yr 10 Yr Inception 

Eight Portfolio A 0.90 2.15 1.23 2.91 4.79 2.30 1.54 

Composite A 1.24 3.00 2.79 4.31 5.13 3.85 3.31 

Eight Portfolio B 2.24 4.76 6.93 4.20 6.36 2.59 1.25 

Composite B 3.07 6.16 9.50 6.25 7.31 4.17 3.21 

Eight Portfolio C 3.47 7.09 12.55 5.78 8.29 3.15 1.28 

Composite C 4.45 8.55 14.74 7.47 9.31 4.49 3.01 

Eight Portfolio D 5.31 10.56 20.65 7.64 9.94 3.14 0.76 

Composite D 6.29 11.80 21.90 9.27 11.26 4.60 2.63 

Eight Portfolio E 6.37 13.02 27.29 9.07 11.96 3.46 0.48 

Composite E 7.69 14.28 27.61 10.42 13.17 4.75 2.24 

Source: © 2013 Morningstar, Inc. & Russell Investment Group, returns as at 31 December 2013. Returns are calculated 

on NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any. Returns 

for period in excess of 1 year are annualised. 

Since 


Eight Portfolio A -4.15 7.36 -3.83 1.17 3.72 1.77 1.17 

Composite A 1.24 3.00 2.79 4.31 5.13 3.85 3.31 

Eight Portfolio B -2.87 5.03 1.58 2.43 5.27 2.06 0.88 

Composite B 3.07 6.16 9.50 6.25 7.31 4.17 3.21 

Eight Portfolio C -1.70 1.74 6.92 3.98 7.19 2.62 0.91 

Composite C 4.45 8.55 14.74 7.47 9.31 4.49 3.01 

Eight Portfolio D 0.05 -0.48 14.62 5.81 8.82 2.61 0.38 

Composite D 6.29 11.80 21.90 9.27 11.26 4.60 2.63 

Eight Portfolio E 1.06 -2.96 20.93 7.22 10.82 2.93 0.10 

Composite E 7.69 14.28 27.61 10.42 13.17 4.75 2.24 


on a NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any, and 

take into account of maximum sales and realisation charges. Returns for period in excess of 1 year are annualised. 

Inception date: 21 February 2000 

Note: 

(1) With effect from 17 October 2011, the umbrella unit trust (formerly known as “Eight Portfolios”) has been renamed 

Nikko AM Shenton Eight Portfolios. 

(2) With effect from 20 February 2012, the fund (formerly known as “Horizon Singapore Equity Fund”) has been 

renamed Singapore Dividend Equity Fund. 

(3) With effect from 16 December 2013, Horizon Global Equity Fund was reshaped to Nikko AM Global Dividend Equity 

Fund. 

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Composite A - 35% Barclays Capital Global Aggregate Index, S$ Hedged 

- 45% UOB Singapore Government Bond All Index 

- 15% composite index comprising 5 regional equity indexes:- 

(1) FTSE All Share Index 

(2) TOPIX Dividend Included Index 

(3) Russell Developed Europe ex-UK Large Cap Index (Net) 

(4) Russell Asia Pacific ex-Japan (All Cap) Index 

(5) Russell 1000® Net 30% Index 

according to their regional weights from time to time 

- 5% Straits Times Index 

Composite B - 30% Barclays Capital Global Aggregate Index, S$ Hedged 










Composite C - 20% Barclays Capital Global Aggregate Index, S$ Hedged 






(4) Russell Asia Pacific ex-Japan (All cap) Index 




Composite D - 10% Barclays Capital Global Aggregate Index, S$ Hedged 










Composite E - 85% composite index comprising 5 regional equity indexes:- 








With effect from 1 April 2011, the portion of the composite benchmarks of the Funds which previously reflected FTSE 

World Europe ex-UK Index was changed to Russell Developed Europe ex-UK Large Cap Index (Net). 

With effect from 1 August 2006, the portion of the composite benchmarks of the Funds which previously reflected 

MSCI All Country Pacific Basin ex-Japan Free Index will be changed to the MSCI AC Asia Pacific ex-Japan Index. This 

portion of the composite benchmark was subsequently changed to Russell Asia Pacific ex Japan (All cap) Index from 1 

April 2011. 

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The portion of the composite benchmarks of the Funds which previously reflected the 3-month SIBID rate was also 

changed to the UOB Singapore Government Bond All Index with effect from 1 August 2006. 

With effect from November 2008, the benchmark component of Lehman Brothers Global Aggregate (SGD Hedged) 

Index was renamed as Barclays Capital Global Aggregate Index, S$ Hedged. 

With effect from 16 December 2013, the composite benchmark of the former Horizon Global Equity Fund (now 

reshaped to “Nikko AM Global Dividend Equity Fund”) has been changed to the MSCI All Country World Index, USD 

base. Prior to 16 December 2013, the composite benchmark consists of the Russell 1000® Net 30% Index; FTSE All 

Share Index; TOPIX Dividend Included Index; Russell Developed Europe ex-U.K. Large Cap Index (Net) and Russell Asia 

Pacific ex-Japan (All Cap) Index, according to their regional weights from time to time. 

Singapore Dividend Equity Fund 

Portfolio Review 

Fund outperformed benchmark 

For the year ended 31 December 2013, the Singapore Dividend Equity Fund (the “Fund”) posted a return of 7.85% 

(SGD terms, NAV-NAV basis), outperforming the benchmark FTSE Straits Times Index, which returned 0.01% over 

the same period. The Fund gained most from stock selection, particularly in the Financials, Consumer Discretionary 

and Consumer Staples sectors. The Fund performed well on the back of its overweight positions in Thai Beverage, 

Guocoleisure and high yielding stocks, Mobileone, Starhub and SIA Engineering. The Fund also benefitted from its 

underweight position in City Developments, Fraser and Neave and Singapore Press Holdings. Finally our position in 

CNOOC, a non-Singapore stock, also added value. 

The FTSE STI gained 0.01% in 2013 

Asian equity markets delivered a modest return for the full year of 2013, with Hong Kong, Taiwan, New Zealand 

and Malaysia being the outperforming markets with an average gain of 6-11% while India and ASEAN ex Singapore 

suffered losses. Indonesia and Thailand suffered sharp correction and both registered double-digit decline. Similarly, 

other South East Asian markets in general were negatively impacted, and this was mainly driven by the sharp fall of 

ASEAN currencies against the USD in the 4th quarter on concerns of the US quantitative easing (QE) tapering, resulting 

in considerable outflows of funds. 

Q4 2013 growth slowed to 4.4% year-on-year (YoY), bringing the full year 2013 growth to 3.7% 

Advanced estimates revealed that the Singapore economy grew by 4.4% YoY in 4Q 2013, compared to 5.9% in the 

previous quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted 2.7% in 4Q 

2013, a reversal from the 2.2% expansion in 3Q 2013. Growth in 4Q 2013 was supported by the construction and 

services sectors, albeit at slower paces, with the manufacturing sector also languishing. Specifically, the construction 

sector grew by 4.7% YoY, moderating from the 5.8% growth in the previous quarter, mainly due to a moderation in 

the growth of private sector construction activity. Similarly, the services sector grew by 5.5% YoY in 4Q 2013, easing 

slightly from the 6.5% expansion in the previous three months. The slowdown was largely due to weaker growth in 

the wholesale and retail trade as well as finance and insurance sectors. Meanwhile, the manufacturing sector grew by 

3.5% YoY in 4Q 2013, lower than the 5.3% growth in the preceding quarter, attributed to a sharper contraction in 

biomedical manufacturing output and a slower pace of growth in transport engineering output. With the economy 

growth of 4.4% in 4Q 2013, Singapore expanded by 3.7% for the whole of 2013, which is in line with the Ministry of 

Trade and Industry Singapore’s growth forecast of 3.5-4.0%. 

Monetary Authority of Singapore (MAS) maintained policy stance as outlook remains upbeat 

During the semi-annual policy review meeting in October, the MAS decided to retain its policy stance of targeting a 

modest and gradual appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band. The 

MAS noted that the current policy stance is “appropriate in containing inflationary pressures and keeping the economy 

on a path of restructuring towards sustainable growth”. 

Inflation eased on lower private road transport costs 

Singapore’s headline inflation rose 1.5% in December from a year earlier, easing from an eight-month high of 2.6% in 

November. This was mainly due to lower private road transport costs, which declined 2.8% in December on account 

of lower certificate of entitlement premiums. Meanwhile, the accommodation cost inflation which has been the main 

4

driver for the country’s inflation for a long time, reached 2.9% in December, slightly lower than the 3.3% increase in 

the previous month. In order to tackle the high accommodation costs, the government had announced several rounds 

of cooling measures to curb the soaring prices in residential property market in recent years. For the whole of 2013, 

the consumer price index figure for accommodation cost was at 4.1% YoY. Overall, Singapore’s 2013 headline inflation 

averaged 2.4%, sharply lower than 4.6% in 2012. Core inflation came in at 1.7% in 2013 compared to 2.5% in 2013. 

Looking ahead, the MAS expects Singapore’s headline inflation to be in the 2-3% range in 2014. 

Industrial production (IP) and non-oil domestic exports (NODX) ended the year positively 

For 2013, IP expanded 1.8%, a clear improvement from just 0.5% in the previous year. The IP number ended the 

year on a surprise upside, growing 6.2% YoY in December, significantly above the market expectations of -1.4%. The 

pick-up was due to the rebound in electronic output and a strong performance by the marine and offshore industry. 

Exporters also ended what had been a volatile 12 months on a surprisingly upbeat note in December with shipments 

rising for the first time in almost a year. NODX surged 6% YoY in December, trumping consensus’ expectations of a 

1% increase. The rise contrasts with an 8.9% decline in shipment in November. The rally seen in December was due to 

more exports of non-electronic products, which outweighed electronic product shipments. In particular, non-electronic 

NODX grew 10.6% in December, led by petrochemicals, printer matter and structures of ships and boats. On the 

other hand, electronic NODX recorded its 17th consecutive month of decline, down 3.1% in December, due mainly to 

falling shipments of personal computer parts, disk drives and telecommunications equipment. Nevertheless, this was 

the smallest drop in electronic NODX in more than a year. Overall, the December’s numbers imply that NODX for all of 

2013 contracted 5.9-6.0% YoY. 

Market Outlook and Strategy 

Valuations for Singapore stocks remain reasonable 

We continue to believe that as one of the most externally focused economies in Asia, Singapore is a key beneficiary of 

the firmer global economic environment, particularly in the developed markets. In addition, valuations for Singapore 

stocks remain reasonable. The Fund maintains a meaningful overweight in the REITs as valuations remain attractive. 

Other than that, stock selections are focused on names which offer attractive yields and would also benefit from a 

cyclical uptick in the global economy, as well as selected mid-cap names and bottom-up picks. 

Horizon Singapore Fixed Income Enhanced Fund 


Fund outperformed the benchmark in 2013 

In the twelve months ending 31 December 2013, the Horizon Singapore Fixed Income Enhanced Fund (the “Fund”) 

posted a return of -2.66% (SGD terms, on NAV-NAV basis), better than its benchmark the UOB Singapore Government 

Bond All Index, which returned -3.44% (in SGD terms) during the period. The Fund’s overall underweight duration 

stance for most of the year was the biggest positive factor to the performance. This, alongside the Fund’s short duration 

corporate bond allocation was able to withstand most of the adjustment in overall risk-free rates which took place 

during the year. 

Market Review 

Singapore Government Securities (SGS) weakened in 2013 

The Singapore government yield curve shifted higher over the year, with 2-year yields rising by about 10 basis points 

(bps), while 10-year yields rose by about 120bps. SGS moved largely in tandem with the US treasuries (UST) as the 

US Federal Reserve (Fed) signalled for a tapering of its unprecedented quantitative easing (QE) program. The broad 

steepening of the SGS yield curve which began in 2Q13 flattened somewhat in September 2013 following a surprise 

no QE-taper announcement by the Fed at that time. Nonetheless, as economic progression improved in 4Q 2013, 

expectations rose again for a QE-taper announcement, helping to push the SGS 2 and 10-year yield spread back higher 

to close the year at about 220bps. Not surprisingly, the Singapore Dollar (SGD) depreciated alongside most Asian 

currencies over the period, declining 3.26% against the USD in 2013. 

Q4 2013 growth slowed to 4.4% year-on-year (YoY), bringing full year 2013 growth to 3.7% 

Advanced estimates revealed that the Singapore economy grew by 4.4% YoY in 4Q 2013, compared to 5.9% in the 

previous quarter. On a quarter-on-quarter seasonally-adjusted annualised basis, the economy contracted 2.7% in 4Q 

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2013, a reversal from the 2.2% expansion in 3Q 2013. Growth in 4Q 2013 was supported by the construction and 

services sectors, albeit at slower paces, with the manufacturing sector also languishing. Specifically, the construction 

sector grew by 4.7% YoY, moderating from the 5.8% growth in the previous quarter, mainly due to a moderation in 

the growth of private sector construction activity. Similarly, the services sector grew by 5.5% YoY in 4Q 2013, easing 

slightly from the 6.5% expansion in the previous three months. The slowdown was largely due to weaker growth in 

the wholesale and retail trade as well as finance and insurance sectors. Meanwhile, the manufacturing sector grew by 

3.5% YoY in 4Q 2013, lower than the 5.3% growth in the preceding quarter, attributed to a sharper contraction in 

biomedical manufacturing output and a slower pace of growth in transport engineering output. With the economy 

growth of 4.4% in 4Q 2013, Singapore expanded by 3.7% for the whole of 2013, which is in line with the Ministry of 

Trade and Industry Singapore’s growth forecast of 3.5-4.0%. 

Monetary Authority of Singapore (MAS) maintained policy stance as outlook remains upbeat 

During the semi-annual policy review meeting in October, the MAS decided to retained its policy stance of targeting a 

modest and gradual appreciation of the Singapore dollar nominal effective exchange rate (S$NEER) policy band. The 

MAS noted that the current policy stance is “appropriate in containing inflationary pressures and keeping the economy 

on a path of restructuring towards sustainable growth”. 

Inflation eased on lower private road transport costs 

Singapore’s headline inflation rose 1.5% in December from a year earlier, easing from an eight-month high of 2.6% in 

November. This was mainly due to lower private road transport costs, which declined 2.8% in December on account 

of lower certificate of entitlement premiums. Meanwhile, the accommodation cost inflation which has been the main 

driver for the country’s inflation for a long time, reached 2.9% in December, slightly lower than the 3.3% increase in 

the previous month. In order to tackle the high accommodation costs, the government had announced several rounds 

of cooling measures to curb the soaring prices in residential property market in recent years. For the whole of 2013, 

the consumer price index figure for accommodation cost was at 4.1% YoY. Overall, Singapore’s 2013 headline inflation 

averaged 2.4%, sharply lower than 4.6% in 2012. Core inflation came in at 1.7% in 2013 compared to 2.5% in 2013. 

Looking ahead, the MAS expects Singapore’s headline inflation to be in the 2-3% range in 2014. 

Industrial production (IP) and non-oil domestic exports (NODX) ended the year positively 

For 2013, IP expanded 1.8%, a clear improvement from just 0.5% in the previous year. The IP number ended the 

year on a surprise upside, growing 6.2% YoY in December, significantly above the market expectations of -1.4%. The 

pick-up was due to the rebound in electronic output and a strong performance by the marine and offshore industry. 

Exporters also ended what had been a volatile 12 months on a surprisingly upbeat note in December with shipments 

rising for the first time in almost a year. NODX surged 6% YoY in December, trumping consensus’ expectations of a 

1% increase. The rise contrasts with an 8.9% decline in shipment in November. The rally seen in December was due to 

more exports of non-electronic products, which outweighed electronic product shipments. In particular, non-electronic 

NODX grew 10.6% in December, led by petrochemicals, printer matter and structures of ships and boats. On the 

other hand, electronic NODX recorded its 17th consecutive month of decline, down 3.1% in December, due mainly to 

falling shipments of personal computer parts, disk drives and telecommunications equipment. Nevertheless, this was 

the smallest drop in electronic NODX in more than a year. Overall, the December’s numbers imply that NODX for all of 

2013 contracted 5.9-6.0% YoY. 


We maintain our underweight stance on SGD 

We expect the MAS to maintain its policy of a modest and gradual SGD Nominal Effective Exchange Rate (S$NEER) 

appreciation bias in 2014, with no real impetus for a change in monetary policy stance at this stage. Self-imposed 

property and transport cooling measures have been successful in mitigating high price pressure risks thus far. However, 

ongoing restructuring along with continued tight foreign worker policy (foreign worker levies will be raised again in July 

2014 and further tightening of dependency ratio ceilings can be expected) serve as offsets. Moreover, while Singapore’s 

economy has historically been closely tied to US and global growth, tighter labour supply conditions in Singapore may 

reduce this sensitivity. As a result, we maintain our underweight stance in the SGD. 

We maintain our underweight duration view on SGS 

With an improving economic outlook, we continue to expect the US Fed to gradually reduce its bond purchases 

program in 2014, and possibly end its QE program by year end. Emerging markets risks – slowing growth, high need for 

domestic price and credit growth adjustments – have been the key themes so far this year. Nevertheless, we continue 

to hold the opinion that these risks on balance are containable. Thus, while pockets of risk-aversion can be expected, 

6

we maintain the view that the overall global growth trends and also therefore interest rates are still higher. Thus, we 

maintain our underweight SGS duration stance. 

Nikko AM Global Dividend Equity Fund 


The Nikko AM Global Dividend Equity Fund (the “Fund”) returned 33.68% (SGD terms, NAV-NAV basis) for the year 

ended 31 December 2013, versus the benchmark’s 33.66%. 

The Fund invested in the RIC US Equity Fund, the RIC UK Equity Fund, the RIC Continental European Equity Fund, the 

RIC Japanese Equity Fund and the RIC Pacific Basin Equity Fund over the review period. The allocation to the underlying 

funds was periodically rebalanced to achieve around neutral weight to the Fund’s benchmark’s regional weight. 

On USD gross of fees basis, all the underlying funds with the exception of RIC Japanese Equity Fund and RIC US Equity 

Fund outperformed their respective benchmarks. 

The Fund has ceased to invest in the five underlying RIC Funds from 16 December 2013 onwards, as the Fund was 

changed to be sub-managed by Kleinwort Benson Investors from then on, investing in a diversified portfolio of 

dividend-producing equity investments that offers attractive and sustainable dividends from companies with relatively 

strong sustainable cash flows, stable growth and stable dividend payout. There will be no target industry or sector. 

Due to the short period of 16-31 December 2013 that is managed by the new sub-manager, our comments below 

mainly relates to the period from 1 January 2013 to 13 December 2013, where the Fund was investing in the underlying 

RIC Funds. 

Market Review 

Amid the macroeconomic uncertainty during 1Q 2013, global equity markets posted a solid gain of 8%, as measured 

by the Russell Developed Large Cap Index in USD terms. Performance among regions and sectors was mixed, with the 

US and the Japanese market taking the lead, while Europe and emerging markets lagged. In the US, the Russell 1000 

Index surpassed pre-crisis levels and returned 11% for the quarter. While the automatic budget cuts were not averted 

and the political arm-wrestling in the US Congress over a credible plan for spending cuts carried on, the underlying 

developments in the US economy bolstered to investors’ confidence. Most importantly, housing prices, as well as the 

job market, continued to improve. In Europe, politics remained in the spotlight. The Italian election in March failed to 

secure a majority for the centre-left coalition headed by Pier Luigi Bersani. Towards the end of the quarter, Cyprus 

became the latest country to be rescued by the European Union, the International Monetary Fund and the European 

Central Bank which had implemented a controversial plan to “bail-in” the overleveraged Cypriot banks using deposits 

as well as tax payers’ money. Meanwhile, Japan took bold steps in attempting to break the deflationary spiral that has 

haunted the economy for decades. The policy mix weakened the JPY and boosted growth, leading to strong stock 

market performance. Emerging Markets collectively posted negative returns, with larger countries such as China and 

Brazil lagging. Defensive/stable growth sectors performed best, while the materials sector was the worst performer, 

mainly affected by falling commodities prices. As measured by Russell indices, large-cap securities lagged small caps, 

while value outperformed growth. 

It was a volatile 2Q 2013 for global equities as decoupling of regions and sectors continued. The Russell Developed 

Large Cap Net Index returned 0.7% with a significant proportion of positive returns generated in the first half being 

offset after comments from the US Fed hinted at a tapering of stimulus measures. This sparked concern among investors 

that stimulus withdrawal may come sooner rather than later. The US and Japan continued to perform with largely 

supportive macroeconomic data. Japanese equities continued their upward trajectory, as recent polls indicated that 

Shinzo Abe’s Liberal Democratic Party should easily win the upper house elections this summer, making it more likely 

that Prime Minister Abe will be able to effectively implement the third arrow of his growth policy. In Europe, despite 

elevated levels of unemployment and a lowered growth forecast by the Organisation for Economic Co-operation and 

Development in May, markets held up relatively well. Whereas, emerging markets, negatively impacted by political 

uncertainty and investment outflows, and Asia-Pacific were the worst performing regions. The worst performing sector 

was the materials sector, negatively impacted by falling commodity prices and weak demand, notably out of China. 

7

Energy and consumer staples also lagged. Consumer discretionary significantly outperformed and was the best sector 

led by strong performance in the auto industry. From a style perspective value outperformed growth, as measured by 

the Global Developed Large Cap style indices whilst large-cap securities outperformed small-cap securities, as measured 

by the Russell Global Developed Large Cap and Small Cap Indices. 

Global markets experienced three comparatively distinct periods of performance in what was a relatively strong 3Q. 

A positive start, spurred on by encouraging macroeconomic data and Fed Chairman Bernanke’s assurance that there 

would be “no immediate end to quantitative easing (QE)”, saw markets gain in July. However, speculation surrounding 

the timeline for the end of the QE era triggered a sell-off, particularly in emerging markets (and emerging markets 

currencies), in August as investors grew anxious that stimulus reduction would commence in September. The prospect 

of military action in Syria exacerbated losses before diplomatic efforts between the US and Russia appear to reach a 

resolution. This was a positive catalyst for markets which then rallied higher on the back of a weak non-farm payrolls 

report that was interpreted as an indication the US Fed would be unlikely to unwind stimulus too rapidly. Investors 

then awaited September’s Federal Open Market Committee meeting with anticipation, the majority expecting a taper 

of USD 10bn - USD15bn. The committee’s decision not to reduce asset purchases surprised markets and drove the rally 

higher, with emerging markets enjoying an immediate bounce. September also saw the ruling Christian Democrat Party 

(CDP) win the German federal elections (although they will likely rule in coalition). The quarter ended with markets 

reversing some of their gains as uncertainty surrounding upcoming the US budget and debt ceiling negotiations ticked 

up. The threat of a collapse of Italy’s ruling coalition also renewed concerns in the already fragile eurozone. Continental 

Europe was the standout region with the Russell Global Developed Europe ex-UK Index advancing 14.3%. The more 

peripheral countries recorded the most sizeable returns, including Spain (+25.5%), Greece (+24.1%) and Italy (+19.8%). 

Stylistically, dynamic outperformed defensive by 389 basis points (bps) whilst growth outperformed value by 135bps, as 

measured by the Global Developed Large Cap style indices. 

Global equities had a good run over 4Q, rising 8.1% as measured by the Russell Developed Large Cap Index. The global 

ex-US component gained 5% while the developed ex-US returned 5.7%. North America was the best performing 

region over the quarter, as measured by the Russell North America Index. The political conundrum of the US government 

shutdown during October had limited overspill in the markets, despite its potential to affect the deadline in the US 

Fed’s debt limit increase. Several important US macro indicators came in on the upside during November and December, 

fuelling the positive momentum in the US economy and spurring market’s anticipation of a near-term deceleration in 

the pace of QE. US GDP grew 2.8% year-on-year in 3Q, while ISM Manufacturing and Non-farm payrolls both beat 

consensus forecasts. The beginning of the QE’s wind down was officially announced towards mid-December in the 

amount of USD 10bn tapering to start in January 2014. The relatively low amount of tapering and US Fed Chairman 

Janet Yellen’s dovish commentary on the overall monetary policy stance was positively acknowledged by the markets. 

Macro economic data remained positive in Europe as well, with the composite Purchasing Managers’ Index (PMI) being 

overall stable. Russell Developed Europe ex-UK Index gained 8.5%, while the Russell UK Index returned 8%. Emerging 

markets returned 2.4%, as measured by the Russell Emerging Index. The performance was divergent across the main 

regions. Japan’s equity market stabilised (2% as measured by Russell Japan Index) after a very strong performance in 

the first half of the year amidst certain factors such as the impact of the higher sales tax, which is a potential delay in 

the structural reforms. 

Horizon Global Bond Fund (S$ Hedged) 


The Horizon Global Bond Fund (S$ Hedged) (the “Fund”) returned -1.28% (SGD terms, NAV-NAV basis) for the year 

ended 31 December 2013, versus the benchmark’s -0.24%. 

During 1Q 2013, the Fund outperformed the benchmark with three of the five underlying managers finishing in 

positive territory, while one coming in flattish and one underperforming. The primary driver of the outperformance 

was sector positioning, via exposure to non-agency mortgages (Brookfield and PIMCO) and high-yield credit (PIMCO 

and Loomis). Rates positioning (overweights to Germany, Mexico and Ireland) was a secondary positive (Colchester, 

PIMCO and Loomis). Brookfield was the best-performing manager over the period, with its overweight exposure to 

non-agency mortgages continuing to add value to the Fund. In contrast, the foregoing was marginally hindered by 

currency positioning, where positives from JPY and EUR underweights were offset by underweights to AUD and NZD 

and an underweight to NOK. 

8

Subsequently, the Fund modestly underperformed the benchmark during 2Q 2013, which was a very difficult period for 

active fixed income investing. The primary detractor was an overweight to the emerging market debt (EMD) sector and 

an overweight to Mexican rates and currency. Other detractors included an overweight to German and UK rates and an 

underweight to EUR. These negatives were largely offset by exposure to non-agency mortgages; underweights to the 

US, French and Japanese sovereign rates; and underweights to the Australian Dollar as well as the New Zealand Dollar. 

On 9 April 2013, the Fund’s capabilities were enhanced by introducing an absolute return strategy (i.e. The Russell 

Absolute Return Bond Fund) that reduces interest rate risk but does not sacrifice yield. Our allocation was additive over 

the quarter as it reduced overall duration prior to the surge in interest rates. 

During the third quarter, the Fund posted positive absolute returns but underperformed its benchmark. Performance 

was held back primarily by currency positioning, notably underweights to the Australian Dollar, the New Zealand 

Dollar and the Euro. Mitigating this to certain degree were currency positives in the form of overweights to the 

Polish Zloty and Sterling and an underweight to the Indonesian Rupiah. Rates positioning was mixed, with negatives 

from overweights in Germany and New Zealand offset by positives from overweights in Australia and Ireland. Sector 

positioning dragged primarily due to an overweight to local currency emerging markets (overweight to Mexico and 

Brazil and an underweight to Czech Republic). An underweight to investment grade credit was secondary detractor. 

The Fund finished ahead of the benchmark over the fourth quarter, gaining from its duration underweight as yields 

inched higher over the period as well as its country, sector and currency positioning. An overweight to Irish rates, while 

being underweight to the UK and the US had a positive impact. In terms of sector selection, an overweight to high-yield 

and non-agency mortgages contributed, but exposure to local EMD detracted. Currency underweights to the Japanese 

Yen and the Australian Dollar and an overweight to the Polish Zloty further enhanced gains. 

Market Review 

Global fixed income markets remained dominated by policy and politics during the first quarter of 2013, impacted 

by speculation and outcomes in notable events as the US sequester and debt ceiling, the inconclusive Italian election, 

the botched Cypriot bank resolution as well as the European Central Bank (ECB) and the US Federal Reserve’s (Fed) 

comments/minutes. The Bank of Japan’s (BoJ) loose monetary policy (whose actual size surprised the market in early 

2Q 2013) evolved along with other central banks, who took efforts to ‘jaw bone’ their currencies down (ECB, Norway 

and New Zealand). Most economic and market trends broadly continued, including positive US growth (despite the 

2% payroll tax increase) and housing market, declining European economy and moderating global inflation. In USD 

unhedged terms, the Barclays Global Aggregate Index returned -2.1% over the quarter, with the negative total return 

driven by the sell-offs in EUR (on Draghi statements, Cyprus), GBP (on Bank of England indicating it might tolerate 

higher inflation) and JPY (on the US asset purchases expectations). 10-year US treasury (UST) yields increased modestly 

over the period, rising 10 basis points (bps). Investment grade corporate credit outperformed governments on a 

duration-adjusted basis. This was led by financials, whose yields are now back down to their traditional position below 

that of industrials. The US financial spreads have tightened due to the improving asset quality of their loan books 

and increasing capitalization. High-yield corporates did very well and outperformed most other sectors, given their 

attractive yield levels, strong credit fundamentals and continuing low default rates. Agency mortgage and commercial 

mortgage-backed securities spreads widened a bit and underperformed governments due to investor preference for 

riskier sectors. Non-agency mortgages continued to stand out with exceptionally strong performance, given the sector’s 

supply constraints and the positive fundamental backdrop of the US housing market. Though it struggled over the 

period, emerging markets hard currency outperformed the unhedged Global Aggregate index. Falling commodity 

prices, continued high issuance and devaluing emerging market currencies against the USD contributed to the pressure 

on EMD. 

Global fixed income markets performed poorly in 2Q 2013, closing out their worst first-half since 1994. The Barclays 

Global Aggregate Bond Index posted negative returns of - 2.79% for the quarter and -4.83% during 2H 2013. The key 

driver was a surge in the US interest rates, fuelled by the US Fed Chairman Ben Bernanke’s Congressional testimony 

on 22 May 2013 (and reiterated at the Federal Open Meeting Committee (FOMC) meeting on 19 June 2013) that the 

Fed could “taper” its stimulative bond-buying program before year-end if the economy continued to improve. For 

the quarter, the 10-year USTs rose 63bps to 2.48%, nearly a two-year high. While rising US rates caused German and 

the UK governments to post negative total returns, peripheral European treasuries bucked the trend with declining 

rates and positive returns. These bonds saw firm demand due to comments from ECB President Mario Draghi that the 

central bank “stands ready to act when needed”. Japanese government rates were also pulled up by rising US rates, 

despite the BoJ embarking on a large quantitative easing (QE) effort of its own. Over the quarter, virtually all spread 

9

sectors (including investment grade and high-yield corporate credit) posted negative total returns and underperformed 

equivalent-duration treasuries as concern over the Fed ending its accommodative money policy induced technical 

selling. EMD was especially hard hit, with pressure exacerbated by news of slowing growth in China. Non-agency 

mortgages also declined despite the continued support of an improving US housing market and declining delinquency 

and foreclosure rates. In the currency space, the USD outperformed most currencies on the prospects of rising US rates 

and an improving US economy. Harder hit currencies included the BRL and ZAR, given Brazil and South Africa’s slowing 

growth and renewed inflation concerns. Australia and New Zealand also sold off materially versus the USD as the Royal 

Bank of Australia cut interest rates and the Bank of New Zealand made comments that it would intervene to manage 

down the overvalued kiwi. The EUR appreciated modestly against the USD on the back of expected ECB support. The 

JPY continued selling off due to the BoJ’s effort to weaken the currency. 

During the third quarter, the Barclays Global Aggregate Bond Index advanced 2.8% USD unhedged and 0.8% USD 

hedged. The period’s volatility, which was a continuation of that seen in 2Q 2013, was driven by mixed central bank 

messaging, the crisis in Syria, speculation over the next FOMC governor, German and Italian politics, and confounded 

expectations of a September Fed taper. After rising 50bps and peaking near 3% in early September, 10-year UST yields 

rallied 10bps on the news that Larry Summers withdrew from consideration for the Fed’s governorship, and then rallied 

another 15bps following the Fed’s surprise decision in September to maintain its monthly USD 85bn QE program. 

Although, the 10-year note ended the quarter higher at 2.61%, a potential government shutdown in Washington 

and the looming debt ceiling added to the post Fed-decision momentum as investors turned more cautious. The UK 

also saw a rise in rates, as 10-years gilts yields increased 28bps to 2.72%. The rise was fuelled by speculation the Bank 

of England may raise interest rate earlier than it has forecast, following positive macroeconomic updates. Elsewhere, 

peripheral European bonds continued to outperform for a second consecutive quarter, as Spanish and Italian yields fell 

30bps and 11bps respectively on the back of stronger Purchasing Managers Index. On the other hand, gains on Italian 

debts were eroded by the rising political tension. In Japan, the 10-year government yields declined 17bps. A rebound 

in Chinese economic data along with an incrementally improving outlook for global growth contributed to a modest 

rebound in hard currency EMD. However, local EMD continued to underperform, delivering a negative total return for 

the sector. Local EMD was dragged down by currencies such as the Indonesian Rupiah, Turkish Lira, Indian Rupee and 

Mexican Peso. EM currencies that performed well were those less reliant on external financing, such as Korean Won, or 

benefited from EUR strength, including Polish Zloty and Czech Koruna. In developed market (DM) currencies, the British 

Pound and New Zealand Dollar rallied on better economic news, while the Euro defined gravity due to the implied 

support of the ECB. The Japanese Yen appreciated modestly against the USD during the period. 

The Barclays Global Aggregate Bond Index returned a modest 0.22% (USD hedged) over the fourth quarter, bringing 

the full year return to -0.14%. DM safe haven government yields declined in October, led by USTs which rallied on 

congress kicking the government shutdown and debt ceiling ‘cans’ down the road into the first quarter of 2014. 

However, DM rates rose during the remainder of the quarter on stronger US and UK economic data. This included 

German rates, which increased despite a surprise November ECB rate cut. Key 10-year rates that increased over the 

quarter included the US (+42bps to 3.03%), the UK (+30bps to 3.02%), Germany (+15bps to 1.93%) and Japan 

(+5bps to 0.74%). Notable DM rates defying this trend were those in the European periphery (Italy -30bps and Spain 

-15bps), which performed strongly on the back of improving growth and sentiment, and the continuing expectation of 

an ECB backstop. Italy also benefited from improved government stability and reduced risk of snap elections. 

The quarter ended with the Fed somewhat surprising the markets by announcing the start of its QE program tapering, 

reducing its monthly purchases of treasuries and mortgages from USD 85bn to USD 75bn. This had very little impact on 

the market, given the material increase in rates earlier in the year and the Fed’s accompanying statement that it would 

maintain short term interest rates “well past the time that the unemployment rate declines below 6.5%”. In the wake 

of rising DM yields, hard currency and corporate EMD showed their resilience, while local EMD was dragged down by 

pressure on EM currencies of countries with current account deficits such as Brazil, Indonesia, South Africa and Turkey. 

Currencies of EM countries in better fiscal position fared well, including the Polish Zloty, the Hungarian Forint and the 

South Korean Won. Among DM currencies, EUR continued to confound investors and strengthened against the USD. 

On the other hand, the Japanese Yen, sold off against the greenback. This was due in part to signs that Abe’s policies 

were working and BoJ comments that inflation would have to be maintained at 2%, signalling the central bank’s 

commitment to QE. 

10

IMPORTANT INFORMATION 

This document is for information only with no consideration given to the specific investment objective, 

financial situation and particular needs of any specific person. Any securities mentioned herein are 

for illustration purposes only and should not be construed as a recommendation for investment. 

You should seek advice from a financial adviser before making any investment. In the event that 

you choose not to do so, you should consider whether the investment selected is suitable for you. 

Investments in unit trusts are not deposits in, obligations of, or guaranteed or insured by Nikko Asset 

Management Asia Limited (“Nikko AM Asia”). 

Past performance or any prediction, projection or forecast is not indicative of future 

performance. The funds may use or invest in financial derivative instruments. The value of units 

and income from them may fall or rise. Investments in the funds are subject to investment risks, 

including the possible loss of principal amount invested. You should read the relevant prospectus and 

product highlights sheet obtainable from appointed distributors of Nikko AM Asia or our website 

(www.nikkoam.com.sg) before investing. 

The information contained herein may not be copied, reproduced or redistributed without the 

express consent of Nikko AM Asia. While reasonable care has been taken to ensure the accuracy 

of the information as at the date of publication, Nikko AM Asia does not give any warranty or 

representation, either express or implied, and expressly disclaims liability for any errors or omissions. 

Information may be subject to change without notice. Nikko AM Asia accepts no liability for any loss, 

indirect or consequential damages, arising from any use of or reliance on this document. 

The CPF interest rate for the Ordinary Account (“OA”) is based on the 12-month fixed deposit and 

month-end savings rates of major local banks, subject to a minimum 2.5% interest per annum. The 

interest rate for Special, Medisave and Retirement Accounts (“SMRA”) is pegged to the 12-month 

average yield of 10-year Singapore Government Securities yield plus 1%. A 4% floor rate will be 

maintained for interest earned on SMRA until 31 December 2014, after which a 2.5% minimum 

rate will apply. An extra 1% interest is paid on the first S$60,000 of a member’s combined balances, 

including up to S$20,000 in the OA. The first S$20,000 in the OA and the first S$40,000 in the 

Special Account (“SA”) cannot be invested under the CPF Investment Scheme (“CPFIS”). 

For Hong Kong Investors 

The Fund is offered only to professional investors and is not authorized by the Securities and Futures 

Commission in Hong Kong. The contents of this document have not been reviewed by any regulatory 

authority in Hong Kong. You are advised to exercise caution in relation to this document. If you are in 

any doubt about any of the contents of this document, you should obtain independent professional 

advice. 

Nikko Asset Management Asia Limited. Registration Number 198202562H 

11

SOFT DOLLAR COMMISSIONS/ARRANGEMENTS 

Appointment of soft dollar brokers 

Soft dollar brokers will be appointed onto the Managers’ broker panel only after the Managers have 

ensured that: 

a) full disclosure of the practice of accepting soft dollars is made; 

b) the commission rates charged are comparable with the market rates; 

c) there is no conflict of interest; 

d) the soft dollar credits are used only for clearly defined services; 

e) at all times trades are executed through the respective brokers only on the basis of best execution 

regardless whether soft dollar benefits will accrue. Best execution shall include competitive prices 

with smooth execution ability; and 

f) relevant regulations and guidelines are complied with. 

The procedures for the appointment of the brokers shall be no different from that of normal full service 

brokers. 

Execution and allocation 

If the Trustee objects to the use of the soft dollar brokers, the trades of the Sub-Funds shall be segregated 

from the rest of the trades that are executed through the relevant soft dollar broker(s). The Managers will 

execute trades for such accounts only with authorised full service brokers. 

It is the responsibility of the Managers to ensure that the allocation quotas are adhered to. In addition, 

the Managers will monitor the execution ability of the soft dollar brokers and assign the business strictly 

on a “best execution” basis. 

Subject to the provisions of the Code*, in its management of the Sub-Funds, the Horizon Global Bond 

Fund (S$ Hedged), the Singapore Dividend Equity Fund, the Horizon Singapore Fixed Income Enhanced 

Fund and the Nikko AM Global Dividend Equity Fund, the Managers may receive soft dollar commissions 

from, or may enter into soft dollar arrangements with, stockbrokers who execute trades on behalf of the 

Sub-Funds, the Horizon Global Bond Fund (S$ Hedged), the Singapore Dividend Equity Fund, the Horizon 

Singapore Fixed Income Enhanced Fund and the Nikko AM Global Dividend Equity Fund and the soft 

dollars received would be restricted to the following kinds of services: 

a) specific advice as to the advisability of dealing in, or of the value of any investments; 

b) research and advisory services; 

c) economic and political analysis; 

d) portfolio analysis including valuation and portfolio measurement; 

e) market analysis; 

f) data and quotation services; 

g) computer hardware or software that are used to support the investment decision making process, the 

giving of advice, or the conduct of research or analysis; and 

h) custodial services in relation to the investments managed for clients. 

The following are, however, prohibited: 

a) travel, accommodation and entertainment expenses; 

b) general administrative goods and services including office equipment and premises; 

c) membership fees; 

d) employee salaries; 

e) direct money payments / rebates. 

Records of the payments made using soft dollar commissions shall be retained with the Managers. 

The Manager of the Russell Investment Company plc (“RIC”), Russell Investments (Ireland) Ltd (“RIIL”), 

receives soft dollar commissions from, or enter into soft dollar arrangements with, stockbrokers who 

execute trades on behalf of the RIC Sub-Funds. The receipt of soft dollar commissions by RIIL is subject 

to the conditions of best execution, that such soft dollar commissions must assist in the provision of 

investment services to the RIC Sub-Funds and that the receipt of soft dollar commissions is in the best 

interests of the RIC Sub-Funds’ investors. The following kinds of services are soft dollars that have been 

received by RIIL: 

• written and oral investment advice and research reports; 

• statistical analyses relating to markets, companies, industries, business and economic factors, market 

trends and portfolio strategies; 

• computer-based financial systems, together with their associated software and servicing support; and 

• effecting securities transactions and performing functions incidental thereto such as clearance and 

settlement or are required in connection therewith. 

Kleinwort Benson Investors Dublin Ltd, the Sub-Managers of Nikko AM Global Dividend Equity Fund 

(formerly known as “Horizon Global Equity Fund”), do not receive or intend to receive any soft dollars in 

their management of the Nikko AM Global Dividend Equity Fund. 

* The “Code” shall mean the Code on Collective Investment Schemes issued by the Authority pursuant to 

Section 321 of the Securities and Futures Act, as the same may be modified, amended, supplemented 

or revised by the Authority from time to time. 

12

NIKKO AM SHENTON EIGHT PORTFOLIOS 

(Constituted under a Trust Deed registered in the Republic of Singapore) 

REPORT OF THE TRUSTEE 


The Trustee is under a duty to take into custody and hold the assets of Nikko AM 

Shenton Eight Portfolios (the “sub-funds”) in trust for the unitholders. In accordance with 

the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on 

Collective Investment Schemes, the Trustee shall monitor the activities of the Manager 

for compliance with the limitations imposed on the investment and borrowing powers as 

set out in the Trust Deed in each annual accounting year and report thereon to 

unitholders in an annual report. 

To the best knowledge of the Trustee, the Manager has, in all material 

respects, managed the sub-funds during the financial year covered by these financial 

statements, set out on pages 16 to 47, 

in accordance with the limitations imposed on 

the investment and borrowing powers set out in the Trust Deed. 

For and on behalf of the Trustee 


Authorised signatory 

13



STATEMENT BY THE MANAGER 


In the opinion of the directors of Nikko Asset Management Asia Limited, 

the accompanying financial statements set out on pages 16 to 47, comprising the 

Statement of Total Return, Statement of Financial Position, Statement of Movements 

of Unitholders’ Funds, Statement of Portfolio and Notes to the Financial Statements are 

drawn up so as to present fairly, in all material respects, the financial position of Nikko 

AM Shenton Eight Portfolios (the “sub-funds”) as at 31 December 2013, and the total 

return/(deficits) and changes in unitholders’ funds for the year then ended in 

accordance with the recommendations of Statement of Recommended Accounting 

Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore 

Chartered Accountants (formerly known as Institute of Certified Public Accountants of 

Singapore). At the date of this statement, there are reasonable grounds to believe that 

the sub-funds will be able to meet its financial obligations as and when they 

materialise. 

For and on behalf of the Manager 



14

INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF 



We have audited the accompanying financial statements of Nikko AM Shenton Eight Portfolios (the 

“sub-funds”), which comprise the Statement of Financial Position and Statement of Portfolio as at 

31 December 2013, the Statement of Total Return and Statement of Movements of Unitholders’ 

Funds for the year then ended, and a summary of significant accounting policies and other 

explanatory information, as set out on pages 16 to 47. 

Manager's Responsibility for the Financial Statements 

The sub-fund’s Manager (the “Manager”) is responsible for the preparation and fair presentation of 

these financial statements in accordance with the recommendations of Statement of 

Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the 

Institute of Singapore Chartered Accountants (formerly known as Institute of Certified Public 

Accountants of Singapore), and for such internal control as the Manager determines is necessary 

to enable the preparation of financial statements that are free from material misstatement, whether 

due to fraud or error. 

Auditor’s Responsibility 

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

conducted our audit in accordance with Singapore Standards on Auditing. Those standards require 

that we comply with ethical requirements and plan and perform the audit to obtain reasonable 

assurance about whether the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and 

disclosures in the financial statements. The procedures selected depend on the auditor’s 

judgement, including the assessment of the risks of material misstatement of the financial 

statements, whether due to fraud or error. In making those risk assessments, the auditor considers 

internal control relevant to the sub-fund’s preparation and fair presentation of the financial 

statements 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 sub-fund’s internal control. An 

audit also includes evaluating the appropriateness of accounting policies used and the 

reasonableness of accounting estimates made by the Manager, as well as evaluating the overall 

presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a 

basis for our audit opinion. 

Opinion 

In our opinion, the financial statements present fairly, in all material respects, the financial position 

of the sub-funds as at 31 December 2013 and the total returns/(deficits) for the financial year then 

ended in accordance with the recommendations of Statement of Recommended Accounting 

Practice 7 “Reporting Framework for Unit Trusts” issued by the institute of Singapore Chartered 

Accountants. 


Public Accountants and Chartered Accountants 

Singapore 

15



STATEMENTS OF TOTAL RETURN 


Eight Portfolio A 

Eight Portfolio B 

Note 2013 2012 2013 2012 

S$ S$ S$ S$ 

Income 

Dividends 15,380 7,552 40,914 19,725 

15,380 7,552 40,914 19,725 

Less: Expenses 

Management fee 47,419 46,663 152,689 143,678 

Management fee rebate (44,727) (42,806) (128,829) (119,931) 

Registration fee 11,663 19,761 12,820 20,037 

Trustee fee 1,239 1,267 3,334 3,336 

Custody fee 12,658 2,955 25,461 6,137 

Audit fee 798 7,766 2,181 7,842 

Valuation fee 1,736 1,796 4,704 4,722 

Other expenses 12,622 11,366 16,679 23,462 

43,408 48,768 89,039 89,283 

Net losses (28,028) (41,216) (48,125) (69,558) 

Net gains or losses on value of investments 

Net gains on investments 69,651 316,588 692,342 823,213 

69,651 316,588 692,342 823,213 

Total return for the financial year before 

income tax 41,623 275,372 644,217 753,655 

Less: Income tax 3 (736) - (1,981) - 

Total return for the financial year after 

income tax 40,887 275,372 642,236 753,655 

Eight Portfolio C 

Eight Portfolio D 

Note 2013 2012 2013 2012 

S$ S$ S$ S$ 

Income 

Dividends 899,760 438,863 205,858 115,052 

899,760 438,863 205,858 115,052 


Management fee 1,837,081 1,693,658 421,200 425,243 

Management fee rebate (1,616,247) (1,479,685) (399,075) (393,159) 

Registration fee 31,696 23,509 14,456 16,429 

Trustee fee 39,917 39,498 8,952 9,704 

Custody fee 98,168 34,721 49,168 12,594 

Audit fee 26,069 8,508 5,506 7,838 

Valuation fee 56,373 55,498 12,797 13,881 


575,028 499,186 152,369 135,451 

Net income/(losses) 324,732 (60,323) 53,489 (20,399) 


Net gains on investments 13,122,745 10,826,723 4,796,443 2,785,603 

13,122,745 10,826,723 4,796,443 2,785,603 

Total return for the financial year before 

income tax 13,447,477 10,766,400 4,849,932 2,765,204 

Less: Income tax 3 (47,543) - (12,688) - 

Total return for the financial year after 

income tax 13,399,934 10,766,400 4,837,244 2,765,204 

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

16





Eight Portfolio E 

Note 2013 2012 

S$ S$ 

Income 

Dividends 325,207 158,577 


Management fee 439,411 408,700 

Management fee rebate (430,547) (393,351) 

Registration fee 14,632 17,336 

Trustee fee 9,415 9,320 

Custody fee 33,208 9,684 

Audit fee 6,117 8,034 

Valuation fee 13,372 13,286 

Other expenses 41,635 35,441 

127,243 108,450 

Net income 197,964 50,127 


Net gains on investments 6,276,939 2,862,085 

6,276,939 2,862,085 

Total return for the financial year before income tax 6,474,903 2,912,212 

Less: Income tax 3 (16,921) - 

Total return for the financial year after income tax 6,457,982 2,912,212 


17



STATEMENTS OF FINANCIAL POSITION 

As at 31 December 2013 



Note 2013 2012 2013 2012 

S$ S$ S$ S$ 

ASSETS 

Portfolio of investments 3,215,074 3,507,073 8,889,813 9,254,280 

Sales awaiting settlement - - - 25,614 

Cash and bank balances 124,450 124,695 389,706 352,893 

Total assets 3,339,524 3,631,768 9,279,519 9,632,787 

LIABILITIES 

Payables 4 14,198 12,572 31,700 32,042 

Total liabilities 14,198 12,572 31,700 32,042 

EQUITY 

Net assets attributable to unitholders 5 3,325,326 3,619,196 9,247,819 9,600,745 



Note 2013 2012 2013 2012 

S$ S$ S$ S$ 

ASSETS 


Sales awaiting settlement 38,249 241,924 - 481,291 

Cash and bank balances 3,656,252 3,301,324 663,781 299,399 

Total assets 110,700,638 113,381,043 24,423,788 26,898,256 

LIABILITIES 

Payables 4 300,370 329,289 60,996 230,105 


EQUITY 



Note 2013 2012 

S$ S$ 

ASSETS 

Portfolio of investments 26,038,418 25,513,716 

Sales awaiting settlement 22,472 203,140 

Cash and bank balances 624,333 729,848 

Total assets 26,685,223 26,446,704 

LIABILITIES 

Payables 4 103,234 141,283 

Total liabilities 103,234 141,283 

EQUITY 

Net assets attributable to unitholders 5 26,581,989 26,305,421 


18



STATEMENTS OF MOVEMENTS OF UNITHOLDERS' FUNDS 




Note 2013 2012 2013 2012 

S$ S$ S$ S$ 

Net assets attributable to unitholders at the 

beginning of the financial year 3,619,196 3,963,486 9,600,745 9,924,596 

Operations 

Change in net assets attributable to unitholders 

resulting from operations 40,887 275,372 642,236 753,655 

Unitholders' contributions/(withdrawals) 

Creation of units 8,568 13,149 92,256 22,800 

Cancellation of units (343,325) (632,811) (1,087,418) (1,100,306) 


resulting from net creation and cancellation of 

units (334,757) (619,662) (995,162) (1,077,506) 

Total decrease in net assets attributable to 

unitholders (293,870) (344,290) (352,926) (323,851) 


end of financial year 5 3,325,326 3,619,196 9,247,819 9,600,745 



Note 2013 2012 2013 2012 

S$ S$ S$ S$ 


beginning of the financial year 113,051,754 115,211,746 26,668,151 29,151,090 

Operations 


resulting from operations 13,399,934 10,766,400 4,837,244 2,765,204 



Cancellation of units (16,422,083) (13,296,532) (7,300,703) (5,506,131) 



units (16,051,420) (12,926,392) (7,142,603) (5,248,143) 

Total decrease in net assets attributable to 

unitholders (2,651,486) (2,159,992) (2,305,359) (2,482,939) 


end of financial year 5 110,400,268 113,051,754 24,362,792 26,668,151 


19



STATEMENTS OF MOVEMENTS OF UNITHOLDERS' FUNDS 



Note 2013 2012 

S$ S$ 


beginning of the financial year 26,305,421 27,319,203 

Operations 


resulting from operations 6,457,982 2,912,212 


Creation of units 446,746 163,600 

Cancellation of units (6,628,160) (4,089,594) 



units (6,181,414) (3,925,994) 

Total increase/(decrease) in net assets attributable to 

unitholders 276,568 (1,013,782) 


5 

end of financial year 

26,581,989 26,305,421 


20



STATEMENTS OF PORTFOLIO 


By Geography (Primary) 

Quoted Investment Funds 

Holdings 

at 31 December 

2013 


Fair value 


2013 

Percentage of 

total net assets 

attributable to 

unitholders at 

31 December 

2013 

S$ % 

SINGAPORE 

Horizon Global Bond Fund (S$ Hedged) 765,080 1,065,756 32.05 

Nikko AM Global Dividend Equity Fund 428,849 468,304 14.08 

Horizon Singapore Fixed Income Enhanced Fund 1,099,446 1,488,650 44.77 

Singapore Dividend Equity Fund 121,673 192,364 5.78 

Total Singapore 3,215,074 96.68 

Total Quoted Investment Funds 3,215,074 96.68 

Portfolio of investments 3,215,074 96.68 

Other net assets 110,252 3.32 

Net assets attributable to unitholders 3,325,326 100.00 

By Geography (Summary) 


Percentage of 




31 December 

2013 

Percentage of 




31 December 

2012 

% % 

Singapore 96.68 96.91 

Total Quoted Investment Funds 96.68 96.91 

Portfolio of investments 96.68 96.91 

Other net assets 3.32 3.09 

Net assets attributable to unitholders 100.00 100.00 

As the sub-funds are invested wholly as feeder funds into underlying unit trusts, it is not 

meaningful to classify the investments into industry, country or asset classes. 


21







Holdings 


2013 


Fair value 


2013 

Percentage of 




31 December 

2013 

S$ % 

SINGAPORE 

Horizon Global Bond Fund (S$ Hedged) 1,928,859 2,686,901 29.05 

Nikko AM Global Dividend Equity Fund 2,615,923 2,856,588 30.89 










Percentage of 




31 December 

2013 

Percentage of 




31 December 

2012 

% % 









22







Holdings 


2013 


Fair value 


2013 

Percentage of 




31 December 

2013 

S$ % 

SINGAPORE 




Singapore Dividend Equity Fund 7,245,031 11,454,394 10.38 




Other net assets 3,394,131 3.07 




Percentage of 




31 December 

2013 

Percentage of 




31 December 

2012 

% % 









23







Holdings 


2013 


Fair value 


2013 

Percentage of 




31 December 

2013 

S$ % 

SINGAPORE 












Percentage of 




31 December 

2013 

Percentage of 




31 December 

2012 

% % 









24







Holdings 


2013 


Fair value 


2013 

Percentage of 




31 December 

2013 

S$ % 

SINGAPORE 










Percentage of 




31 December 

2013 

Percentage of 




31 December 

2012 

% % 









25



NOTES TO THE FINANCIAL STATEMENTS 


These notes form an integral part of and should be read in conjunction with the 

accompanying financial statements. 

1. General 

Nikko AM Shenton Eight Portfolios comprising Eight Portfolio A, Eight Portfolio B, 

Eight Portfolio C, Eight Portfolio D, Eight Portfolio E (collectively referred to as the 

“sub-funds”) are constituted as unit trusts in Singapore and as sub-funds of Eight 

Portfolio, pursuant to the Trust Deed dated 3 January 2002 as amended by 

Supplemental Deeds (collectively referred to as the “Deeds”). The Deeds are 

governed by the laws of the Republic of Singapore. As of 1 June 2013, the 

Trustee of the sub-funds have changed to BNP Paribas Trust Services Singapore 

Limited (the “Trustee”). The Manager of the sub-funds is Nikko Asset 

Management Asia Limited. 

The Manager may in its sole discretion invest the assets of the above sub-funds in 

funds established under the Horizon Investment Funds managed by Nikko Asset 

Management Asia Limited, namely the Horizon Global Bond Fund (S$ Hedged), 

Singapore Dividend Equity Fund, Horizon Singapore Fixed Income Enhanced 

Fund and Nikko AM Global Dividend Equity Fund (formerly known as Horizon 

Global Equity Fund). 

2. Significant accounting policies 

The principal accounting policies applied in the preparation of these financial 

statements are set out below: 

(a) 

Basis of preparation 

The financial statements have been prepared under the historical-cost convention, 

as modified by the revaluation of financial assets held at fair value through profit 

or loss. 

The sub-funds has adopted the recommendations of Recommended Accounting 

Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of 

Singapore Chartered Accountants (formerly known as Institute of Certified Public 

Accountants of Singapore) in June 2012 ("RAP 7") for the financial year beginning 

1 January 2013. 

26





2. Significant accounting policies (continued) 

(a) 

Basis of preparation (continued) 

The adoption of the RAP7 did not result in substantial changes to the sub-fund’s 

accounting policies and had no material effect on the amounts reported for the 

current or prior financial years except as disclosed below. 

Classification of net assets attributable to unitholders 

RAP7 recommends that a unit trust should classify its units on initial recognition 

as equity and present a Statement of Movement in Unitholders' Funds 

summarising the movements in the value of the trust/fund. Previously, the subfunds 

had classified its units as liabilities and presented the movements in value in 

the notes to the financial statements in accordance with the existing framework 

issued in May 2005. On the adoption of RAP7, the sub-funds has reclassified its 

units from liabilities to equity. 

The reclassification has been applied retrospectively. 

Financial instruments: fair value measurement 

RAP7 recommends disclosures and presentation of financial instruments in 

accordance with Singapore Financial Reporting Standard 107 "Financial 

Instruments: Disclosures" ("FRS107") wherever possible. 

Apart from enhanced disclosures to present fair value measurements by level of a 

fair value measurement hierarchy, the sub-funds have previously presented 

disclosures of its financial instruments in accordance with FRS 107 voluntarily. 

The adoption of this recommendation results in additional disclosures but does not 

have an impact on the accounting policies and measurement bases of the subfunds. 

In addition, the sub-funds have adopted Singapore Financial Reporting Standard 

113 ‘Fair value measurement’ (“FRS 113”) which is effective for annual periods 

beginning on or after 1 January 2013. The standard improves consistency and 

reduces complexity by providing a precise definition of fair value and a single 

source of fair value measurement and disclosure requirements for use across 

Financial Reporting Standards (“FRS”). The requirements do not extend the use 

of fair value accounting but provide guidance on how it should be applied where 

its use is already required or permitted by other standards within FRS. 

The adoption of FRS 113 does not have any material impact on the accounting 

policies of the sub-funds. The sub-funds have incorporated the additional 

disclosures required by FRS 113 into the financial statements. 

27






(a) 

Basis of preparation (continued) 

Reconciliation of net assets attributable to unitholders per unit for 

issuing/redeeming units and per financial statements 

The application of different valuation and accounting policies may result in 

differences between pricing net asset values and accounting net asset values. 

Where the difference is considered material, RAP7 further recommends that a 

reconciliation of the net assets attributable to unitholders per unit for 

issuing/redeeming units at the financial year end date and the net assets 

attributable to unitholders per unit per the financial statements should be 

presented in the notes to the financial statements. The adoption of this 

recommendation results in additional disclosures but does not have a significant 

impact on the accounting policies and measurement bases of the sub-funds. 

(b) 

Recognition of income 

Dividend income from investments is recognised when the right to receive 

payment is established. 

Interest income is recognised on a time-proportion basis using the effective 

interest rate method. 

(c) 

Cash and cash equivalents 

Cash and cash equivalents comprise cash and bank balances and term deposits. 

(d) 

Units in issue 

All units issued by the Trust provide the investors with the right to redeem for cash 

at the value proportionate to the investors' share in the Trust's net assets at 

redemption date. Such instruments give rise to a financial liability for the present 

value of the redemption amount. 

(e) 

Investments 

Investments are classified as financial assets at fair value through profit or loss. 

(i) 

Initial recognition 

Purchases of investments are recognised on the trade date. Investments 

are recorded at fair value on initial recognition. 

28






(e) 

Investments (continued) 

(ii) 

Subsequent measurement 

Investments are subsequently carried at fair value. The fair value of 

investments held in underlying funds is the quoted net asset value of the 

underlying fund as determined by the underlying fund administrator. Net 

change in fair value on investments are included in the Statement of Total 

Return in the year in which they arise. 

(iii) 

Derecognition 

Investments are derecognised on the trade date of disposal. The resultant 

realised gains and losses on the sales of investments are computed on the 

basis of the difference between the weighted average cost and selling 

price gross of transaction costs, and are taken up in the Statement of Total 

Return. 

(f) 

Receivables 

Receivables are non-derivative financial assets with fixed or determinable 

payments that are not quoted in an active market. Receivables are initially 

recognised at their fair value and subsequently carried at amortised cost using the 

effective interest method, less accumulated impairment losses. 

(g) 

Foreign currency translation 

(i) 

Functional and presentation currency 

The sub-funds qualify as an authorised scheme under the Securities and 

Futures Act ("SFA") of Singapore and is offered to retail investors in 

Singapore. The sub-fund’s activities are substantially based in Singapore, 

with subscription and redemptions of the units of the sub-funds 

denominated in Singapore dollars. 

The performance of the sub-funds is measured and reported to the 

investors in Singapore dollars. The Manager considers the Singapore 

Dollar as the currency which most faithfully represents the economic 

effects of the underlying transactions, events and conditions. The financial 

statements are expressed in Singapore dollars, which is the sub-fund’s 

functional and presentation currency. 

29






(g) 

Foreign currency translation (continued) 

(ii) 

Transactions and balances 

Foreign currency monetary assets and liabilities are translated into 

Singapore dollars at the rates of exchange prevailing at the date of the 

Balance Sheet. The net unrealised gain or loss is taken to the Statement 

of Total Return. Transactions during the year are recorded in Singapore 

dollars at the rates of exchange ruling on transaction dates. All realised 

gains or losses are recognised in the Statement of Total Return. 

3. Income tax 

The sub-funds were granted the status of a Designated Unit Trust by the Inland 

Revenue Authority of Singapore. 

In accordance to Section 35(12) and (12A) of the Income Tax Act (Cap 134) of 

Singapore, subject to certain conditions, the following income shall not form part 

of the statutory income of the sub-funds and is thus not taxable for the year of 

assessment: 

(a) 

(b) 

(c) 

(d) 

(e) 

gains or profits derived from Singapore or elsewhere from the disposal of 

securities; 

interest (other than interest for which tax has been deducted under section 

45 of the Income Tax Act); 

dividends derived from outside Singapore and received in Singapore; 

gains or profits derived from foreign exchange transactions, transactions in 

futures contracts, transactions in interest rate or currency forwards, swaps 

or option contracts and transactions in forwards, swaps or option contracts 

relating to any securities of financial index; and 

distributions from foreign unit trusts derived from outside Singapore and 

received in Singapore. 

30





3. Income tax (continued) 


2013 2012 

S$ 

S$ 


2013 2012 

S$ 

S$ 

Singapore income tax 736 - 1,981 - 


2013 2012 

S$ 

S$ 


2013 2012 

S$ 

S$ 

Singapore income tax 47,543 - 12,688 - 


2013 2012 

S$ 

S$ 

Singapore income tax 16,921 - 

4. Payables 


2013 2012 

S$ 

S$ 


2013 2012 

S$ 

S$ 

Payable to unitholders for cancellation of 

units - - - 4,652 

Amount due to the Manager 1,469 979 8,437 7,195 

Trustee fees payable 317 346 870 925 

Valuation fees payable 443 - 1,218 - 

Registrar fees payable 2,901 5,868 2,901 5,868 

Provision for audit fee 835 828 2,297 2,213 

Amount due to custodian 6,339 866 12,676 1,733 

Other payables 1,894 3,685 3,301 9,456 

14,198 12,572 31,700 32,042 


2013 2012 

S$ 

S$ 


2013 2012 

S$ 

S$ 

Payable to unitholders for cancellation of 

units 92,037 110,138 5,568 174,550 

Amount due to the Manager 83,004 63,867 12,485 8,716 

Trustee fees payable 10,437 10,856 2,321 2,676 

Valuation fees payable 14,612 - 3,249 - 

Registrar fees payable 2,901 5,868 2,901 5,868 

Provision for audit fee 27,341 25,945 6,039 6,409 

Amount due to custodian 42,876 5,860 21,065 2,879 


300,370 329,289 60,996 230,105 

31





4. Payables 


2013 2012 

S$ 

S$ 

Payable to unitholders for cancellation of units 56,598 92,433 

Amount due to the Manager 9,426 4,069 

Trustee fees payable 2,511 2,599 

Valuation fees payable 3,517 - 

Registrar fees payable 2,901 5,868 

Provision for audit fee 6,591 6,218 

Amount due to custodian 13,981 1,911 

Other payables 7,709 28,185 

103,234 141,283 

Management fee is payable to Nikko Asset Management Asia Limited. Trustee fee 

and registrar fee are payable to BNP Paribas Trust Services Singapore Limited. 

Valuation fee and custody fee are payable to BNP Paribas Securities Services 

Singapore Branch. 

5. Units in issue 

During the year ended 31 December 2013 and 31 December 2012, the number of 

units issued, redeemed and outstanding were as follows: 


2013 2012 

Units at beginning of the financial year 2,963,932 3,489,868 

Units created 6,927 10,970 

Units cancelled (279,395) (536,906) 

Units at end of the financial year 2,691,464 2,963,932 

2013 2012 

Net assets attributable to unitholders – S$ 3,325,326 3,619,196 

Net asset value per unit – S$ 1.236 1.221 

32





5. Units in issue (continued) 


2013 2012 



Units cancelled (940,135) (1,019,934) 


2013 2012 




2013 2012 



Units cancelled (14,452,242) (13,001,430) 


2013 2012 




2013 2012 





2013 2012 



33





5. Units in issue (continued) 


2013 2012 





2013 2012 



6. Financial risk management 

The sub-fund’s activities expose it to a variety of risk, including but not limited to 

market risk (including currency risk, interest rate risk and price risk), liquidity risk 

and credit risk. The Manager is responsible for the implementation of the overall 

risk management programme, which seeks to minimise potential adverse effects 

on the sub-fund’s financial performance. Specific guidelines on exposures to 

individual securities and certain industries and/or countries are in place for the 

individual sub-funds as part of the overall financial risk management to reduce the 

sub-fund’s exposures to these risks. 

The sub-fund’s primary objective is to achieve medium to long-term capital 

appreciation for the investors. 

The five sub-funds under Nikko AM Shenton Eight Portfolios umbrella fund are 

“fund of funds” investing in Horizon Global Bond Fund (S$ Hedged), Singapore 

Dividend Equity Fund, Horizon Singapore Fixed Income Enhanced Fund and 

Nikko AM Global Dividend Equity Fund. These underlying funds are separately 

managed by their respective managers and the Manager may not view the risk 

exposures of feeder funds to be the identical to those of the underlying funds in 

which they hold investments. 

The sub-fund’s investments are held in accordance with the published investment 

policies of the sub-funds and managed accordingly to achieve the investment 

objectives. 

34





6. Financial risk management (continued) 

(a) 

Market risk - Price risk 

Price risk is the risk that arises from uncertainties about future prices of financial 

instruments. 

The sub-fund’s investments are substantially dependent on the changes in market 

prices. The sub-fund’s overall market positions are monitored regularly so as to 

assess deviation from the sub-fund’s investment objectives. However, events 

beyond reasonable control of the Manager could affect the prices of the 

underlying investments and hence the net asset value of the sub-funds. 

The table below summarises the impact of an increase/decrease of index 

components within the benchmark of individual sub-funds by 10% (2012: 15%), 

with all other variables held constant, on the net assets attributable to unitholders 

as at 31 December 2013 and 31 December 2012. Changes in market index 

percentage are revised annually depending on management’s current view on 

market volatility and other relevant factors. 

Fund Associated Benchmark Impact in net asset 


unitholders 


-35% Barcap Global Aggregate Index(SGD Hedged) 

-45% UOB Singapore Government Bond All Index 

-15% composite index comprising 5 regional indexes 

(1) FTSE All Shares Index 


(3)Russell Developed Europe ex-UK Large Cap 

Index(net) 

(4) Russell Asia Pacific ex Japan(All cap)Index 

(5) Russell 1000 Net 30% Index 

2013 

% 

2012 

% 

according to their regional weights from time to 

time 

-5% Straits Times Index 10 16 








Index(net) 




time 


35






(a) 

Market risk - Price risk (continued) 

Fund Associated Benchmark Impact in net asset 


unitholders 








Index(net) 



2013 

% 

2012 

% 


time 









Index(net) 




time 

-10% Straits Times Index 

9 15 






Index(net) 




time 


9 15 

36






(b) 

Market risk - Interest rate risk 

Interest rate risk is the risk that the value of a financial instrument will fluctuate 

due to changes in market interest rates (fair value risk). 

Except for cash and bank balances with maturity period of less than 3 months, all 

other assets and liabilities are non-interest bearing. Changes in interest rates may 

also have an impact on the value of investment portfolios that consist of fixed 

income components within the underlying funds. The impact of a change in 

interest rates on the net assets attributable to unitholders is analysed in Note 7(a), 

where such a change has an impact on the benchmarked bond indices used in 

the price risk sensitivity analysis. Hence, no separate interest rate risk sensitivity 

analysis is presented. 

(c) 

Market risk - Currency risk 

Currency risk is the risk that the value of financial instrument will fluctuate due to 

changes in foreign exchange rates. 

To minimise currency risk, the sub-funds mainly holds its excess cash in its 

functional currency. For hedging purposes, the sub-funds may also enter into 

forward foreign exchange contracts. 

The sub-funds have no exposure to currency risk as all the assets and liabilities of 

the sub-funds are denominated in Singapore dollars, being the functional currency 

of the sub-funds. 

37






(d) 

Liquidity risk 

Liquidity risk is the risk arising from the inability of the sub-funds to meet its 

obligations as and when they fall due without incurring unacceptable cost or 

losses. 

The sub-funds are exposed to daily cash redemptions from unitholders. However, 

in accordance with the sub-funds’ prospectus, minimum holdings size are set. 

To manage the liquidity risk, a cash buffer is maintained in the sub-funds and 

monitored for minimum cash balances to prevent any extensive disposition of 

assets which may occur at lower prices and overdraft situations to meet trade 

settlements and obligations. 

The sub-funds’ financial liabilities are analysed for maturity using contractual 

undiscounted cashflows grouping based on the remaining period at the reporting 

date to the contractual maturity date. At the year end, all liabilities are either 

payable on demand or due in less than 3 months. The impact of discounting is not 

significant. 

Liabilities 


Less than 3 months 

As at 

31 December 

2013 

As at 

31 December 

2012 



As at 

31 December 

2013 

As at 

31 December 

2012 

S$ S$ S$ S$ 

Payables 14,198 12,572 31,700 32,042 

Contractual cash outflows 

(excluding gross settled 

derivatives) 14,198 12,572 31,700 32,042 

Liabilities 



As at 

31 December 

2013 

As at 

31 December 

2012 



As at 

31 December 

2013 

As at 

31 December 

2012 

S$ S$ S$ S$ 

Payables 300,370 329,289 60,996 230,105 



derivatives) 300,370 329,289 60,996 230,105 

38






(d) 

Liquidity risk (continued) 

Liabilities 



As at 

31 December 

2013 

As at 

31 December 

2012 

S$ S$ 

Payables 103,234 141,283 



derivatives) 103,234 141,283 

(e) 

Credit risk 

Credit risk is the risk that a counterparty will be unable to fulfil its obligations to the 

Fund in part or in full as and when they fall due. 

Concentrations of credit risk are minimised primarily by: 

– ensuring counterparties as well as the respective credit limits are approved; 

– ensuring there are controls in place to identify and assess the 

creditworthiness of counterparties and reviews such controls on a 

semi-annual basis; and 

– ensuring that transactions are undertaken with a large number of 

counterparties. 

All trade settlement with approved counterparties are on Delivery versus Payment 

and/or Receipt versus Payment basis; 

Credit risk arises from cash and bank balances and fixed deposits. The table 

below summarises the credit rating of banks and custodians in which the subfunds’ 

assets are held as at 31 December 2013 and 31 December 2012. 


Credit rating 

as at 

31 December 

2013 

Credit rating 

as at 

31 December 

2012 

Source of credit 

rating 

Bank balance and Custodian 

- BNP Paribas Securities Services 

Singapore Branch A+ - Standard & Poor's 

- The Northern Trust Company - A+ Standard & Poor's 

39






(e) 

Credit risk (continued) 


Credit rating 

as at 

31 December 

2013 

Credit rating 

as at 

31 December 

2012 


rating 






Credit rating 

as at 

31 December 

2013 

Credit rating 

as at 

31 December 

2012 


rating 

Bank balance and custodian 





Credit rating 

as at 

31 December 

2013 

Credit rating 

as at 

31 December 

2012 


rating 






Credit rating 

as at 

31 December 

2013 

Credit rating 

as at 

31 December 

2012 


rating 





With effect from 1 June 2013, the custodian of the sub-funds has changed to BNP 

Paribas Securities Services Singapore Branch. 

The credit ratings are based on Long-Term Local Issuer Ratings published by the 

rating agency. 

The maximum exposure to credit risk at the reporting date is the carrying amount 

of the financial assets. 

40






(f) 

Capital management 

The sub-funds’ capital is represented by the net assets attributable to unitholders. 

The sub-funds strive to invest the subscriptions of redeemable participating units 

in investments that meet the sub-funds’ investment objectives while maintaining 

sufficient liquidity to meet unitholder redemptions. 

(g) 

Fair value estimation 

The Fund classifies fair value measurements using a fair value hierarchy that 

reflects the significance of the inputs used in making the measurements. The fair 

value hierarchy has the following levels: 

• Quoted prices (unadjusted) in active markets for identical assets or 

liabilities (Level 1). 

• Inputs other than quoted prices included within level 1 that are observable 

for the asset or liability, either directly (that is, as prices) or indirectly (that 

is, derived from prices) (Level 2). 

• Inputs for the asset or liability that are not based on observable market 

data (that is, unobservable inputs) (Level 3). 

The following table analyses within the fair value hierarchy the sub-fund’s financial 

assets and liabilities (by class) measured at fair value at 31 December 2013 and 

2012: 



Assets 

Financial assets designated at 

fair value through profit or loss 

at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 

- Quoted investment funds 3,215,074 - - 3,215,074 

3,215,074 - - 3,215,074 



Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


3,507,073 - - 3,507,073 

41






(g) 

Fair value estimation (continued) 



Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


8,889,813 - - 8,889,813 


Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


9,254,280 - - 9,254,280 



Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


107,006,137 - - 107,006,137 


Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


109,837,795 - - 109,837,795 

42






(g) 




Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


23,760,007 - - 23,760,007 


Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


26,117,566 - - 26,117,566 



Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


26,038,418 - - 26,038,418 


Assets 



at inception: 

Level 1 

S$ 

Level 2 

S$ 

Level 3 

S$ 

Total 

S$ 


25,513,716 - - 25,513,716 

43






(g) 


Investments in open-ended investment funds whose net asset value is struck 

daily, price information is published and readily available and units are subscribed 

and redeemable on demand at the published price, are classified within level 1. 

The sub-funds’ do not adjust the quoted price for these instruments. 

Except for cash and bank balances which are classified as level 1, the sub-funds’ 

assets and liabilities not measured at fair value at 31 December 2013 and 2012 

have been classified as level 2. The carrying amounts of these assets and 

liabilities approximate their fair values as at the Statement of Financial Position 

date. 

7. Related party transactions 

The Manager of the sub-funds is Nikko Asset Management Asia Limited, a 

subsidiary of Nikko Asset Management International Limited. With effect from 1 

June 2013, The Trustee of the sub-funds has been changed to BNP Paribas Trust 

Services Singapore Limited (the "Trustee"). 

In addition, the bank holding company and related parties of the Trustee have also 

provided custodian, banking, foreign exchange, fund administration and brokerage 

services to the sub-funds in the normal course of business at terms agreed 

between the parties and within the provisions of the Deeds. 


2013 2012 

S$ S$ 


2013 2012 

S$ S$ 

Bank balances held with related 

party of the Trustee 124,450 - 389,706 - 


2013 2012 

S$ S$ 


2013 2012 

S$ S$ 


party of the Trustee 3,656,252 - 663,781 - 


2013 2012 

S$ S$ 


party of the Trustee 624,333 - 

44





8. Financial ratios 

Expense ratio 


2013 2012 

Total operating expenses S$ 43,408 44,704 

Average daily net asset value S$ 3,471,011 3,755,666 

Total expense ratio 1 (including underlying 

funds’ expense ratio) % 2.59 2.59 

Weighted average of the underlying funds’ 

unaudited expense ratio % 1.34 1.40 


2013 2012 








2013 2012 








2013 2012 



Total expense ratio 1 (including Underlying 

Fund's expense ratio) % 1.72 2.05 



45





8. Financial ratios (continued) 

Expense ratio (continued) 


2013 2012 



Total expense ratio 1 (including Underlying 

Fund's expense ratio) % 1.54 2.03 



1 The expense ratio has been computed based on the guidelines laid down by the Investment Management 

Association of Singapore ("IMAS"). The calculation of the expense ratio at financial year end was based on total 

operating expenses divided by the average net asset value for the year. The total operating expenses do not 

include (where applicable) brokerage and other transactions costs, performance fee, interest expense, 

distribution paid out to unitholders’, foreign exchange gains/losses, front or back end loads arising from the 

purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not 

pay any performance fee. The average net asset value is based on the daily balances. 

Turnover ratio 


2013 2012 

Lower of total value of purchases or sales S$ NA NA 

Average daily net asset value S$ NA NA 

Total turnover ratio 2 % NA NA 


2013 2012 





2013 2012 





2013 2012 




46





8. Financial ratios (continued) 

Turnover ratio (continued) 


2013 2012 




2 The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective 

Investment Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of 

purchases or sales of the underlying investments, divided by the average daily net asset value. In line with 

Statement of Recommended Accounting Practice 7 “Reporting framework for Unit Trusts” (“RAP 7”) issued by 

the Institute of Singapore Chartered Accountant in June 2012, total value of purchases or sales for the current 

year do not include brokerage and other transaction costs. 

9. Comparatives 

The 2012 comparative figures have been reclassified to conform with changes in 

the current presentation, in relation to the revised Recommended Accounting 

Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of 

Singapore Chartered Accountants in June 2012. 

47



REPORT TO UNITHOLDERS 


The following contains additional information relating to the Fund. 

1. Distribution of investments 

Please refer to the Statement of Portfolio on pages 21 to 25. 

2. Credit rating of debit securities 

Nil. 

3. Top 10 holdings 


10 Largest holdings at 31 December 2013 Fair value 

S$ 

Percentage of total 

net assets 


unitholders 

% 

Horizon Singapore Fixed Income Enhanced Fund 1,488,650 44.77 

Horizon Global Bond Fund (S$ Hedged) 1,065,756 32.05 

Nikko AM Global Dividend Equity Fund 468,304 14.08 

Singapore Dividend Equity Fund 192,364 5.78 


S$ 


net assets attributable 

to unitholders 

% 



Horizon Global Equity Fund 384,401 10.62 




S$ 


net assets 


unitholders 

% 

Nikko AM Global Dividend Equity Fund 2,856,588 30.89 




48





3. Top 10 holdings (continued) 



S$ 

Percentage of 



unitholders 

% 



Horizon Global Equity Fund 2,598,621 27.07 



10 Largest holdings at 31 December 2013 

Fair value 

S$ 

Percentage of 

total net 

assets 


unitholders 

% 



Horizon Singapore Fixed Income Enhanced 

Fund 21,384,619 19.37 

Singapore Dividend Equity Fund 11,454,394 10.38 


S$ 

Percentage of 



unitholders 

% 







Fair value 

S$ 

Percentage of 

total net 

assets 


unitholders 

% 




Horizon Singapore Fixed Income Enhanced 

Fund 2,285,450 9.38 

49








S$ 


net assets 


unitholders 

% 







S$ 

Percentage of 



unitholders 

% 




S$ 


net assets 


unitholders 

% 



4. Exposure to financial derivatives 

Nil. 

5. Global exposure to financial derivatives 

Nil. 

6. Collateral 

Nil. 

7. Securities lending or repurchase transactions 

Nil. 

8. Investment in unit trusts, mutual funds and collective investment schemes 

Please refer to Statement of Portfolio on pages 21 to 25. 

9. Borrowings 

Nil. 

50





10. Amount of units created and cancelled for the financial year ended 31 

December 2013 


S$ 


S$ 


S$ 

Units created 8,568 92,256 370,663 

Units cancelled (343,325) (1,087,418) (16,422,083) 


S$ 


S$ 



11. Turnover ratio 

Please refer to Note 8 of the Notes to the Financial Statements on page 46 to 47. 

12. Expense ratio 

Please refer to Note 8 of the Notes to the Financial Statements on page 45 to 46. 


Please refer to Note 7 of the Notes to the Financial Statements on page 44. 

14. Any other material information that will adversely impact the valuation of the 

fund 

Nil. 

51





The details which follow make reference to the investments within the Singapore Dividend Equity 

Fund unless otherwise stated. 

1. Top 10 Holdings 


Percentage of 



Fair value 

S$ 

unitholders 

% 

DBS Group Holdings Limited 14,911,200 9.06 

Singapore Telecommunications Limited 14,844,960 9.02 

Oversea-Chinese Banking Corporation Limited 13,311,000 8.08 

United Overseas Bank Limited 13,147,560 7.98 

Keppel Corporation Limited 12,678,270 7.70 

Hongkong Land Holdings Limited 6,771,454 4.11 

Jardine Matheson Holdings Limited 6,736,758 4.09 

Wilmar International Limited 4,432,320 2.69 

Sembcorp Marine Limited 4,231,950 2.57 

Starhub Limited 4,028,310 2.45 

Percentage of 




Fair value 

S$ 

unitholders 

% 

Singapore Telecommunications Limited 4,577,100 9.24 

Frasers Centrepoint Trust 3,004,900 6.07 

Thai Beverage Public Company Limited 2,642,945 5.34 

Genting Singapore Public Limited Company 2,090,700 4.22 

Overseas Union Enterprise Limited 2,018,280 4.07 

DBS Group Holdings Limited 1,793,220 3.62 

United Overseas Bank Limited 1,743,280 3.52 

Frasers Commercial Trust 1,710,720 3.45 

Oversea-Chinese Banking Corporation Limited 1,663,830 3.36 

SIA Engineering Company Limited 1,611,840 3.25 

52





2. Financial Ratios 

Singapore Dividend 

Equity Fund 

2013 2012 

% % 

Expense Ratio (a) 1.56 1.66 

Turnover Ratio (b) 155.80 239.33 

(a) 

The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of 

Singapore ("IMAS"). The calculation of the expense ratio at financial year end was based on total operating expenses 

divided by the average net asset value for the year. The total operating expenses do not include (where applicable) 

brokerage and other transactions costs, performance fee, interest expense, distribution paid out to unitholders, foreign 

exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at 

source or arising out of income received. The Fund does not pay any performance fee. The average net asset value is 

based on the daily balances. 

(b) The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment 

Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales of 

the underlying investments, divided by the average daily net asset value. In line with Statement of Recommended 

Accounting Practice 7 “Reporting framework for Unit Trusts” (“RAP 7”) issued by the Institute of Singapore Chartered 

Accountant(formerly known as Institute of Certified Public Accountants of Singapore)in June 2012, total value of 

purchases or sales for the current year do not include brokerage and other transaction costs. 

53





The details which follow make reference to the investments within the Horizon Singapore Fixed 

Income Enhanced Fund unless otherwise stated. 


Percentage of 




Fair value 

S$ 

unitholders 

% 

Singapore Government Bond 3.25% due 01/09/2020 2,243,850 7.55 

Housing & Development Board 1.83% due 

21/11/2018 2,192,220 7.38 

DBS Bank Limited 3.625% due 21/09/2022 FRN 1,950,292 6.57 


Singapore Government Bond 3% due 01/09/2024 1,527,000 5.14 

Land Transport Authority of Singapore 2.71% due 

27/05/2020 1,515,032 5.10 

United Overseas Bank Limited 3.45% due 

01/04/2021 FRN 1,274,063 4.29 

Singapore Government Bond 2.875% due 

01/09/2030 1,177,200 3.96 

Capitamalls Asia Treasury Limited 3.95% due 

24/08/2017 1,053,382 3.55 


Percentage of 




Fair value 

S$ 

unitholders 

% 







Capitamalls Asia 3.95% due 24/08/2017 1,050,190 3.28 

Overseas Union Enterprise 4.3% due 15/04/2014 1,024,621 3.20 

NTUC Income due 23/08/2027 FRN 782,048 2.45 

CCT MTN Private Limited 3.25% due 15/12/2015 759,371 2.37 

54






Horizon Singapore Fixed 

Income Enhanced Fund 

2013 2012 

% % 



(a) 














55





The details which follow make reference to the investments within the Horizon Global Bond Fund (S$ 

Hedged) unless otherwise stated. 



Fair value 

S$ 

Percentage of 



unitholders 

% 

Russell Investment Company PLC – Russell Global 

Bond Fund (Class A) 33,865,999 98.04 


Fair value 

S$ 

Percentage of 



unitholders 

% 

Russell Investment Company PLC – Russell Global 

Bond Fund (Class A) 

39,582,606 96.04 


Horizon Global Bond Fund 

(S$ Hedged) 

2013 2012 

% 

% 


Turnover Ratio (b) NA NA 

(a) 














56





The details which follow make reference to the investments within the Nikko AM Global Dividend 

Equity Fund unless otherwise stated. 



Fair value 

$ 

Percentage of 



unitholders 

% 

Eli Lilly & Company 1,672,669 2.05 

Microsoft Corporation 1,614,037 1.98 

Exxon Mobil Corporation 1,477,621 1.81 

IGM Financial Incorporation 1,406,468 1.72 

ConocoPhillips Company 1,394,616 1.71 

Chevron Corporation 1,382,004 1.69 

Lorillard Incorporation 1,118,660 1.37 

Intel Corporation 993,324 1.22 

Astrazeneca Public Limited Company 983,380 1.21 

Canadian Imperial Bank Of Commerce/Canada 939,404 1.15 


Fair value 

S$ 


net assets 


unitholders 

% 

Russell Investment Company PLC – Russell U.S. 

Equity Fund (Class A) 

Russell Investment Company PLC - Russell 

Continental European Equity Fund (Class A) 

Russell Investment Company PLC - Russell U.K. 


Russell Investment Company PLC - Russell Japan 


Russell Investment Company PLC – Russell Pacific 

Basin Equity Fund (Class A) 

55,915,492 56.03 

17,831,765 17.87 

9,468,281 9.49 

8,234,692 8.25 

6,076,935 6.09 

57






Nikko AM Global Dividend 

Equity Fund 

2013 2012 

% 

% 


Turnover Ratio (b) 0.91 NA 

(a) 














58

Intentionally left blank.


8 Cross Street #08-01 PWC Building Singapore 048424 

Intermediaries Hotline: 1800 535 8025 / 65 6535 8025 

Website: www.nikkoam.com.sg 

Company registration number 198202562H

SEMI-ANNUAL REPORT 

For the financial period ending 30 June 2013 



1

MANAGERS 





DIRECTORS 




Lim Say Boon 

V Arivazhagan 


Ng Soo Nam 

TRUSTEE 


20 Collyer Quay, #01-01 Tung Centre 


AUDITORS 




REGISTRAR 









Tan Peng Chin LLC 

30 Raffles Place, #11-00 Chevron House 


CUSTODIAN 

BNP Paribas Securities Services, Singapore Branch 




1


Since 


Eight Portfolio A -2.50 -0.90 3.42 3.54 2.61 2.24 1.44 

Composite A -1.68 -0.20 2.88 4.13 4.15 3.88 3.21 

Eight Portfolio B -1.13 2.07 7.39 4.56 2.30 2.51 0.95 

Composite B -0.41 3.14 7.03 5.97 3.96 4.19 2.87 

Eight Portfolio C -0.18 5.09 11.96 6.09 2.06 3.30 0.81 

Composite C 0.38 5.70 10.57 7.31 3.57 4.61 2.49 

Eight Portfolio D 1.52 9.13 16.88 7.38 1.22 3.31 0.03 

Composite D 1.61 9.04 14.72 8.97 3.07 4.72 1.87 

Eight Portfolio E 2.61 12.63 22.09 8.79 0.60 3.81 -0.42 

Composite E 2.39 11.67 18.44 10.23 2.44 4.97 1.31 

Source: © 2013 Morningstar, Inc. & Russell Investment Group, returns as at 30 June 2013. Returns are calculated on 

NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any. Returns for 

period in excess of 1 year are annualised. 

Since 


Eight Portfolio A -7.37 -5.86 -1.75 1.79 1.56 1.71 1.05 

Composite A -1.68 -0.20 2.88 4.13 4.15 3.88 3.21 

Eight Portfolio B -6.08 -3.03 2.02 2.79 1.26 1.99 0.56 

Composite B -0.41 3.14 7.03 5.97 3.96 4.19 2.87 

Eight Portfolio C -5.17 -0.16 6.36 4.29 1.02 2.77 0.43 

Composite C 0.38 5.70 10.57 7.31 3.57 4.61 2.49 

Eight Portfolio D -3.56 3.67 11.04 5.55 0.19 2.78 -0.35 

Composite D 1.61 9.04 14.72 8.97 3.07 4.72 1.87 

Eight Portfolio E -2.52 7.00 15.99 6.94 -0.42 3.28 -0.80 

Composite E 2.39 11.67 18.44 10.23 2.44 4.97 1.31 

Source: © 2013 Morningstar, Inc. & Russell Investment Group, returns as at 30 June 2013. Returns are calculated on a 

NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any, and take 

into account of maximum sales and realisation charges. Returns for period in excess of 1 year are annualised. 

Inception date: 21 February 2000 

Note: 





2

Composite A - 35% Barclays Capital Global Aggregate Index, S$ Hedged 










Composite B - 30% Barclays Capital Global Aggregate Index, S$ Hedged 

- 30% UOB Singapore Government Bond All Index- 









Composite C - 20% Barclays Capital Global Aggregate Index, S$ Hedged 










Composite D - 10% Barclays Capital Global Aggregate Index, S$ Hedged 










Composite E - 85% composite index comprising 5 regional equity indexes:- 











MSCI All Country Pacific Basin ex-Japan Free Index will be changed to the MSCI AC Asia Pacific ex-Japan Index. 

3

This portion of the composite benchmark was subsequently changed to Russell Asia Pacific ex-Japan (All cap) Index 

from 1 April 2011. 








For the half year ended 30 June 2013, the Singapore Dividend Equity Fund (the “Fund”) posted a return of 6.51% (SGD 

terms, NAV-NAV basis), outperforming the benchmark, which declined 0.53% over the same period. 

The outperformance can be attributed to the Fund’s overweight in REITs and telecommunication sectors in the early part 

of the year. Some key stock picks that did well include Thai Beverage, Overseas Union Enterprise and Singapore Press 

Holdings. The underweight exposure in the commodity/supply chain managers also helped. 

Market Review 

Singapore equities lost 0.53% in 1H2013 

The FTSE STI fell 0.53% over the first half of 2013. In the first quarter, Singapore equities posted modest gains as 

sentiment was supported by positive data in China and the U.S., while a late-month Cyprus bailout in March eased 

concerns over European sovereign risks. The second quarter started positively, with continued improvement in U.S. 

housing and jobs as well as positive investor sentiment. However investors turned jittery over the looming tapering 

of asset purchases by the Federal (“Fed”) in May, which many feared was immature. In June, U.S. Fed Chairman Ben 

Bernanke’s statement suggesting that the U.S. Fed could pull back its bond purchases sooner than the market was 

anticipating sent shockwaves across global financial markets as a re-pricing of risk saw asset prices generally correct 

lower across the board. Compounding the uncertainty and re-pricing of markets was the sudden rise in Chinese 

interbank lending rates, with the SHIBOR soaring to a record high of 13.44% on 20 June 2013, igniting fears of a 

liquidity crisis in China. Amidst these concerns, sentiment was also weighed down by fresh property curbs announced 

by the Monetary Authority of Singapore at the end of June, where the total debt servicing ratio for individuals was 

capped at 60%, taking into account the borrower’s other debt commitments. 

The Singapore economy continued on a modest recovery path in 1Q2013 

Gross Domestic Product (“GDP”) growth came in at 1.8% Quarter-On-Quarter (seasonally-adjusted annualised rate) 

in 1Q2013, following an expansion of 3.3% in the preceding quarter. While activity remained firm in the domesticfacing 

industries, the external-oriented industries as a whole reverted to contraction mode in 1Q after an incipient 

upturn in the previous quarter. Manufacturing was the main detractor from overall growth in 1Q2013, as the volatile 

biomedical manufacturing cluster posted a significant contraction in output. Construction remained a bright spot for 

the Singapore economy, with the huge pipeline of both public and private construction projects likely to sustain growth 

in the segment going forward. 

Government announced 2013 budget in February 

The government unveiled the 2013 budget, addressing pressing constituency concerns (ranging from rising living and 

business costs to curbing foreign labour inflows), and initiatives to further enhance workplace productivity. Among 

measures introduced were increases in healthcare and social spending, a hike in property tax for high-end residential 

properties, personal income and corporate tax rebates, and a rise in the levy imposed on employment of low-cost 

foreign workers. The overall balance for FY 2012 is expected to register a surplus 1.1% of GDP compared to a target 

of around 0.4% of GDP. For FY 2013, the overall budget surplus is expected to register SGD 2.4bn, or 0.7% of GDP. 

MAS maintained gradual tightening bias as inflation eased 

By the end of 1Q2013, inflation had moderated with the March Consumer Price Index (“CPI”) rising 3.5% Year- 

On-Year after rising 4.9% in February. The lowered rate of price increases was attributed to the absence of Lunar 

4

New Year base effects (which had resulted in higher reported inflation for February) as well as moderation in private 

transportation costs as a result of lowered Certificate of Entitlement prices. The MAS elected to maintain its “modest, 

gradual appreciation” for the SGD. 

Second quarter GDP printed higher than expected 

Advanced estimates reveal that the economy expanded 3.7% y/y in the second quarter of 2013, reflecting the fastest 

increase since 2011. On an annualized q/q basis, GDP grew 15.2% after seasonal adjustments, far exceeding expectations. 

Manufacturing activity picked up on account of soaring trade in biomedical manufacturing and electronics clusters, 

growing 1.1% y/y in the second quarter, a reversal from the 6.9% contraction in the previous quarter. Meanwhile, the 

construction and service producing industries segments grew 5.6% y/y and 5.0% y/y, respectively. 


Policy moves caused market volatility but are essential for longer term health of U.S. and China 

The two key factors that caused the market correction in June, viz. the likelihood of the U.S. Fed winding down its bond 

purchases and credit tightening in China, could continue to weigh on markets in the near term. However, these policies 

are essential in managing the longer term health of the U.S. and Chinese economy respectively. If well-executed, they 

entail the sustainability of economic growth in the top two largest economies in the world. The fact that policy-makers 

are on top of the issues and acting vigilantly is a positive factor differentiating the current risk environment from that 

preceding the financial crisis in 2008/09. 

Medium term macro outlook remains promising for Singapore companies 

In the near term, equity markets may stay choppy as sentiment takes time to settle down. However, the sharp correction 

has resulted in some stocks being sold off indiscriminately and these present buying opportunities for returns in the 

medium term. The medium term macroeconomic outlook remains very promising on the back of the improving recovery 

momentum in the U.S., still decent growth in Asia, and proactive economic management policies in key parts of the 

world especially Asia, which bodes well for companies listed in Singapore. 

Fund will stay anchored on reaping returns via dividend yields and capital appreciation 

The Fund will remain anchored in companies with robust profitability and dividend payouts. With the market correction, 

we are also targeting potentially more rewarding opportunities in the medium term that are likely to come from 

oversold stocks where their business franchises still remain strong. This is in line with our steady approach to reaping 

returns via a balanced combination of dividend yield and capital appreciation. 



Fund outperformed the benchmark due to shorter duration positioning and credit allocation 

In the six months ending 30 June 2013, the Horizon Singapore Fixed Income Enhanced Fund (the “Fund”) posted a net 

return of -3.45%, better than its benchmark, the UOB Singapore Government Bond All Index, which returned -3.85% 

during the period. This was largely due to the Fund’s underweight duration positioning overall relative to benchmark, 

as well as our positioning in short-dated SGD corporate bonds for yield pick-up. 

Market Review 

A volatile ride for Singapore Government Securities 

Singapore Government Securities (“SGS”) exhibited volatility in the period. At the start of the year, prices were dragged 

down by weak macroeconomic numbers from Singapore and overall risk-on sentiment resulting from the U.S. averting 

a fall off the “fiscal cliff”. However, political events in Europe – particularly the inconclusive result of Italy’s general 

election and the announcement of an unprecedented levy on Cyprus’ banking deposits – re-ignited market stress, 

sparking an abrupt and significant rally in perceived safe-haven instruments including SGS. Meanwhile, a SGD 3.1bn 

auction of 5-year SGS – the largest in history – led to same tenor bonds being particularly weak in March. Soon after, 

new Bank of Japan (“BOJ”) Governor Haruhiko Kuroda declared that the central bank will do whatever it can to achieve 

its 2% inflation target “at the earliest time possible”, leading to SGS yield compression as investors expected that these 

aggressive easing measures would push capital inflows into triple-A rated economies like Singapore. However, towards 

the end of the period, indication from Fed Chairman Ben Bernanke of an impending withdrawal of Quantitative Easing 

5

(“QE”) driven liquidity drove yields of SGS much higher. The Singapore government yield curve shifted higher over the 

period, with 5-year yields widening by about 86bp, while 10-year yields jumped by about 121bp. 

MAS maintained gradual tightening bias in April 

The Monetary Authority of Singapore (“MAS”) maintained its previous policy stance of gradual tightening bias, and 

kept the width, slope, and mid-point of the SGD Nominal Effective Exchange Rate (“NEER”) band unchanged. Despite 

a downgrade in the inflation outlook for the year, the central bank remained wary of inflation, noting that core inflation 

“is expected to rise moderately in the latter half, reflecting persistent tightness in the labour market.” 

Government announced 2013 budget 

The government unveiled the 2013 budget, addressing pressing constituency concerns (ranging from rising living and 

business costs to curbing foreign labour inflows), and initiatives to further enhance workplace productivity. Among 

measures introduced were increases in healthcare and social spending, a hike in property tax for high-end residential 

properties, personal income and corporate tax rebates, and a rise in the levy imposed on employment of low-cost foreign 

workers. The overall balance for Financial Year (“FY”) 2012 is expected to register a surplus 1.1% of GDP compared to a 

target of around 0.4% of GDP. For FY 2013, the overall budget surplus is expected to register SGD 2.4bn, or 0.7% of GDP. 

Inflation eased on lower transport costs; Singapore dollar depreciated against the USD 

Headline inflation remained persistently high in the first quarter of the year, as accommodation and transport costs 

remained elevated. The government’s decision to hike the down payment requirement for car purchases eventually led 

to a sharp softening in transport inflation as COE premiums plunged. Consequently, headline inflation reverted back to 

relatively more subdued levels, printing 1.8% y/y in June. Easing inflationary pressures led investors to believe that the 

MAS may look into readjusting the SGD NEER rate. This, together with capital outflows from the region brought about 

by fears of QE tapering, weakened sentiment toward the Singapore Dollar, with the currency weakening 3.68% against 

the U.S. Dollar in the first six months of 2013. 

Second quarter GDP printed higher than expected 

Advanced estimates reveal that the economy expanded 3.7% y/y in the second quarter of 2013, reflecting the fastest 

increase since 2011. On an annualized q/q basis, GDP grew 15.2% after seasonal adjustments, far exceeding expectations. 

Manufacturing activity picked up on account of soaring trade in biomedical manufacturing and electronics clusters, 

growing 1.1% y/y in the second quarter, a reversal from the 6.9% contraction in the previous quarter. Meanwhile, the 

construction and service producing industries segments grew 5.6% y/y and 5.0% y/y, respectively. 


We are underweight the Singapore Dollar and neutral on Singapore Government Securities 

Moderating inflation in Singapore amid tepid domestic growth prospects has, in our view, reduced the pressure on the 

MAS to maintain its policy stance of a gradual tightening bias. Moreover, we believe that the global economy is on a 

mend, and that the continued pick-up will continue to prompt investors to favour riskier assets and decrease demand 

for safe haven currencies. On government bonds, we anticipate volatility in US Treasuries (“UST”) to persist in the 

near-term. SGS tend to have a strong correlation with USTs. We believe that the sharp sell-off in capital markets was 

triggered not by system concerns but was a response of heavy market positioning to the Fed Chairman’s signal of an 

earlier-than-expected end of the QE program. Valuations certainly look much more interesting at current levels but we 

deem it prudent to wait for more signs of stability before raising our call on Singapore government bonds to positive. 

Horizon Global Equity Fund 


The Horizon Global Equity Fund (the “Fund”) returned 14.81% (SGD terms, NAV-NAV basis) during the first half of 

2013, versus the benchmark’s 13.93%. 

The Fund invested in the RIC U.S. Equity Fund, the RIC UK Equity Fund, the RIC Continental European Equity Fund, the 

RIC Japanese Equity Fund and the RIC Pacific Basin Equity Fund over the review period. The allocation to the underlying 


On USD gross of fees basis, all the five underlying funds outperformed their respective benchmarks. 

6

Market Review 

Global equity markets defied headline events and macroeconomic uncertainty during the first quarter of 2013, posting a 

solid gain of 8% as measured by the Russell Developed Large Cap Index in USD terms. Performance among regions and 

sectors was mixed, with the U.S. and Japanese market marching ahead, while Europe and Emerging Markets lagged. 

In the U.S., the Russell 1000 Index surpassed pre-crisis levels and returned 11% for the quarter. While the automatic 

budget cuts were not averted and the political arm-wrestling in the U.S. Congress over a credible plan for spending 

cuts carried on, the underlying developments in the U.S. economy bolstered investors’ confidence. Importantly, U.S. 

housing prices continued to improve as did the U.S. jobs market. In Europe, politics once again dominated the news 

flow. The Italian elections in March failed to secure a majority for the centre-left coalition headed by Pier Luigi Bersani. 

Towards the end of the quarter, Cyprus became the latest country to be rescued by the European Union (“EU”), 

International Monetary Fund (“IMF”) and the European Central Bank (“ECB”), which saw a controversial plan to “bailin” 

the overleveraged Cypriot banks using deposits as well as tax payers’ money. Meanwhile, Japan took bold steps in 

attempting to break the deflationary spiral that had haunted the economy for decades. The policy mix weakened the 

JPY and boosted growth, leading to strong stock market performance. Emerging Markets collectively posted negative 

returns, with the larger countries such as China and Brazil lagging. Defensive/stable growth sectors performed best, 

while the materials sector was the worst performer, mainly affected by falling commodity prices. As measured by Russell 

indices, large cap securities lagged small caps, while value outperformed growth. 

It was a volatile second quarter of 2013 for global equities as decoupling of regions and sectors continued. The Russell 

Developed Large Cap Net Index returned 0.7% with a significant proportion of positive returns generated in the first 

half given up after comments from the U.S. Fed which hinted at a tapering of stimulus measures. This sparked concern 

among investors that stimulus withdrawal may come sooner than anticipated. The U.S. and Japan continued to march 

ahead with macroeconomic data largely supportive. Japanese equities continued their upward trajectory, as recent polls 

indicated that Shinzo Abe’s Liberal Democratic Party should easily win the upper house elections this summer, making 

it more likely that Abe will be able to effectively implement the third arrow of his growth policy. In Europe, despite 

elevated levels of unemployment and a lowered growth forecast by the Organisation for Economic Co-operation and 

Development (“OECD”) in May, markets held up relatively well. Emerging markets were negatively impacted by political 

uncertainty and investment outflows, with Asia-Pacific being the worst performing region. The worst performing sector 

was materials, as it was negatively impacted by falling commodity prices and weak demand, notably out of China. 

Energy and consumer staples also lagged. Consumer discretionary significantly outperformed and was the best sector, 

led by a strong performance in the auto industry. From a style perspective, value outperformed growth as measured by 

the Global Developed Large Cap style indices whilst large cap securities outperformed small cap securities, as measured 

by the Russell Global Developed Large Cap and Small Cap Indices. 



The Horizon Global Bond Fund (S$ Hedged) (the “Fund”) returned -1.84% (SGD terms, NAV-NAV basis) during the first 

half of 2013, versus the benchmark’s -1.23%. 

The Fund outperformed the benchmark over 1Q2013, with three of the five underlying managers finishing in positive 

territory, one coming in flattish and one underperforming. The primary driver of outperformance was sector positioning, 

via exposure to non-agency mortgages (Brookfield and PIMCO) and HY credit (PIMCO and Loomis). Rates positioning 

(overweights to Germany, Mexico and Ireland) was a secondary positive (Colchester, PIMCO, Loomis). Brookfield finished 

as the best-performing manager over the period, with its overweight exposure to non-agency mortgages continuing to 

add value to the Fund. In contrast, the foregoing was marginally hindered by currency positioning, where positives from 

JPY and EUR underweights were offset by underweights to AUD and NZD and an underweight to NOK. 

The Fund modestly underperformed the benchmark during 2Q2013, which was a very difficult period for active fixed 

income investing. The primary detractor was an overweight to the Emerging Market Debt (“EMD”) sector and an 

overweight to Mexican rates and currency. Other detractors included an overweight to German and UK rates and an 

underweight to the euro. These negatives were largely offset by exposure to non-agency mortgages; underweights to 

7

U.S., French and Japanese sovereign rates; and underweights to the Australian dollar and the New Zealand dollar. On 9 

April the fund’s capabilities were enhanced by introducing an absolute return strategy (i.e., The Russell Absolute Return 

Bond Fund) that reduces interest rate risk but does not sacrifice yield. Our allocation was additive over the quarter, as it 

reduced overall duration prior to the surge in interest rates. 

Market Review 

Global fixed income markets remained dominated by policy and politics during the first quarter of 2013, impacted 

by speculation and outcomes in notable events such as the U.S. sequester and debt ceiling, the inconclusive Italian 

election, the botched Cypriot bank resolution, and European Central Bank (“ECB”) and U.S. Fed comments/minutes. 

The Bank of Japan’s loose monetary policy (whose actual size surprised the market in early 2Q13) evolved along 

with other central banks, who took efforts to ‘jaw bone’ their currencies down (ECB, Norway, and New Zealand). 

Most economic and market trends broadly continued, including positive U.S. growth (despite the 2% payroll tax 

increase) and housing market, declining European economy and moderating global inflation. In USD unhedged terms 

the Barclays Global Aggregate Index returned -2.1% over the quarter, with the negative total return driven by sell offs in 

the EUR (on Draghi statements, Cyprus), GBP (on Bank of England indicating it might tolerate higher inflation) and JPY 

(on QE expectations). U.S. 10-year treasury yields increased modestly over the period, rising 10bps. Investment Grade 

(“IG”) corporate credit outperformed governments on a duration-adjusted basis. This was led by financials, whose 

yields are now back down to their traditional position, below that of industrials. U.S. financial spreads have tightened 

due to the improving asset quality of their loan books and increasing capitalization. High Yield (“HY”) corporates 

did very well and outperformed most other sectors, given their attractive yield levels, strong credit fundamentals and 

continuing low default rates. Agency mortgage and Commercial mortgage-backed security spreads widened a bit and 

underperformed governments due to investor preference for riskier sectors. Non-agency mortgages continued to stand 

out with exceptionally strong performance, given the sector’s supply constraints and the positive fundamental backdrop 

of the U.S. housing market. Though it struggled over the period, Emerging Market hard currency outperformed the 

unhedged Global Aggregate index. Falling commodity prices, continued high issuance, and devaluing emerging market 

currencies against dollar contributed to the pressure on EMD. 

Global fixed income markets performed poorly in 2Q2013, closing out their worst first-half since 1994. The Barclays 

Global Aggregate Bond Index posted negative returns of - 2.79% for the quarter and -4.83% YTD. The key driver was 

a surge in U.S. interest rates, fueled by U.S. Fed Chairman Ben Bernanke’s Congressional testimony on 22 May (and 

reiterated at the 19 June FOMC meeting) that the Fed could “taper” its stimulative bond-buying program before yearend 

if the economy continued to improve. Over the second quarter, the 10-year U.S. Treasury rose 63 bps (with an 

intra-quarter surge of 98bps) to 2.48%, nearly a two-year high. While rising U.S. rates caused German and the U.K. 

governments to also post negative total returns, peripheral European treasuries bucked the trend with declining rates 

and positive returns. These bonds saw firm demand due to comments from ECB President Mario Draghi that the ECB 

“stands ready to act when needed”. Japanese government rates were also pulled up by rising U.S. rates, despite the 

Bank of Japan embarking on a large Quantitative Easing effort of its own. Over the quarter, virtually all spread sectors 

(including IG and HY corporate credit) posted negative total returns and underperformed equivalent-duration treasuries 

as concern over the Fed ending its loose money policy induced technical selling. EMD was especially hard hit, with 

pressure exacerbated by news of slowing growth in China. Non-agency mortgages also declined despite the continued 

support of an improving U.S. housing market and declining delinquency and foreclosure rates. In the currency space, 

the USD outperformed most currencies on the prospects of rising U.S. rates and an improving U.S. economy. Harder hit 

currencies included the BRL and ZAR, given Brazil’s and South Africa’s slowing growth and renewed inflation concerns. 

Australia and New Zealand also sold off materially versus the USD as the Reserve Bank of Australia cut interest rates 

and the Bank of New Zealand made comments that it would intervene to manage down the overvalued kiwi. The euro 

appreciated modestly against the USD on the back of expected ECB support. The JPY continued selling off due to the 

BoJ’s efforts to weaken the currency. 

8








Management Asia Limited (“Nikko AM Asia”). 

Past performance or any prediction, projection or forecast is not indicative of future 

performance. The funds may use or invest in financial derivative instruments. The value of units and 

income from them may fall or rise. Investments in the funds are subject to investment risks, including 

the possible loss of principal amount invested. You should read the relevant prospectus and product 

highlights sheet obtainable from appointed distributors of Nikko AM Asia or our website (www. 

nikkoam.com.sg) before investing. 




















advice. 


9




ensured that: 

a) full disclosure of the practice of accepting soft dollars is made to all clients and in the Funds’ 

Prospectus if it relates to any of the Funds; 

b) the commission rates charged are comparable with the market rates; 

c) there is no conflict of interest; 

d) the soft dollar credits are used only for clearly defined services; 

e) at all times trades are executed through the respective brokers only on the basis of best execution 

regardless whether soft dollar benefits will accrue. Best execution shall include competitive prices 

with smooth execution ability; and 

f) relevant regulations and guidelines are complied with. 

The procedures for the appointment of the brokers shall be no different from that of normal full 

service brokers. 


Clients or trustees of funds managed by the Managers who object to the use of the soft dollar brokers 

shall have their trades segregated from the rest of the trades that are executed through the relevant 

soft dollar broker(s). The Managers will execute trades for such accounts only with authorised full 


It is the responsibility of the central dealers to ensure that the allocation quotas are adhered to. In 

addition, the central dealers will monitor the execution ability of the soft dollar brokers and assign the 

business strictly on a “best execution” basis. 

Subject to the provisions of the Code, in its management of the Funds, the Singapore Dividend Equity 

Fund and the Horizon Singapore Fixed Income Enhanced Fund, the Managers may receive soft dollar 

commissions from, or may enter into soft dollar arrangements with, stockbrokers who execute trades 

on behalf of the Funds, the Singapore Dividend Equity Fund and the Horizon Singapore Fixed Income 

Enhanced Fund and the soft dollars received would be restricted to the following kinds of services: 

a) specific advice as to the advisability of dealing in, or of the value of any investments; 

b) research and advisory services; 

c) economic and political analysis; 

d) portfolio analysis including valuation and portfolio measurement; 

e) market analysis; 

f) data and quotation services; 

g) computer hardware or software that are used to support the investment decision making process, 

the giving of advice, or the conduct of research or analysis; and 

h) custodial services in relation to the investments managed for clients. 


a) travel, accommodation and entertainment expenses; 

b) general administrative goods and services including office equipment and premises; 

c) membership fees; 

d) employee salaries; 

e) direct money payments / rebates. 


The Manager of the Russell Investment Company plc (“RIC”) Sub-Funds in which the sub-funds of the 

Nikko AM Shenton Horizon Investment Funds invest, Russell Investments Ireland Ltd (“RIIL”), receives 

soft dollar commissions from, or enter into soft dollar arrangements with, stockbrokers who execute 

trades on behalf of the RIC Sub-Funds. The receipt of soft dollar commissions by RIIL is subject to 

the conditions of best execution, that such soft dollar commissions must assist in the provision of 

investment services to the RIC Sub-Funds and that the receipt of soft dollar commissions is in the best 

interests of the RIC Sub-Funds’ investors. The following kinds of services are soft dollars that have 

been received by RIIL: 


• statistical analyses relating to markets, companies, industries, business and economic factors, 

market trends and portfolio strategies; 


• effecting securities transactions and performing functions incidental thereto such as clearance 

and settlement or are required in connection therewith. 

10



STATEMENT OF TOTAL RETURN 

For the financial period from 01 January 2013 to 30 June 2013 (unaudited) 



30 June 2013 30 June 2012 30 June 2013 30 June 2012 

S$ S$ S$ S$ 

Income 

Dividends 8,666 2,263 22,950 5,707 

8,666 2,263 22,950 5,707 


Management fees 26,190 1,993 82,946 13,400 

Management fee rebates (25,493) - (72,779) - 

Registration fees 5,867 8,685 6,511 9,254 

Trustees' fees 630 659 1,690 1,723 

Custody fees 7,947 - 15,125 - 

Audit fee 397 7,363 1,049 6,741 

Valuation fees 886 912 2,378 2,359 


20,846 25,477 43,797 42,565 

Net income/(losses) (12,180) (23,214) (20,847) (36,858) 

Net gains or (loss) on value of 

investments and financial 

derivatives 

Net gains/(loss) on investments (16,403) 143,255 236,138 302,730 

(16,403) 143,255 236,138 302,730 

Total return/(deficit) for the 

period before income tax (28,583) 120,041 215,291 265,872 

Less: Income tax - - - - 


period after income tax 

before distribution (28,583) 120,041 215,291 265,872 



30 June 2013 30 June 2012 30 June 2013 30 June 2012 

S$ S$ S$ S$ 

Income 

Dividends 505,089 141,014 116,977 40,762 

505,089 141,014 116,977 40,762 


Management fees 997,724 122,988 232,848 21,218 

Management fee rebates (909,064) - (228,578) - 

Registration fees 17,871 17,768 7,339 8,190 

Trustees' fees 20,167 20,279 4,630 5,115 

Custody fees 63,915 - 31,600 - 

Audit fee 12,630 (4,390) 2,644 4,674 

Valuation fees 28,376 27,742 6,513 7,018 


299,010 204,358 78,296 60,247 

Net income/(losses) 206,079 (63,344) 38,681 (19,485) 



derivatives 

Net gains/(loss) on investments 5,651,310 3,680,975 2,301,274 808,991 

5,651,310 3,680,975 2,301,274 808,991 


period before income tax 5,857,389 3,617,631 2,339,955 789,506 

Less: Income tax - - - - 



before distribution 5,857,389 3,617,631 2,339,955 789,506 

11



STATEMENT OF TOTAL RETURN 



30 June 2013 30 June 2012 

S$ S$ 

Income 

Dividends 177,636 49,155 

177,636 49,155 


Management fees 237,747 11,043 

Management fee rebates (238,750) - 

Registration fees 7,364 8,706 

Trustees' fees 4,719 4,866 

Custody fees 21,620 - 

Audit fee 2,791 4,900 

Valuation fees 6,642 6,655 


64,317 46,858 

Net income/(losses) 113,319 2,297 



derivatives 

Net gains/(loss) on investments 3,083,533 710,384 

3,083,533 710,384 


period before income tax 3,196,852 712,681 

Less: Income tax - - 



before distribution 3,196,852 712,681 

12



STATEMENT OF FINANCIAL POSITION 

As at 30 June 2013 (unaudited) 



30 June 2013 31 December 2012 30 June 2013 31 December 2012 

S$ S$ S$ S$ 

ASSETS 


Sales awaiting settlement 24,639 - - 25,614 


Total assets 3,406,444 3,631,768 9,169,352 9,632,787 

LIABILITIES 

Payables 11,526 12,572 24,175 32,042 


EQUITY 

Net assets attributable to 

unitholders 3,394,918 3,619,196 9,145,177 9,600,745 




S$ S$ S$ S$ 

ASSETS 


Sales awaiting settlement 3,811 241,924 4,930 481,291 

Cash and bank balances 5,659,335 3,301,324 1,016,602 299,399 

Total assets 110,277,712 113,381,043 25,041,580 26,898,256 

LIABILITIES 

Payables 177,814 329,289 48,067 230,105 

Total liabilities 177,814 329,289 48,067 - 

EQUITY 


unitholders 110,099,898 113,051,754 24,993,513 26,668,151 


30 June 2013 31 December 2012 

S$ S$ 

ASSETS 




Total assets 26,221,713 26,446,704 

LIABILITIES 

Payables 64,318 141,283 

Total liabilities 64,318 141,283 

EQUITY 


unitholders 26,157,395 26,305,421 

13



STATEMENT OF MOVEMENTS OF UNITHOLDERS' FUNDS 





S$ S$ S$ S$ 


unitholders at the beginning 

of the period/year 3,619,196 3,963,486 9,600,745 9,924,596 

Operations 

Change in net assets attributable 

to unitholders resulting from 

operations (28,583) 275,372 215,291 753,655 

Unitholders' contributions 

/ (withdrawals) 


Cancellation of units (202,231) (632,811) (691,809) (1,100,306) 

Change in net assets 

attributable to unitholders 

resulting from net creation 

and cancellation of units (195,695) (619,662) (670,859) (1,077,506) 

Distributions - - - - 

Total increase/(decrease) in net 

assets attributable to unitholders (224,278) (344,290) (455,568) (323,851) 


unitholders at the end of 

period/year 3,394,918 3,619,196 9,145,177 9,600,745 




S$ S$ S$ S$ 



of the period/year 113,051,754 115,211,746 26,668,151 29,151,090 

Operations 



operations 5,857,389 10,766,400 2,339,955 2,765,204 








and cancellation of units (8,809,245) (12,926,392) (4,014,593) (5,248,143) 

Distributions - - - - 


assets attributable to unitholders (2,951,856) (2,159,992) (1,674,638) (2,482,939) 



period/year 110,099,898 113,051,754 24,993,513 26,668,151 

14



STATEMENT OF MOVEMENTS OF UNITHOLDERS' FUNDS 




S$ S$ 



of the period/year 26,305,421 27,319,203 

Operations 



operations 3,196,852 2,912,212 








and cancellation of units (3,344,878) (3,925,994) 

Distributions - - 


assets attributable to unitholders (148,026) (1,013,782) 



period/year 26,157,395 26,305,421 

15



STATEMENT OF PORTFOLIO 




Quoted Investment Fund 

Holdings 

at 

30 June 2013 

Fair value 

at 

30 June 2013 


net assets 



30 June 2013 

S$ % 

SINGAPORE 

Horizon Global Bond Fund (S$ Hedged) 784,016 1,085,862 31.98 

Horizon Global Equity Fund 495,264 464,558 13.68 

Horizon Singapore Fixed Income 

Enhanced Fund 1,127,154 1,513,768 44.59 


Total SINGAPORE 3,259,094 95.99 

Total Quoted Investment Fund 3,259,094 95.99 





Percentage of total net 

assets attributable to 


30 June 2013 




31 December 2012 

% % 



Total Quoted Investment Fund 95.99 96.91 




By Industry (Secondary) 

Fair Value at 

30 June 2013 

Percentage of 




30 June 2013 


net assets 




S$ % % 

Debt Fund 2,599,630 76.57 80.25 

Equity Fund 659,464 19.42 16.66 

Portfolio of investments 3,259,094 95.99 96.91 

Other net assets 135,824 4.01 3.09 

Net assets attributable to unitholders 3,394,918 100.00 100.00 

16








Holdings 

at 

30 June 2013 

Fair value 

at 

30 June 2013 


net assets 



30 June 2013 

S$ % 

SINGAPORE 


Horizon Global Equity Fund 2,939,354 2,757,114 30.15 


Enhanced Fund 2,055,008 2,759,876 30.18 











30 June 2013 





% % 








Fair Value at 

30 June 2013 

Percentage of 




30 June 2013 


net assets 




S$ % % 

Debt Fund 5,508,182 60.23 63.32 

Equity Fund 3,272,940 35.79 33.07 




17








Holdings 

at 

30 June 2013 

Fair value 

at 

30 June 2013 


net assets 



30 June 2013 

S$ % 

SINGAPORE 




Enhanced Fund 16,634,483 22,340,110 20.29 





Other net assets 5,485,332 4.99 






30 June 2013 





% % 








Fair Value at 

30 June 2013 

Percentage of 




30 June 2013 


net assets 




S$ % % 

Debt Fund 46,676,255 42.39 45.33 

Equity Fund 57,938,311 52.62 51.83 


Other net assets 5,485,332 4.99 2.84 


18








Holdings 

at 

30 June 2013 

Fair value 

at 

30 June 2013 


net assets 



30 June 2013 

S$ % 

SINGAPORE 




Enhanced Fund 1,834,141 2,463,251 9.86 











30 June 2013 





% % 








Fair Value at 

30 June 2013 

Percentage of 




30 June 2013 


net assets 




S$ % % 

Debt Fund 5,136,093 20.55 23.40 

Equity Fund 18,883,955 75.55 74.53 




19








Holdings 

at 

30 June 2013 

Fair value 

at 

30 June 2013 


net assets 



30 June 2013 

S$ % 

SINGAPORE 












30 June 2013 





% % 








Fair Value at 

30 June 2013 

Percentage of 




30 June 2013 


net assets 




S$ % % 

Equity Fund 25,372,724 97.00 96.99 




20





The following contains additional information relating to the Fund. 



2. Credit rating of debt securities 

Nil. 



Largest holdings at 30 June 2013 

Percentage of 



unitholders 

% 

Fair value 

S$ 






Percentage of 



Fair value 

S$ 

unitholders 

% 







Percentage of 



unitholders 

% 

Fair value 

S$ 






Percentage of 



Fair value 

S$ 

unitholders 

% 





21








22 

Percentage of 



unitholders 

% 

Fair value 

S$ 






Percentage of 



Fair value 

S$ 

unitholders 

% 







Percentage of 



unitholders 

% 

Fair value 

S$ 






Percentage of 



Fair value 

S$ 

unitholders 

% 







Percentage of 



unitholders 

% 

Fair value 

S$ 




Percentage of 



Fair value 

S$ 

unitholders 

% 


Singapore Dividend Equity Fund 4,428,959 16.60






Nil. 

5. Global exposure to financial derivatives 

Nil. 

6. Collateral 

Nil. 

7. Securities lending or repurchase transactions 

Nil. 



9. Borrowings 

Nil. 

10. Amount of units created and cancelled for the financial year ended 30 June 2013 


S$ 


S$ 


S$ 

Units created 6,536 20,950 191,864 

Units cancelled (202,231) (691,809) (9,001,109) 


S$ 


S$ 




Not applicable 

Note: The portfolio turnover ratio is calculated in accordance with the formula stated in the 

Code on Collective Investment Schemes. The calculation of the portfolio turnover ratio was 

based on the lower of the total value of purchases or sales of the underlying investments, 

divided by the average daily net asset value. In line with Statement of Recommended 

Accounting Practice 7 “Reporting framework for Unit Trusts” (“RAP 7”) issued by the institute 

of Certified Public Accountants of Singapore in June 2012, total value of purchases or sales 

for the current year do not include brokerage and other transaction costs. 

23







2013 2012 



Total expense ratio Note (including Underlying % 

Fund's expense ratio) (annualised) 

2.60 2.26 


2013 2012 





2.40 2.20 


2013 2012 





2.01 1.98 


2013 2012 





2.13 2.02 


2013 2012 





2.11 2.04 

Note: The expense ratio has been computed based on the guidelines laid down by the 

Investment Management Association of Singapore ("IMAS"). The calculation of the expense 

ratio at financial year end was based on total operating expenses divided by the average net 

asset value for the year. The total operating expenses do not include (where applicable) 

brokerage and other transactions costs, performance fee, interest expense, distribution paid 

out to unit holders, foreign exchange gains/losses, front or back end loads arising from the 

purchase or sale of other funds and tax deducted at source or arising out of income 

received. The Sub-Fund does not pay any performance fee. The average net asset value is 


24






The Manager of the Fund is Nikko Asset Management Asia Limited, a subsidiary of Nikko 

Asset Management International Limited. As of 1 June 2013, The Trustee of the Fund has 

changed to BNP Paribas Trust Services Singapore Limited (the "Trustee"). 

Management fee is payable to Nikko Asset Management Asia Limited. Trustee fee is 

payable to BNP Paribas Trust Services Singapore Limited. 

In addition, the bank holding company and related parties of the Trustee have also provided 

custodian, banking, foreign exchange, fund administration and brokerage services to the 

Fund in the normal course of business at terms agreed between the parties and within the 

provisions of the Trust Deed. 


S$ S$ 

Bank balances held with related party 

of the trustee 

Eight portfolio A 122,711 - 

Eight portfolio B 388,230 - 

Eight portfolio C 5,659,335 - 

Eight portfolio D 1,016,602 - 

Eight portfolio E 844,366 - 

14. Any other material information that will adversely impact the valuation of the fund 

Nil. 

15 Adoption of Revised Recommended Accounting Practice RAP 7 

The Fund has adopted the recommendations of Statement of Recommended Accounting 

Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute Certified Public 

Accountants of Singapore in June 2012 for the financial year of beginning 1 July 2012. 

Certain comparative figures have been reclassified to conform with changes in the current 

presentation. 

25





The details which follow make reference to the investments within the Singapore Dividend Equity 

Fund unless otherwise stated. 



10 Largest holdings at 30 June 2013 


net assets 


unitholders 

% 

Fair value 

S$ 

Singapore Telecom Ltd 9,964,000 8.53 

DBS Group Holdings Ltd 8,928,000 7.64 

United Overseas Bank Ltd 8,778,120 7.52 

Keppel Corp Ltd 7,259,200 6.21 

Oversea-Chinese Banking Corp 7,082,910 6.06 

Capitamalls Asia Ltd 6,663,075 5.71 

Capitaland Ltd 5,599,680 4.79 

BHP Billiton Ltd 4,709,195 4.03 

Sembcorp Marine Ltd 4,557,600 3.90 



net assets 


Fair value 

S$ 

unitholders 

% 

Capitacommercial Trust 2,180,860 8.11 

Capitamalls Asia Ltd 1,759,680 6.54 



Singapore Telecommunications Ltd 1,296,260 4.82 

ST Engineering 1,221,400 4.54 

Capitamall Trust 1,080,135 4.02 

Mapletree Industrial Trust 1,073,110 3.99 

Sembcorp Industries Ltd 1,072,170 3.99 

United Overseas Bank Ltd 935,370 3.48 



2013 2012 

Lower of total value of purchases or sales S$ 108,176,172 29,254,457 


Total turnover ratio Note % 127.80 117.18 








26







2013 2012 



Total expense ratio Note % 1.41 1.68 






out to unitholders, foreign exchange gains/losses, front or back end loads arising from the 




27





The details which follow make reference to the investments within the Horizon Singapore Fixed 

Income Enhanced Fund unless otherwise stated. 


Horizon Spore Fixed Income Enhanced FD 


Fair value 

S$ 


net assets 


unitholders 

% 

Housing & Development Board 1.83% Due 

21/11/2018 2,208,193 7.19 

Singapore Government 3.5% Due 01/03/2027 2,150,879 7.01 






Singapore Government 3% Due 01/09/2024 1,540,857 5.02 


Land Transport Authority 2.71% Due 27/05/2020 1,514,212 4.93 



net assets 


Fair value 

S$ 

unitholders 

% 

Singapore Government 3.125% 01/09/22 1,997,608 6.24 


Singapore Government 3 0%1/09/24 1,116,480 3.49 



Capitamalls Asia 3.95% 24/08/17 EMTN 1,018,830 3.18 

Overseas Union Enterprise Ltd 4.3% 15/04/14 MTN 1,014,230 3.17 

Street Square 3.02% 05/05/14 751,943 2.35 

CCT MTN Pte Ltd 3.25% 15/12/15 MTN 750,705 2.34 

Gll IHT Pte Ltd 4.125% 13/05/15 MTN 747,967 2.34 



2013 2012 

Lower of total value of purchases or sales S$ 36,795,365 25,317,376 


Total turnover ratio Note % 116.38 77.85 








28







2013 2012 



Total expense ratio Note % 1.25 1.28 










29





The details which follow make reference to the investments within the Horizon Global Bond Fund (S$ 

Hedge) unless otherwise stated. 




Percentage of 



Fair value 

S$ 

unitholders 

% 

RIC Global Bond Fund (CLASS A) 32,883,904 93.15 


Percentage of 



Fair value 

S$ 

unitholders 

% 

RIC Global Bond Fund (CLASS A) 32,720,892 99.90 



2013 2012 



Total turnover ratio Note % NA NA 










2013 2012 





1.63 1.65 










30





The details which follow make reference to the investments within the Horizon Global Equity Fund 

unless otherwise stated. 




Percentage of 



unitholders 

% 

Fair value 

S$ 

RIC US Equity Fund (CLASS A) 55,743,333 57.18 

RIC Continental European Equity Fund (CLASS A) 16,185,197 16.60 

RIC UK Equity Fund (CLASS A) 8,717,824 8.94 

RIC Japan Equity Fund (CLASS A) 7,877,194 8.08 

RIC Pacific Basin Equity Fund (CLASS A) 5,150,570 5.28 


Percentage of 



Fair value 

S$ 

unitholders 

% 

RIC US Equity Fund (CLASS A) 64,765,458 57.35 

RIC Continental European Equity Fund (CLASS A) 19,563,405 17.32 

RIC UK Equity Fund (CLASS A) 11,305,230 10.01 

RIC Japan Equity Fund (CLASS A) 9,063,340 8.03 

RIC Pacific Basin Equity Fund (CLASS A) 4,724,434 4.18 



2013 2012 



Total turnover ratio Note % NA NA 








31







2013 2012 

Total operating expenses S$ 890,106 1,059,865 




1.74 1.81 










32





ANNUAL REPORT 




1

MANAGERS 





DIRECTORS 




Lim Say Boon 

V Arivazhagan 


Ng Soo Nam 

TRUSTEE 

RBC Investor Services Trust Singapore Limited 

20 Cecil Street, #28-01 Equity Plaza 


AUDITORS 




REGISTRAR 


20 Cecil Street, #28-01 Equity Plaza 







Rodyk & Davidson LLP 

80 Raffles Place, #33-00 UOB Plaza 1 


CUSTODIAN 

The Northern Trust Company Singapore Branch 

One George Street, #12-06 



1


Since 


Eight Portfolio A 1.16 4.36 7.48 4.24 1.67 2.65 1.56 

Composite A 1.21 3.09 6.20 4.72 3.33 4.27 3.35 

Eight Portfolio B 1.09 5.21 7.97 3.50 0.13 2.77 0.82 

Composite B 1.47 3.77 7.33 4.49 1.81 4.49 2.74 

Eight Portfolio C 1.34 6.53 9.73 3.32 -1.36 3.45 0.45 

Composite C 1.79 4.61 8.83 4.15 0.28 4.86 2.15 

Eight Portfolio D 1.10 7.10 9.92 2.15 -3.58 3.22 -0.65 

Composite D 2.04 5.21 9.79 3.71 -1.51 4.86 1.26 

Eight Portfolio E 1.45 8.40 11.13 1.60 -5.41 3.76 -1.36 

Composite E 2.36 6.06 11.25 3.24 -3.25 5.06 0.49 


on NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any. Returns 

for period in excess of 1 year are annualised. 

Since 


Eight Portfolio A -3.90 - 0.86 2.11 2.47 0.63 2.12 1.16 

Composite A 1.21 3.09 6.20 4.72 3.33 4.27 3.35 

Eight Portfolio B -3.96 - 0.05 2.57 1.75 -0.90 2.25 0.42 

Composite B 1.47 3.77 7.33 4.49 1.81 4.49 2.74 

Eight Portfolio C -3.73 1.21 4.24 1.57 -2.36 2.92 0.05 

Composite C 1.79 4.61 8.83 4.15 0.28 4.86 2.15 

Eight Portfolio D -3.96 1.75 4.42 0.42 -4.56 2.69 -1.04 

Composite D 2.04 5.21 9.79 3.71 -1.51 4.86 1.26 

Eight Portfolio E -3.62 2.98 5.57 -0.12 -6.37 3.23 -1.75 

Composite E 2.36 6.06 11.25 3.24 -3.25 5.06 0.49 


on a NAV-NAV basis, SGD, and based on the assumption that all dividends and distributions are reinvested, if any, and 

take into account of maximum sales and realisation charges. Returns for period in excess of 1 year are annualised. 

Since Inception: 21 February 2000 

Note: 





2

Composite A - 35% Barclays Global Aggregate Index, S$ Hedged 


- 15% composite index comprising 5 regional equity indexes: 





(5) Russell 1000 ® Net 30% Index 



Composite B - 30% Barclays Global Aggregate Index, S$ Hedged 










Composite C - 20% Barclays Global Aggregate Index, S$ Hedged 










Composite D - 10% Barclays Global Aggregate Index, S$ Hedged 










Composite E - 85% composite index comprising 5 regional equity indexes: 








3




MSCI All Country Pacific Basin ex-Japan Free Index will be changed to the MSCI AC Asia Pacific ex-Japan Index. This 

portion of the composite benchmark was subsequently changed to Russell Asia Pacific ex Japan (All cap) Index from 1 

April 2011. 








For the year ended 31 December 2012, the Singapore Dividend Equity Fund (the “Fund”) posted a return of 38.59% 

(SGD terms, NAV-NAV basis), outperforming the benchmark FTSE Straits Times Index, which returned 19.68% over the 

same period. It was a very strong year for high dividend yielding stocks as the search for yields saw a huge re-rating 

of such stocks. The Fund’s outperformance can be attributed to the overweight in the Real Estate Investment Trusts 

(“REITs”), CapitaMalls Asia and Overseas Union Enterprise. The investments in stocks listed outside of Singapore also 

did well. 

Market Review 

The FTSE STI gained 19.68% in 2012 

It was a highly volatile market in 2012, marked by a few key events. The market started the year very strongly in 

1Q12 but soon met with a very sharp correction in 2Q12 due to nervousness over Spain’s fiscal standing, weaker Gross 

Domestic Product (“GDP”) growth in China and a spike in risk aversion on the potential of a Greek exit from the Euro 

zone. The market rebounded in June 2012 after the favourable result of the Greek elections, where pro-austerity parties 

won enough seats to form a coalition government. Market sentiment also improved post the agreement reached at 

the E.U. Summit permitting the use of bailout funds to directly re-capitalize Spanish banks. In 2H12, Singapore stocks 

continued to gain amid improvements in global markets and improved investor sentiment, on the back of easing 

concerns over the European debt woes, stronger indications of a U.S. economic recovery and positive signs on China’s 

growth. 

Persistently high inflation due to continued rise in accommodation and transport costs 

Inflation in Singapore remained elevated in 2012, due to the continued rise in accommodation and transport costs. The 

stubbornly high inflation level prompted the MAS to maintain a “modest and gradual” appreciation of the Singapore 

Dollar Nominal Effective Exchange Rate (“S$NEER”) policy band in October, surprising markets which were expecting 

some policy easing to support faltering growth. Meanwhile, in an effort to further reign in property prices at year-end, 

the government introduced a slew of new property cooling measures covering public and private residential property, 

as well as industrial property sectors. 

Economic numbers were weak 

Singapore’s economy deteriorated further in the second half of the year, with the manufacturing sector notably 

weak. More specifically, the Purchasing Managers’ Index (“PMI”) stayed below 50 for the whole second half of 

2012. Meanwhile, the weak external environment resulted in electronic exports declining for five consecutive months 

from August to December, while Non-Oil Domestic Exports (“NODX”) contracted by 16.3% Year-on-year (“YOY”) 

in December. Advanced estimates reveal that the Singapore economy rose an annualized 1.8% Quarter-on-quarter 

(“QOQ”) in the fourth quarter of 2012, following a downwardly adjusted 6.3% contraction in the prior quarter, leading 

to full-year 1.2% GDP growth, against the 4.9% expansion in 2011. 

4


We expect Asia markets to remain resilient 

Looking ahead, we believe that Asia as a region will continue to benefit from the low interest rate environment while 

anchored by a stabilization in the Chinese economy. With its once-a-decade leadership transition completed, China’s 

growth engine is also easing into a highly sustainable pace that will continue to support many companies in Asia that 

have built strong platforms to tap its economic growth. Despite economic uncertainties in the U.S. and E.U., Asia 

business confidence and domestic economic momentum has remained firmly supported by strong fiscal and corporate 

fundamentals. As some of the current global uncertainties abate, Asian markets can expect a climate of stable to 

improving corporate profitability, which will be supportive of further market re-rating. 

We will maintain a steady approach to reaping returns 

We will maintain a steady approach to reaping returns via a balanced combination of dividend yield and capital 

appreciation. Resilient dividend streams on the back of sustainable business models will remain highly sought after 

in the current low interest rate environment, and there remains no shortage of dividend yield stocks that meet our 

selection criteria, in sectors such as Telecommunication and Consumer. For capital appreciation, we will look to be 

positioned in selected stocks that are still trading at depressed valuations and/or are likely to rebound on the back of 

better profitability in the coming year. 



Fund outperformed the benchmark, benefitting from the underweight duration stance on SGS 

In the twelve months ending 31 December 2012, the Horizon Singapore Fixed Income Enhanced Fund (the “Fund”) 

posted a return of 6.67% (SGD terms, NAV-NAV basis), outperforming the benchmark UOB Singapore Government 

Bond All Index by 2.82%. This was largely due to the Fund’s underweight in duration on Singapore Government 

Securities (“SGS”). In addition, the rally in the credit spread of the selected Asian credit bonds in the Fund contributed 

positively to the performance as well. 

Market Review 

Singapore Government Securities rallied in 2012 

The Singapore government yield curve shifted lower over the year, with 2-year yields tightening by about 7bp, while 10- 

year yields compressed by about 33bp. Singapore government securities moved largely in tandem with U.S. Treasuries 

for the most part, diverging notably in October when the U.S. Treasury yield curve slightly steepened as the SGS yield 

curve flattened. The compression in SGS yields in October followed weak economic numbers from Singapore and the 

Monetary Authority of Singapore’s (“MAS”) surprise decision to maintain its tight FX stance. Meanwhile, the SGD 

appreciated alongside most Asian currencies over the period, advancing 6.5% against the U.S. Dollar in 2012. 

Persistently high inflation led MAS to keep its appreciating FX stance in October 

Inflation in Singapore remained elevated in 2012, due to the continued rise in accommodation and transport costs. 

Certificates of entitlement rose to record levels in the second half of the year, closing the year at SGD 81,889 for cars 

below 1600 cc, and SGD 95,990 for the open category, representing gains of 63.8% and 35.2%, respectively, from 

end December 2011 levels. The stubbornly high inflation level prompted the MAS to maintain a “modest and gradual” 

appreciation of the Singapore Dollar Nominal Effective Exchange Rate (“S$NEER”) policy band in October, surprising 

markets which were expecting some policy easing to support faltering growth. Meanwhile, in an effort to further 

reign in property prices at year-end, the government introduced a slew of new property cooling measures – described 

as the “most significant to date” by Deputy Prime Minister Tharman Shanmugaratnam – covering public and private 

residential property, as well as industrial property sectors. 

Economic numbers were weak 

Singapore’s economy deteriorated further in the second half of the year, with the manufacturing sector notably weak, 

as the PMI reading registered below the figure 50 threshold differentiating expansion from contraction, for most of 

the year. More specifically, the PMI reading stayed below 50 for the whole second half of 2012. Meanwhile, the weak 

5

external environment resulted in electronic exports declining for five consecutive months from August to December, 

while NODX contracted by 16.3%YOY in December. Advanced estimates reveal that the Singapore economy rose an 

annualized 1.8% QOQ in the fourth quarter of 2012, following a downwardly adjusted 6.3% contraction in the prior 

quarter, leading to full-year 1.2% GDP growth, against the 4.9% expansion in 2011. 


We reduce duration on SGS, and are neutral on the Singapore Dollar in the near-term 

The start of the year ushered a climactic end to the fiscal showdown as the House, at the eleventh hour, voted in support 

of the bill earlier passed by the Senate to avert a fall off the ‘fiscal cliff’, sending risky assets rallying. We believe that 

optimism in markets is likely to persist, on expectations that economic numbers from the U.S. will depict a continued 

recovery in the economy. Consequently, investors are likely to favour higher yielding currencies and instruments over 

perceived safe-haven ones such as the Singapore Dollar and Singapore Government Securities. Nonetheless, as inflation 

is unlikely to taper off in the near-term, we expect the MAS to maintain its gradual appreciation FX stance in April, 

and take a neutral view on the currency. This tightening stance is likely to continue to put downward pressure on the 

country’s export sector. Consequently, we anticipate economic numbers in the next few months to remain weak. In 

addition, we anticipate U.S. Treasury yields – and SGS yields for that matter, given that both curves tend to move in 

tandem – to remain elevated in the near-term as risk-on sentiments prevail. 



The Horizon Global Equity Fund (the “Fund”) returned 7.64% (SGD terms, NAV-NAV basis) for the year ended 31 

December 2012, versus the benchmark’s 9.74%. 

The Fund invested in the RIC U.S. Equity Fund, the RIC U.K. Equity Fund, the RIC Continental European Equity Fund, the 

RIC Japan Equity Fund and the RIC Pacific Basin Equity Fund over the review period. The allocation to the underlying 


On USD net of fees basis, the underperforming funds for 2012 were RIC U.S. Equity Fund, RIC Japan Equity Fund 

and RIC Pacific Basin Equity Fund, while the outperforming funds included RIC U.K. Equity Fund and RIC Continental 

European Equity Fund. 

Market Review 

The Russell Global Large Cap Index rose 12.1% over 1Q12, its best start to the year since 1998. Global equity markets 

continued the turnaround that began in the previous quarter and registered strong gains in January and February. 

Investors’ reactions grew increasingly positive to the improved credit conditions in Europe following the European 

Central Bank’s (“ECB’s”) successful Long-Term Refinancing Operations (“LTRO”). Continued positive news flow on 

the U.S. economy, most notably better-than-expected housing and unemployment data, also helped to lift sentiment. 

Within a risk-tolerant environment, Emerging Markets (“EM”) unsurprisingly outperformed developed markets by 

2.3%, with Eastern Europe leading. Among the developed markets, the U.S. was the strongest performer, followed 

closely by Europe. There was growing divergence between core Euro zone countries such as Germany and Austria, 

which were among the strongest markets globally, and peripheral countries such as Spain and Portugal, which barely 

rose. Within Asia, Japan was the strongest market in local currency terms, but the surprise announcement by the Bank 

of Japan that it would target inflation prompted a significant depreciation in the Japanese yen, resulting in much lower 

U.S. dollar returns. On a sector basis, technology and consumer discretionary led, while the financial sector continued 

to rally on improved credit conditions and favourable stress test results in the U.S. In contrast, traditional defensive 

sectors such as consumer staples, telecoms and utilities lagged for the quarter. Despite oil prices holding near record 

levels, energy was another notable laggard amid rumours surrounding the coordinated release of strategic oil reserves 

by several countries. From a style perspective, small caps outperformed large caps while growth outperformed value. 

Global equity markets corrected sharply over 2Q12, with the Russell Developed Large Cap Index returning -5.2%. The 

root cause of market negativity was the political and economic turmoil in the Euro zone and, to a smaller extent, the 

6

uncertainty of the economic outlooks for China and the U.S. France saw the election of the socialist Hollande who 

came into power with a softer agenda on fiscal issues, while elections in Greece also showed signs of austerity-fatigue 

as a fragile pro-euro coalition finally took power. In Spain, banking sector problems escalated and the country became 

the latest member state to seek a bailout. In the late June European summit, it was decided that funds in the European 

Stability Mechanism could be directly used for bank recapitalisations for any country with good progress in implementing 

its needed reforms and fiscal tightening. This was positively received by the markets, which rallied strongly on the last 

day of June. However Greece, Portugal and Spain featured among the worst markets, declining -17.1%, -16.3% and 

-13.1% respectively, as they were pulled down by the Euro which lost 5.6% versus the USD. Emerging Markets (“EM”) 

were also in the red for the second quarter as fears over slowing growth were reflected in local currencies and stock 

markets. In contrast, the U.S. resumed its role of a safe haven for an increasingly nervous investment community. At a 

sector level, the second quarter was, to a large extent, a reverse image of the first quarter with pro-cyclical sectors like 

materials and energy underperforming defensives, such as consumer staples and healthcare. 

Global equity markets posted solid gains during 3Q12 as monetary support from major central banks ultimately 

outweighed any structural or cyclical issues that could be hindrances to future growth. The Russell Global Large Cap 

Index climbed 6.9% in USD terms, with most of the outperformance generated in September, when central banks took 

bold actions to tackle sluggish growth in the world’s largest economies. The European Central Bank and the U.S. Federal 

Reserve both committed to buy as many assets as necessary, while the Bank of Japan announced an extension of its 

asset-buying program in the hope of weakening its currency, whose strength was a headwind to exporters. Regionally, 

Europe was the largest beneficiary of the renewed optimism, with Germany, Italy, and Spain among the top performing 

countries, while the U.K. and Eastern European countries also fared well. In contrast, Japan was the worst-performing 

market due to the strength of its currency coupled with the economic slowdown of its largest trading partner, China. 

This slowdown also impacted European luxury goods makers negatively, who were dependent on emerging market 

demand to offset slowing revenue generation in Europe. From a sector perspective, the areas which struggled for most 

of the year turned out to be the best performers in the third quarter, namely energy, financials, and materials. The 

strong performance of the financials sector was largely driven by the rebound in European banks. Defensive sectors 

struggled most, with consumer staples and utilities being two of the three worst-performing sectors. These sector 

spreads were representative of a more risk-seeking market than we saw in the second quarter. 

Global equity markets posted a surprisingly strong gain in 4Q12, with the Russell Global Large Cap Index returning 

16.4%. Despite worries over the U.S. “fiscal cliff” and the unresolved Euro zone crisis, the momentum continued 

through the fourth quarter and the Index finished 2.6% higher. The more optimistic undertones were tied to the 

conclusion of the U.S. presidential election, some indications of less dire economic trends and modest albeit unsteady 

progress towards resolution of sovereign default risks in the Euro markets. Factors reflecting quality and defensiveness 

lagged, particularly in December, while value and risk factors, including higher beta and volatility, outperformed. 

Sectors tied to improving economic trends performed best, led by financials and industrials. In contrast, more defensive 

sectors of the market, most notably telecoms, lagged. Less apparent story lines included a strong rally for Japanese 

stocks that was largely obscured by the concomitant depreciation of the yen. In yen terms, Japanese stocks gained 

more than 17% in the quarter. However, the yen broke from a stubbornly strong sub-80 yen/USD level on the election 

of Liberal Democrat Shinzo Abe as the country’s new prime minister. One of Abe’s main campaign pledges was to fight 

the country’s chronic deflation with aggressive monetary easing. Similarly, European shares gained on indications that 

the worst of scenarios for the Euro zone, a Greek exit or Spanish default, had been averted. 



The Horizon Global Bond Fund (S$ Hedged) (the “Fund”) returned 9.13% (SGD terms, NAV-NAV basis) for the year 

ended 31 December 2012, versus the benchmark’s 5.70%. 

Over the period, all of the underlying managers outperformed the benchmark, led by Hyperion Brookfield Asset 

Management. Over the year, rates and currency specialist Strategic Fixed Income was hired to the Fund. 

The Fund enjoyed very strong performance over 1Q12, with all of the underlying managers outperforming the 

benchmark. Currency effects contributed positively, most notably an underweight to the Japanese yen, which declined 

7

over the period due to the Bank of Japan’s increase in stimulus measures. In terms of rates, the overweights to Ireland 

and Mexico against an underweight to the U.S. boosted returns. Sector positioning added value through an exposure 

to emerging market debt and high yield corporates versus an underweight to governments. 

The Fund outperformed the benchmark in 2Q12, largely aided by its performance in June. All of the underlying managers 

except Loomis, Sayles & Company outperformed. Positive returns were driven by an underweight allocation to the 

struggling Euro (all managers) and overweight exposures to non-agency mortgages (Brookfield and Pacific Investment 

Manager Company) and Irish debt (Colchester Global Investors). Over the quarter the Fund increased its exposure to 

high quality securities like government securities, government-related and agency mortgage-backed securities (“MBS”) 

at the cost of high yield and emerging market securities, while maintaining its duration underweight. Governmentsonly 

manager Strategic was introduced to the Fund at the end of May and underperformed in June, as risk taking grew 

due to the prospect of positive news emanating from the quarter-end E.U. summit. 

The Fund outperformed the benchmark over 3Q12, with all but one of the underlying managers finishing in positive 

territory. Governments-only manager Strategic lagged its peers in the Fund and underperformed the benchmark, as 

risk taking grew due to increasing expectations of E.U. / European Central Bank’s (“’ECB”) policy support and further 

monetary easing in the U.S. Positive returns were predominantly driven by an overweight position to non-agency 

mortgages (Brookfield and PIMCO). In addition, relative gains were driven by an overweight allocation to emerging 

market debt, which performed well over a more risk-tolerant quarter, as well as out-of-benchmark exposure to high 

yield corporates. Rates positioning also benefited over the period, specifically an overweight position to the Ireland and 

Italy. 

The Fund outperformed the benchmark over 4Q12, with four of the five underlying managers finishing in positive 

territory. The Fund recorded a stellar performance for the year, finishing up 5.5% against the benchmark. Positive returns 

for the quarter were predominantly driven by an underweight to the Japanese yen and overweights to the Norwegian 

krone and Korean won (Strategic, Loomis, Colchester). Sector positioning also contributed to performance, notably 

an overweight to emerging market debt (Colchester, Loomis), which performed well over the month. In addition, outof-index 

exposure to non-agency mortgages (Brookfield and PIMCO) and High Yield corporates (PIMCO, Loomis) also 

added value. The Fund’s underweight to Investment Grade corporates was a modest drag. 

Market Review 

The Barclays Capital Global Aggregate Bond Index returned 0.9% over 1Q12. After a rocky second half of 2011, the first 

quarter of 2012 saw systemic risk dissipating, market volatility decreasing and credit spreads tightening. The primary 

catalysts were developments surrounding the European debt crisis, which provided clarity on policy and significantly 

reduced liquidity risk. First and foremost was the ECB Long Term Refinancing Operation (“LTRO“) programme, which 

injected €1 trillion worth of liquidity into Euro zone banks, eliminating the probability of a Lehman-like event. Near 

term Greek pressure was alleviated as private borrowers agreed on terms of a principal write-down and the German 

parliament approved a second bailout of €130 billion. The events played out over a backdrop of an ongoing trend in 

global central bank easing (including the U.S. Federal Reserve’s forecast to remain on hold into 2014), positive U.S. 

economic data and somewhat decreasing concerns of a China hard landing. At the end of the quarter there was some 

disappointment in E.U. finance ministers limiting fresh “firewall” funds to €500 billion, as a higher amount would 

demonstrate deeper E.U. commitment and potentially compel other countries to donate more to the IMF. The above 

events drove positive sentiment in risk assets, with Pan-European high-yield banks returning an astounding 24% and 

lowest quality global credits (rated Ca to D) returning 13%. Peripheral European sovereign debt which had been 

struggling rebounded with strong returns. The positive environment helped capital to continue to pour into emerging 

market debt funds, bolstering their returns. Subprime mortgages did well, due in part to the Federal Reserve selling 

the remainder of its Maiden Lane II portfolio privately and some indications that the housing market may be nearing 

the bottom. 

The Barclays Global Aggregate Bond Index returned 0.6% in 2Q12. As the Euro debt crisis spread to Spain and as 

economic activity worldwide slowed over the period, investors generally gravitated to the safest markets – the U.S., the 

U.K. and Germany. The U.S. dollar outperformed nearly every major currency except the Japanese yen. Government 

bonds in major markets benefited from the flight to quality. Italian yields rose and Spanish yields flirted with the pivotal 

7% bailout threshold (breaching it briefly). That said, some riskier sovereign debt did post positive returns, including 

8

Portugal and Ireland (on compelling yields and June E.U. summit proposals) as well as Hungary (on progress toward on 

IMF bailout). A slowdown in the rate of U.S. job creation caused investment grade and high yield corporate bonds to 

lag government bonds. Emerging market debt modestly outperformed, driven by relatively better economic prospects 

in countries such as Mexico and Poland. The quarter started with the positive effects from the ECB’s LTRO stimulus 

already faded and investors again anxious, focusing on news flow and fundamentals. U.S. economic data releases 

were mixed bringing into question the magnitude and sustainability of future U.S. growth. The U.K. and Spain (which 

S&P downgraded by two notches to BBB+) slipped into recession. May was a firmly ‘risk off’ month where safe haven 

government bonds strongly outperformed credit markets. This was due largely to the Greek elections failing to generate 

a ruling party and the ECB’s rejection of the Spanish government’s €19bn proposal to recapitalise Bankia, a failing bank 

(which caused Spanish 10 year yields to temporarily exceed 7%). June was more optimistic and U.S. Treasuries fell for 

the first time since March along with other core markets. Positive sentiment was largely driven by the proposal from 

the late June E.U. summit that could lead in the near term toward a banking union, direct recapitalisation of banks 

(avoiding increasing sovereign debt-to-GDP ratios) and potential for the European Stability Mechanism (“ESM”) to 

purchase sovereign debt in the secondary market. Throughout the quarter, global central banks remained concerned 

about the state of their respective economies and continued to ease, which included the U.S. Federal Reserve’s extension 

of Operation Twist until the end of the year. 

The Barclays Capital Global Aggregate Bond Index returned 3.3% in 3Q12. Fixed income markets made solid gains 

in July and August before turning in an even stronger performance in September. Corporate bonds outperformed 

government bonds given the risk-on environment. Government bonds provided positive total returns in part by the 

promise of further quantitative easing in the U.S. and the U.K., and the planned bond-purchase programme in Europe. 

The weakness in economic activity worldwide was also a positive factor for sovereign debt in the safest economies. 

However, safe haven sovereign gains were tempered by the strong risk seeking behavior during the third quarter. 

Government bond valuations have become stretched in recent months after a long period of strong performance, 

which creates a challenge for further price appreciation. In contrast, investors were drawn to the valuations in corporate 

bonds, where spreads over government bonds remained attractive and well above their lows from before the financial 

crisis. 

Although 4Q12 was generally positive for global fixed income risk, the market as measured by the Barclays Global 

Aggregate Index (global agg) returned -0.5% over the period. The primary driver of this negative total return was Japan, 

whose surprise election in December ushered in the return of Shinzo Abe as Prime Minister advocating aggressively 

loose central bank policy. While the Japan yield curve was largely unchanged over the quarter, the JPY sold off by more 

than 10% versus the USD and EUR. The European market fared well over the period, with the EUR appreciating 2.5% 

against the USD. Peripheral European sovereign debt posted particularly strong returns and outperformed German 

bunds and U.K. gilts, as markets became even more confident that a Euro zone break up would not occur in the near 

term and that Spain would seek a bail out. European high yield banks were a stand out, returning 9% over the quarter 

and 47% for the year. The U.S. market was flattish over the quarter, with modest negatives from the larger treasury and 

agency mortgage sectors offsetting positive returns from the Investment Grade (“IG”) corporate sector (IG financials 

stood out with a 1.9% return). The 10-year U.S. treasury was volatile over the period (ending 10bps higher at 1.75%). 

Uncertainty stemmed from the U.S. election and fiscal cliff negotiations combined with the Fed’s announcement that it 

would augment Quantitative Easing 3 (“QE3”) with an additional $45 billion of treasury purchases. The U.S. non-agency 

mortgage market performed strongly throughout the quarter on attractive loss-adjusted yields and an improving U.S. 

housing market. Global high yield (concentrated in the U.S.) fared well, returning 4.6% on the back of strong balance 

sheets, low default rates and a 2% U.S. GDP run rate. Emerging Market debt returned 3.5% on investors’ technical 

bid as well as the sector’s stronger growth prospects and balance sheets versus developed market sovereigns. In the 

Emerging Market currency space, stronger economies did well versus the USD (e.g., Korean Won and Polish Zloty) while 

the Brazilian Real and South African Rand sold off (the former on lower-than-expected third quarter growth, causing 

policy makers to intervene and the latter on violent protests coupled with increasing inflation). 

9








Management Asia Limited (“Nikko AM”). 

Past performance of Nikko AM Asia or the fund is not necessarily indicative of its future 

performance. The funds may use or invest in financial derivative instruments. The value of units 

and income from them may fall or rise. Investments in the funds are subject to investment risks, 

including the possible loss of principal amount invested. You should read the relevant prospectus and 

product highlights sheet obtainable from appointed distributors of Nikko AM Asia or our website 

(www.nikkoam.com.sg) before investing. 




















advice. 


10




ensured that: 

• full disclosure of the practice of accepting soft dollars is made to all clients and in the Funds’ 

Prospectus if it relates to any of the Funds; 

• the commission rates charged are comparable with the market rates; 

• there is no conflict of interest; 

• the soft dollar credits are used only for clearly defined services; 

• at all times trades are executed through the respective brokers only on the basis of best execution 

regardless whether soft dollar benefits will accrue. Best execution shall include competitive 

prices with smooth execution ability; and 

• relevant regulations and guidelines are complied with. 

The procedures for the appointment of the brokers shall be no different from that of normal full 



Clients or trustees of funds managed by the Managers who object to the use of the soft dollar brokers 

shall have their trades segregated from the rest of the trades that are executed through the relevant 

soft dollar broker(s). The Managers will execute trades for such accounts only with authorised full 


It is the responsibility of the central dealers to ensure that the allocation quotas are adhered to. In 

addition, the central dealers will monitor the execution ability of the soft dollar brokers and assign the 

business strictly on a “best execution” basis. 

Subject to the provisions of the Code, in its management of the Funds, the Singapore Dividend Equity 

Fund and the Horizon Singapore Fixed Income Enhanced Fund, the Managers may receive soft dollar 

commissions from, or may enter into soft dollar arrangements with, stockbrokers who execute trades 

on behalf of the Funds, the Singapore Dividend Equity Fund and the Horizon Singapore Fixed Income 

Enhanced Fund and the soft dollars received would be restricted to the following kinds of services: 

• specific advice as to the advisability of dealing in, or of the value of any investments; 

• research and advisory services; 

• economic and political analysis; 

• portfolio analysis including valuation and portfolio measurement; 

• market analysis; 

• data and quotation services; 

• computer hardware or software that are used to support the investment decision making 

process, the giving of advice, or the conduct of research or analysis; and 

• custodial services in relation to the investments managed for clients. 

11


• travel, accommodation and entertainment expenses; 

• general administrative goods and services including office equipment and premises; 

• membership fees; 

• employee salaries; 

• direct money payments / rebates. 


The manager of the Russell Investment Company plc (“RIC”) Sub-Funds in which the sub-funds of the Nikko AM 

Shenton Horizon Investment Funds invest, Russell Investments Ireland Ltd (“RIIL”), receives soft dollar commissions 

from, or enter into soft dollar arrangements with, stockbrokers who execute trades on behalf of the said RIC Sub- 

Funds. The receipt of soft dollar commissions by RIIL is subject to the conditions of best execution, that such soft 

dollar commissions must assist in the provision of investment services to the RIC Sub-Funds and that the receipt of 

soft dollar commissions is in the best interests of the RIC Sub-Funds’ investors. The following kinds of services are 

soft dollars that have been received by RIIL: 


• statistical analyses relating to markets, companies, industries, business and economic factors, market trends 

and portfolio strategies; 


• effecting securities transactions and performing functions incidental thereto such as clearance and settlement 

or are required in connection therewith. 

12



REPORT OF THE TRUSTEE 


The Trustee is under a duty to take into custody and hold the assets of Nikko AM 

Shenton Eight Portfolios (the “sub-funds”) in trust for the unitholders. In accordance with 

the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on 

Collective Investment Schemes (collectively referred to as the “laws and regulations”), the 

Trustee shall monitor the activities of the Manager for compliance with the limitations 

imposed on the investment and borrowing powers as set out in the Trust Deed in each 

annual accounting year and report thereon to unitholders in an annual report which shall 

contain the matters prescribed by the laws and regulations as well as the 

recommendations of the Statement of Recommended Accounting Practice 7 “Reporting 

Framework for Units Trusts” issued by the Institute of Certified Public Accountants of 

Singapore and the Trust Deed. 

To the best knowledge of the Trustee, the Manager has, in all material respects, 

managed the sub-funds during the financial year covered by these financial statements 

set out on pages 16 to 35, comprising the Statements of Total Return, Balance Sheets, 

Portfolio Statements and Notes to the Financial Statements, in accordance with the 

limitations imposed on the investment and borrowing powers set out in the Trust Deed, 

laws and regulations and otherwise in accordance with the provisions of the Trust Deed. 

For and on behalf of the Trustee 



13



STATEMENT BY THE MANAGER 


In the opinion of the directors of Nikko Asset Management Asia Limited, the 

accompanying financial statements set out on pages 16 to 35, comprising the Statements 

of Total Return, Balance Sheets, Portfolio Statements, and Notes to the Financial 

Statements are drawn up so as to present fairly, in all material respects, the financial 

position of Nikko AM Shenton Eight Portfolios (the “sub-funds”) as at 31 December 2012 

and the total return for the financial year then ended in accordance with the 

recommendations of Statement of Recommended Accounting Practice 7 “Reporting 

Framework for Unit Trusts” issued by the Institute of Certified Public Accountants of 

Singapore. At the date of this statement, there are reasonable grounds to believe that the 

sub-funds will be able to meet its financial obligations as and when they materialise. 

For and on behalf of the Manager 



14

INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF THE SUB-FUNDS OF 


(Constituted under a Trust Deed in the Republic of Singapore) 

We have audited the accompanying financial statements of the sub-funds of Nikko AM Shenton Eight 

Portfolios, namely, Eight Portfolio A, Eight Portfolio B, Eight Portfolio C, Eight Portfolio D and Eight 

Portfolio E (collectively referred to as the “sub-funds”) set out on pages 16 to 35, which comprise the 

Balance Sheets and Portfolio Statements as at 31 December 2012, the Statements of Total Return for 

the financial year then ended, and a summary of significant accounting policies and other explanatory 

information. 

Manager’s Responsibility for the Financial Statements 

The Manager of the sub-funds (the “Manager”) is responsible for the preparation and fair presentation 

of these financial statements in accordance with the recommendations of Statement of Recommended 

Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Certified Public 

Accountants of Singapore and for such internal control as the Manager determines is necessary to 

enable the preparation of financial statements that are free from material misstatement, whether due to 

fraud or error. 

Auditor’s Responsibility 

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

conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that 

we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance 

about whether the financial statements are free from material misstatement. 

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in 

the financial statements. The procedures selected depend on the auditor’s judgement, including the 

assessment of the risks of material misstatement of the financial statements, whether due to fraud or 

error. In making those risk assessments, the auditor considers internal control relevant to the sub-funds’ 

preparation and fair presentation of the financial statements 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 sub-funds’ internal control. An audit also includes evaluating the appropriateness of accounting 

policies used and the reasonableness of accounting estimates made by the Manager of the sub-funds, 

as well as evaluating the overall presentation of the financial statements. 

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for 

our audit opinion. 

Opinion 

In our opinion, the financial statements present fairly, in all material respects, the financial positions of 

the sub-funds as at 31 December 2012 and the total returns for the financial year then ended in 

accordance with the recommendations of Statement of Recommended Accounting Practice 7 

“Reporting Framework for Unit Trusts” issued by the Institute of Certified Public Accountants of 

Singapore. 


Public Accountants and Certified Public Accountants 

Singapore 

15





Note 

Eight Portfolio 

A 


B 

2012 2011 2012 2011 

S$ S$ S$ S$ 

Income 

Dividends 7,552 - 19,725 - 

7,552 - 19,725 - 



Trustee fee 1,267 1,389 3,336 3,580 

Valuation fee 1,796 1,965 4,722 5,072 

Audit fee 7,766 794 7,842 1,973 

Registrar fee 19,761 1,476 20,037 3,795 

Custody fee 2,955 1,277 6,137 3,367 


48,768 27,338 89,283 78,953 

Net expenses (41,216) (27,338) (69,558) (78,953) 


Net realised gains on investments 191,894 84,237 223,885 192,424 

Net change in fair value of investments 124,694 (46,749) 599,328 (317,720) 

316,588 37,488 823,213 (125,296) 

Total return/(deficit) for the financial year 

before income tax 275,372 10,150 753,655 (204,249) 

Less: Income tax 3 - - - - 

Total return/(deficit) for the financial year 275,372 10,150 753,655 (204,249) 

Note 


C 


D 

2012 2011 2012 2011 

S$ S$ S$ S$ 

Income 

Dividends 438,863 - 115,052 - 

Other Income - 185 - - 

438,863 185 115,052 - 



Trustee fee 39,498 41,246 9,704 5,228 

Valuation fee 55,498 58,620 13,881 14,992 

Audit fee 8,508 22,953 7,838 11,071 

Registrar fee 23,509 43,956 16,429 11,295 

Custody fee 34,721 38,708 12,594 9,974 


499,186 622,727 135,451 162,699 

Net expenses (60,323) (622,542) (20,399) (162,699) 


Net realised gains/(losses) on investments 1,320,381 1,150,074 (45,463) (75,977) 

Net change in fair value on investments 9,506,342 (5,658,479) 2,831,066 (1,642,895) 

10,826,723 (4,508,405) 2,785,603 (1,718,872) 

Total return/(deficit) for the financial year 

before income tax 10,766,400 (5,130,947) 2,765,204 (1,881,571) 

Less: Income tax 3 - - - - 

Total return/(deficit) for the financial year 10,766,400 (5,130,947) 2,765,204 (1,881,571) 


16





Note 


E 

2012 2011 

S$ S$ 

Income 

Dividends 158,577 - 

158,577 - 


Management fee 15,349 23,265 

Trustee fee 9,320 9,931 

Valuation fee 13,286 14,175 

Audit fee 8,034 5,410 

Registrar fee 17,336 10,686 

Custody fee 9,684 9,457 


108,450 121,792 

Net income/(expenses) 50,127 (121,792) 


Net realised losses on investments (229,791) (252,551) 

Net change in fair value on investments 3,091,876 (2,144,343) 

2,862,085 (2,396,894) 

Total return/(deficit) for the financial year before income tax 2,912,212 (2,518,686) 

Less: Income tax 3 - - 

Total return/(deficit) for the financial year 2,919,212 (2,518,686) 


17



BALANCE SHEETS 


Note 


A 


B 

2012 2011 2012 2011 

S$ S$ S$ S$ 

Assets 


Sales awaiting settlement - - 25,614 - 


Total assets 3,631,768 3,971,075 9,632,787 9,948,217 

Liabilities 

Payables 4 12,572 7,589 32,042 23,621 


Total liabilities 3,631,768 3,971,075 9,632,787 9,948,217 

Note 


C 


D 

2012 2011 2012 2011 

S$ S$ S$ S$ 

Assets 


Sales awaiting settlement 241,924 54,106 481,291 - 

Cash and bank balances 3,301,324 3,647,091 299,399 934,756 

Total assets 113,381,043 115,534,234 26,898,256 29,216,386 

Liabilities 

Payables 4 329,289 322,488 230,105 65,296 


Total liabilities 113,381,043 115,534,234 26,898,256 29,216,386 

Note 


E 

2012 2011 

S$ S$ 

Assets 




Total assets 26,446,704 27,391,718 

Liabilities 

Payables 4 141,283 72,515 

Net assets attributable to unitholders 5 26,305,421 27,319,203 

Total liabilities 26,446,704 27,391,718 


18



PORTFOLIO STATEMENTS 



Holdings at 

Fair 

value at 

Percentage of 




Percentage of 




31 December 31 December 31 December 31 December 

2012 2012 2012 2011 

S$ % % 

Unit trusts 

Horizon Singapore Fixed Income Enhanced Fund 1,173,617 1,632,500 45.11 44.81 

Horizon Global Bond Fund (S$ Hedged) 901,300 1,271,735 35.14 34.32 

Horizon Global Equity Fund 470,503 384,401 10.62 14.08 

Singapore Dividend Equity Fund 138,339 218,437 6.04 4.31 

3,507,073 96.91 97.52 





Holdings at 

Fair 

value at 

Percentage of 




Percentage of 





2012 2012 2012 2011 

S$ % % 

Unit trusts 

Horizon Global Equity Fund 3,180,687 2,598,621 27.07 33.43 

Horizon Global Bond Fund (S$ Hedged) 2,243,285 3,165,275 32.97 29.75 


Singapore Dividend Equity Fund 364,918 576,206 6.00 4.19 

9,254,280 96.39 97.06 







19






Holdings at 

Fair 

value at 

Percentage of 




Percentage of 





2012 2012 2012 2011 

S$ % % 

Unit trusts 




Singapore Dividend Equity Fund 8,083,350 12,763,609 11.29 8.86 

109,837,795 97.16 97.06 


Other net assets 3,213,959 2.84 2.94 



Holdings at 

Fair 

value at 

Percentage of 




Percentage of 





2012 2012 2012 2011 

S$ % % 

Unit trusts 





26,117,566 97.93 97.01 







20






Holdings at Fair value at 

Percentage of 




Percentage of 





2012 2012 2012 2011 

S$ % % 

Unit trusts 



25,513,716 96.99 96.79 




As the sub-fund is invested wholly as a feeder fund into underlying unit trusts, it is not meaningful 

to classify the investments into industry, country or asset classes. 


21





These notes form an integral part of and should be read in conjunction with the 

accompanying financial statements. 

1. General 

Nikko AM Shenton Eight Portfolios (formerly known as Eight Portfolios) comprising 

Eight Portfolio A, Eight Portfolio B, Eight Portfolio C, Eight Portfolio D, Eight 

Portfolio E (collectively referred to as the “sub-funds”) are constituted as unit trusts 

in Singapore and as sub-funds of Eight Portfolios, pursuant to the Trust Deed 

dated 3 January 2002 entered into between DBS Asset Management Ltd (the 

“Manager”) and RBC Dexia Trust Services Singapore Limited (the “Trustee”). The 

Trust Deed has since been amended by Supplemental Deeds (collectively 

referred to as the “Deeds”). The Deeds are governed by the laws of the Republic 

of Singapore. 

The sole shareholder of the Manager, DBS Bank Ltd, had on 30 September 2011 

completed a sale and purchase agreement with Nikko Asset Management 

International Limited and Nikko Asset Management Co., Ltd; pursuant to which 

DBS Bank Ltd had sold and Nikko Asset Management International Limited had 

acquired all the ordinary shares in DBS Asset management Ltd (the “Share 

Acquisition”). Pursuant to the Share Acquisition, DBS Asset Management Ltd has 

been renamed as Nikko Asset Management Asia Limited (the “Manager”) and the 

Fund renamed as Nikko AM Shenton Eight Portfolios with effect from 17 October 

2011. 

The Manager may in its sole discretion invest the assets of the above sub-funds in 

funds established under the Horizon Investment Funds managed by Nikko Asset 

Management Asia Limited, namely the Horizon Global Bond Fund (S$ Hedged), 

Singapore Dividend Equity Fund, Horizon Singapore Fixed Income Enhanced 

Fund and Horizon Global Equity Fund. 

With effect from 27 July 2012, RBC Dexia Trust Services Singapore Limited was 

renamed as RBC Investor Services Trust Singapore Limited and RBC Dexia 

Investor Services Limited renamed as RBC Investor Services Limited following the 

acquisition of the Royal Bank of Canada of the 50% share in RBC Dexia Investor 

Services Limited from Banque Internationale á Luxembourg S.A. 

2. Significant accounting policies 

The principal accounting policies applied in the preparation of these financial 

statements are set out below. 

22






(a) 

Basis of preparation 

The financial statements have been prepared under the historical-cost convention, 

as modified by the revaluation of financial assets held at fair value through profit 

or loss, and in accordance with the recommendations of Statement of 

Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” 

issued by Institute of Certified Public Accountants of Singapore. 

(b) 

Recognition of income 

Dividend income from investments is recognised when the right to receive 

payment is established. 

Interest income is recognised on a time-proportion basis using the effective 

interest rate method. 

(c) 

Expenses charged to the sub-funds 

All direct expenses are charged directly to the Statement of Total Return of each 

sub-fund. Common expenses shared by all sub-funds are allocated to each subfund 

in the ratio of the respective net asset values of each sub-fund at the end of 

each month, quarter or year, as agreed between the Manager and Trustee. 

(d) 

Foreign currency translation 

(i) 

Functional and presentation currency 

The Fund qualifies as an authorised scheme under the Securities and 

Futures Act (“SFA”) of Singapore and is offered to retail investors in 

Singapore. The Fund’s activities are substantially based in Singapore, with 

subscriptions and redemptions of the units of the Fund being denominated 

in Singapore dollars. 

The performance of the Fund is measured and reported to the investors in 

Singapore dollars. The Manager considers the Singapore Dollar as the 

currency which most faithfully represents the economic effects of the 

underlying transactions, events and conditions. The financial statements 

are expressed in Singapore dollars, which is the Fund’s functional and 

presentation currency. 

(ii) 

Transactions and balances 

Foreign currency monetary assets and liabilities are translated into 

Singapore dollars at the rates of exchange prevailing at the date of the 

Balance Sheet. The net unrealised gain or loss is taken to the Statement 

of Total Return. Transactions during the year are recorded in Singapore 

dollars at the rates of exchange ruling on transaction dates. All realised 

gains or losses are recognised in the Statement of Total Return. 

23






(e) 

Investments (continued) 

Investments are classified as financial assets at fair value through profit or loss. 

(i) 

Initial recognition 

Purchases of investments are recognised on the trade date. Investments 

are recorded at fair value on initial recognition. 

(ii) 

Subsequent measurement 

Investments are subsequently carried at fair value. Net changes in fair 

value on investments is included in the Statement of Total Return in the 

year in which they arise. 

(iii) 

Derecognition 

Investments are derecognised on the trade date of disposal. The resultant 

realised gains and losses on the sales of investments are computed on the 

basis of the difference between the weighted average cost and selling 

price gross of transaction costs, and are taken up in the Statement of Total 

Return. 

(f) 

Receivables 

Receivables are non-derivative financial assets with fixed or determinable 

payments that are not quoted in an active market. Receivables are initially 

recognised at fair value and subsequently carried at amortised cost using the 

effective interest method, less accumulated impairment losses. 

3. Income tax 

The sub-funds were granted Designated Unit Trust status by the Inland Revenue 

Authority of Singapore. 

In accordance to Section 35(12) and (12A) of the Income Tax Act (Cap 134) of 

Singapore, subject to certain conditions, the following income shall not form part 

of the statutory income of the sub-funds and is thus not taxable for the year of 

assessment: 

(a) 

(b) 

(c) 

gains or profits derived from Singapore or elsewhere from the disposal of 

securities; 

interest (other than interest for which tax has been deducted under section 

45 of the Income Tax Act); 

dividends derived from outside Singapore and received in Singapore; 

24





3. Income tax (continued) 

(d) 

(e) 

gains or profits derived from foreign exchange transactions; transactions in 

future contracts, transactions in interest rate or currency forwards, swaps 

or option contracts and transactions in forwards, swaps or option contracts 

relating to any securities of financial index; and 

distributions from foreign unit trusts derived from outside Singapore and 

received in Singapore. 

4. Payables 


A 


B 

2012 2011 2012 2011 

S$ S$ S$ S$ 

Amount payable for cancellation of units - - 4,652 - 

Amount due to the Manager 979 1,192 7,195 7,537 

Amount due to the Trustee 346 1,147 925 2,931 

Provision for audit fee 828 1,007 2,213 2,523 


12,572 7,589 32,042 23,621 


C 


D 

2012 2011 2012 2011 

S$ S$ S$ S$ 

Amount payable for cancellation of units 110,138 67,616 174,550 4,123 

Amount due to the Manager 63,867 68,393 8,716 11,781 

Amount due to the Trustee 10,856 33,762 2,676 8,527 

Provision for audit fee 25,945 29,297 6,409 7,409 


329,289 322,488 230,105 65,296 


E 

Amount payable for cancellation of units 92,433 19,792 

Amount due to the Manager 4,069 6,262 

Amount due to the Trustee 2,599 8,027 

Provision for audit fee 6,218 6,942 

Other payables 35,964 31,492 

141,283 72,515 

Management fee is payable to Nikko Asset Management Asia Limited. Valuation 

fee is payable to Nikko Asset Management Asia Limited and BNP Paribas 

Securities Services. Trustee and registrar fee are payable to RBC Investor 

Services Trust Singapore Limited. 

2012 

S$ 

2011 

S$ 

25





5. Net assets attributable to unitholders 


A 


B 

2012 2011 2012 2011 

S$ S$ S$ S$ 

At beginning of the financial year 3,963,486 4,357,423 9,924,596 11,645,704 

Operations 

Change in net assets attributable to 

unitholders resulting from operations 275,372 10,150 753,655 (204,249) 

Unitholders' contributions / 

(withdrawals) 


Cancellation of units (632,811) (456,562) (1,100,306) (1,556,379) 


unitholders resulting from net 

creation and cancellation of units (619,662) (404,087) (1,077,506) (1,516,859) 

Total decrease in net assets 

attributable to unitholders (344,290) (393,937) (323,851) (1,721,108) 

At end of the financial year 3,619,196 3,963,486 9,600,745 9,924,596 

Units in issue (see note 6) 2,963,932 3,489,868 8,644,250 9,642,964 

S$ S$ S$ S$ 


unitholders per unit 1.221 1.136 1.111 1.029 


C 


D 

2012 2011 2012 2011 

S$ S$ S$ S$ 

At beginning of the financial year 115,211,746 134,208,532 29,151,090 34,971,971 

Operations 


unitholders resulting from operations 10,766,400 (5,130,947) 2,765,204 (1,881,571) 

Unitholders' contributions/ 

(withdrawals) 




unitholders resulting from net 

creation and cancellation of units (12,926,392) (13,865,839) (5,248,143) (3,939,310) 


attributable to unitholders (2,159,992) (18,996,786) (2,482,939) (5,820,881) 

At end of the financial year 113,051,754 115,211,746 26,668,151 29,151,090 

Units in issue (see note 6) 106,686,920 119,319,769 28,981,740 34,831,298 

S$ S$ S$ S$ 


unitholders per unit 1.060 0.966 0.920 0.837 

26





5. Net assets attributable to unitholders (continued) 


E 

2012 2011 

S$ S$ 

At beginning of the financial year 27,319,203 33,489,902 

Operations 


unitholders resulting from operations 2,912,212 (2,518,686) 

Unitholders' contributions/ 

(withdrawals) 




unitholders resulting from net creation 

and cancellation of units (3,925,994) (3,652,013) 


attributable to unitholders (1,013,782) (6,170,699) 

At the end of the financial year 26,305,421 27,319,203 

Units in issue (see note 6) 31,353,852 36,171,804 

S$ S$ 


unitholders per unit 0.839 0.755 

6. Units in issue 


A 


B 

2012 2011 2012 2011 

Units at the beginning of the financial year 3,489,868 3,842,218 9,642,964 11,088,293 

Units created 10,970 45,816 21,220 37,868 

Units cancelled (536,906) (398,166) (1,019,934) (1,483,197) 

Units at the end of the financial year 2,963,932 3,489,868 8,644,250 9,642,964 


C 


D 

2012 2011 2012 2011 

Units at the beginning of the financial year 119,319,769 133,208,598 34,831,298 39,315,981 

Units created 368,581 455,455 293,606 368,290 

Units cancelled (13,001,430) (14,344,284) (6,143,164) (4,852,973) 

Units at the end of the financial year 106,686,920 119,319,769 28,981,740 34,831,298 


E 

2012 2011 

Units at the beginning of the financial year 36,171,804 40,681,279 



Units at the end of the financial year 31,353,852 36,171,804 

27





7. Financial risk management 

The sub-funds’ activities exposed it to a variety of risk, including but not limited to 

market risk (including currency risk, interest rate risk and price risk), liquidity risk 

and credit risk. The Manager is responsible for the implementation of the overall 

risk management programme, which seeks to minimise potential adverse effects 

on the sub-funds’ financial performance. Specific guidelines on exposures to 

individual securities and certain industries and/or countries are in place for the 

individual sub-funds as part of the overall financial risk management to reduce the 

sub-funds’ exposures to these risks. 

The sub-funds’ primary objective is to achieve medium to long term capital 

appreciation for the investors. 

The five sub-funds under Nikko AM Shenton Eight Portfolios umbrella fund are 

“fund of funds” investing in Horizon Global Bond Fund (S$ Hedged), Singapore 

Dividend Equity Fund, Horizon Singapore Fixed Income Enhanced Fund and 

Horizon Global Equity Fund. These underlying funds are separately managed by 

their respective managers and the Manager may not view the risk exposures of 

feeder funds to be the identical to those of the underlying funds in which they hold 

investments. 

The sub-funds’ investments are held in accordance with the published investment 

policies of the sub-funds and managed accordingly to achieve the investment 

objectives. 

(a) 

Market risk – Price risk 

Price risk is the risk that arises from uncertainties about future prices of financial 

instruments. 

The sub-funds’ investments are substantially dependent on the changes in market 

prices. The sub-funds’ overall market positions are monitored regularly so as to 

assess deviation from the sub-funds’ investment objectives. However, events 

beyond reasonable control of the Manager could affect the prices of the 

underlying investments and hence the net asset value of the sub-funds. 

28






(a) 

Market risk – Price risk (continued) 

The table below summarises the impact of an increase/decrease of index 

components within the benchmark of individual sub-funds by 15% (2011: 30%), 

with all other variables held constant, on the net assets attributable to unitholders 

as at 31 December 2012 and 31 December 2011. Changes in market index 

percentage are revised annually depending on management’s current view on 

market volatility and other relevant factors. 

Fund 

Associated Benchmark 

Impact in net asset 


unitholders 

(%) 

31 December 

2012 

31 December 

2011 

Eight Portfolio A - 35% Barcap Global Aggregate Index (SGD Hedged) * 16 31 


-15% composite index comprising 5 regional equity 

indexes: 



(3) Russell Developed Europe ex-UK Large Cap Index 

(net) 

(4)Russell Asia Pacific ex Japan (All cap) Index 




Eight Portfolio B - 30% Barcap Global Aggregate Index (SGD Hedged) * 16 31 


- 35% composite index comprising 5 regional equity 

indexes: 




(net) 

(4) Russell Asia Pacific ex Japan (All cap) Index 




29






(a) 

Market risk – Price risk (continued) 

Fund 

Associated Benchmark 

Impact in net asset 


unitholders 

(%) 

31 December 

2012 

31 December 

2011 

Eight Portfolio C - 20% Barcap Global Aggregate Index (SGD Hedged) * 15 30 



indexes: 




(net) 





Eight Portfolio D - 10% Barcap Global Aggregate Index (SGD Hedged) * 15 30 



indexes: 




(net) 







indexes: 




(net) 





15 30 

30






(b) 

Market risk - Interest rate risk 

Interest rate risk is the risk that the value of a financial instrument will fluctuate 

due to changes in market interest rates (fair value risk). 

Except for cash and bank balances with maturity period of less than 3 months, all 

other assets and liabilities are non-interest bearing. Changes in interest rates may 

also have an impact on the value of investment portfolios that consist of fixed 

income components within the underlying funds. The impact of a change in 

interest rates on the net assets attributable to unitholders is analysed in Note 7(a), 

where such a change has an impact on the benchmarked bond indices used in 

the price risk sensitivity analysis. Hence, no separate interest rate risk sensitivity 

analysis is presented. 

(c) 

Market risk - Currency risk 

Currency risk is the risk that the value of a financial instrument will fluctuate due to 

changes in foreign exchange rates. 

To minimise currency risk, the sub-funds mainly hold their excess cash in its 

functional and presentation currency. For hedging purposes, the sub-funds may 

also enter into forward foreign exchange contracts. 

The sub-funds have no exposure to currency risk as all the assets and liabilities of 

the sub-funds are denominated in Singapore dollars, being the functional currency 

of the sub-funds. 

(d) 

Liquidity risk 

Liquidity risk is the risk arising from the inability of the sub-fund to meet its 

obligations as and when they fall due without incurring unacceptable cost or 

losses. 

The sub-funds are exposed to daily cash redemptions from unitholders. However, 

in accordance with the sub-funds’ prospectus, minimum holding size is set. 

To manage the liquidity risk, a cash buffer is maintained in the sub-funds and 

monitored for minimum cash balances to prevent any extensive disposition of 

assets which may occur at lower prices and overdraft situations to meet trade 

settlements and obligations. 

The sub-funds’ financial liabilities are analysed for maturity using contracted 

undiscounted cash flows groupings based on the remaining period at the balance 

sheet date to the contractual maturity date. At year end, all financial liabilities 

either payable upon demand or due in less than 3 months. The impact of 

discounting is not significant. 

31






(d) 

Liquidity risk (continued) 

Eight Portfolio A On demand Less than 3 months 

As at As at As at As at 

Liabilities 

31 December 

2012 

31 December 

2011 

31 December 

2012 

31 December 

2011 

Payables - - 12,572 7,589 

Net assets attributable to unitholders 3,619,196 3,963,486 - - 

Contractual cash out flows 

(excluding gross settled derivatives) 3,619,196 3,963,486 12,572 7,589 

Eight Portfolio B On demand Less than 3 months 


Liabilities 

31 December 

2012 

31 December 

2011 

31 December 

2012 

31 December 

2011 

Payables - - 32,042 23,621 




Eight Portfolio C On demand Less than 3 months 


Liabilities 

31 December 

2012 

31 December 

2011 

31 December 

2012 

31 December 

2011 

Payables - - 329,289 322,488 




Eight Portfolio D On demand Less than 3 months 


Liabilities 

31 December 

2012 

31 December 

2011 

31 December 

2012 

31 December 

2011 

Payables - - 230,105 65,296 




Eight Portfolio E On demand Less than 3 months 


Liabilities 

31 December 

2012 

31 December 

2011 

31 December 

2012 

31 December 

2011 

Payables - - 141,283 72,515 




32






(e) 

Credit risk 

Credit risk is the risk that a counterparty will be unable to fulfil its obligations to the 

sub-funds as and when they fall due. 

Concentrations of credit risk are minimised primarily by: 

– ensuring counterparties as well as the respective credit limits are approved; 

– ensuring there are controls in place to identify and assess the 

creditworthiness of counterparties, and reviews such controls on a semiannual 

basis; and 

– ensuring that transactions are undertaken with a large number of 

counterparties. 

All trade settlements with approved counterparties are on Delivery versus 

Payment and/or Receipt versus Payment basis. 

Credit risk arises from cash and bank balances and outstanding and committed 

transactions with brokers. The table below summarises the credit rating of bank 

and custodian in which the sub-funds’ assets are held as at 31 December 2012 

and 31 December 2011. 


Credit rating as at 



31 December 2011 Source of credit rating 

Bank and Custodian 

- The Northern Trust Company A+ A+ Standard and Poor’s 















33






(e) 

Credit risk (continued) 















The credit ratings are based on the Long-Term Local Issuer Ratings published by 

the rating agency. 

The maximum exposure to credit risk at the reporting date is the carrying amount 

of the financial assets. 

(f) 

Capital management 

The sub funds’ capital is represented by the net assets attributable to unitholders. 

The sub-funds strive to invest the subscriptions of redeemable participating units 

in investments that meet the sub-funds’ investment objectives while maintaining 

sufficient liquidity to meet unitholder redemptions. 


The Manager of the sub-funds is Nikko Asset Management Asia Limited, a 

subsidiary of Nikko Asset Management International Limited. The Trustee is RBC 

Investor Services Trust Singapore Limited, a subsidiary of RBC Investor Services 

Limited. 

In addition to the related party information shown elsewhere in the financial 

statements, no other significant related party transactions took place during the 

financial year between the sub-funds and related parties at terms agreed between 

the parties and within the provisions of the Deeds. 

34





9. Financial ratios 


A 


B 

2012 2011 2012 2011 

% % % % 

Expense ratio (a) 2.59 1.90 2.30 2.15 

Turnover ratio (b) NA NA NA NA 


C 


D 

2012 2011 2012 2011 

% % % % 

Expense ratio (a) 1.95 2.12 2.05 2.16 

Turnover ratio (b) NA NA NA NA 


E 

2012 2011 

% % 

Expense ratio (a) 2.03 2.18 

Turnover ratio (b) NA NA 

(a) 

The expense ratio is calculated in accordance with IMAS’ guidelines on the disclosure of 

expense ratios. 

Interest expense, brokerage and other transaction costs, foreign exchange gains/losses, tax 

deducted at source or arising out of income received, front or back end loads arising from the 

purchase and sales of other schemes and distributions paid to unitholders are not included in 

the expense ratios. 

The sub-funds do not pay performance fees. 

(b) 

The portfolio turnover ratio is calculated in accordance with the formula stated in the “Code on 

Collective Investment Schemes”. 

10. Subsequent event 

With effect from 15 January 2013, Eight Portfolio D and Eight Portfolio E have 

voluntarily delisted from the Central Provident Fund Investment Scheme. 

Following the delisting, the investment objective, focus and approach of Eight 

Portfolio D and Eight Portfolio E remain unchanged. However, they will no longer 

be required to comply with the Central Provident Fund Investment Guidelines. 

35





The following contains additional information relating to the sub-funds. 


Please refer to the Portfolio Statements on pages 19 to 21. 

2. Credit rating of debt securities 

Not applicable. 


Largest holding at 31 December 2012 


Enhanced Fund 






Enhanced Fund 





Percentage of 



Fair Value unitholders 

S$ % 

1,632,500 45.11 

1,271,735 35.14 

384,401 10.62 

218,437 6.04 

Percentage of 




S$ % 

1,776,003 44.81 

1,360,434 34.32 

557,932 14.08 

170,678 4.31 

36









Enhanced Fund 




Percentage of 




S$ % 

3,165,275 32.97 

2,914,178 30.35 

2,598,621 27.07 

576,206 6.00 


Percentage of 




S$ % 




Enhanced Fund 

2,946,336 29.69 


415,421 4.19 



Percentage of 




S$ % 


45,830,470 40.54 



Enhanced Fund 


22,813,017 20.18 

12,763,609 11.29 

37







Percentage of 




S$ % 



Enhanced Fund 

23,137,264 20.08 



10,212,150 8.86 



Percentage of 




S$ % 


16,915,742 63.43 



2,959,426 11.10 


Enhanced Fund 

2,595,823 9.73 


Percentage of 




S$ % 



Enhanced Fund 

3,106,544 10.66 


2,948,418 10.11 


38













Percentage of 




S$ % 

21,032,610 79.96 

4,481,106 17.03 

Percentage of 




S$ % 

22,891,414 83.79 

3,552,470 13.00 


Nil. 


Please refer to the Portfolio Statements on Pages 19 to 21. 

6. Borrowings 

Nil. 

39





7. Amount of redemptions and subscriptions for the year 

Eight Portfolio Redemptions Subscriptions 

S$ S$ 

A 632,811 13,149 

B 1,100,306 22,800 

C 13,296,532 370,140 

D 5,506,131 257,988 

E 4,089,594 163,600 







11. Any other material information that will adversely impact the valuation of the fund 

Nil. 

40





The details which follow make reference to the investments within the Singapore 

Dividend Equity Fund unless otherwise stated. 



Percentage of 




S$ % 

Singapore Telecom Ltd 4,577,100 9.24 


Thai Beverage Pcl 2,642,945 5.34 

Genting Singapore Plc 2,090,700 4.22 

Overseas Union Enterprise 2,018,280 4.07 



Frasers Commercial Trust 1,710,720 3.45 

Oversea-Chinese Banking Corp 1,663,830 3.36 

SIA Engineering Co Ltd 1,611,840 3.25 

10 Largest holding at 31 December 2011 

Percentage of 




S$ % 


ComfortDelgro Corporation Limited 1,420,660 6.31 

Nikko AM Singapore STI ETF 1,330,000 5.91 

Starhub Ltd 1,302,100 5.78 

Singapore Press Holdings Limited 1,225,080 5.44 

Global Logistics Properties Ltd 1,221,480 5.43 

Singapore Telecommunications Ltd 1,214,370 5.40 

Wilmar International Limited 1,195,000 5.31 

SIA Engineering Company Limited 1,142,350 5.08 

Capitamall Trust 1,105,000 4.91 

41






Singapore Dividend 

Equity Fund 

2012 2011 

% % 



(a) The expense ratio is calculated in accordance with IMAS' guidelines on the 

disclosure of expense ratios. 

Interest expenses, brokerage and other transaction costs, foreign exchange 

gains/losses, tax deducted at source or arising out of income recived, front or back 

end loads, arising from the purchase and sales of other schemes and distributions 

paid to unit-holders are not included in the expense ratios. 


(b) The portfolio turnover ratio is calculated in accordance with formula stated in 

the "Code on Collective Investment Schemes". 

42





The details which follow make reference to the investments within the Horizon 

Singapore Fixed Income Enhanced Fund unless otherwise stated. 



Percentage of 




S$ % 

Singapore Govt 3.125% 07-01/09/2022 2,057,030 6.43 


Singapore Govt 4% 03-01/09/2018 1,204,170 3.77 

Singapore Govt 3% 09-01/09/2024 1,156,028 3.61 



Capitamalls Asia 3.95% 10-24/08/2017 1,050,190 3.28 

Overseas Union E 4.3% 11-15/04/2014 1,024,621 3.20 

NTUC Income 12-23/08/2027 FRN 782,048 2.45 

CCT MTN Pte Ltd 3.25% 11-15/12/2015 759,371 2.37 

10 Largest holding at 31 December 2011 

Percentage of 




S$ % 

CMT MTN Pte Ltd 4.321 08/04/15 EMTN 1,347,184 4.13 

Overseas Union E 4.3 15/04/2014 1,263,861 3.88 

UOB Cayman Ltd 5.796 Regs 1,184,882 3.63 

Capitamalls Asia 3.95 24/08/2017 EMTN 1,029,228 3.16 

Street Square 3.02 05/05/2014 1,002,516 3.07 

CBA Cap Trst II 6.024 29/03/2049 144A 903,428 2.77 

Westpac Cap III 5.819 29/12/2049 MTN Regs 889,401 2.73 

National Cap II 5.486 Regs 878,374 2.69 

Pusan Bank 5.5 14/03/17 789,518 2.42 

CCT MTN Pte Ltd 3.25 15/12/15 MTN 751,135 2.30 

43






Horizon Singapore Fixed 

Income Enhanced Fund 

2012 2011 

% % 












44






Global Bond Fund (S$ Hedge) unless otherwise stated. 


Largest holdings at 31 December 2012 

Percentage of 




S$ % 

RIC Global Bond Fund (Class A) 39,582,606 96.04 


Percentage of 




S$ % 

RIC Global Bond Fund (Class A) 34,355,455 98.30 


Horizon Global Bond Fund 

(S$ Hedged) 

2012 2011 

% % 


Turnover Ratio (b) N/A N/A 










45






Global Equity Fund unless otherwise stated. 



Percentage of 




S$ % 

RIC US Equity Fund (Class A) 55,915,492 56.03 

RIC Continental European Equity Fund 

(Class A) 

17,831,765 17.87 

RIC UK Equity Fund (Class A) 9,468,281 9.49 

RIC Japan Equity Fund (Class A) 8,234,692 8.25 

RIC Pacific Basin Equity Fund (Class A) 6,076,935 6.09 


Percentage of 




S$ % 

RIC US Equity Fund (Class A) 65,496,371 56.56 

RIC Continental European Equity Fund 

(Class A) 

20,983,669 18.12 

RIC UK Equity Fund (Class A) 11,595,396 10.01 

RIC Japan Equity Fund (Class A) 10,018,360 8.65 

RIC Pacific Basin Equity Fund (Class A) 4,953,675 4.28 

46







2012 2011 

% % 


Turnover Ratio (b) N/A N/A 










47

Report - Nikko AM Asia Limited

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