Funds GreatLink - Great Eastern Life

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GREATLINK GLOBAL SUPREME FUND report as at 31 December 2005 FUND OBJECTIVE & INVESTMENT STRATEGY The Fund Objective is to maximize total returns in Singapore Dollar terms over the longer term by investing in a balanced but diversified portfolio of equities and debt securities of the major stock markets and bond markets around the world. The Fund shall invest in a broad mix of global equities and bonds in a wide range of industries and companies in various countries. The allocation for each asset class will be actively managed and altered constantly in such a way that seeks to maximize the overall riskadjusted performance of the Fund. PORTFOLIO WEIGHTINGS Other currencies FI 5% JPY FI 14% USD FI 9% Euro FI 18% FUND FACTS Inception Date 1 July 1999 Offer Price S$ 1.253 Bid Price S$ 1.191 Fund Size S$ 561.70 mil Fund Manager Lion Capital Management (wef 26 Sep 2005) Sub Manager (Equity) Capital International Inc. Sub Manager (Fixed Income) State Street Global Advisors Bid-Offer Spread 5% Fund Management Fee 1.00% p.a. Valuation Frequency Daily Currency of Fund Singapore Dollar CPF Approved CPFIS – OA & SA Risk Category Medium to High Risk / Broadly Diversified Mercer Fund Rating as at 31 Dec 2005 ★★★★ S&P Fund Stars as at 31 Dec 2005 ★★ Cash 3% Asia Pacific ex Japan Eq 3% UK Eq 6% Other Eq 1% Europe ex UK Eq 11% Japan Eq 10% North America Eq 20% FUND PERFORMANCE SINCE INCEPTION Performance Review (Jul 1999 to Dec 2005) 00 01 02 03 04 05 ––––– Greatlink Global Supreme Fund ––––– Benchmark Index Benchmark: 50% MSCI World & 50% Citigrp World Gov Bond Ind (Unhedged) Source: S&P For Top 10 Investments refer to page 88. MARKET REVIEW For the half year ended 31 December 2005, the fund gained 3.57% (bid-bid), outperforming its benchmark, 50% MSCI World & 50% Citigroup World Government Bond index (unhedged) which rose 1.99%. Equity It was a good year for global equities, supported by strong profit growth. Global economic growth was good and inflation remained subdued. The best results among developed markets came from Japan. Resource rich countries such as Canada were also strong. Commodity indices registered a fourth-straight year of increases, helped by strong demand. Energy stocks led the markets for the first three quarters and had the best returns by far for the year fuelled by soaring oil prices. Crude oil futures reached a peak of US$67.9 in the third quarter then eased back below US$60 towards the end of the year. Cyclical stocks took the lead in the fourth quarter, with materials and industrials ending the year with large gains. Financials also had good results thanks to record profits. Mergers and acquisitions occurred at a feverish pace, with global deal volume up 38% from 2004, according to preliminary year-end data. Private equity transactions also ran high as well as underwriting, with many high profile IPOs outside the US. The telecommunications services sector was the weakest by far. Investors grew increasingly concerned about bleak growth prospects (in developed markets), pressure on profit margins and fears that cash-rich operators would overpay for acquisitions. Current account imbalances showed no sign of correcting. Despite this, the US dollar defied conventional wisdom and rose, thanks to higher interest rates. Despite many doubters, the U.S. economy remained strong in the face of high energy prices, natural disasters, concerns about US consumers, and rising interest rates. PERFORMANCE ON BID-BID BASIS (%) 3mths 6 mths 1 year 3 years 3 years 5 years 5 years Since Inception Since Inception (annualised) (annualised) (annualised) Greatlink Global Supreme Fund -0.25 3.57 3.30 33.97 10.25 11.94 2.28 25.37 3.54 Benchmark Index -1.02 1.99 3.00 35.35 10.62 23.18 4.26 28.88 3.98 14 NOTE: This factsheet is compiled by Great Eastern Life. The information presented is for informational use only. The performance of the Fund is not guaranteed and the value may increase or decrease in accordance with the future experience of the Fund. Past returns are not necessarily a guide to future performance. Price Indexed 135 130 125 120 115 110 105 100 95 90 85 +28.88 +25.37 35 30 25 20 15 10 5 0 -5 -10 -15 Percent Change
GREATLINK GLOBAL SUPREME FUND report as at 31 December 2005 The Federal Reserve raised the federal funds rate from 2.25% to 4.25%, though their stated goal is not to achieve a tight monetary policy, but rather, to move from an accommodative policy to a neutral one. The European equity markets rallied throughout most of 2005 and finished the year with good annual returns. There were signs that an economic recovery was beginning to take hold in the eurozone, and, in a move that was widely anticipated in the market, the European Central Bank raised interest rates by a quarter percent to 2.25% on 1 December. In the UK, the government reduced its economic growth forecast for 2005 and 2006. The gradual economic recovery in Japan gained believers as the year progressed. The stock market surged. Reforms regained momentum after the prime minister’s landslide victory in a snap parliamentary election which reinforced his mandate for reform including the proposed privatization of Japan Post. Currencies played a major role over the year with rising interest rates in the U.S. helping to support the dollar which strengthened 15% against the euro, 12% against the British pound and 15% against the Japanese yen. Fixed Income Bonds markets were mixed in the first quarter of 2005 though on aggregate they returned 0.74% in local currency terms (Citigroup WGBI). In the US, the bonds returned -0.42%, the quarter started constructively following a disappointing non-farm payroll figure. The 10-year benchmark bond touched its lowest yield level of 4% for the third time in five months. However, the market suffered a strong correction following Fed Chairman Alan Greenspan's comments that "the broadly unanticipated behaviour of world bond markets [in keeping yields so low despite rising short rates] remains a conundrum." The Fed increased overnight rate to 2.75% with some members showing concern about upside inflation risks. Meanwhile in the UK, bonds returned -0.08%, the Monetary Policy Committee (MPC) left rates on hold at 4.75% during the quarter. The decision to leave rates on hold probably reflects a balance between downside news for near term growth (weaker housing, weak output and higher oil prices) and upside risks for future growth, namely, strong profit and earnings growth, buoyant investment and a weaker pound. In Eurozone, bonds returned 1.26%. As expected, the ECB left rates on hold during the quarter. The tone of the ECB Monthly Bulletins took a more hawkish stance, focusing in particular on the size of the liquidity overhang and sounding more up-beat towards the global environment. Japan bonds returned 0.80%. Comments from Policy Board members were sufficiently mixed to keep the markets guessing about the BoJ's next move. Despite the negative news about GDP growth over the last three quarters, the bond market, was sold off thanks to some stronger data like machinery orders and industrial production during the month of February. However, inflation and employment data disappointed again at the end of the quarter causing a three week rally in the bond market. Bonds markets performed favourably in the second quarter of 2005, returning 2.99% in local currency terms (Citigroup WGBI). In the US, bonds returned 3.64%. As expected, the Fed raised interest rates at each meeting by 0.25%, pushing the overnight rate to 3.25% by the end of the quarter. It also retained its pledge to raise rates at no more than a “measured” pace, and continued to describe policy as “accommodative”. While in the UK bonds returned +4.80%, the second quarter of 2005 was dominated by a turnaround in market interest rate expectations from a 25bp hike to a 50bp cut by the end of the year. The Monetary Policy Committee (MPC) failed to give in to market pressure to hike rates to 5% early in the quarter, predictably keeping rates on hold at 4.75%. Eurozone bonds returned 3.76%. Once again the ECB left rates on hold during the quarter. The ECB’s decision to maintain a 2% repo rate was universally expected, amid the general weakness of recent data. In Japan, bonds returned 1.03%. The BoJ left policy unchanged during the quarter. However, a new clause was inserted into the BoJ’s official policy statement validating market expectations of a modest technical adjustment which now permits the current account balances to fall below the target range of JPY 30-35 trillion. This amendment also reflects the fact that the economy appears to be in a recovery phase. Bonds markets performed negatively in the third quarter of 2005, returning -0.50% in local currency terms (Citigroup WGBI). In the US bonds returned -1.11%, the Fed continued to raise rates at a measured pace over Q3. After two consecutive hikes the Fed Funds ended the quarter at 3.75%, in line with expectations. In its statement, the Fed retained its view that the ongoing monetary accommodation, along with robust underlying growth in productivity, is providing support to economic activity. In UK, bonds returned +0.37% and the MPC delivered a long awaited rate cut on the basis of their downward revisions to growth and expectations of second round oil effects. Further cuts will be dependent on how the inflation story unfolds. Meanwhile in Eurozone, bonds returned 0.49%. The ECB left rates on hold during the third quarter. The ECB’s decision to maintain the 2% repo rate was in line with consensus expectations, due to the general weakness and growing divergence of the economy. In Japan, bonds returned -1.31% with the BoJ left policy unchanged during the quarter. However, a few speeches from BOJ’s Policy Board members have underlying that the time to exit from the quantitative easing policy is getting closer. The stabilisation of core consumer prices at zero or above has been identified as an important criterion to change policy. Bonds markets performed positively in the fourth quarter of 2005, returning 0.33% in local currency terms (Citigroup WGBI). In US, bonds returned +0.72% and the Fed continued to raise rates at a measured pace over Q4. After two consecutive hikes the Fed Funds ended the quarter at 4.25%, in line with expectations. In its statement, the Fed expressed its view that the economy advanced a great deal over the past months. In UK, bonds returned +2.76% and the Bank of England left rates unchanged at 4.50% throughout Q4. In the beginning of the quarter policy makers expressed a growing concern about potentially accelerating inflationary pressures. Later on, however, headline inflation eased to 2.1%, close to the BoE target so market focus shifted back towards the state of the economy. In Eurozone, bonds returned -0.12%. The ECB raised its benchmark rate by a quarter of a percent to 2.25% in early December, possibly marking the start of a series of measured rate hikes. The decision came in line with market expectations. The central bank seemed increasingly concerned about potential inflationary pressures, although actual figures showed a resilience after the highs seen in September. Japan bonds returned 0.22%. The BoJ left policy unchanged during the quarter. The iterated BoJ’s assessment stated that Japan’s economy is expected to recover; domestic private demand NOTE: This factsheet is compiled by Great Eastern Life. The information presented is for informational use only. The performance of the Fund is not guaranteed and the value may increase or decrease in accordance with the future experience of the Fund. Past returns are not necessarily a guide to future performance. 15
Page 1 and 2: MICA (P) 100/02/2006 Statement and
Page 3 and 4: CEO’S MESSAGE GreatLink Funds yie
Page 5 and 6: ANNOUNCEMENTS New CPF Admission Cri
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Page 9 and 10: LEAD STORIES On a quantitative basi
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PORTFOLIO STATEMENT as at 31 Decemb
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SOFT DOLLAR COMMISSIONS as at 31 De
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TOP 10 INVESTMENTS as at 31 Decembe
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CAPITAL ACCOUNT for the period 01 J
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STATEMENT OF ASSETS AND LIABILITIES
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NOTES TO THE ACCOUNTS 2. Significan
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NOTES TO THE ACCOUNTS Fair Value As
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GREATLINK FUND SUMMARY Fund Name In
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Funds GreatLink - Great Eastern Life

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