Funds GreatLink - Great Eastern Life

GREATLINK GLOBAL INTERSECTION FUND report as at 31 December 2005
FUND FACTS
Inception Date 25 March 2002
Offer Price S$ 1.138
Bid Price S$ 1.082
Fund Size
S$ 62.59 mil
Fund Manager
Lion Capital Management
(wef 26 Sep 2005)
Sub Manager
Wellington International
Management
Bid-Offer Spread 5%
Fund Management Fee
1.50% p.a.
Valuation Frequency
Daily
Currency of Fund
Singapore Dollar
CPF Approved
CPFIS – OA
Risk Category
Higher Risk / Broadly Diversified
Mercer Fund Rating as at 31 Dec 2005 ★★★★
S&P Fund Stars as at 31 Dec 2005 ★★
FUND OBJECTIVE & INVESTMENT STRATEGY
The Fund’s objective is to provide long-term total returns
consistently in excess of the MSCI World Index while controlling
the tracking risk relative to benchmark.
PORTFOLIO WEIGHTINGS
Asia Pacific ex Japan
5.7%
North America
51.6%
Japan
14.7%
FUND PERFORMANCE SINCE INCEPTION
Price Indexed
Europe
28.0%
Performance Review (Mar 2002 to Dec 2005)
125.00
+22.54
120.00
115.0
110.0
105.0
100.0
+12.59
95.0
90.0
85.0
80.0
75.0
70.0
Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec
02 02 02 02 03 03 03 03 04 04 04 04 05 05 05 05
––––– Greatlink Global Intersection Fund ––––– Benchmark Index
Benchmark: MSCI World Index (Gross of Dividends Reinvested)
For Top 10 Investments refer to page 86.
MARKET REVIEW
Global equity markets rose 16.3% in local currency terms
for the year of 2005. In the US, the S&P 500 rose 4.9% y-o-y on
the back of encouraging economic releases. Both the manufacturing
and service sectors showed continued growth, third-quarter
productivity was revised upward, and the Conference Board’s
Leading Index and Consumer Confidence Index both rose. Also,
the Federal Open Market Committee raised short-term interest
rates another quarter point to 4.25% in December, but dropped
the reference to policy “accommodation” in its statement, suggesting
it may be nearing an end to rate hikes.
Outside the US, Japan (+44.7%) was the best-performing
developed market, with Europe (+25.5%) and Pac Basin ex Japan
(+20.3%) generating positive returns as well in local currency
terms. Emerging market equities (+34.5%) outperformed developed
markets (+10.0%) in US dollar terms.
The Greatlink Global Intersection Fund outperformed its
benchmark during the period, aided by strong security selection
in the Energy, Health Care and Consumer Staples sectors.
MARKET OUTLOOK
For the last two years, equities’ primary headwind was
excessive valuation. This raised many concerns, as an abrupt
valuation adjustment held the potential for sharply negative equity
market returns, particularly in the US. During this time, equity
valuations adjusted in the healthiest and least painful manner
possible; earnings grew strongly in excess of consensus expectations,
and P/E multiples gradually contracted. As we stand today, global
equity market multiples have converged to a fairly narrow range.
Provided that the economic cycle moderates to a steady-state
rate of growth, as we expect, the probabilities of P/E multiple
expansion and contraction are now approximately in balance. This
represents a clear improvement versus the last two years.
The counterpoint to this optimistic condition, and what
makes the environment less bullish looking forward, is our
expectation of continued deterioration in the corporate earnings
outlook. As the economic cycle continues to advance, in part as
a US housing slowdown reduces the amount of mortgage equity
likely to be extracted by consumers, we expect corporate earnings
to continue to decelerate in nearly all regions; Japan is a most
notable exception. In 2006, earnings growth in many regions will
fall to or below trend growth rates, thereby limiting the scope for
equity market returns. Indeed, the valuation adjustment of the last
two years was quite important, as the possibility of valuation
expansion makes a strong equity market a reasonable bet in 2006.
Even so, modest earnings growth means that even a small amount
of P/E contraction would result in negative equity market returns.
Therein lies the challenge for 2006.
22
PERFORMANCE ON BID-BID BASIS (%)
3mths 6 mths 1 year 3 years 3 years Since Inception* Since Inception*
(annualised)
(annualised)
Greatlink Global Intersection Fund** 0.19 7.13 10.39 48.02 13.96 12.59 3.21
Benchmark Index 1.53 8.86 12.07 62.60 17.59 22.54 5.57
* Measured since earliest available date 31 March 2002
** Performance net of fees
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.