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GREATLINK GLOBAL BOND FUND report as at 31 December 2005 FUND FACTS Inception Date 15 January 2002 Offer Price S$ 1.191 Bid Price S$ 1.132 Fund Size S$ 102.10 mil Fund Manager Lion Capital Management (wef 26 Sep 2005) Sub Manager PIMCO Bid-Offer Spread 5% Fund Management Fee 0.85% p.a. Valuation Frequency Daily Currency of Fund Singapore Dollar CPF Approved CPFIS – OA & SA Risk Category Low to Medium 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 objective is to achieve excess return relative to the index while minimizing volatility of return relative to the index (Lehman Global Aggregate Bond Index, 50% hedged into Singapore Dollars). PORTFOLIO WEIGHTINGS United States 48% FUND PERFORMANCE SINCE INCEPTION Price Indexed 123 118 113 108 103 Japan 10% Performance Review (Jun 2002 To Dec 2005) Europe 42% +20.81 +20.54 98 Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec Feb Apr Jun Aug Oct Dec 01 02 02 02 02 02 02 03 03 03 03 03 03 04 04 04 04 04 04 05 05 05 05 05 05 ––––– Greatlink Global Bond Fund ––––– Benchmark Index Benchmark: Lehman Global Aggregate Bond Index 50% Hedged into SGD For Top 10 Investments refer to page 86. MARKET REVIEW Developed global bonds posted mediocre returns in 2005. The Lehman Global Aggregate hedged in USD returned 4.28%, while a stronger dollar pushed the unhedged index into negative territory (-4.48%). The main themes for fixed income in 2005 were central bank tightening, flatter curves, a stronger dollar, and continued commodity strength. All of which, surprisingly, did not lead to higher long-term yields. 30-year rates for the G3 were all lower from a year earlier. Spread sectors underperformed treasuries for the first time in three years as investors risk appetite waned. Negative headlines in the US corporate sector and the dismal outlook for the US auto sector weighed on corporate spreads while reduced demand, fear of extension, and a flatter curve all weighed on the mortgage sector. The only major USD fixed income asset class to outperform treasuries in 2005 was Emerging Market bonds as the increase in reserves and the ratings uptrend continued. US equities provided disappointing returns while the global arena, most notably emerging economies, provided a winning atmosphere for investors. The global economy continued to grow at a strong pace while inflation remained relatively well contained. Higher energy prices seemed to have a minimal impact to core inflation rates and unit labor costs in developed economies were suppressed by cheap wages abroad. Globalization, marked by both reserve growth and labor outsourcing, continued to provide a deflationary force in the market. US consumption and China’s capital expenditure remained the driving forces in the global aggregate demand function while most developing economies savings rates increased at a healthy pace. The US current account deficit continues to swell and sits near 7% of GDP. While the UK, Australia, and the US seem to be ahead in the cycle: Europe, Japan, and Canada appear to be behind in the cycle. The Fed may be nearing the end of its rate hikes as a levered consumer and a slowing housing market seem to be responding to the 3.25% increase in the Fed Funds rate. The ECB decided to raise rates towards the end of the year due to inflationary concerns, but anemic growth prospects and high unemployment continue to weigh on the outlook for the economy. The BoJ has become increasingly hawkish as positive inflation is coming back into the picture for the first time in almost 10 years. The US Dollar ignored the warning signals from the global imbalances and provided a shock to most economists as interest rate differentials and the supply of savings drove the dollar higher verses all major currencies except the CAD, which was driven by the strength in commodities. U.S. and Dollar Bloc The US bond market returned 2.43% with treasuries leading the way. The significant curve flattening meant that longer dated 36 PERFORMANCE ON BID-BID BASIS (%) 3mths 6 mths 1 year 3 years 3 years Since Inception Since Inception (annualised) (annualised) Greatlink Global Bond Fund -1.32 -1.60 0.31 12.00 4.58 20.81 4.84 Benchmark Index -1.21 -1.71 0.18 11.54 3.71 20.54 5.64 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.
GREATLINK GLOBAL BOND FUND report as at 31 December 2005 bonds well outperformed shorter dated securities, even on a duration-adjusted basis. Investment grade corporates and mortgages underperformed while emerging market bonds posted another year of solid returns. EMBIG spreads are now at an all time tight of 237 bps over treasuries while investment grade corporates finished the year at 90 bps over treasuries. Hedged to dollars, Canada outperformed all other dollar bloc countries posting a return of 6.89%, followed by Australia (3.55%) and New Zealand (3.43%). Currencies were mixed as the CAD appreciated to the dollar while Australia and New Zealand fell victim to the green back. The overnight lending rates in Canada and New Zealand were raised by 75 bps over the year lagging the US. Australia seemed to lead the cycle in the raising rates for the final time in March. A slowing housing market and a relatively inactive consumer helped keep the RBA on hold. The cash rate in Australia sits at 5.5% Euroland and the U.K. European bonds outperformed the US when hedged into dollars. Belgium, Ireland, and the Netherlands lead the way. The worst performer in the EU was Luxemburg returning only 1.53% over the year. The structural inefficiencies in the labor market continued to cast a negative shadow on the market’s outlook for growth in Europe, causing yields to fall in the longer end of the curve. A rate hike by the ECB towards the end of the year caused the front end to sell off and the curve to flatten. UK gilts continued to perform well in 2005 on the BoE’s rate cut and the markets speculation for more. The slowing housing market drove reduced consumption and a slowing economy. The market continued to seesaw on their expectations for policy decisions, but the long end continued to be driven by asset-liability regulation causing the curve to flatten. Japan JGB’s had a strong first half, only to sell-off in the later half of 2005. Driven by an increase in domestic demand and prospects for positive inflation, risk premiums were built back into the front end of the yield curve. Uncertainty regarding the end of the 0% interest rate policy caused investors to question the appropriate term premium for JGB’s. The five-year was the worst performer selling off by 25bps over the year. The weaker JPY added confidence to the markets perception of Japan’s recovery and only added an increase in exports to higher consumption. The Nikkei 225 had a strong year (+40%) with the banking sector leading the way. MARKET OUTLOOK The U.S. economy will slow relative to the rest of the world, reflecting global monetary policies that are not synchronized. The Federal Reserve is nearing the end of its tightening cycle while central banks outside the U.S., such as the European Central Bank, have only begun to tighten. A decelerating U.S. economy will limit how fast other countries can grow because expansion outside the U.S. is partially dependent on U.S. demand. Key elements of the outlook are: • As Housing Decelerates … Housing gains have contributed significantly to U.S. growth via wealth effects on consumers, cashout refinancings, home equity loans and job growth in real estaterelated industries. Higher mortgage rates over recent months and continued pressure on real wages and incomes will crimp housing affordability in 2006, taking the froth out of the property market. • … So Will Consumer Spending – As housing cools, consumer spending will grow more in line with income, thereby reducing U.S. growth. A potential offset to the negative effect of weaker consumption is corporate investment, which has been robust for the last several years. However, investment has recently begun to grow more slowly as capacity utilization has risen. PIMCO expects much of U.S. investment to continue to occur abroad in rapidly growing markets such as China. • The Fed Is Nearly Done – The U.S. central bank will stop at a federal funds rate of 4.5 percent early next year as the soaring property market cools off and growth moderates. Yields on 1-5 year Treasuries could fall by as much as 100 basis points over the next year as investors anticipate that the Federal Reserve will move toward easing later in 2006. • Europe Unlikely To Pick Up – Europe will get no help on the policy front. The ECB is preoccupied with asset price inflation even as core inflation remains subdued. Meanwhile, prospects for fiscal tightening in Germany, the region’s biggest economy, bode ill for any substantial increase in domestic consumption. Domestic demand throughout Europe is weak because real wages remain stagnant. • Japan’s Recovery to Moderate – Gains in consumption followed Japan’s export and investment-led recovery in 2003, but now this growth is softening as higher energy prices squeeze wages. Longer-term prospects for capital spending in Japan may be negatively affected by an expected slowdown in corporate profits. • Emerging Markets Not Yet a Factor – Inflation will remain well contained. Commodity prices are moderating after their post- Katrina bounce, and there has been relatively little pass-through of higher energy prices into core U.S. inflation. More importantly, the long-run economic trend of an expanding global labor supply (in China, India and Brazil, for example) will put downward pressure on the price of labor, making a wage-induced boost in inflation highly unlikely. • Benign Inflation – Inflation will remain well contained. Commodity prices are moderating after their post-Katrina bounce, and there has been relatively little pass-through of higher energy prices into core U.S. inflation. More importantly, the long-run economic trend of an expanding global labor supply (in China, India and Brazil, for example) will put downward pressure on the price of labor, making a wage-induced boost in inflation highly unlikely. 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. 37
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
Page 7 and 8: LEAD STORIES High Potential Investm
Page 9 and 10: LEAD STORIES On a quantitative basi
Page 11 and 12: GREATLINK LIFESTYLE PORTFOLIOS repo
Page 17 and 18: GREATLINK GLOBAL SUPREME FUND repor
Page 19 and 20: GREATLINK GLOBAL OPTIMUM FUND repor
Page 21 and 22: GREATLINK GLOBAL EQUITY FUND report
Page 23 and 24: GREATLINK GLOBAL VALUE EQUITY FUND
Page 25 and 26: GREATLINK GLOBAL GROWTH TRENDS PORT
Page 27 and 28: GREATLINK GLOBAL REAL ESTATE SECURI
Page 29 and 30: GREATLINK EUROPEAN EQUITY FUND repo
Page 31 and 32: GREATLINK ENHANCER FUND report as a
Page 33 and 34: GREATLINK ASEAN GROWTH FUND report
Page 35 and 36: GREATLINK SINGAPORE EQUITIES FUND r
Page 37: GREATLINK CASH FUND report as at 31
Page 41 and 42: GREATLINK CHOICE (SEP 2010) & (OCT
Page 43 and 44: GREATLINK CHOICE (SEP 2010) & (OCT
Page 45 and 46: PORTFOLIO STATEMENT as at 31 Decemb
Page 85 and 86: SOFT DOLLAR COMMISSIONS as at 31 De
Page 87 and 88: TOP 10 INVESTMENTS as at 31 Decembe
Page 89 and 90:
TOP 10 INVESTMENTS as at 31 Decembe
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Page 93 and 94:
Page 95 and 96:
CAPITAL ACCOUNT for the period 01 J
Page 97 and 98:
STATEMENT OF ASSETS AND LIABILITIES
Page 99 and 100:
NOTES TO THE ACCOUNTS 2. Significan
Page 101 and 102:
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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