427015 Shenton Thrift Fund KS4 - nikkoam.com.sg · Thrift Fund SEMI-ANNUAL REPORT For the ﬁ nancial period ending 30 June 2020 8808586 Shenton Thrift Fund_BN2.indd i08586 Shenton

Nikko AM Shenton Thrift Fund

SEMI-ANNUAL REPORTFor the fi nancial period ending 30 June 2020

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MANAGERSNikko Asset Management Asia Limited

12 Marina View, #18-02 Asia Square Tower 2 Singapore 018961

Company Registration No. 198202562H

DIRECTORSHou Wey Fook

Lim Soon ChongKiyotaka Ryu

Seet Oon Hui EleanorHiroki Tsujimura (appointed with effect from 30 July 2020)

TRUSTEE & REGISTRARBNP Paribas Trust Services Singapore Limited

20 Collyer Quay, #01-01Singapore 049319

AUDITORSPricewaterhouseCoopers LLP7 Straits View, Marina One,

East Tower, Level 12,Singapore 018936

CUSTODIANBNP Paribas Securities Services, operating through its Singapore Branch


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

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

Inception

Nikko AM Shenton Thrift Fund - SGD Class1 12.17 -16.07 -14.49 -3.26 -0.38 2.90 5.26

Straits Times Index (STI)2 6.23 -17.77 -18.60 -3.36 -2.42 0.34 2.16

Source: Nikko Asset Management Asia Limited, returns as at 30 June 2020. Returns are calculated on a 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. Past performance is not indicative of future performance.


Inception

Nikko AM Shenton Thrift Fund - SGD Class1 6.56 -20.27 -18.77 -4.90 -1.39 2.37 5.10

Straits Times Index (STI)2 6.23 -17.77 -18.60 -3.36 -2.42 0.34 2.16

Source: Nikko Asset Management Asia Limited, returns as at 30 June 2020. 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 initial sales and a realisation charge, currently nil, as and where applicable. Returns for period in excess of 1 year are annualised. Past performance is not indicative of future performance.

Inception date: 31 August 1987

Note: (1) With effect from 17 October 2011, the Fund (formerly known as “Shenton Thrift Fund”) has

been renamed Nikko AM Shenton Thrift Fund.

(2) Prior to 1 May 2017, the performance returns of the benchmark were calculated using price index methodology. With effect from 1 May 2017, the performance returns of the benchmark is calculated using net total return index methodology. Net total return index methodology incorporates into its returns calculation the reinvestment of a constituent company’s dividend distributions net of tax credits or charges.

Portfolio Review

The Fund returned -16.07% in 1H20For the fi nancial period ending 30 June 2020, the Nikko AM Shenton Thrift Fund (the “Fund”) posted a return of -16.07% (SGD terms, on a NAV-NAV basis), outperforming the Straits Times Index (STI) which returned -17.77% on a total return basis over the same period.

The Fund’s overweight positions in Japfa and NetLink NBN Trust, and underweight in Thai Beverage added the most to relative performance in the fi rst half of 2020 (1H20). Conversely, the overweight positions in CSE Global and Bumitama Agri, and underweight in Ascendas REIT were the biggest detractors from relative performance over the six-month period.

PERFORMANCE SUMMARY

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Market Review

The Straits Times Index fell 17.77% in 1H20Singapore stocks, as measured by the STI, sank 17.77% on a total return basis in SGD terms in 1H20, which saw two contrasting quarters due to the ebb and fl ow in the developments of the Covid-19 pandemic.

In the fi rst quarter of 2020 (1Q20), the fallout from Covid-19, widespread fears of a severe global recession and plummeting oil prices sent stocks around the world, including those of Singapore, into a tailspin. The virus-induced equity rout during the quarter saw some of the biggest daily sell-offs since the 2008 Global Financial Crisis, prompting global governments and major central banks to roll out massive fi scal support measures and monetary stimulus to stabilise markets and reduce the economic impact from the Covid-19 outbreak.

After the harrowing selloff in 1Q20, global stocks staged a strong rebound in 2Q20, buoyed by optimism that the pandemic has passed its peak, as the daily number of Covid-19 cases in many countries started to fall. Continuous fi scal support and monetary stimulus by governments and central banks around the world, and the reopening of economies in many countries in 2Q20, with the gradual easing of lockdown measures, also lifted equities.

Singapore stocks—buoyed by the upswing in global equities—surged in 2Q20, despite a slew of gloomy economic data and the curtail of economic activities in the nation due to the government’s partial lockdown directives known as the “circuit breaker” measures (implemented from 7 April to 1 June) to stem the spread of Covid-19 in the community. On a six-month basis, however, the gains of Singapore equities in 2Q20 weren’t enough to offset the steep losses incurred in 1Q20. As a result, local stocks ended 1H20 in negative territory.

At the sector level, communication services and industrials were the worst performers, while information technology and consumer staples were best performers over the six-month period.

Of the 30 component stocks in the STI; SATS, Singapore Press Holdings (which was dropped from the STI on 22 June) and Singapore Airlines were the worst performers in 1H 2020. At the other end of the performance spectrum; Mapletree Logistics Trust, Ascendas REIT and Venture Corporation were the top gainers over the period.

Unprecedented fi scal stimulus to support the economy; MAS eased monetary policyIn 1H20, the Singapore government unprecedentedly rolled out four stimulus packages worth nearly SGD 100 billion to deal with the economic fallout of Covid-19. Additionally, in a widely expected move to make Singapore exports more competitive, the Monetary Authority of Singapore (MAS) in March re-centred the SGD Nominal Effective Exchange Rate’s midpoint slightly lower and reduced the slope to zero, with no change to the policy bandwidth.

Singapore’s MTI downgraded 2020 growth forecast In 2Q20, Singapore’s Ministry of Trade and Industry (MTI) cut its growth projection for 2020 yet again. GDP is now expected to shrink between 4% and 7%, down from the previous forecast range of between -1% and -4%. The ministry further cautioned that “a signifi cant degree of uncertainty” remains, with regard to the length and severity of the Covid-19 outbreak, and the trajectory of the economic recovery in Singapore and other countries around the world.

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Market Outlook and Strategy

Maintaining positions in benefi ciaries of a resumption in economic activityWe continue to monitor the Covid-19 crisis globally and in Singapore, particularly around the easing of social distancing measures, resumption of economic activity and the potential second waves of infections. In Singapore, Phase Two of the reopening of the economy started on 19 June, with almost the entire economy resuming operations. Selected tourist attractions, including the two casinos, will also reopen from 1 July. As such, we are seeing a gradual resumption of economic activity, albeit still below pre-pandemic levels at the current time.

The Singapore stock market remains at around the same valuation as during the trough of the Global Financial Crisis, based on the Price-to-Book measure. We continue to believe that valuations have begun to price in a recovery from the second half of 2020 and as such, there is risk of further market volatility should the pace of recovery be uneven, especially as further waves of infections remain a threat.

Amidst the uncertain backdrop, we maintain our positions in benefi ciaries of a resumption in economic activity. These include selected retail REITs, particularly those with quality suburban assets. We also hold selected names in the domestic transportation sector and companies that operate in countries which are more advanced in reopening their economies. We remain light in sectors which are more badly affected by the Covid-19 crisis.

We continue to like “New Singapore” stocks, which represent the future economy of Singapore, and corporate restructuring candidates, where companies are looking to reorganise their businesses in order to be more relevant in the future economy. We also advocate investing in dividend stocks, especially where dividend growth is structural and less impacted by the Covid-19 pandemic.

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This document is purely for informational purposes only with no consideration given to the specifi c investment objective, fi nancial situation and particular needs of any specifi c person. It should not be relied upon as fi nancial advice. 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 fi nancial 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 funds 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 Fund or any underlying fund may use or invest in fi nancial derivative instruments. The value of units and income from them may fall or rise. Investments in the Fund are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus (including the risk warnings) and product highlights sheet of the Fund, which are available and may be obtained from appointed distributors of Nikko AM Asia or our website (www.nikkoam.com.sg) before deciding whether to invest in the Fund.

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 Central Provident Fund (“CPF”) interest rate for the Ordinary Account (“OA”) is based on the 12-month fi xed 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 plus 1% per annum. A 4% per annum fl oor rate will be maintained for interest earned on SMRA until 31 December 2020, after which a 2.5% per annum minimum rate will apply. An extra 1% per annum interest is paid on the fi rst S$60,000 of a member’s combined balances, including up to S$20,000 in the OA. The fi rst S$20,000 in the OA and the fi rst S$40,000 in the Special Account (“SA”) cannot be invested under the CPF Investment Scheme (“CPFIS”). Investors should note that the applicable interest rates for each of the CPF accounts may be varied by the CPF Board from time to time.

For Hong Kong Investors

The Fund may be offered to professional investors in Hong Kong or to Hong Kong investors via the private placement exemption. Hong Kong investors should note that the contents of this document have not been reviewed by any regulatory authority in Hong Kong and are advised to exercise caution in relation to the offer. 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

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In their management of the Nikko AM Shenton Thrift Fund, the Managers currently do not receive or enter into any soft dollar commissions or arrangements.

SOFT DOLLAR COMMISSIONS/ARRANGEMENTS

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NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF TOTAL RETURN For the financial period from 01 January 2020 to 30 June 2020 (unaudited) 30 June 2020 30 June 2019 S$ S$ Income Dividends 1,211,566 1,776,764 Interest on cash and bank balances 310 8,390 1,211,876 1,785,154 Less: Expenses Management fee 243,141 309,175 Registrar fee 15,219 16,316 Custody fee 3,837 12,331 Audit fee 8,980 8,746 Valuation fee 6,484 8,245 Transaction costs 165,236 249,778 Other expenses 5,599 (3,678) 448,496 600,913 Net income 763,380 1,184,241 Net gains or losses on value of investments Net (loss)/gain on investments (12,765,114) 6,623,949 Net foreign exchange losses (16,962) (45,301) (12,782,076) 6,578,648 Total (deficit)/return for the financial period before

income tax (12,018,696) 7,762,889 Less: Income tax (8,743) (29,250) Total (deficit)/return for the financial period after

income tax (12,027,439) 7,733,639

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NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore)

STATEMENT OF FINANCIAL POSITION As at 30 June 2020 (unaudited) 30 June 2020 31 December 2019

S$

S$

ASSETS Portfolio of investments 56,230,510 74,949,623 Sales awaiting settlement 150,634 745,030 Receivables 229,045 91,721 Cash and bank balances 3,614,220 3,009,609 Total assets 60,224,409 78,795,983 LIABILITIES Payables 2,857,266 2,716,817 Purchases awaiting settlement 208,309 - Total liabilities 3,065,575 2,716,817 EQUITY Net assets attributable to unitholders 57,158,834 76,079,166

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STATEMENT OF MOVEMENTS OF UNITHOLDERS' FUNDS For the financial period from 01 January 2020 to 30 June 2020 (unaudited)

30 June 2020 31 December 2019 S$ S$ Net assets attributable to unitholders at the

beginning of the financial period/year 76,079,166 80,067,825 Operations Change in net assets attributable to unitholders resulting

from operations (12,027,439) 9,185,232 Unitholders' contributions/(withdrawals) Creation of units 2,141,187 1,962,097 Cancellation of units (9,034,080) (15,135,988) Change in net assets attributable to unitholders resulting

from net creation and cancellation of units (6,892,893) (13,173,891) Total decreases in net assets attributable to unitholders (18,920,332) (3,988,659) Net assets attributable to unitholders at the end of

the financial period/year 57,158,834 76,079,166

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NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 30 June 2020 (unaudited) By Geography (Primary)

Holdings at 30 June 2020

Fair value at 30 June 2020

Percentage of total net assets attributable to unitholders at 30 June 2020

S$ % Quoted Equities

HONG KONG SAR Hongkong Land Holdings Limited 338,800 1,952,016 3.42 Jardine Strategic Holdings Limited 107,200 3,222,790 5.64 Total HONG KONG SAR 5,174,806 9.06 INDONESIA Bumitama Agri Limited 2,818,300 1,240,052 2.17 Total INDONESIA 1,240,052 2.17 MALAYSIA Top Glove Corporation Berhad 64,600 340,442 0.60 Total MALAYSIA 340,442 0.60 SINGAPORE Capitaland Limited 475,800 1,389,336 2.43 ComfortDelGro Corporation Limited 1,289,200 1,869,340 3.27 CSE Global Limited 3,536,600 1,414,640 2.47 DBS Group Holdings Limited 360,921 7,507,157 13.13 Hi-P International Limited 1,348,100 1,428,986 2.50 Hyphens Pharma International Limited 4,500,000 1,327,500 2.32 Japfa Limited 3,189,850 2,185,047 3.82 Keppel Corporation Limited 247,300 1,473,908 2.58 Koufu Group Limited 1,591,300 1,097,997 1.92 Oversea-Chinese Banking Corporation Limited 705,944 6,353,496 11.12 RE&S Holdings Limited 576,500 54,191 0.10 Sembcorp Industries Limited 320,900 561,575 0.99 Singapore Exchange Limited 307,200 2,562,048 4.48 Singapore Technologies Engineering Limited 276,900 913,770 1.60 Singapore Telecommunications Limited 376,600 926,436 1.62 Starhub Limited 1,272,800 1,654,640 2.89 UOL Group Limited 133,000 903,070 1.59 Venture Corporation Limited 172,100 2,784,578 4.87 Wilmar International Limited 1,117,000 4,568,530 7.99 Yanlord Land Group Limited 1,130,600 1,322,802 2.31 Total SINGAPORE 42,299,047 74.00 THAILAND Thai Beverage Public Company Limited 1,455,200 982,260 1.72 Total THAILAND 982,260 1.72 Total Quoted Equities 50,036,607 87.55

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NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 30 June 2020 (unaudited) By Geography (Primary) (continued)




S$ % Quoted Investment Funds

SINGAPORE Keppel Infrastructure Trust 1,663,700 898,398 1.57 NetLink NBN Trust 637,300 618,181 1.08 Total SINGAPORE 1,516,579 2.65 Total Quoted Investment Funds 1,516,579 2.65 Quoted Real Estate Investment Trusts SINGAPORE CapitaLand Mall Trust 285,700 559,972 0.98 Frasers Centrepoint Trust 395,500 913,605 1.60 Frasers Logistics & Commercial Trust 602,900 717,451 1.26 Keppel REIT 634,000 697,400 1.22 Lendlease Global Commercial REIT 527,900 358,972 0.62 Mapletree Industrial Trust 74,000 212,380 0.37 Mapletree Logistics Trust 627,600 1,217,544 2.13 Total SINGAPORE 4,677,324 8.18 Total Quoted Real Estate Investment Trusts 4,677,324 8.18 Portfolio of investments 56,230,510 98.38 Other net assets 928,324 1.62 Net assets attributable to unitholders 57,158,834 100.00

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NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 30 June 2020 (unaudited)

By Geography (Summary) Percentage of total net assets attributable to unitholders at

30 June 2020

%

Percentage of total net assets

attributable to unitholders at 31 December

2019 %

Quoted Equities China - 2.29 Hong Kong SAR 9.06 5.68 Indonesia 2.17 2.56 Malaysia 0.60 - Singapore 74.00 78.76 Thailand 1.72 3.71 Total Quoted Equities 87.55 93.00 Quoted Investment Funds Singapore 2.65 2.93 Total Quoted Investment Funds 2.65 2.93 Quoted Real Estate Investment Trusts Singapore 8.18 2.59 Total Quoted Real Estate Investment Trusts 8.18 2.59 Portfolio of investments 98.38 98.52 Other net assets 1.62 1.48 Net assets attributable to unitholders 100.00 100.00

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NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 30 June 2020 (unaudited)

By Industry (Secondary)



Percentage of total net assets attributable to unitholders at

31 December 2019 S$

%

%

Agriculture 3,425,099 5.99 5.70 Banks 13,860,653 24.25 22.21 Beverages 982,260 1.72 1.54 Building Materials - - 0.90 Chemicals - - 2.29 Computers 1,414,640 2.47 4.12 Diversified Financial Services 2,562,048 4.48 - Electric 1,459,973 2.56 4.65 Electronics 4,213,564 7.37 4.11 Engineering and Construction 2,387,678 4.18 11.88 Food 7,791,320 13.63 10.38 Gas - - 1.59 Healthcare-Products 340,442 0.60 - Lodging - - 4.48 Pharmaceuticals 1,327,500 2.32 1.46 Real Estate 5,567,224 9.74 14.43 Real Estate Investment Trusts (REITS) 4,677,324 8.18 3.44 Retail 1,152,188 2.02 2.90 Telecommunications 3,199,257 5.60 2.44 Transportation 1,869,340 3.27 - Portfolio of investments 56,230,510 98.38 98.52 Other net assets 928,324 1.62 1.48 Net assets attributable to unitholders 57,158,834 100.00 100.00

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NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) REPORT TO UNITHOLDERS For the financial period from 01 January 2020 to 30 June 2020 (unaudited)

The following contains additional information relating to the Fund. 1. Distribution of investments

Please refer to the Statement of Portfolio on pages 10 to 13.

2. Credit rating of debt securities Nil.

3. Top 10 holdings 10 Largest holdings at 30 June 2020

Fair value S$


attributable to unitholders

% DBS Group Holdings Limited 7,507,157 13.13 Oversea-Chinese Banking Corporation Limited 6,353,496 11.12 Wilmar International Limited 4,568,530 7.99 Jardine Strategic Holdings Limited 3,222,790 5.64 Venture Corporation Limited 2,784,578 4.87 Singapore Exchange Limited 2,562,048 4.48 Japfa Limited 2,185,047 3.82 Hongkong Land Holdings Limited 1,952,016 3.42 ComfortDelGro Corporation Limited 1,869,340 3.27 Starhub Limited 1,654,640 2.89 10 Largest holdings at 30 June 2019

Fair value S$



% DBS Group Holdings Limited 9,644,685 11.96 Oversea-Chinese Banking Corporation Limited 5,920,522 7.34 Wilmar International Limited 4,903,610 6.08 Keppel Corporation Limited 4,607,388 5.72 Memtech International Limited 3,915,000 4.86 Singapore Technologies Engineering Limited 3,608,838 4.48 Venture Corporation Limited 3,386,691 4.20 Bumitama Agri Limited 3,150,000 3.91

Tianjin Zhongxin Pharmaceutical Group Corporation

Limited 2,862,860 3.55

Cosco Shipping Energy Transportation Company Limited 2,800,293 3.47

4. Exposure to financial derivatives

Nil.

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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


9. Borrowings

Nil.

10. Amount of units created and cancelled for the financial period ended 30 June 2020

S$ Units created 2,141,187 Units cancelled (9,034,080)

11. Turnover ratio 30 June

2020 30 June

2019 Lower of total value of purchases or sales S$ 28,239,633 48,302,582 Average daily net asset value S$ 65,210,348 83,151,783 Total turnover ratio1 % 43.31 58.09 1 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.

12. Expense ratio

30 June 2020

30 June 2019

SGD Class Total operating expenses S$ 641,083 733,784 Average daily net asset value S$ 71,360,142 84,143,039 Total expense ratio2 % 0.90 0.87 2 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.

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13. Related party transactions

The Manager of the Fund is Nikko Asset Management Asia Limited, a subsidiary of Nikko Asset Management International Limited. The Trustee of the Fund is BNP Paribas Trust Services Singapore Limited (the "Trustee"). Management fee is payable to the Manager. Trustee fee is payable out of management fees by Nikko Asset Management Asia Limited to BNP Paribas Trust Services Singapore Limited. Registrar fee is payable to the Trustee. Custody fee and valuation fee are payable to a related company of the Trustee, BNP Paribas Securities Services operating through its Singapore Branch. In addition to related party information shown elsewhere in the financial statements (including the Statement of Portfolio), the following significant transactions took place during the financial period between the Fund and a related party at terms agreed between the parties and within the provisions of the Deeds: 30 June

2020 31 December

2019 S$ S$ Bank balances held with related party of the Trustee 3,614,220 3,009,609

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

Nil.

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12 Marina View, #18-02 Asia Square Tower 2, Singapore 018961Intermediaries Hotline: 1800 535 8025 / 65 6535 8025Website: www.nikkoam.com.sg

Company registration number 198202562H



ANNUAL REPORT






Seet Oon Hui EleanorYu-Ming Wang (resigned with effect from 24 January 2020)








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Inception

Nikko AM Shenton Thrift Fund - SGD Class1 5.86 1.88 11.77 6.73 3.65 4.42 5.92

Straits Times Index (STI)2 3.89 -1.01 9.39 7.40 1.18 2.11 2.82

Source: Nikko Asset Management Asia Limited, returns as at 31 December 2019. Returns are calculated on a 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. Past performance is not indicative of future performance.


Inception

Nikko AM Shenton Thrift Fund - SGD Class1 0.57 -3.21 6.18 4.92 2.59 3.88 5.75

Straits Times Index (STI)2 3.89 -1.01 9.39 7.40 1.18 2.11 2.82

Source: Nikko Asset Management Asia Limited, returns as at 31 December 2019. 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 initial sales and a realisation charge, currently nil, as and where applicable. Returns for period in excess of 1 year are annualised. Past performance is not indicative of future performance.


Note: (1) With effect from 17 October 2011, the Fund (formerly known as “Shenton Thrift Fund”) has been

renamed Nikko AM Shenton Thrift Fund.


Portfolio Review

Fund returned in 11.77% in 2019For the financial year ended 31 December 2019, the Nikko AM Shenton Thrift Fund (the “Fund”) posted a return of 11.77% (SGD terms, on a NAV-NAV basis), outperforming the Straits Times Index (STI) which returned 9.39% on a total return basis over the same period.

The Fund’s overweight positions in Memtech International and CSE Global, and underweights in Dairy Farm International Holdings and Jardine Matheson Holdings added the most to relative performance over the period. Conversely, the underweight position in Thai Beverage and active selections in Valuetronics Holdings and Indonesia Pondasi Raya were the biggest detractors from relative performance.

PERFORMANCE SUMMARY

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Market Review

The Straits Times Index rose over 9% in 2019On the whole, Singapore stocks, as measured by the Straits Times Index (STI), turned in decent gains of over 9% (in SGD terms) in 2019, despite the ebb and flow of the US-China trade disputes.

The Singapore equity market started 2019 positively, owing to optimism that the US and China could reach a much-needed compromise in their protracted trade negotiations. Stocks in Singapore were also lifted by the incrementally dovish stance of the US Federal Reserve (Fed), which abandoned projections for any rate hikes in 1Q19 and thereafter signalled its intention to cut rates towards the end of 2Q19.

The upturn in Singapore stocks, however, wasn’t all smooth sailing. Local equities had to withstand the flare-ups in US-China trade tensions in May as well as in 3Q19, when trade talks abruptly broke down between the two nations, which subsequently hurled fresh tariffs at each other. A fleeting spike in oil prices in September, when Saudi Arabia’s oil facilities were hit by drone attacks, and political wrangling in the US, where a formal impeachment inquiry was launched against US President Donald Trump, also dampened stock market sentiment in 3Q.

Singapore stocks, however, rebounded meaningfully in 4Q19, buoyed by a US-China trade truce and the anticipated signing of a partial trade deal between the two nations. Risk appetite for local equities was also boosted by better-than-expected 3Q economic growth in Singapore as well as a rate cut by the Fed, which trimmed rates by 25 basis points (bps) in October. It was the Fed’s third 25 bps rate cut in 2019, following similar cuts in July and September. The year-end rally lifted Singapore stocks meaningfully higher for the year, despite constant market volatility owing to the US-China trade tensions.

At the sector level, information technology and consumer staples were the best-performing Singapore equity segments, while consumer discretionary and industrials were the worst performers over the 12-month period.

Of the 30 component stocks in the STI, Thai Beverage, City Developments and UOL Group were the top gainers in 2019. At the other end of the performance spectrum, Dairy Farm International, Jardine Matheson Holdings and Golden Agri-Resources were the three worst performing STI stocks over the period

MAS eased policy with “slight” reduction in SGDNEER slopeDuring the Monetary Authority of Singapore (MAS)’s bi-annual meeting in October, the central bank eased its policy by reducing “slightly” the slope of the Singapore Dollar Nominal Effective Exchange Rate (SGD NEER) band, while keeping the width and the level at which it is centred unchanged. The central bank cited below-potential output and muted inflationary pressures as reasons for the easing.

Improving GDP growth eased concerns of a possible technical recessionIn late 2019, the MAS announced that 3Q GDP growth was adjusted upwards to 0.5% year-on-year (from an earlier estimate of just 0.1% YoY), easing concerns of a possible technical recession. Singapore’s economy improved further and expanded 0.8% in 4Q 2019, according to advance estimates by the Ministry of Trade and Industry (MTI). Overall, MTI reported full-year 2019 growth of 0.7% YoY—this is within the 0.5-1.0% official forecast range but marked the slowest pace of growth since 2009.

3


Favouring “New Singapore” stocks and dividend countersThe outbreak of the coronavirus in China, with cases also in Singapore, has made it necessary for us to re-examine our scenario of a modest acceleration for economic growth in 2020. While there are differences, our experience during the Severe Acute Respiratory Syndrome (SARS) epidemic in 2003 is the most sensible reference. In 2003, almost all key indicators fell sharply over a period of one-two quarters and recovered to normal levels one-two quarters following the peak of the epidemic. Economic growth was impacted only for a single quarter. We are hopeful that the same pattern will prevail for the current outbreak but remain watchful given differences between the two diseases, as well as the relatively greater level of connectivity with China and importance of the Chinese economy in 2020 versus 2003. In particular, the far more aggressive countermeasures taken in 2020 imply a sharper short-term downturn, but in itself bodes well for more effective containment.

The 1.5% GDP growth, which we have pencilled in for 2020, will now certainly have to be downgraded, with growth likely to slow more significantly in 1Q and 2Q of 2020. However, in the early stages of the epidemic, pinpointing a new forecasts is still difficult. During SARS period, Singapore GDP growth fell 4.5 percentage points in 2Q 2003 before rebounding by 5.6 percentage points in 3Q 2003. Supportive measures will soften the blow somewhat, including targeted fiscal measures, which the Singapore government has already flagged, and possibly another round of monetary easing by the MAS in April. In terms of valuations, we find some assurance in the attractive levels currently, with the price-to-book ratio of the Singapore market close to the lows seen during the SARS outbreak in 2003.

Amidst the developing epidemic, we have refrained from making significant changes to our portfolio, only lightening our exposure to the air travel and hospitality sectors, which will be impacted to a larger extent. As such, our portfolio construction remains biased towards “New Singapore” stocks, which represent the future economy of Singapore. These tend to be in sectors like technology, data centres, healthcare, logistics, tourism and consumer services. We also continue to like corporate restructuring candidates, which are companies looking to reorganise or reinvent their business models in order to be more relevant in the future economy. We remain positive on selected property developers due to corporate restructuring and significant asset redevelopment opportunities.

We continue to advocate investing in dividend stocks, especially where dividends are supported by healthy and structural earnings growth. Forward dividend yields remain one of the most attractive in the Asian region, highlighting the importance of dividends as part of the total return equation for investing in Singapore stocks. However, valuations have become fuller in the S-REIT space, and unless long bond yield expectations become more supportive due to the coronavirus epidemic, we will maintain a relatively more neutral stance in the sub-sector.

4

This document is purely for informational purposes only with no consideration given to the specific investment objective, financial situation and particular needs of any specific person. It should not be relied upon as financial advice. 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 funds 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 Fund or any underlying fund may use or invest in financial derivative instruments. The value of units and income from them may fall or rise. Investments in the Fund are subject to investment risks, including the possible loss of principal amount invested. You should read the relevant prospectus (including the risk warnings) and product highlights sheet of the Fund, which are available and may be obtained from appointed distributors of Nikko AM Asia or our website (www.nikkoam.com.sg) before deciding whether to invest in the Fund.

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 Central Provident Board (“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 plus 1% per annum. A 4% per annum floor rate will be maintained for interest earned on SMRA until 31 December 2020, after which a 2.5% per annum minimum rate will apply. An extra 1% per annum 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”). Investors should note that the applicable interest rates for each of the CPF accounts may be varied by the CPF Board from time to time.


The Fund may be offered to professional investors in Hong Kong or to Hong Kong investors via the private placement exemption. Hong Kong investors should note that the contents of this document have not been reviewed by any regulatory authority in Hong Kong and are advised to exercise caution in relation to the offer. If you are in any doubt about any of the contents of this document, you should obtain independent professional advice.


5



6

NIKKO AM SHENTON THRIFT FUND

7

REPORT OF THE TRUSTEE

The Trustee is under a duty to take into custody and hold the assets of Nikko AM Shenton Thrift Fund (the “Fund”) 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 Fund during the financial year covered by these financial statements, set out on pages 12 to 30, 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 BNP Paribas Trust Services Singapore Limited Authorised signatory 27 March 2020

7


8

STATEMENT BY THE MANAGER

In the opinion of Nikko Asset Management Asia Limited, the accompanying financial statements set out on pages 12 to 30, 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 and the portfolio holdings of Nikko AM Shenton Thrift Fund (the “Fund”) as at 31 December 2019, and the financial performance and movements 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. At the date of this statement, there are reasonable grounds to believe that the Fund will be able to meet its financial obligations as and when they materialise. For and on behalf of the Manager Nikko Asset Management Asia Limited Authorised signatory 27 March 2020

8

9

INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF NIKKO AM SHENTON THRIFT FUND

In our opinion, the accompanying financial statements of Nikko AM Shenton Thrift Fund (the “Fund”) are properly drawn up 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, so as to present fairly, in all material respects, the financial position and portfolio holdings of the Fund as at 31 December 2019, and of the financial performance and movements of unitholders’ funds for the financial year ended on that date.

The financial statements of the Fund comprise: the Statement of Total Return for the financial year ended 31 December 2019; the Statement of Financial Position as at 31 December 2019; the Statement of Movements of Unitholders’ Funds for the financial year ended 31 December

2019; the Statement of Portfolio as at 31 December 2019; and the notes to the financial statements, including a summary of significant accounting policies.

We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

We are independent of the Fund in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities(“ACRA Code”) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code.

The Fund’s Manager (the “Manager”) is responsible for the other information. The other information comprises all sections of the annual report but does not include the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

9

10


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 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. In preparing the financial statements, the Manager is responsible for assessing the Fund’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to terminate the Fund or to cease the Fund’s operations, or has no realistic alternative but to do so. The Manager's responsibilities include overseeing the Fund's financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due

to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

Obtain an understanding of internal control relevant to the audit 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 Fund’s internal control.

Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by the Manager. Conclude on the appropriateness of the Manager’s use of the going concern basis of

accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

10

11


Evaluate the overall presentation, structure and content of the financial statements, including

the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore, DDMMMMYYYY

11


12

STATEMENT OF TOTAL RETURN

Note 2019 2018 S$ S$ Income Dividends 2,865,055 3,281,623 Interest on cash and bank balances 11,817 65 2,876,872 3,281,688 Less: Expenses Management fee 601,194 665,331 Registrar fee 31,241 35,133 Custody fee 25,102 26,037 Audit fee 16,913 16,886 Valuation fee 16,032 17,742 Transaction costs 468,956 364,341 Other expenses 18,479 38,550 1,177,917 1,164,020 Net income 1,698,955 2,117,668 Net gains or losses on value of investments Net gains/(losses) on investments 7,621,422 (12,223,128) Net foreign exchange losses (82,725) (18,600) 7,538,697 (12,241,728) Total return/(deficit) for the financial year

before income tax 9,237,652 (10,124,060) Less: Income tax 3 (52,420) (22,840) Total return/(deficit) for the financial year after

income tax 9,185,232 (10,146,900)

12


The accompanying notes form an integral part of these financial statements

STATEMENT OF FINANCIAL POSITION As at 31 December 2019

2019 S$

ASSETS

74,949,623 745,030 91,721

3,009,609 Total assets 78,795,983

LIABILITIES 2,716,817

Total liabilities 2,716,817

EQUITY 76,079,166

13


STATEMENT OF MOVEMENTS OF UNITHOLDERS' FUNDS

2019 S$

Net assets attributable to unitholders at the beginning of the financial year 80,067,825

Operations

9,185,232

Unitholders' contributions/(withdrawals) 1,962,097 (15,135,988)

(13,173,891) 2,494,730

(3,988,659)

Net assets attributable to unitholders at the end of the financial year 76,079,166

14

NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 31 December 2019 By Geography (Primary)

Holdings at 31 December

2019

Fair value at 31 December

2019

Percentage of total net assets attributable to unitholders at 31 December

2019 S$ % Quoted Equities


15

CHINA Fufeng Group Limited 2,940,000 1,740,232 2.29 Total CHINA 1,740,232 2.29 HONG KONG SAR Hongkong Land Holdings Limited 360,400 2,786,484 3.66 Jardine Strategic Holdings Limited 37,300 1,537,246 2.02 Total HONG KONG SAR 4,323,730 5.68 INDONESIA Bumitama Agri Limited 2,281,500 1,825,200 2.40 Indonesia Pondasi Raya TBK PT 3,487,700 124,315 0.16 Total INDONESIA 1,949,515 2.56 SINGAPORE Capitaland Limited 1,055,000 3,956,250 5.20 City Developments Limited 310,800 3,403,260 4.47 CSE Global Limited 5,703,000 3,136,650 4.12 DBS Group Holdings Limited 432,421 11,191,055 14.71 Far East Hospitality Trust 878,500 650,090 0.85 Hyphens Pharma International Limited 5,300,000 1,113,000 1.46 Japfa Limited 4,321,500 2,506,470 3.29 Keppel Corporation Limited 724,200 4,902,834 6.44 Koufu Group Limited 2,641,300 2,033,801 2.68 Oversea-Chinese Banking Corporation Limited 519,344 5,702,397 7.50 RE&S Holdings Limited 1,085,900 172,658 0.23 SATS Limited 110,700 560,140 0.74 Sembcorp Industries Limited 1,546,000 3,540,340 4.65 Singapore Technologies Engineering Limited 875,400 3,449,076 4.53 Singapore Telecommunications Limited 248,300 836,771 1.10 UOL Group Limited 189,500 1,576,640 2.08 Venture Corporation Limited 193,200 3,129,840 4.11 Wilmar International Limited 1,310,900 5,400,908 7.10 Yanlord Land Group Limited 2,197,600 2,659,096 3.50 Total SINGAPORE 59,921,276 78.76 THAILAND Charoen Pokphand Foods Public Company Limited 779,600 962,402 1.27 Thai Beverage Public Company Limited 1,320,000 1,174,800 1.54 Tipco Asphalt Public Company Limited 715,600 681,018 0.90 Total THAILAND 2,818,220 3.71 Total Quoted Equities 70,752,973 93.00

15

NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 31 December 2019 By Geography (Primary)

Holdings at 31 December

2019


2019


2019 S$ % Quoted Investment Funds


SINGAPORE 2,233,600 1,206,144 1.591,082,800 1,023,246 1.34

Total SINGAPORE 2,229,390 2.93

Total Quoted Investment Fund 2,229,390 2.93 Quoted Real Estate Investment Trusts SINGAPORE

634,000 786,160 1.031,270,000 1,181,100 1.56

Total SINGAPORE 1,967,260 2.59

Total Quoted Real Estate Investment Trusts 1,967,260 2.59 Portfolio of investments 74,949,623 98.52 Other net assets 1,129,543 1.48 Net assets attributable to unitholders 76,079,166 100.00

16

NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 31 December 2019


17

By Geography (Summary)


2019 %


2018 %

Quoted Equities Bermuda Islands - 3.30 China 2.29 8.68 Hong Kong SAR 5.68 8.55 Indonesia 2.56 0.64 Singapore 78.76 76.15 Thailand 3.71 1.07 Total Quoted Equities 93.00 98.39 Quoted Investment Funds Singapore 2.93 - Total Quoted Investment Funds 2.93 - Quoted Real Estate Investment Trusts Singapore 2.59 - Total Quoted Real Estate Investment Trusts 2.59 - Portfolio of investments 98.52 98.39 Other net assets 1.48 1.61 Net assets attributable to unitholders 100.00 100.00

17

NIKKO AM SHENTON THRIFT FUND (Constituted under a Trust Deed registered in the Republic of Singapore) STATEMENT OF PORTFOLIO As at 31 December 2019


18



2019


2019


2018 S$

%

%

Agriculture 4,331,670 5.70 6.51 Airlines - - 5.91 Banks 16,893,452 22.21 19.00 Beverages 1,174,800 1.54 - Building Materials 681,018 0.90 - Chemicals 1,740,232 2.29 - Computers 3,136,650 4.12 2.89 Diversified Financial Services - - 2.53 Electric 3,540,340 4.65 1.50 Electronics 3,129,840 4.11 5.74 Engineering and Construction 9,036,365 11.88 4.46 Entertainment - - 0.77 Food 7,900,556 10.38 8.18 Food Service - - 0.24 Gas 1,206,144 1.59 - Healthcare-Services - - 3.41 Holding Companies-Diversified - - 8.98 Internet - - 0.66 Lodging 3,403,260 4.48 1.55 Miscellaneous Manufacture - - 4.35 Oil and Gas - - 3.43 Pharmaceuticals 1,113,000 1.46 6.48 Real Estate 10,978,470 14.43 0.50 Real Estate Investment Trusts (REITS) 2,617,350 3.44 - Retail 2,206,459 2.90 1.74 Shipbuilding - - 3.61 Telecommunications 1,860,017 2.44 2.15 Transportation - - 3.80 Portfolio of investments 74,949,623 98.52 98.39 Other net assets 1,129,543 1.48 1.61 Net assets attributable to unitholders 76,079,166 100.00 100.00

18


NOTES TO THE FINANCIAL STATEMENTS

19

These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. General

Nikko AM Shenton Thrift Fund (the "Fund") is a Singapore domiciled fund constituted under a Trust Deed dated 12 June 1987 as amended by Supplemental Deeds and Amended and Restated Deeds (collectively referred to as the "Deeds"”). The Deeds are governed by the laws of the Republic of Singapore. The Trustee of the Fund is BNP Paribas Trust Services Singapore Limited (the "Trustee"). The Manager of the Fund is Nikko Asset Management Asia Limited (the "Manager”). There are four classes of units established within the Fund, namely the SGD Class, USD Class, RMB Class and SGD Class B. The classes may differ in terms of their class currency, the minimum subscription amounts applicable. As of 31 December 2019, only units in the SGD Class have been issued.

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, and in accordance with the recommendations of Statement of Recommended Accounting Practice 7 "Reporting Framework for Unit Trusts" ("RAP 7") issued by the Institute of Singapore Chartered Accountants.

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

Purchases of investments are recognised on the trade date. Investments are recorded at fair value on initial recognition.

Investments are subsequently carried at fair value. Net change in fair value on investments is included in the Statement of Total Return in the year in which they arise.

19



2. Significant accounting policies (continued) (c) Investments (continued)

20

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.

(d) Basis of valuation of investments The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of trading on the reporting date. The quoted market price used for equities securities held by the Fund is the last traded market price for both financial assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread that is most representative of fair value.

(e) 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.

(f) Sales and purchases awaiting settlement Sales and purchases awaiting settlement represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the Statement of Financial Position date respectively. These amounts are recognised initially at fair value and subsequently measured at amortised cost.

(g) Payables Accrued expenses are recognised initially at fair value and subsequently stated at amortised cost using the effective interest method.

(h) Cash and bank balances Cash and bank balances comprise cash at banks and on hand which are subject to an insignificant risk of changes in value.

(i) Foreign currency translation

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 denominated in Singapore Dollar ("SGD").

20



2. Significant accounting policies (continued) (i) Foreign currency translation (continued)

(continued)

21

The performance of the Fund is measured and reported to the investors in Singapore Dollar. 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 Dollar, which is the Fund’s functional and presentation currency.

Foreign currency monetary assets and liabilities are translated into Singapore Dollar at the rates of exchange prevailing at the date of the Statement of Financial Position. The net unrealised gain or loss is taken to the Statement of Total Return. Transactions during the year are recorded in Singapore Dollar 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 Fund was granted the status of a Designated Unit Trust (DUT) in Singapore. The Manager and Trustee of the Fund will ensure that the Fund fulfills its reporting obligations under the DUT Scheme. Under the DUT Scheme, subject to certain conditions and reporting obligations being met, certain income of the DUT fund is not taxable in accordance to Sections 35(12) and 35(12A) of the Income Tax Act. Such income includes: (a) gains or profits derived from Singapore or elsewhere from the disposal of securities; (b) interest (other than interest for which tax has been deducted under section 45 of the

Income Tax Act); (c) dividends derived from outside Singapore and received in Singapore; (d) 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 or financial index;

(e) discount prepayment fees, redemption premium and break cost from qualifying debt

securities issued during the prescribed period; and (f) distributions from foreign unit trusts derived from outside Singapore and received in

Singapore.

21



3. Income Tax (continued)

22

Income tax for the financial year ended 31 December 2019 and 2018 comprises:

2019 2018 S$ S$

Singapore income tax 11,093 - Overseas income tax 41,327 22,840 52,420 22,840 The Singapore income tax represents tax deducted at source for Singapore sourced dividends. The overseas income tax represents tax deducted at source on dividend derived from outside Singapore.

4. Receivables 2019 2018 S$ S$ Receivable from unitholders for creation of units 70,280 10,501 Dividends receivable 16,884 40,025 Other receivable 4,557 - 91,721 50,526

5. Payables

2019 2018 S$ S$ Payable to unitholders for cancellation of units 2,527,157 66,333 Amount due to the Manager 156,609 171,877 Valuation fee payable 4,176 4,479 Registrar fee payable 2,967 2,967 Provision for audit fee 17,334 17,334 Custody fee payable 8,574 4,579 2,716,817 267,569 Amount due to the Manager comprises of management fee and is payable to Nikko Asset Management Asia Limited. Trustee fee is payable out of the management fees by Nikko Asset Management Asia Limited to BNP Paribas Trust Services Singapore Limited. Custody fee and valuation fee are payable to BNP Paribas Securities Services operating through its Singapore Branch. Registrar fee is payable to BNP Paribas Trust Services Singapore Limited.

22



23

6. Units in issue During the year ended 31 December 2019 and 2018, the number of units issued, redeemed and outstanding were as follows: SGD Class 2019 2018 Units at beginning of the financial year 37,620,599 36,686,469 Units created 868,333 5,213,549 Units cancelled (6,563,213) (4,279,419) Units at end of the financial year 31,925,719 37,620,599 Net assets attributable to unitholders - S$ 76,079,166 80,067,825 Net asset value per unit - S$ 2.383 2.128 A reconciliation of the net asset value as reported in the Statement of Financial Position to the net asset value as determined for the purpose of processing unit subscription and redemption is provided below: SGD Class 2019

S$ 2018

S$ Net assets attributable to unitholders per financial statements

per unit 2.383 2.128 Effect of adopting bid prices at fair value per unit - 0.004 Net assets attributable to unitholders for issuing/redeeming

per unit 2.383 2.132

23



24

7. Financial risk management The 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 Fund’s financial performance. Specific guidelines on exposures to individual securities and certain industries and/or countries are in place as part of the overall financial risk management to reduce the Fund’s exposures to these risks. The Fund’s primary objective is to achieve medium to long term capital appreciation by investing primarily in stocks listed on the Singapore Exchange Securities Trading Limited (the "SGX-ST"). Beside stocks listed on the SGX-ST, the Fund may also invest in companies listed on stock exchanges outside Singapore subject to a limit not exceeding 30% of the net asset value of the Fund. The Manager will seek to add value by selectively over/under weighting benchmark components to achieve relative out performance and blending the mix with a selection of non-benchmark components to deliver absolute out-performance. These financial instruments are held in accordance with the published investment policies of the Fund 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 Fund’s investment is substantially dependent on the changes of market prices. The Fund’s overall market positions are monitored regularly so as to assess any deviation from the Fund's investment objective. However, events beyond reasonable control of the Manager could affect the prices of the underlying investments and hence the net asset value of the Fund. The Fund’s market price risk is managed through diversification of the investment portfolio exposure across various stocks traded on the SGX-ST. As the Fund invests primarily in stocks listed on the SGX-ST, the Manager is of the view that the price risk the fund is best reflected by movements in its benchmark of the Straits Times Index (the "Benchmark").

24



7. Financial risk management (continued) (a) Market risk - Price risk (continued)

25

As at 31 December 2019, an increase/decrease of the index component within the Benchmark by 12% (2018: 12%), with all other variables remaining constant, the net assets attributable to unitholders for the year would increase/decrease by approximately 10% (2018: 10%). The analysis was based on the assumptions that the index components within the Benchmark increased/decreased by a reasonable possible shift, with all other variables held constant and that the fair value of Fund’s investments moved according to the beta. Reasonable possible changes in market index percentage are revised annually depending on management’s current view on market volatility and other relevant factors.

(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). Investment funds that invest in equity securities may be subject to interest rate risk as any interest rate change may affect the equity risk premium though at varying degrees. To manage this risk, the Manager analyses how interest rate changes may affect different industries and securities and then seeks to adjust the Fund’s portfolio investments accordingly. However, the effects of changes in interest rates on the Fund’s portfolio may not be quantified as the relationship between the interest rates and the value of equity securities is indirect. Hence, no sensitivity analysis has been presented separately.

(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 Fund mainly holds its excess cash in its functional currency. For hedging purposes, the Fund may also enter into forward foreign exchange contracts. The tables below summarise the Fund's exposure to currency risks.

25



7. Financial risk management (continued) (c) Market risk - Currency risk (continued)

26

As at 31 December 2019 SGD USD IDR HKD THB Total S$ S$ S$ S$ S$ S$ Assets Portfolio of investments 67,117,926 4,323,730 124,315 1,740,232 1,643,420 74,949,623 Sales awaiting settlement - - - 745,030 - 745,030 Receivables 91,721 - - - - 91,721 Cash and bank balances 3,008,860 749 - - - 3,009,609 Total assets 70,218,507 4,324,479 124,315 2,485,262 1,643,420 78,795,983 Liabilities Payables 2,716,817 - - - - 2,716,817 Total liabilities 2,716,817 - - - - 2,716,817 Net currency exposure 67,501,690 4,324,479 124,315 2,485,262 1,643,420 As at 31 December 2018 SGD USD IDR HKD THB Total

S$ S$ S$ S$ S$ S$ Assets Portfolio of investments 66,503,154 7,582,627 511,553 3,320,733 858,594 78,776,661 Sales awaiting settlement 8,783 - - - - 8,783 Receivables 50,526 - - - - 50,526 Cash and bank balances 1,498,577 847 - - - 1,499,424 Total assets 68,061,040 7,583,474 511,553 3,320,733 858,594 80,335,394 Liabilities Payables 267,569 - - - - 267,569 Total liabilities 267,569 - - - - 267,569 Net currency exposure 67,793,471 7,583,474 511,553 3,320,733 858,594 Portfolio of investments, which is a significant item in the Statement of Financial Position is exposed to currency risk and other price risk. The Manager has considered the impact of currency risk sensitivity on non-monetary assets as part of the price risk sensitivity analysis. As of 31 December 2019 and 2018, the Fund does not hold substantial monetary assets/liabilities denominated in foreign currencies. Changes in foreign exchange rates on monetary assets/liabilities will not result in a significant change in the net asset value of the Fund. Hence, no separate sensitivity analysis on foreign currency risk has been presented.

(d) Liquidity risk Liquidity risk is the risk of loss arising from the inability of the Fund to meet its obligations as and when they fall due without incurring unacceptable cost or losses. The Fund is exposed to daily cash redemptions from unitholders. However, in accordance with the Fund’s prospectus, minimum holdings and redemption size are set. To manage the liquidity risk, a cash buffer is maintained in the Fund 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.

26



7. Financial risk management (continued) (d) Liquidity risk (continued)

27

The Fund’s securities are considered readily realisable, as the majority of the securities are listed on recognised stock exchanges. The Fund’s financial liabilities are analysed using contractual undiscounted cash flows for maturity groupings based on the remaining year at the Statement of Financial Position date to the contractual maturity date. As at 31 December 2019 and 2018, all liabilities are either payable upon demand or due in less than 3 months. The impact of discounting is not significant. Less than 3 months

As at 31 December

2019

As at 31 December

2018 S$ S$ Payables 2,716,817 267,569 Contractual cash outflows 2,716,817 267,569

(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 review such controls on a semi-annual basis; and – ensuring that transactions are undertaken with a large number of counterparties.

27



7. Financial risk management (continued) (e) Credit risk (continued)

28

All trade settlement with approved counterparties are on Delivery versus Payment and/or Receipt versus Payment basis, with the exception of initial public offerings, new issues and placement transactions. Credit risk arises from cash and bank balances and outstanding and committed transactions from brokers. The table below summarises the credit rating of bank and custodians in which the Fund’s assets are held as at 31 December 2019 and 2018.

Credit rating as at 31 December 2019

Credit rating as at 31 December 2018

Source of credit rating

Bank balance - BNP Paribas Securities

Services, operating through its Singapore Branch A+ A Standard & Poor's

Custodian - BNP Paribas Securities

Services, operating through its Singapore Branch A+ A Standard & Poor's

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.

(f) Capital management The Fund’s capital is represented by the net assets attributable to unitholders. The Fund strives to invest the subscriptions of redeemable participating units in investments that meet the Fund’s 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).

28



7. Financial risk management

Fair value estimation

The following table analyses within the fair value hierarchy the Fund’s financial assets and

As at 31 December 2019 Level 1 Level 2 Level 3 Total S$ S$ S$ S$

Assets

70,752,973 - - 70,752,973 2,229,390 - - 2,229,390 1,967,260 - - 1,967,260

74,949,623 - - 74,949,623

As at 31 December 2018 Level 1 Level 2 Level 3 Total S$ S$ S$ S$

Assets

Except for cash and bank balances which are classified as level 1, the Fund’s assets and


2019 S$

3,009,609

29



30

9. Financial ratios Expense ratio 2019 2018 SGD Class Total operating expenses S$ 708,958 799,679 Average daily net asset value S$ 80,188,467 88,720,314 Total expense ratio1 % 0.88 0.90 Turnover ratio 2019 2018 Lower of total value of purchases or sales S$ 87,748,141 68,566,039 Average daily net asset value S$ 80,188,467 88,720,314 Total turnover ratio2 % 109.43 77.28 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.

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.

30


REPORT TO UNITHOLDERS

31

The following contains additional information relating to the Fund. 1. Distribution of investments


2. Credit rating of debt securities Nil.

3. Top 10 holdings 10 Largest holdings at 31 December 2019

Fair valueS$



% DBS Group Holdings Limited 11,191,055 14.71 Oversea-Chinese Banking Corporation Limited 5,702,397 7.50 Wilmar International Limited 5,400,908 7.10 Keppel Corporation Limited 4,902,834 6.44 Capitaland Limited 3,956,250 5.20 Sembcorp Industries Limited 3,540,340 4.65 Singapore Technologies Engineering Limited 3,449,076 4.53 City Developments Limited 3,403,260 4.47 CSE Global Limited 3,136,650 4.12 Venture Corporation Limited 3,129,840 4.11

10 Largest holdings at 31 December 2018

Fair value S$



% DBS Group Holdings Limited 8,251,724 10.31 Oversea-Chinese Banking Corporation Limited 6,962,553 8.70 Wilmar International Limited 6,547,944 8.18 Singapore Airlines Limited 4,728,840 5.91

Tianjin Zhongxin Pharmaceutical Group Corporation

Limited 4,055,023 5.07 Keppel Corporation Limited 3,663,609 4.58 Jardine Strategic Holdings Limited 3,527,604 4.41 Yangzijiang Shipbuilding Holdings Limited 2,893,750 3.61 Sembcorp Marine Limited 2,745,358 3.43 Health Management International Limited 2,730,186 3.41

31


REPORT TO UNITHOLDERS

4. Exposure to financial derivatives

5. Global exposure to financial derivatives

6. Collateral

7. Securities lending or repurchase transactions

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

9. Borrowings

10. Amount of units created and cancelled for the financial year ended 31 December 2019

S$

11. Turnover ratio

12. Expense ratio


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

32




SEMI-ANNUAL REPORTFor the fi nancial period ending 30 June 2019






Seet Oon Hui EleanorYu-Ming Wang








1


Inception

Nikko AM Shenton Thrift Fund - SGD Class1 3.82 9.71 2.50 7.98 3.78 7.09 5.95

Straits Times Index (STI)2 5.14 10.51 5.77 8.27 2.06 4.45 2.89

Source: Nikko Asset Management Asia Limited, returns as at 30 June 2019. Returns are calculated on a 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. Past performance is not indicative of future performance.


Inception

Nikko AM Shenton Thrift Fund - SGD Class1 -1.37 4.22 -2.63 6.15 2.72 6.54 5.78

Straits Times Index (STI)2 5.14 10.51 5.77 8.27 2.06 4.45 2.89

Source: Nikko Asset Management Asia Limited, returns as at 30 June 2019. 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 initial sales and a realisation charge, currently nil, as and where applicable. Returns for period in excess of 1 year are annualised. Past performance is not indicative of future performance.


Note: (1) With effect from 17 October 2011, the Fund (formerly known as “Shenton Thrift Fund”) has been

renamed Nikko AM Shenton Thrift Fund.


Portfolio Review

Fund returned in 9.71% in 1H 2019For the fi nancial period ending 30 June 2019, the Nikko AM Shenton Thrift Fund (the “Fund”) posted a return of 9.71% (SGD terms, on a NAV-NAV basis), underperforming the Straits Times Index (STI) which returned 10.51% on a total return basis over the same period.

The Fund’s underweight position in Jardine Matheson, as well as the active holdings in Keppel Corp, Bank Mandiri and Hong Kong Exchanges & Clearing added the most to relative performance over the period. Conversely, the overweight positions in Valuetronics Holdings, Bumitama Agri and Sembcorp Industries were the biggest detractors from relative performance.

PERFORMANCE SUMMARY

2

Market Review

The Straits Times Index surged in 1H 2019Notwithstanding the incessant news fl ow and developments regarding the US-China trade confl icts as well as the persistent concerns about the slowing global economy, the Straits Times Index (STI) still managed to turn in respectable gains of 10.51% on a total return basis in 1H 2019.

For most months over the half-year period (except for the dismal May, when US-China trade dispute fl ared up), market sentiment was generally positive due to optimism that the two largest economies in the world would reach a much-needed compromise in their protracted negotiations to end the ongoing trade spat.

Singapore equities were also lifted by the incrementally dovish stance of the US Federal Reserve (Fed), the European Central Bank (ECB) and other major central banks. In a surprise move, the Fed abandoned projections for any interest rate hikes in 1Q 2019 and subsequently signalled its intention to cut rates towards the end of 2Q 2019 to prevent the US-China trade war from stalling growth. Likewise, the ECB indicated that it was prepared to cut policy rates if economic growth in the Eurozone weakens going forward.

The market uptrend over the six-month period, however, wasn’t all smooth sailing. Singapore equities had to withstand the market turbulence in May, when US-China trade talks abruptly broke down between the two nations, which subsequently hurled fresh tariff measures at each other. Nonetheless, a scheduled meeting between US President Donald Trump and Chinese President Xi Jinping at the June-end G20 Summit in Osaka led to a relief rally at the end of 1H 2019 on hopes that US-China trade talks would resume. The Trump-Xi meeting didn’t disappoint markets with the US and China agreeing to a temporary trade truce plus the resumption of trade talks.

All in all, despite the market volatility, Singapore stocks posted one of the best half-yearly returns in recent years in 1H 2019. At the sector level, information technology and consumer staples were the best-performing Singapore equity segments, while consumer discretionary and industrials lagged over the six-month period.

Of the 30 component stocks in the STI, Thai Beverage, ComfortDelGro Corp and Yangzijiang Shipbuilding were the top gainers in 1H 2019, surging 39.13%, 26.68% and 26.65% respectively. At the other end of the performance spectrum, Dairy Farm International, Jardine Matheson Holdings and SembCorp Industries were the three worst performing STI stocks over the period, slumping 20.04%, 8.32% and 4.43% respectively.

Monetary Authority of Singapore (MAS) maintained its FX policy The MAS kept monetary policy setting unchanged in April, after two consecutive slight increases in the pace of SGD Nominal Effective Exchange Rate appreciation. It explained that growth has eased and noted that infl ationary pressures “are mild and should remain contained.” The MAS also downgraded its 2019 forecast range for core infl ation to between 1% and 2% (from 1.5% to 2.5%).

Policymakers downgraded the full-year growth forecastThe Singapore economy saw year-on-year (YoY) growth of 1.2% in the fi rst three months of 2019. The fi nal reading registered a notch lower than the advance estimate of 1.3%, and represented the lowest growth rate in close to 10 years. Notably, contraction in manufacturing sector growth was the main driver of the slowdown. Following release of the fi nal GDP reading, the Ministry of Trade and Industry narrowed its full-year growth forecast to between 1.5% and 2.5%, from an earlier range of 1.5% to 3.5%, citing worsening external conditions. According to the ministry, global growth outlook “remains clouded by uncertainties and downside risks” – citing factors which include trade tensions between the US and China, slower-than-expected growth in China, and the delay in Brexit.

3

NODX growth contracted further; industrial production dropped anewMeanwhile, weak Non-Oil Domestic Exports (NODX) and worsening factory output growth numbers over the period pinpointed to a continuation of the externally-led slowdown. Of late, the contraction in NODX worsened in May. NODX growth declined 15.9% YoY – the most since February 2013, as electronics exports plummeted 31.4%. The latter was caused by a marked decline in shipments of integrated circuits (ICs), disk media products and parts of ICs. Non-electronic exports also declined but by a much milder 10.8%. Factory output in May also contracted. Industrial production growth was down 2.4% YoY in the month, following the 0.1% rise in April. As was the case for NODX growth, the key drag was the slump in the electronics sector.


Positive on ‘New Singapore’ stocks and dividend countersIn the wake of the heightened trade US-China tensions, the Singapore economy has weakened more than we had expected, with economic growth slowing down to 0.1% YoY in 2Q19, based on advanced estimates. The slowdown is cushioned by a dovish US Fed, and as is increasingly likely, monetary loosening by the MAS as well. On the back of a weak 2Q 2019, we now think that Singapore economic growth for 2019 will come in at around 1%. Against this backdrop, it is likely that earnings expectations will continue to be cut, with downside risk to our current expectation of 3-5% growth.

Nonetheless, we see several reasons to be sanguine. In the last economic downturn of 2015-2016, the oil & gas sector was badly affected, spilling over to credit risks for the Singapore banks. This time, there isn’t a major impact on any specifi c sector with a signifi cant stock market representation. In 2015-2016, the US Fed had just entered its tightening cycle, which also led to higher interest rates in Singapore. In 2019, it is about to enter a loosening cycle. Lastly, valuations for the Singapore market are not stretched. Valuations are higher than during the 2016 low, but this may be justifi ed by the more benign impact of the current downturn on specifi c sectors.

Amidst the current uncertainties, we continue to believe that the most prudent investment strategy is to maintain our focus on bottom-up stock selections, especially in structural ideas. As such, we remain positive on “New Singapore” stocks, which represent the future economy of Singapore. These tend to be in sectors like technology, data centres, healthcare, logistics, tourism and consumer services. We continue to like corporate restructuring candidates, which are companies looking to reorganise or reinvent their business models in order to be more relevant in the future economy.

With the current dovish monetary environment, we are more assured about investing in dividend stocks, especially where dividends are supported by healthy and structural earnings growth. In addition, we continue to believe that dividend expectations for Singapore corporates will be more resilient than earnings estimates, a testament to the quality of their underlying earnings, cash fl ows and balance sheets. Forward dividend yields also remain one of the most attractive in the Asian region, highlighting the importance of dividends as part of the total return equation for investing in Singapore stocks.

4

This document is for information only with no consideration given to the specifi c investment objective, fi nancial situation and particular needs of any specifi c person. Any securities mentioned herein are for reporting or illustration purposes only and should not be construed as a recommendation for investment. You should seek advice from a fi nancial 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 or ETFs 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 fi nancial 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. This publication has not been reviewed by the Monetary Authority of Singapore.

The CPF interest rate for the Ordinary Account (“OA”) is based on the 12-month fi xed 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% fl oor rate will be maintained for interest earned on SMRA until 31 December 2019, after which a 2.5% minimum rate will apply. An extra 1% interest is paid on the fi rst S$60,000 of a member’s combined balances, including up to S$20,000 in the OA. The fi rst S$20,000 in the OA and the fi rst S$40,000 in the Special Account (“SA”) cannot be invested under the CPF Investment Scheme (“CPFIS”).


The fund is only offered 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, you should obtain independent professional advice.


5



6


STATEMENT OF TOTAL RETURN For the financial period from 01 January 2019 to 30 June 2019 (unaudited)

30 June 2019 30 June 2018 S$ S$

IncomeDividends 1,776,764 1,966,048 Interest on cash and bank balances 8,390 59

1,785,154 1,966,107

Less: Expenses Management fee 309,175 343,873 Registrar fee 16,316 17,311 Custody fee 12,331 13,355 Audit fee 8,746 8,720 Valuation fee 8,245 9,170 Transaction costs 249,778 187,548 Other expenses (3,678) 24,601

600,913 604,578

Net income 1,184,241 1,361,529

Net gains or losses on value of investments Net gain/(loss) on investments 6,623,949 (5,628,629) Net foreign exchange losses (45,301) (3,119)

6,578,648 (5,631,748)

Total return/(deficit) for the financial period before income tax 7,762,889 (4,270,219)

Less: Income tax (29,250) (21,072) Total return/(deficit) for the financial period after income tax 7,733,639 (4,291,291)

7


STATEMENT OF FINANCIAL POSITION As at 30 June 2019 (unaudited)

30 June 2019 31 December 2018 S$ S$

ASSETSPortfolio of investments 79,694,938 78,776,661 Sales awaiting settlement 953,741 8,783 Receivables 44,155 50,526 Cash and bank balances 1,225,956 1,499,424 Total assets 81,918,790 80,335,394

LIABILITIESPayables 267,479 267,569 Purchases awaiting settlement 1,037,598 -Total liabilities 1,305,077 267,569

EQUITYNet assets attributable to unitholders 80,613,713 80,067,825

8


STATEMENT OF MOVEMENTS OF UNITHOLDERS' FUNDS For the financial period from 01 January 2019 to 30 June 2019 (unaudited)

Note 30 June 2019 31 December 2018 S$ S$

Net assets attributable to unitholders at the beginning of the financial period/year 80,067,825 87,719,995

Operations Change in net assets attributable to unitholders

resulting from operations 7,733,639 (10,146,900)

Unitholders' contributions/(withdrawals) Creation of units 1,034,539 12,568,946 Cancellation of units (8,222,290) (10,074,216)

Change in net assets attributable to unitholders resulting from net creation and cancellation of units (7,187,751) 2,494,730

Total increase/(decrease) in net assets attributable to unitholders 545,888 (7,652,170)

Net assets attributable to unitholders at the end of the financial period/year 80,613,713 80,067,825

9


STATEMENT OF PORTFOLIO As at 30 June 2019 (unaudited)

By Geography (Primary)




S$ %Quoted Equities

CHINACosco Shipping Energy Transportation Company

Limited 3,500,000 2,800,293 3.47Fufeng Group Limited 3,200,000 2,366,308 2.94Memtech International Limited 2,900,000 3,915,000 4.86Tianjin Zhongxin Pharmaceutical Group Corporation

Limited 2,300,000 2,862,860 3.55Total CHINA 11,944,461 14.82

HONG KONG SARJardine Strategic Holdings Limited 18,100 933,748 1.16Pacific Basin Shipping Limited 5,000,000 1,238,225 1.54Total HONG KONG SAR 2,171,973 2.70

INDONESIABumitama Agri Limited 5,000,000 3,150,000 3.91Indonesia Pondasi Raya TBK PT 6,478,000 246,913 0.31Telekomunikasi Indonesia Persero TBK PT 3,273,100 1,297,714 1.60Vale Indonesia TBK PT 5,500,000 1,643,375 2.04Total INDONESIA 6,338,002 7.86

SINGAPOREBanyan Tree Holdings Limited 2,164,000 1,071,180 1.33Capitaland Limited 727,500 2,568,075 3.19CSE Global Limited 5,703,000 2,765,955 3.43DBS Group Holdings Limited 371,521 9,644,685 11.96Health Management International Limited 3,128,300 2,049,036 2.54Hyphens Pharma International Limited 5,799,600 1,136,722 1.41Japfa Limited 1,441,800 764,154 0.95Keppel Corporation Limited 691,800 4,607,388 5.72Koufu Group Limited 1,987,100 1,371,099 1.70Oversea-Chinese Banking Corporation Limited 519,344 5,920,522 7.34RE & S Holdings Limited 1,085,900 195,463 0.24SATS Limited 190,700 995,454 1.23Sembcorp Industries Limited 632,700 1,524,807 1.89Singapore Technologies Engineering Limited 871,700 3,608,838 4.48Singapore Telecommunications Limited 248,300 869,050 1.08UOL Group Limited 193,800 1,463,190 1.81Venture Corporation Limited 207,900 3,386,691 4.20Wilmar International Limited 1,325,300 4,903,610 6.08Yanlord Land Group Limited 1,530,600 1,974,474 2.45Total SINGAPORE 50,820,393 63.03

THAILANDAmata Corporation Public Company Limited 994,400 1,070,428 1.33CH Karnchang Public Company Limited 979,900 1,275,293 1.58Charoen Pokphand Foods Public Company Limited 1,790,000 2,230,888 2.77Thai Beverage Public Company Limited 688,800 571,704 0.71Total THAILAND 5,148,313 6.39

Total Quoted Equities 76,423,142 94.80

10



By Geography (Primary) (continued)




S$ %

Quoted Real Estate Investment Trusts

SINGAPORE Far East Hospitality Trust 1,271,000 845,216 1.05Frasers Centrepoint Trust 365,500 950,300 1.18Frasers Commercial Trust 884,000 1,476,280 1.83Total SINGAPORE 3,271,796 4.06

Total Quoted Real Estate Investment Trusts 3,271,796 4.06

Portfolio of investments 79,694,938 98.86Other net assets 918,775 1.14Net assets attributable to unitholders 80,613,713 100.00

11



By Geography (Summary) Percentage of total net assets attributable to unitholders at 30 June 2019

%


31 December 2018 %

Quoted Equities Bermuda Islands - 3.30China 14.82 8.68Hong Kong SAR 2.70 8.55Indonesia 7.86 0.64Singapore 63.03 76.15Thailand 6.39 1.07Total Quoted Equities 94.80 98.39

Quoted Real Estate Investment Trusts Singapore 4.06 -Total Quoted Real Estate Investment Trusts 4.06 -

Portfolio of investments 98.86 98.39 Other net assets 1.14 1.61 Net assets attributable to unitholders 100.00 100.00

12







31 December 2018 S$ % %

Agriculture 3,914,154 4.85 6.51Airlines - - 5.91 Banks 15,565,207 19.31 19.00 Beverages 571,704 0.71 -Chemicals 2,366,308 2.93 -Computers 2,765,955 3.43 2.89 Diversified Financial Services - - 2.53 Electric 1,524,807 1.89 1.50 Electronics 3,386,691 4.20 5.74 Engineering and Construction 10,733,886 13.32 4.46 Entertainment - - 0.77 Food 8,068,246 10.01 8.18 Food Service - - 0.24 Healthcare-Services 2,049,036 2.54 3.41 Holding Companies-Diversified - - 8.98 Internet - - 0.66 Lodging 1,071,180 1.33 1.55 Mining 1,643,375 2.04 -Miscellaneous Manufacture 3,915,000 4.86 4.35 Oil and Gas - - 3.43 Pharmaceuticals 3,999,582 4.96 6.48 Real Estate 7,076,167 8.78 0.50 Real Estate Investment Trusts (REITS) 3,271,796 4.06 -Retail 1,566,562 1.94 1.74 Shipbuilding - - 3.61 Telecommunications 2,166,764 2.69 2.15 Transportation 4,038,518 5.01 3.80 Portfolio of investments 79,694,938 98.86 98.39 Other net assets 918,775 1.14 1.61 Net assets attributable to unitholders 80,613,713 100.00 100.00

13


REPORT TO UNITHOLDERS For the financial period from 01 January 2019 to 30 June 2019 (unaudited)

The following contains additional information relating to the Fund.

Distribution of investments

Please refer to the Statement of Portfolio on pages 1 to 1 .

Credit rating of debt securities

Nil.

Top 10 holdings

10 Largest holdings at 30 June 2019

Fair valueS$

Percentage of total net assets attributable to

unitholders%

DBS Group Holdings Limited 9,644,685 11.96 Oversea-Chinese Banking Corporation Limited 5,920,522 7.34 Wilmar International Limited 4,903,610 6.08 Keppel Corporation Limited 4,607,388 5.72 Memtech International Limited 3,915,000 4.86 Singapore Technologies Engineering Limited 3,608,838 4.48 Venture Corporation Limited 3,386,691 4.20 Bumitama Agri Limited 3,150,000 3.91 Tianjin Zhongxin Pharmaceutical Group

Corporation Limited 2,862,860 3.55Cosco Shipping Energy Transportation Company

Limited 2,800,293 3.47

10 Largest holdings at 30 June 2018

Fair valueS$

Percentage of total net assets attributable to

unitholders%

DBS Group Holdings Limited 13,398,694 15.24 Oversea-Chinese Banking Corporation Limited 7,530,428 8.57 Wilmar International Limited 5,836,950 6.64 Keppel Corporation Limited 5,691,400 6.48 Singapore Airlines Limited 4,435,281 5.05 Yangzijiang Shipbuilding Holdings Limited 3,805,887 4.33 Tianjin Zhongxin Pharmaceutical Group Corporation Limited 3,750,977 4.27

Venture Corporation Limited 3,321,808 3.78 Keppel Telecommunications & Transportation Limited 3,306,462 3.76 Memtech International Limited 3,276,000 3.73

14



Exposure to financial derivatives

Nil.

Global exposure to financial derivatives

Nil.

Collateral

Nil.

Securities lending or repurchase transactions

Nil.

Investment in unit trusts, mutual funds and collective investment schemes

Please refer to the Statement of Portfolio on pages 1 to 1 .

Borrowings

Nil.

Amount of units created and cancelled for the financial period ended 30 June2019

S$

Units created 1,034,539Units cancelled (8,222,290)

11. Turnover ratio

30 June 2019 30 June 2018

Lower of total value of purchases or sales S$ 48,302,582 30,006,511Average daily net asset value S$ 83,151,783 92,460,392Total turnover ratioNote % 58.09 32.45

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.

15



12. Expense ratio30 June 2019 30 June 2018

Total operating expenses S$ 733,784 815,476Average daily net asset value S$ 84,143,039 89,985,962Total expense ratioNote % 0.87 0.91

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 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.


The Manager of the Fund is Nikko Asset Management Asia Limited, a subsidiary ofNikko Asset Management International Limited. The Trustee of the Fund is BNPParibas Trust Services Singapore Limited (the "Trustee").

Management fee is payable to the Manager. Trustee fee is payable out ofmanagement fees by Nikko Asset Managemant Asia Limited to BNP Paribas TrustServices Singapore Limited. Registrar fee is payable to the Trustee. Custody fee andvaluation fee are payable to a related company of the Trustee, BNP ParibasSecurities Services operating through its Singapore Branch.

In addition to related party information shown elsewhere in the financial statements(including the Statement of Portfolio), the following significant transactions took placeduring the financial period between the Fund and a related party at terms agreedbetween the parties and within the provisions of the Deeds:

30 June 2019 S$

31 December 2018 S$

Bank balances held with related party of the Trustee 1,225,956 1,499,424

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

Nil.

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Documents

427015 Shenton Thrift Fund KS4 - nikkoam.com.sg · Thrift Fund SEMI-ANNUAL REPORT For the ﬁ nancial period ending 30 June 2020 8808586 Shenton Thrift Fund_BN2.indd i08586 Shenton