United Enhanced Income Fund

Transcription

1 United Enhanced Income Fund Semi Annual Report for the period 1 st July to 31 st December 2013

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3 MANAGER UOB Asset Management Ltd Registered Address: 80 Raffles Place UOB Plaza Singapore Company Registration No. : Z OPERATIONS ADDRESS 80 Raffles Place #06-00, UOB Plaza 2 Singapore Tel: DIRECTORS OF UOB ASSET MANAGEMENT Terence Ong Sea Eng Cheo Chai Hong Thio Boon Kiat TRUSTEE / REGISTRAR HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-02, HSBC Building Singapore CUSTODIAN State Street Bank and Trust Company State Street Financial Center One Lincoln Street Boston, Massachusetts United States of America AUDITORS PricewaterhouseCoopers LLP 8 Cross Street #17-00, PWC Building Singapore SOLICITORS TO THE MANAGER Tan Peng Chin LLC 30 Raffles Place #11-00, Chevron House Singapore SOLICITORS TO THE TRUSTEE Shook Lin & Bok LLP 1 Robinson Road #18-00, AIA Tower Singapore

4 A) Fund Performance Fund Performance 3 mth % Growth 6 mth % Growth 1 yr % Growth 3 yr Ann Comp Ret 5 yr Ann Comp Ret 10 yr Ann Comp Ret Since Inception 02 July 2007 Ann Comp Ret United Enhanced Income Fund N/A Source: Lipper, a Thomson Reuters Company. Note: The performance returns of the Fund are in Singapore dollars based on a NAV-to-NAV basis with net dividends reinvested. For the second half of 2013, the United Enhanced Income Fund returned 5%. Over this period, the Fund was invested in a defensive multi-asset class strategy. Given the market volatility experienced during this period, this defensive positioning worked to the Fund s advantage, and we intend to continue with this strategy going forward. Since June, the Fund has increasingly positioned itself equities and this has yielded positive returns towards the end of Manager s Outlook Markets were buoyed by the fact that US policy makers managed to restart the government and dodge default, as well as by the US Federal Reserve s continued asset purchases. Data suggests that there was limited disruption caused by the temporary US government shutdown. Meanwhile, developing economies are showing signs of stabilisation after a sharp slowdown into mid The outlook for advanced economies has improved slightly, with expectations of modest growth in US data continues to suggest that the recovery is broadening out and becoming more robust. Unlike in previous years, the fear of double-dipping is largely over and the US housing market is showing more signs of life than before. While it is still weak, we have seen hiring activity pick up in the US as the jobless claims continued to slide broadly. The US unemployment rate is still on a downward path, even though that is partly due to the low labour force participation rate. In Europe, the economic recovery is supported by a rise in retail sales and confidence and the trend of some purchasing managers indices (PMI) breaking above 50. Although there are still some structural problems to be resolved, things are at least looking much better, helped by supportive monetary policy. Expectations that Europe s economy will return to positive growth is largely hinged on Germany s economic growth exceeding 1.5 per cent in This compares to consensus expectations of 1.0 per cent GDP growth for the Eurozone as a whole. This suggests that many of the peripheral Eurozone economies may continue to struggle. Such a scenario is supported by the current Purchasing Managers Index (PMI) manufacturing and services data, which shows Germany continuing to outperform its Eurozone peers. We think that important structural reforms are still required in Italy and France to help boost economic activity. However, progress in legislation to support such reforms remain disappointing. 2

5 The growth outlook for Asia ex Japan seems to have stabilised, thanks to a broadening out of the economic recovery in the developed economies, which should bode well for Asian exports in time. However, the US Fed s eventual tapering of its asset purchase programme could keep markets volatile in the near term. In particular, some Southeast Asian economies and India are more vulnerable to capital outflows and currency depreciation, which in turn have placed upward pressure on local interest rates. In China, we see signs of growth stability and this is another bright spot for the region. During the Third Plenary session in November 2013, China s senior leadership announced its aim to achieve wide ranging economic and social reforms by The key focus includes fiscal reform, factor price and market reforms, as well as social safety net and government administration reforms. Although these proposed reforms will take time to play out fundamentally and the implementation progress will be gradual, a positive reform momentum should boost market confidence and sentiment. The challenges presented by a rebalancing of China s economy remain. However, the market looks to have largely discounted this and there is room for the valuation gap to narrow on the prospect of reforms and improving economic efficiency. We see investment opportunities in selected beneficiaries of China s reform. These include companies in the areas of clean energy and urbanisation, but we remain cautious on deep cyclical sectors with excess capacity. We continue to favour consumer companies that benefit from the rise of the middle income population. In particular, we expect e-commerce to see explosive growth in coming years as the penetration rate of the Internet and smartphones rises in Asia, especially in China. China s dairy industry is another high growth sector as the currently low per capita milk consumption in China and the demand-supply gap will likely keep milk prices buoyant over the next few years. The recovery in the global developed markets present opportunities for selective US dollar earners such as certain pharmaceutical companies and Asian exporters including technology companies that form part of the supply chain of global brand names. While the impending tapering of quantitative easing by the Fed poses near term headwinds to domestic demand in Southeast Asia, the long term structural fundamentals for these economies remain robust. In essence, these factors augur well for the investment markets and we believe that investing in a multi asset class strategy which has the flexibility to tactically re-allocate to the best performing asset classes, combined with strong risk management features will continue to be beneficial in the months to come. 3

6 B) Investments at fair value and as a percentage of NAV as at 31 December 2013 under review classified by Fair Value (S$) % of NAV i) Country Singapore 8,579, Portfolio of investments 8,579, Other net assets 616, Total 9,196, ii) Industry Unit Trust/Fund 8,579, Portfolio of investments 8,579, Other net assets 616, Total 9,196, iii) Asset Class Fixed Income 8,579, Other net assets 616, Total 9,196, iv) Credit rating of debt securities of S&P NR 8,579, Total 8,579, v) Credit rating of debt securities of Moody s NR 8,579, Total 8,579,

7 C) Top Ten Holdings The top 10 holdings as at 31 December 2013 and 31 December 2012 Percentage of total net assets attributable to 3 largest holdings at 31 December 2013 Fair Value unitholders (S$) % UNITED HIGH GRADE CORPORATE BOND FUND 6,640, UNITED SINGAPORE BOND FUND 1,482, UNITED HIGH GRADE CORPORATE BOND FUND (USD CLASS) 456, There were only 3 holdings as at 31 December 2013 Percentage of total net assets attributable to 7 largest holdings at 31 December 2012 Fair Value unitholders (S$) % UNITED HIGH GRADE CORPORATE BOND FUND 5,362, UNITED SINGAPORE BOND FUND 1,631, MUBADALA DEVELOPMENT CO 5.75% DUE 06/05/ , SPI ELECTRICITY & GAS AUTHORITY 6.15% DUE 15/11/ , ANZ NATIONAL INTL NZ 6.2% DUE 19/07/ , HUTCHISON WHAMPOA INTL 6.5% DUE 13/02/ , WOORI BANK 7% DUE 02/02/ , There were only 7 holdings as at 31 December

8 D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 31 December December 2013 Contract or underlying Positive Negative principal fair fair amount value % of NAV value % of NAV $ $ $ Forward foreign exchange contracts 1,067, , % Total Return Swaps 10,100,800 57, % - - ii) iii) There was a net gain of SGD 16,245 on derivative contracts realised for the financial period ended 31 December There was a net gain of SGD 281,842 on outstanding derivative contracts marked to market as at 31 December E) Amount and percentage of net asset value (NAV) invested in other schemes as at 31 December 2013 Fair Value (S$) % of NAV UNITED HIGH GRADE CORPORATE BOND FUND 6,640, UNITED SINGAPORE BOND FUND 1,482, UNITED HIGH GRADE CORPORATE BOND FUND (USD CLASS) 456, F) Amount and percentage of borrowings to net asset value (NAV) as at 31 December 2013 N/A G) Amount of redemptions and subscriptions for the financial period 01 July 2013 to 31 December 2013 Total amount of redemptions SGD 1,279,207 Total amount of subscriptions SGD 30,298 6

9 H) The amount and terms of related-party transactions for the financial period 01 July 2013 to 31 December 2013 i) As at 31 December 2013 the Fund maintained current accounts with the United Overseas Bank Limited as follows: Bank balances SGD 9,998 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 31 December 2013 N/A iii) Investment in Initial Public Offerings managed by UOB Group. N/A iv) As at 31 December 2013 there was no brokerage income earned by UOB Kay Hian Pte Ltd. I) Expense ratios 31 December % 31 December % Note: The expense ratios have been computed based on the guidelines laid down by the Investment Management Association of Singapore ( IMAS ). This is the sum of the Fund s expense ratio and the weighted average of the underlying Funds expense ratio. All the underlying Funds expense ratios are unaudited. The calculation of the Fund s expense ratio at 31 December 2013 was based on total operating expenses of $153,513 (2012: $246,187) divided by the average net asset value of $9,973,923 (2012: $13,178,948) 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 weekly balances. The expense ratios of the underlying funds are obtained from Underlying Funds Manager. All the underlying Funds expense ratios are unaudited. The weighted average of the underlying Funds unaudited expense ratio is 1.24%. J) Turnover ratios 31 December % 31 December % 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, being purchases of $1,042,033 (2012: purchases of $2,183,269) divided by the average weekly net asset value of $9,418,350 (2012: $11,813,048). 7

10 K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts N/A L) For schemes which invest more than 30% of their deposited property in another scheme, the following key information on the second-mentioned scheme ( the underlying scheme ) 1 should be disclosed as well i) top 10 holdings at fair value and as percentage of NAV as at 30 June 2013 and 30 June largest holdings at 30 June 2013 United High Grade Corporate Bond Fund Percentage of Fair Value total net assets (S$) % BPCE SA 1.70% DUE 25/04/2016 1,260, CARREFOUR BANQUE 2.875% DUE 25/09/ , SWEDBANK AB 3% DUE 05/12/ , ALD INTERNATIONAL 1.875% DUE 13/06/ , AFLAC INC 8.50% DUE 15/05/ , BASF SE 1.875% DUE 04/02/ , ONEOK PARTNERS LP 8.625% DUE 01/03/ , ANHEUSER-BUSCH INBEV 7.75% DUE 15/01/ , ORIGIN ENERGY FINANCE 2.50% DUE 23/10/ , WESTPAC CAPITAL TRST III 5.819% DUE 29/12/49 757, largest holdings at 30 June 2012 United High Grade Corporate Bond Fund Percentage of Fair Value total net assets (S$) % ANHEUSER-BUSCH INBEV 7.75% DUE 15/01/ , ONEOK PARTNERS LP 8.625% DUE 01/03/ , AFLAC INC 8.50% DUE 15/05/ , GENERAL ELEC CAP CORP 6% DUE 7/8/ , PRUDENTIAL FINANCIAL INC 6% DUE 01/12/ , HCP INC 7.072% DUE 8/6/ , WESTERN POWER DIST EAST 5.25% DUE 17/1/23 683, PHILLIPS % DUE 01/04/ , MACQUARIE BANK LTD 5% DUE 22/02/ , AMERICAN INTL GROUP 3.80% DUE 22/03/ ,

11 L) For schemes which invest more than 30% of their deposited property in another scheme, the following key information on the second-mentioned scheme ( the underlying scheme ) 1 should be disclosed as well (continued) ii) expense ratios for the financial period ended 30 June 2013 and 30 June 2012 United High Grade Corporate Bond Fund 30 June % 30 June % 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 30 June 2013 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 transaction 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 Sub-Funds do not pay any performance fee. The average net asset value is based on the daily balances. iii) turnover ratios for the financial period ended 30 June 2013 and 30 June 2012 United High Grade Corporate Bond Fund 30 June % 30 June % 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 net asset value. M) Soft dollar commissions/arrangements UOB Asset Management has entered into soft dollars arrangements with selected brokers from whom products and services are received from third parties. The products and services relate essentially to computer hardware and software to the extent that they are used to support the investment decision making process, research and advisory services, economic and political analyses, portfolio analyses including performance measurements, market analyses, data and quotation services, all of which are believed to be helpful in the overall discharge of UOB Asset Management s duties to clients. As such services generally benefit all of UOB Asset Management s clients in terms of input into the investment decision making process, the soft credits utilised are not allocated on a specific client basis. The Manager confirms that trades were executed on a best execution basis and there was no churning of trades. There were no soft dollar arrangements, rebates, commissions or other money incentives received by UOB Asset Management Ltd. 1 where the underlying scheme is managed by a foreign manager which belongs to the same group of companies as, or has a formal arrangement or investment agreement with, the Singapore manager, the above information should be disclosed on the underlying scheme. In other cases, such information on the underlying scheme should be disclosed only if it is readily available to the Singapore manager. 9

12 STATEMENT OF TOTAL RETURN For the half year ended 31 December 2013 (Un-audited) 31 December 31 December $ $ Income Interest Less: Expenses Management fee 71,087 89,124 Management fee rebate (40,351) (25,566) Trustee fee 2,521 2,377 Audit fee 6,804 6,352 Registrar fee 7,562 7,427 Custody fee 1,492 1,819 Valuation fee 5,924 7,427 Interest expenses Other expenses 19,958 4,468 75,091 93,448 Net loss (74,833) (92,955) Net gains or losses on value of investments and financial derivatives Net gain on investments 278, ,855 Net gain on forward foreign exchange contracts 11, ,509 Net gain on total return swap 286, ,101 Net foreign exchange loss (11,876) (2,750) 564, ,715 Total return for the period 489, ,760 10

13 STATEMENT OF FINANCIAL POSITION As at 31 December 2013 (Un-audited) 31 December 30 June $ $ ASSETS Portfolio of investments 8,579,158 8,391,210 Receivables 20,284 18,821 Cash and bank balances 97,439 1,323,517 Margin account 505, ,320 Financial derivatives at fair value 57,575 5,982 Total Assets 9,259,496 10,246,850 LIABILITIES Payables 58,298 61,171 Financial derivatives at fair value 5, ,323 Total Liabilities 63, ,494 EQUITY Net assets attributable to unitholders 9,196,100 9,955,356 11

14 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 31 December 2013 (Un-audited) 31 December 30 June $ $ Net assets attributable to unitholders at the beginning of the financial period/year 9,955,356 12,918,480 Operations Change in net assets attributable to unitholders resulting from operations 489, ,228 Unitholders contributions/(withdrawals) Creation of units 30,298 32,657 Cancellation of units (1,279,207) (3,612,009) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (1,248,909) (3,579,352) Total decrease in net assets attributable to unitholders (759,256) (2,963,124) Net assets attributable to unitholders at the end of the financial period/year 9,196,100 9,955,356 12

15 STATEMENT OF PORTFOLIO As at 31 December 2013 (Un-audited) By Geography - Primary Quoted Unit Trust Percentage of total net assets Nominal attributable to holdings at Fair value at unitholders at 31 December 31 December 31 December $ % SINGAPORE UNITED HIGH GRADE CORPORATE BOND FUND 5,342,221 6,640, UNITED HIGH GRADE CORPORATE BOND FUND (USD CLASS) 367, , UNITED SINGAPORE BOND FUND 1,180,887 1,482, TOTAL SINGAPORE 8,579, Portfolio of investments 8,579, Other net assets 616, Net assets attributable to unitholders 9,196,

16 STATEMENT OF PORTFOLIO As at 31 December 2013 (Un-audited) By Geography - Primary (Summary) Quoted Unit Trust Percentage of Percentage of total net assets total net assets attributable to attributable to unitholders at unitholders at 31 December 30 June % % Singapore South Korea Accrued interest receivable on quoted bonds Portfolio of investments Other net assets Net assets attributable to unitholders

17 STATEMENT OF PORTFOLIO As at 31 December 2013 (Un-audited) By Industry - Secondary Quoted Unit Trust Percentage of Percentage of total net assets total net assets attributable to attributable to Fair value at unitholders at unitholders at 31 December 31 December 30 June $ % % Financials Unit Trust 8,579, Accrued interest receivable on quoted bonds Portfolio of investments 8,579, Other net assets 616, Net assets attributable to unitholders 9,196,

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