United Real Estate Multi Strategy Funds

Transcription

1 United Real Estate Multi Strategy Funds United Global Real Estate Securities Fund United Asia Pacific Real Estate Income Fund Annual Report for the financial year ended 30 th June 2015

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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 Goh Yu Min Thio Boon Kiat TRUSTEE / REGISTRAR HSBC Institutional Trust Services (Singapore) Limited 21 Collyer Quay #10-02, HSBC Building Singapore CUSTODIAN (For Sub-Fund: United Global Real Estate Securities Fund) State Street Bank and Trust Company One Lincoln Street Boston, MA United States of America CUSTODIAN (For Sub-Fund: United Asia Pacific Real Estate Income Fund) The Hongkong and Shanghai Banking Corporation Limited 1 Queen s Road Central Hong Kong 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 Allen & Gledhill LLP One Marina Boulevard #28-00 Singapore

4 United Global Real Estate Securities Fund A) Fund Performance Fund Performance/ Benchmark Returns 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 04 May 2005 Ann Comp Ret United Global Real Estate Securities Fund Benchmark 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. The benchmark of the Fund: S&P Developed Property Index. For the 12 months ended 30 June 2015, the Fund rose 4.2% on a net-asset-value basis in Singapore dollar terms, compared to the benchmark S&P Developed Property Index which increased by 8.1% during the same period. The Fund s underperformance was largely a result of asset allocation. The Fund s overweight in Australia and underweight in Singapore negatively impacted performance. Security selection, particularly in Hong Kong, United States and United Kingdom contributed positively to performance, while that in the France detracted from performance in the period under review. The contributors to performance included Public Storage, CK Hutchison Holdings Limited, Sun Hung Kai Properties Limited, UDR INC and Realty Income Corporation while Store Capital Corp and American Realty Capital detracted from performance. As at 30 June 2015, the Fund was positioned 52.4% in the United States, 11.5% in Hong Kong, 14.8% in Japan, 7.5% in Australia, 7.3% in United Kingdom, 4.0% in France, 1.3% in other regions and 1.2% in cash. Market Review The global real estate sector performed generally well during the financial year, with only two macro-developments punctuating its ascent during the period. The first came towards the end of September 2014 when the US Federal Reserve (Fed) ended its quantitative easing programme, and investors became concerned over the timing of an interest rate hike. The index declined by 6.1 per cent for that month alone, and it was only with the reiteration of Fed patience by its Chairwoman, Janet Yellen, that the property-related counters recovered. The index managed to post a monthly gain of 6.2 per cent in the following month of October

5 United Global Real Estate Securities Fund Subsequent to this recovery, the sector rallied strongly on the back of gains from Japanese, Hong Kong and selected European markets such as Norway, the UK and Sweden. Investment in Japan was spurred by the low cost of borrowing as a result of Abenomics and relatively healthy yield spreads, as well as improving corporate fundamentals. Hong Kong saw resilient end-user demand for residential properties and relatively stable office leasing activity with low single-digit vacancy rates. For the selected European countries, it was the Scandinavian markets such as Norway and Sweden that surprised on the upside. Strong domestic demand and consumption in spite of weakness in the economy from their traditional reliance on the oil and gas sector lifted the diversified property exposure. Consequently, the index had a year-to-date gain of 6.5 per cent at the end of April However, for the last two months of the financial year in May and June 2015, investor confidence eroded as speculation over the timing of a Fed rate hike resurfaced. This was further exacerbated by overall macro uncertainty from a lack of resolution in the Greek debt crisis, and tepid economic data from the US. The real estate sector also experienced some spill-over effect from fears of a Chinese stock market bubble. This led to a period of strong selling and the index fell 1.2 per cent and 4.1 per cent, respectively, for the months of May and June In terms of sector performance, Specialized REITs, Diversified Real Estate Companies and Residential REITs fared the best within the benchmark. Specialized REITs include companies or trusts that deal with properties not classified elsewhere such as storage properties etc. This sector had the highest average gain of 15.9 per cent for the year, followed by the Diversified Real Estate Companies with an average gain of 15.7 per cent and Residential REITs with an average gain of 11.4 per cent. At the other end, Retail REITs was one of the laggards with a small average gain of 2.8 per cent due to lower overall consumer confidence and retail sales growth figures. Similarly, the Healthcare REIT segment had an average loss of 1.1 per cent for the financial year as investors shunned counters that had exposure to less desired healthcare assets such as hospitals for counters that had exposure to more stable medical facilities such as nursing homes. Market Outlook We believe that the impending Fed rate hikes have been largely priced into valuations and expect the pace of subsequent rate hikes to be one of the slowest in history with around two rate increases in 2015 and three more in That said, our base case expectation is that economic data will rebound, the economy will adapt to interest rate increases in the US and corporate revenues will resume their growth. If the cycle continues as expected, we would expect risk assets like equities to outperform other asset classes. However in the near-term, we can expect some volatility as a result of potentially weak economic data and political risks, most notably in Europe. 3

6 United Global Real Estate Securities Fund B) Investments at fair value and as a percentage of NAV as at 30 June 2015 under review classified by i) Country Fair Value (S$) % of NAV Australia 642, Austria 14, Canada 97, France 338, Hong Kong 980, Japan 1,258, United Kingdom 623, United States 4,462, Portfolio of investments 8,418, Other net assets 103, Total 8,522, ii) Industry Consumer Discretionary 103, Financials 8,315, Portfolio of investments 8,418, Other net assets 103, Total 8,522, iii) Asset Class Equities 8,418, Other net assets 103, Total 8,522, iv) Credit rating of debt securities N/A 4

7 United Global Real Estate Securities Fund C) Top Ten Holdings The top 10 holdings as at 30 June 2015 and 30 June largest holdings at 30 June 2015 Percentage of total net assets attributable to Fair Value unitholders (S$) % SUN HUNG KAI PROPERTIES LIMITED 654, SIMON PROPERTY GROUP LTD 512, MITSUI FUDOSAN COMPANY LTD 452, MITSUBISHI ESTATE CO LTD 406, AVALONBAY COMMUNITIES INC 365, HCP INC 343, BRITISH LAND CO PLC 342, STORE CAPITAL CORP 330, HOST HOTELS & RESORTS INC 317, GLADSTONE COMMERCIAL CORPORATION 283, largest holdings at 30 June 2014 Percentage of total net assets attributable to Fair Value unitholders (S$) % HCP INC 500, NIPPON BUILDING FUND 466, BIOMED REALTY TRUST INC 424, MERCIALYS 422, SUN HUNG KAI PROPERTIES LIMITED 410, EQUITY RESIDENTIAL 376, PUBLIC STORAGE 363, CFS RETAIL PROPERTY TRUST GROUP 337, SEGRO PLC 323, VENTAS INC 287,

8 United Global Real Estate Securities Fund D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2015 N/A ii) net gains/(losses) on derivative contracts realised during the financial year ended 30 June 2015 N/A iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2015 N/A E) Amount and percentage of net asset value (NAV) invested in other schemes as at 30 June 2015 Please refer to the Portfolio Statement on page 24 to 26 F) Amount and percentage of borrowings to net asset value (NAV) as at 30 June 2015 N/A G) Amount of redemptions and subscriptions for the financial year ended 30 June 2015 Total amount of redemptions SGD 2,979,136 Total amount of subscriptions SGD 2,362,006 H) The amount and terms of related-party transactions for the financial year ended 30 June 2015 i) As at 30 June 2015 the Fund maintained current accounts with the United Overseas Bank Limited as follows: Bank balances SGD 3,125 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June N/A iii) Investment in Initial Public Offerings managed by UOB Group. N/A iv) As at 30 June 2015 there was no brokerage income earned by UOB Kay Hian Pte Ltd. 6

9 United Global Real Estate Securities Fund I) Expense ratios 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 Sub-Fund s expense ratio at 30 June 2015 was based on total operating expenses of $201,795 (2014: $224,258) divided by the average net asset value of $9,055,326 (2014: $10,341,286) 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 Sub-Fund does not pay any performance fee. The average net asset value is based on the daily balances. J) Turnover ratios 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, being purchases of $20,686,658 (2014: purchases of $16,348,267) divided by the average daily net asset value of $9,055,326 (2014: $10,341,286). 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 market value and as percentage of NAV as at 30 June 2015 and 30 June 2014 N/A ii) expense ratios for the financial year ended 30 June 2015 and 30 June 2014 N/A iii) turnover ratios for the financial year ended 30 June 2015 and 30 June 2014 N/A 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. 7

10 United Global Real Estate Securities Fund 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. N) Where the scheme offers pre-determined payouts, an explanation on the calculation of the actual payouts received by participants and any significant deviation from the predetermined payouts N/A 8

11 United Asia Pacific Real Estate Income Fund A) Fund Performance Class SGD Acc Fund Performance/ Benchmark Returns 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 17 June 2013 Ann Comp Ret United Asia Pacific Real Estate Income Fund N/A N/A N/A 6.51 Benchmark N/A N/A N/A 9.54 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. The benchmark of the Fund: S&P Asia Pacific REITs Index. Class SGD Dist Fund Performance/ Benchmark Returns 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 17 June 2013 Ann Comp Ret United Asia Pacific Real Estate Income Fund N/A N/A N/A 6.32 Benchmark N/A N/A N/A 9.54 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. The benchmark of the Fund: S&P Asia Pacific REITs Index. Class USD Dist Fund Performance/ Benchmark Returns 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 25 November 2014 Ann Comp Ret United Asia Pacific Real Estate Income Fund N/A N/A N/A N/A Benchmark N/A N/A N/A N/A 0.11 Source: Lipper, a Thomson Reuters Company. Note: The performance returns of the Fund are in United States dollars based on a NAV-to-NAV basis with net dividends reinvested. The benchmark of the Fund: S&P Asia Pacific REITs Index. 9

12 United Asia Pacific Real Estate Income Fund Class SGD Acc For the year ended 30 June 2015, the Fund rose by 5.6%, compared with a 6.4% increase in the benchmark S&P Asia Pacific REITs Index, in Singapore dollar terms. Class SGD Dist For the year ended 30 June 2015, the Fund rose by 5.5%, compared with a 6.4% increase in the benchmark S&P Asia Pacific REITs Index, in Singapore dollar terms. Class USD Dist For the period from inception on 25 November 2014 to 30 June 2015, the Fund fell by 0.9%, compared with a 0.1% increase in the benchmark S&P Asia Pacific REITs Index, in US dollar terms. The Fund underperformed the benchmark due mainly to its overweight position in Australia and Japan REITs and underweight in Hong Kong REITs. Hong Kong REITS outperformed despite high valuations due to asset recycling and strong rental reversions. Japan REITs, in which the Fund had an overweight position, underperformed REITs in Hong Kong and Singapore. This was offset by positive stock selection in Japan. The Fund s holdings in Daiwa Office Investment Corporation, Ichigo Real Estate Investment Corporation and Japan Hotel REIT Investment Corporation contributed to performance. The key detractors from performance were Japan Retail Fund Investment Corporation (Japan) Nippon Building Fund (Japan), Stockland (Australia) and Mirvac Group (Australia). During the period under review, the Fund trimmed its exposure to Japan and raised its weight in Hong Kong and Singapore. As at 30 June 2015, the Fund was positioned 34.8% in Australia, 39.9% in Japan, 8.0% in Hong Kong, 13.7% in Singapore with the remainder 3.6% in cash. Economic and Market Review Asia Pacific real estate investment trusts (REITs) gained in the year under review, but underperformed the global REITs and the broader Asia Pacific equity market. High yield investments including REITs were in favour in the first six months of the review period due to the low interest rate environment but lagged in the later six months on rising global government bond yields. The sector declined in the second quarter of 2015 on interest rate volatility, driven by renewed concerns over Greece s debt crisis and speculation on the timing of the first rate hike in the US. Economic indicators across the major Asia Pacific economies generally deteriorated on the back of an uneven global recovery. Exports in the major Asia economies contracted while industrial production slowed. Events globally such as a substantial decline in oil price in the second half of 2014 as well as the surprise move by Japan to further ease monetary policy also impacted markets. The key positive was a stabilisation in inflation, which enabled central banks across the Asia Pacific region to ease monetary policy, including Japan, Australia, China, Korea, India, Singapore and Thailand. 10

13 United Asia Pacific Real Estate Income Fund REITs globally, including Asia Pacific REITs, enjoyed positive returns as long-term expectations for interest rates remained low and yield spreads remained attractive. The best-performing Asia Pacific REIT markets for the period under review were Hong Kong and Singapore as the US Federal Reserve pushed back its first rate hike that had been widely anticipated to take place in June. Australia and Japan underperformed due to interest rate volatility but still posted positive returns. Japan REITs enjoyed strong performance in the first six months but saw profit-taking in the later six months after reaching record highs in December Outlook and Fund Strategy Asia Pacific markets continue to benefit from low interest rates and strong liquidity flow. Low inflation provides room for central banks to ease policy to support growth. There is some concern over when the US will raise interest rates and the impact on REITs as an asset class. However we believe that the normalisation of rates is taking place in tandem with a sustainable recovery in global growth. The overall liquidity backdrop is expected to remain supportive for Asia Pacific REITs. In Japan, core consumer price index (CPI) net of the impact of the consumption tax hike in 2014 has trended down due to low oil prices. The Bank of Japan also revised down its core CPI outlook for FY2015 and FY2016, while giving a positive assessment of the economy based on improving private consumption and housing investment. The physical property market continues to recover as seen in the office rental growth. Vacancy rates have fallen to the lowest levels since 2002 and the recovery seems to be broadening to other areas of Japan apart from Tokyo. Boosted by supportive measures and rising real estate prices, we expect more capital market activities in the J-REITs sector including acquisitions, divestments and public offerings. We are overweight J-REITs, in particular the hospitality segment which is a key beneficiary of rising inbound travel. Macroeconomic conditions in Australia are more mixed, as weak commodity prices continue to weigh on economic growth. In view of downside risks to GDP growth, the Reserve Bank of Australia cut its policy rate in February and May The low interest rate environment has supported the physical property market with prudential measures on the housing market so far targeted at foreign investors. Notwithstanding these measures, global investors continue to be active in the physical property market, including residential and commercial properties. With stability in the physical property market, AREITs will be encouraged to increase property acquisitions, which will underpin growth in distribution per unit (DPU). We are underweight A-REITs due to the less attractive yield spread, favouring the retail segment where a number of REITs are undergoing restructuring or mergers. In Singapore, the final refinements of the regulatory framework for S-REITs were announced in July after months of consultation. We believe these proposed measures to strengthen the corporate governance of S-REITs and to enhance the disclosure on REIT income support and operating expenses would help to improve investors perception and confidence in the sector. This should help to improve valuations in the long-term. S-REITs offer yield spread of 300bps over the risk-free rate, which is the largest yield spread in the region. We are underweight but look to raise our weights in SREITs, favouring retail and industrial REITs with resilient DPU. 11

14 United Asia Pacific Real Estate Income Fund Yield spreads for the Hong Kong REIT sector widened over the last two months, hence total returns look relatively more attractive in US Dollar terms. We expect retail rents in the H-REIT space to be resilient given that these are not exposed to luxury retail which has been lacklustre. Office rents have also picked up due to limited new supply and rising economic activity in financial services. We also see better value in smaller H-REITs which are trading at more attractive yields. We are neutral the Hong Kong REIT sector as yield spreads are less attractive. The Asia Pacific REIT market presents an attractive investment proposition from a total return perspective, with a combination of stable dividend yield and upside potential for asset valuations. Investors have increased allocation to long-dated assets including real estate as institutional investors such as pension funds seek to match the duration of their liabilities with their assets. We believe that this is a structural trend and Asia Pacific REITs should feature as a key investment component in investors diversified portfolios. While rising interest rates could lead to cap rate expansion, rental growth will be able to offset most of this impact. Corporate balance sheets have also improved after the global financial crisis and many REITs have taken steps to manage their refinancing needs in anticipation of higher interest rates. Hence any impact on valuations and earnings should be manageable if rates rise in a gradual and orderly manner. 12

15 United Asia Pacific Real Estate Income Fund B) Investments at fair value and as a percentage of NAV as at 30 June 2015 under review classified by i) Country Fair Value (S$) % of NAV Australia 1,744, Hong Kong 399, Japan 1,997, Singapore 688, Portfolio of investments 4,829, Other net assets 180, Total 5,009, ii) Industry Diversified REITs 1,403, Financials REITs 111, Hotel & Resort REITs 81, Industrial REITs 358, Office REITs 997, Residential REITs 376, Retail REITs 1,351, Specialised REITs 147, Portfolio of investments 4,829, Other net assets 180, Total 5,009, iii) Asset Class Equities 4,829, Other net assets 180, Total 5,009, iv) Credit rating of debt securities N/A 13

16 United Asia Pacific Real Estate Income Fund C) Top Ten Holdings The top 10 holdings as at 30 June 2015 and 30 June largest holdings at 30 June 2015 Percentage of total net assets attributable to Fair Value unitholders (S$) % SCENTRE GROUP 372, NIPPON BUILDING FUND 265, DAIWA OFFICE INVESTMENT CORPORATION 264, STOCKLAND 224, THE LINK REIT 220, FEDERATION CENTRES 220, GOODMAN GROUP 194, WESTFIELD CORP 184, NIPPON ACCOMMODATIONS FUND 182, DEXUS PROPERTY GROUP 156, largest holdings at 30 June 2014 Percentage of total net assets attributable to Fair Value unitholders (S$) % DAIWA OFFICE INVESTMENT CORPORATION 456, SCENTRE GROUP 327, MIRVAC GROUP 312, DEXUS PROPERTY GROUP 279, THE LINK REIT 228, GOODMAN GROUP 225, STOCKLAND 223, NIPPON BUILDING FUND 218, FEDERATION CENTRES 184, ORIX JREIT INC 183,

17 United Asia Pacific Real Estate Income Fund D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2015 N/A ii) net gains/(losses) on derivative contracts realised during the financial year ended 30 June 2015 N/A iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2015 N/A E) Amount and percentage of net asset value (NAV) invested in other schemes as at 30 June 2015 Please refer to the Portfolio Statement on page 29 to 31 F) Amount and percentage of borrowings to net asset value (NAV) as at 30 June 2015 N/A G) Amount of redemptions and subscriptions for the financial year ended 30 June 2015 Total amount of redemptions SGD 4,069,416 Total amount of subscriptions SGD 4,060,019 H) The amount and terms of related-party transactions for the financial year ended 30 June 2015 i) As at 30 June 2015 the Fund maintained current accounts with the United Overseas Bank Limited as follows: Bank balances SGD 1,604 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June N/A iii) Investment in Initial Public Offerings managed by UOB Group. N/A iv) As at 30 June 2015 there was no brokerage income earned by UOB Kay Hian Pte Ltd. 15

18 United Asia Pacific Real Estate Income Fund I) Expense ratios 2015 For the financial period from 20 February 2013 (date of constitution) to 30 June 2014 Expense ratio (including preliminary expenses) 2.93% 2.62% Expense ratio (excluding preliminary expenses) 2.93% 2.15% Note: The expense ratios have been computed based on the guidelines laid down by the Investment Management Association of Singapore ( IMAS ). The calculation of the Sub-Fund s expense ratios at 30 June 2015 was based on total operating expenses of $102,311 (2014: $284,060 ($234,933 excluding preliminary expenses)) divided by the average net asset value of $3,492,693 (2014: $10,511,518) 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-Fund does not pay any performance fee. The average net asset value is based on the daily balances. J) Turnover ratios 2015 For the financial period from 20 February 2013 (date of constitution) to 30 June 2014 Turnover ratio % % 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 $7,362,914 (2014: sales of $22,636,347) divided by the average daily bet asset value of $3,492,693 (2014: $10,511,518). K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts N/A 16

19 United Asia Pacific Real Estate Income Fund 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 market value and as percentage of NAV as at 30 June 2015 and 30 June 2014 N/A ii) expense ratios for the financial year ended 30 June 2015 and 30 June 2014 N/A iii) turnover ratios for the financial year ended 30 June 2015 and 30 June 2014 N/A 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. N) Where the scheme offers pre-determined payouts, an explanation on the calculation of the actual payouts received by participants and any significant deviation from the predetermined payouts N/A 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. 17

20 REPORT OF THE TRUSTEE The Trustee is under a duty to take into custody and hold the assets of the Sub-Funds of United Real Estate Multi Strategy Funds (the Sub-Funds ) 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 Sub-Funds during the year covered by these financial statements, set out on pages 21 to 57, 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 HSBC INSTITUTIONAL TRUST SERVICES (SINGAPORE) LIMITED Authorised signatory 21 September

21 STATEMENT BY THE MANAGER In the opinion of the directors of UOB Asset Management Ltd, the accompanying financial statements set out on pages 21 to 57, comprising the Statements of Total Return, Statements of Financial Position, Statements of Movements of Unitholders Funds, Statements of Portfolio and Notes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial positions of the Sub-Funds of (the Sub-Funds ) as at 30 June 2015, and the total returns and changes 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 Sub-Funds will be able to meet its financial obligations as and when they materialise. For and on behalf of the Manager UOB ASSET MANAGEMENT LTD THIO BOON KIAT Authorised signatory 21 September

22 INDEPENDENT AUDITOR S REPORT TO THE UNITHOLDERS OF UNITED REAL ESTATE MULTI STRATEGY FUNDS We have audited the accompanying financial statements of Sub-Funds of United Real Estate Multi Strategy Funds (the Sub-Funds ), which comprise the Statements of Financial Position and Statements of Portfolio as at 30 June 2015, the Statements of Total Return and Statements of Movements of Unitholders Funds for the year then ended, and a summary of significant accounting policies and other explanatory information, as set out on pages 21 to 57. Manager s Responsibility for the Financial Statements The Sub-Funds Manager (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. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Sub-Fund s preparation and fair presentation of the financial statements 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 Sub-Fund s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Manager, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements present fairly, in all material respects, the financial positions of the Sub-Funds as at 30 June 2015 and the total returns 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. PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore, 21 September

23 STATEMENTS OF TOTAL RETURN For the financial year ended 30 June 2015 United Global Real Estate Securities Fund United Asia Pacific Real Estate Income Fund For the financial period from 20 February 2013 (date of constitution) to 30 June 2014 Note $ $ $ $ Income Dividends 365, , , ,271 Interest , , , ,302 Less: Expenses Management fee 9 117, ,342 52, ,403 Trustee fee 9 5,000 5,000 5,000 5,192 Audit fee 17,400 17,100 17,300 17,000 Registrar fee 9 15,000 15,000 15,000 15,575 Valuation fee 9 11,324 12,918 4,344 13,617 Custody fee 12,803 17, ,757 Interest expenses Preliminary expenses ,127 Transaction cost 46,521 41,715 45, ,936 Other expenses 30,059 50,329 7,916 18, , , , ,996 Net income 109, ,291 1, ,306 Net gains or losses on value of investments Net gains on investments 319, ,303 99, ,458 Net foreign exchange gains/(losses) 21,045 (10,111) (8,841) (78,454) 340, ,192 90, ,004 Total return for the year/period before income tax 449, ,483 91, ,310 Less: Income tax 3 (67,954) (85,897) (18,672) (86,070) Total return for the year/period 381, ,586 73, ,240 The accompanying notes form an integral part of these financial statements. 21

24 STATEMENTS OF FINANCIAL POSITION As at 30 June 2015 United Global Real Estate Securities Fund United Asia Pacific Real Estate Income Fund Note $ $ $ $ ASSETS Portfolio of investments 8,418,643 9,234,640 4,829,303 5,132,897 Receivables 5 36,843 51,077 42,980 48,266 Sales awaiting settlement , ,134 Cash and bank balances 254,880 85, ,293 85,729 Total Assets 8,710,366 9,371,522 5,184,291 5,951,026 LIABILITIES Payables 6 99,994 86,951 43, ,560 Purchases awaiting settlement , ,069 Proposed distribution payable 4 88,215 87,109 18,039 48,210 Bank overdraft - 86, Total Liabilities 188, , , ,839 EQUITY Net assets attributable to unitholders 7 8,522,157 9,111,372 5,009,711 5,070,187 The accompanying notes form an integral part of these financial statements. 22

25 STATEMENTS OF MOVEMENTS OF UNITHOLDERS FUNDS For the financial year ended 30 June 2015 United Global Real Estate Securities Fund United Asia Pacific Real Estate Income Fund For the financial period from 20 February 2013 (date of constitution) to 30 June 2014 Note $ $ $ $ Net assets attributable to unitholders at the beginning of the financial year/period 9,111,372 11,476,591 5,070,187 - Operations Change in net assets attributable to unitholders resulting from operations 381, ,586 73, ,240 Unitholders contributions/ (withdrawals) Creation of units 2,362,006 1,101,565 4,060,019 14,262,300 Cancellation of units (2,979,136) (3,879,346) (4,069,416) (9,489,574) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (617,130) (2,777,781) (9,397) 4,772,726 Distribution 4 (353,891) (398,024) (124,102) (225,779) Total (decrease)/increase in net assets attributable to unitholders (589,215) (2,365,219) (60,476) 5,070,187 Net assets attributable to unitholders at the end of the financial year/period 7 8,522,157 9,111,372 5,009,711 5,070,187 The accompanying notes form an integral part of these financial statements. 23

26 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary Quoted Equities United Global Real Estate Securities Fund Percentage of total net assets attributable to Holdings at 30 June 2015 Fair value at 30 June 2015 unitholders at 30 June 2015 $ % AUSTRALIA CROMWELL PROPERTY GROUP 200, , INDUSTRIA REIT 63, , STOCKLAND 38, , WESTFIELD CORP 15, , TOTAL AUSTRALIA 642, AUSTRIA BUWOG AG , CANADA RETROCOM REAL ESTATE INVESTM 25,400 97, FRANCE ICADE 1, , KLEPIERRE 2, , UNIBAIL - RODAMCO SE , TOTAL FRANCE 338, HONG KONG CHEUNG KONG PROPERTY HOLDING 4,000 44, CHINA OCEANWIDE HOLDINGS LTD 232,000 59, LANGHAM HOSPITALITY INVESTMENTS LIMITED 178, , ROAD KING INFRASTRUCTURE LIMITED 85, , SUN HUNG KAI PROPERTIES LIMITED 30, , SUN HUNG KAI PROPERTIES LIMITED WARRANT DUE 22/04/2016 2,000 9, TOTAL HONG KONG 980, The accompanying notes form an integral part of these financial statements. 24

27 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary (continued) Quoted Equities United Global Real Estate Securities Fund Percentage of total net assets attributable to Holdings at 30 June 2015 Fair value at 30 June 2015 unitholders at 30 June 2015 $ % JAPAN DAIWA HOUSE INDUSTRY CO LTD 2,900 91, JAPAN REAL ESTATE INVESTMENT CORPORATION , MITSUBISHI ESTATE CO LTD 14, , MITSUI FUDOSAN COMPANY LTD 12, , NIPPON BUILDING FUND INC 16 94, TOTAL JAPAN 1,258, UNITED KINGDOM BRITISH LAND CO PLC 20, , INTU PROPERTIES PLC 43, , TOTAL UNITED KINGDOM 623, UNITED STATES AMERICAN REALTY CAPITAL PROPERTIES 7,700 84, AVALONBAY COMMUNITIES INC 1, , BIOMED REALTY TRUST INC 3,200 83, CBL & ASSOCIATES PROPERTIES INC 1,200 26, DDR CORP 7, , EQUITY RESIDENTIAL 1, , EXCEL TRUST INC 3,600 76, GLADSTONE COMMERCIAL CORPORATION 12, , GOVERNMENT PROPERTIES INCOME TRUST 2,300 57, HCP INC 7, , HEALTH CARE REIT INC 1, , HOME PROPERTIES INC 1, , HOSPITALITY PROPERTIES TRUST 4, , HOST HOTELS & RESORTS INC 11, , Balance carried forward 2,421, The accompanying notes form an integral part of these financial statements. 25

28 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary (continued) Quoted Equities United Global Real Estate Securities Fund Percentage of total net assets attributable to Holdings at 30 June 2015 Fair value at 30 June 2015 unitholders at 30 June 2015 $ % UNITED STATES (continued) Balance brought forward 2,421, INVESTORS REAL ESTATE TRUST 7,900 75, KIMCO REALTY CORPORATION 1,400 42, LEXINGTON REALTY TRUST 200 2, LIBERTY PROPERTY TRUST 4, , MACERICH COMPANY 1, , MEDICAL PROPERTIES TRUST INC , SELECT INCOME REIT 4, , SIMON PROPERTY GROUP LTD 2, , STAG INDUSTRIAL INC , STORE CAPITAL CORP 12, , SUNSTONE HOTEL INVESTORS INC 87 1, URBAN EDGE PROPERTIES , VENTAS INC 2, , VORNADO REALTY TRUST 1, , WHITESTONE REIT 300 5, WP CAREY INC 2, , TOTAL UNITED STATES 4,462, Portfolio of investments 8,418, Other net assets 103, Net assets attributable to unitholders 8,522, The accompanying notes form an integral part of these financial statements. 26

29 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary (Summary) Quoted Equities United Global Real Estate Securities Fund Percentage of Percentage of total net assets total net assets attributable to attributable to unitholders at unitholders at 30 June 30 June % % Australia Austria Canada France Hong Kong Japan Netherlands Singapore United Kingdom United States Portfolio of investments Other net assets/(liabilities) 1.21 (1.35) Net assets attributable to unitholders The accompanying notes form an integral part of these financial statements. 27

30 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Industry - Secondary Quoted Equities United Global Real Estate Securities Fund Fair value at 30 June 2015 Percentage of total net assets attributable to unitholders at 30 June 2015 Percentage of total net assets attributable to unitholders at 30 June 2014 $ % % Consumer Discretionary 103, Financials 8,315, Portfolio of investments 8,418, Other net assets/(liabilities) 103, (1.35) Net assets attributable to unitholders 8,522, The accompanying notes form an integral part of these financial statements. 28

31 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary Quoted Equities United Asia Pacific Real Estate Income Fund Percentage of total net assets attributable to Holdings at 30 June 2015 Fair value at 30 June 2015 unitholders at 30 June 2015 $ % AUSTRALIA CHARTER HALL GROUP 15,000 70, CROMWELL PROPERTY GROUP 44,000 46, DEXUS PROPERTY GROUP 20, , FEDERATION CENTRES 73, , GOODMAN GROUP 30, , GROWTHPOINT PROPERTIES AUSTRALIA LIMITED 10,027 32, INVESTA OFFICE FUND 23,000 90, MIRVAC GROUP 79, , SCENTRE GROUP 96, , STOCKLAND 53, , WESTFIELD CORP 19, , TOTAL AUSTRALIA 1,744, HONG KONG CHAMPION REAL EASTATE INVESTMENT TRUST 150, , FORTUNE REIT 50,000 67, THE LINK REIT 28, , TOTAL HONG KONG 399, The accompanying notes form an integral part of these financial statements. 29

32 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary (continued) Quoted Equities United Asia Pacific Real Estate Income Fund Percentage of total net assets attributable to Holdings at 30 June 2015 Fair value at 30 June 2015 unitholders at 30 June 2015 $ % JAPAN ACTIVIA PROPERTIES INC 9 102, DAIWA HOUSE REIT INVESTMENT 16 90, DAIWA OFFICE INVESTMENT CORPORATION , FUKUOKA REIT CORPORATION 27 63, HULIC REIT INC , ICHIGO REAL ESTATE INVESTMENT CORPORATION , INDUSTRIAL & INFRASTRUCTURE FUND INVESTMENT CORPORATION 13 79, INVINCIBLE INVESTMENT CORP , JAPAN HOTEL REIT INVESTMENT CORPORATION , JAPAN RETAIL FUND INVESTMENT CORPORATION 26 70, KENEDIX RETAIL REIT CORPORATION , NIPPON ACCOMMODATIONS FUND , NIPPON BUILDING FUND , NOMURA REAL ESTATE MASTER FUND INC , ORIX JREIT INC , TOTAL JAPAN 1,997, The accompanying notes form an integral part of these financial statements. 30

33 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary (continued) Quoted Equities United Asia Pacific Real Estate Income Fund Percentage of total net assets attributable to Holdings at 30 June 2015 Fair value at 30 June 2015 unitholders at 30 June 2015 $ % SINGAPORE CAPITALAND COMMERCIAL TRUST 50,000 78, CAPITALAND MALL TRUST 45,000 96, CDL HOSPITALITY TRUST 50,000 81, MAPLETREE COMMERCIAL TRUST 38,000 55, MAPLETREE GREATER CHINA COMMERCIAL TRUST 60,000 61, MAPLETREE LOGISTICS TRUST 75,000 84, SOILBUILD BUSINESS SPACE REIT 180, , SUNTEC REIT 45,000 77, TOTAL SINGAPORE 688, Portfolio of investments 4,829, Other net assets 180, Net assets attributable to unitholders 5,009, The accompanying notes form an integral part of these financial statements. 31

34 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Geography - Primary (Summary) Quoted Equities United Asia Pacific Real Estate Income Fund Percentage of Percentage of total net assets total net assets attributable to attributable to unitholders at unitholders at 30 June 30 June % % Australia Hong Kong Japan Singapore Portfolio of investments Other net assets/(liabilities) 3.60 (1.24) Net assets attributable to unitholders The accompanying notes form an integral part of these financial statements. 32

35 STATEMENTS OF PORTFOLIO As at 30 June 2015 By Industry - Secondary Quoted Equities United Asia Pacific Real Estate Income Fund Fair value at 30 June 2015 Percentage of total net assets attributable to unitholders at 30 June 2015 Percentage of total net assets attributable to unitholders at 30 June 2014 $ % % Diversified REITs 1,403, Financials REITs 111, Hotel & Resort REITs 81, Industrial REITs 358, Office REITs 997, Residential REITs 376, Retail REITs 1,351, Specialised REITs 147, Portfolio of investments 4,829, Other net assets/(liabilities) 180, (1.24) Net assets attributable to unitholders 5,009, The accompanying notes form an integral part of these financial statements. 33

36 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2015 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1. General (the Fund ) is a Singapore registered umbrella fund constituted under a Trust Deed dated 2 February 2005 between UOB Asset Management Ltd (the Manager ) and HSBC Institutional Trust Services (Singapore) Limited (the Trustee ). The Trust Deed is governed by the laws of the Republic of Singapore. The Fund comprises of two sub-funds, namely United Global Real Estate Securities Fund (the Sub-Fund ) and United Asia Pacific Real Estate Income Fund (the Sub-Fund ) which are denominated in Singapore Dollar (collectively refer to Sub-Funds ). The primary activity of the Fund is that of investment trading. The Sub-Funds investment objectives are stated below: United Global Real Estate Securities Fund The investment objective of this Sub-Fund is to seek total return consisting of income and capital appreciation over time. The Sub-Fund will invest in, and at the same time seek to provide diversified exposure to, the global real estate market; this will be done primarily through investment in real estate investment trusts (including business trusts) and dividend paying equity securities of companies which are principally engaged in the real estate industry. Subscriptions and redemptions of the units are denominated in Singapore Dollar and United States Dollar. Investors may subscribe in United States Dollar at the applicable rate of exchange from Singapore Dollar. United Asia Pacific Real Estate Income Fund The investment objective of this Sub-Fund is to seek total return consisting of income and capital appreciation over the medium to long term by investing primarily in Real Estate Investment Trusts ( REITs ) listed in the Asia Pacific region (including Japan, Australia and New Zealand). Subscriptions and redemptions of the units are denominated in Singapore Dollar, United States Dollar and Japanese Yen. Investors may subscribe in United States Dollar and Japanese Yen at the applicable rate of exchange from Singapore Dollar. 34

37 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Significant accounting policies (a) Basis of preparation The financial statements have been prepared under the historical cost convention, modified by the revaluation of financial assets 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 issued by the Institute of Singapore Chartered Accountants. (b) Recognition of income Dividend income is recognised when the right to receive payment is established. Interest income is recognised on a time proportion basis using the effective interest method. (c) Investments Investments are classified as financial assets at fair value through profit or loss. (i) Initial recognition Purchase of investments are recognised on the trade date. Investments are recorded at fair value on initial recognition. (ii) Subsequent measurement Investments are subsequently carried at fair value. Net change in fair value on investments are included in the Statements of Total Return in the year in which they arise. (iii) Derecognition 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 Statements 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 investments held by the Sub-Funds are 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. 35