United Global Telecoms Fund

Transcription

1 United Global Telecoms Fund Semi Annual Report for the half year ended 30 June 2017

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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 Lee Wai Fai Cheo Chai Hong Goh Yu Min Thio Boon Kiat TRUSTEE State Street Trust (SG) Limited 168 Robinson Road #33-01, Capital Tower Singapore CUSTODIAN / ADMINISTRATOR / REGISTRAR State Street Bank and Trust Company, acting through its Singapore Branch 168 Robinson Road #33-01, Capital Tower Singapore 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 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 16 August 1999 Ann Comp Ret Fund Performance/ Benchmark Returns United Global Telecoms Fund Benchmark Source: Note: Lipper, a Thomson Reuters Company. The performance returns of the Fund are in Singapore dollars based on a NAV-to-NAV basis with dividends and distributions reinvested, if any. The benchmark of the Fund: MSCI ACWI Telecoms. For the half year ended 30 June 2017, the net asset value of the Fund decrease 2.87% and the benchmark MSCI AC World Telecom Index declined by 2.92% (in Singapore dollar terms). The Fund performed in-line with its benchmark, with positive contribution from securities selection in US, partially offset by unfavourable currency effects from holdings in the same region. The top contributors to the Fund s performance included Vodafone (UK), Softbank (JP), NTT (JP). Key detractors were Verizon (US), AT&T (US) and China Mobile (HK). As at 30 June 2017, the Fund had the following country asset allocation: United States (39.45%), Japan (17.70%), Germany (7.12%), United Kingdom (5.87%), France (4.88%), Hong Kong (4.66%), Others (19.55%) and Cash (0.77%). In terms of sub-sector allocation, the Fund had 85.34% weight in Telecommunications Services providers, 9.07% in Cable Operators, 4.82% in Internet companies and 0.77% in cash. Economic and Market Review Total shareholder return of the global telecommunications (telecom) sector dipped (in Singapore dollar terms) in the first half of fiscal year While telecom operators in Japan, Europe and Asia Pacific ex-japan delivered decent performance, the overall sector performance was dragged down by strikingly poor performance by the US players. Over the initial six months of 2017, US wireless firms ceded nearly half of the stellar share price gains from The underwhelming performance can be chiefly attributed to the introduction of new plans with unlimited data offerings by an incumbent in February. Moreover, hopes for a recovery were dimmed after the news media suggested that consolidation talks between the smaller competitors were stalled. On the other hand, stock performance of cable operators was robust over the same period, underpinned by buoyant broadband growth momentum. Conversely, the share prices of European telecom companies recovered modestly in the first half of 2017 after a remarkably disappointing performance in We believe the key positive factors were favourable results driven by better-than-expected margins, as well as retreating political risks in the region. Notably, operators are increasingly optimistic of the opportunities for further operating cost efficiency despite the extended softness of top-line growth. Telecom operators in Japan were among the best regional share performers on expanding shareholder return, as well as rising value of e-commerce related investment by a player. As for other parts of Asia Pacific, share performance was fairly good notwithstanding a lacklustre earnings season. With the exception of Indonesia, Thailand and China, wireless service revenue growth in the first quarter across all major markets were either flat or negative. -2-

5 A) Fund Performance (continued) Outlook and Fund Strategy In US, we turned underweight on telecom operators, but keep our overweight stance on cable operators. We opine that competition intensify in the telecom industry is unlikely to abate in the medium run, baring successful consolidation and renewed industry focus on profitability over subscriber share. Cable operators are still our clear favourites in the nation, backed by their healthy growth prospect driven by fixed line sales. We reverse our tactical underweight call on European operators to overweight. Our bullish view stem from lowered political risks in the region, greater visibility on the impact of roaming charges abolishment starting mid-june, as well as attractive yield play. Our core preferences are telecom operators who are well positioned to benefit from wireless pricing recovery, efficiency-driven margin expansion, and potential in-market consolidation. We have trimmed our overweight position in Japanese telecom service providers. We are convinced the providers can continue to drive greater shareholder return on the back of sturdy cash flows, but recognise the mildly deteriorating competitive outlook amplified by branded wireless resellers. We stay underweight on Asia Pacific ex-japan players primarily due to elevated threat of mobile competition and new entrants. We remain keen in operators in selected developing countries with longer-term growth potential, but prefer to wait for firmer evidence that earnings decline has bottomed. We will maintain a focus on high quality firms with strong franchises. Our investment targets are companies with superior networks, economies of scale, or differentiating technologies. The firm has to exhibit the ability to outperform in a highly competitive and tough regulatory environment with profitability that is commensurate with capital invested. The Fund is mainly invested in telecom companies within developed markets which would provide strong stable growing dividends, as well as emerging market telecom operators and cable/satellite operators that provide both growth and defensive characteristics at reasonable valuation. -3-

6 B) Investments at fair value and as a percentage of net asset value ( NAV ) as at 30 June 2017 under review classified by i) Country Fair Value (S$) % of NAV Australia 195, Finland 372, France 804, Germany 1,172, Hong Kong 767, Indonesia 548, Japan 2,917, Mexico 346, Norway 443, Singapore 616, Spain 698, United Kingdom 967, United States 6,500, Portfolio of investments 16,352, Other net assets/(liabilities) 126, Total 16,479, ii) Industry Fair Value (S$) % of NAV Consumer Discretionary 1,495, Information Technology 793, Telecommunication Services 14,063, Portfolio of investments 16,352, Other net assets/(liabilities) 126, Total 16,479, iii) Asset Class Fair Value (S$) % of NAV Quoted equities 16,352, Other net assets/(liabilities) 126, Total 16,479,

7 B) Investments at fair value and as a percentage of net asset value ( NAV ) as at 30 June 2017 under review classified by (continued) iv) Credit rating of quoted bonds C) Top Ten Holdings 10 largest holdings as at 30 June 2017 Fair Value (S$) Percentage of total net assets attributable to unitholders % AT&T INC 2,716, VERIZON COMMUNICATIONS INC 2,111, NIPPON TELEGRAPH & TELEPHONE CORP 1,268, DEUTSCHE TELEKOM AG 1,172, VODAFONE GROUP PLC 967, COMCAST CORP 878, KDDI CORP 834, SOFTBANK GROUP CORP 813, ALPHABET INC 793, CHINA MOBILE LTD 767, largest holdings as at 30 June 2016 Percentage of total net assets attributable to Fair Value unitholders (S$) % AT&TINC 3,623, VERIZON COMMUNICATIONS INC 3,051, NIPPON TELEGRAPH & TELEPHONE CORPORATION 1,574, COMCAST CORPORATION - CLASS A 1,474, VODAFONE GROUP PLC 1,242, KDDI CORPORATION 1,123, ORANGE SA 747, DEUTSCHE TELEKOM AG 726, CHINA MOBILE LIMITED 715, SINGAPORE TELECOMMUNICATIONS LTD 654, D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June

8 D) Exposure to derivatives (continued) ii) There was a net realised gain of SGD 7,219 on derivative contracts during the financial period from 01 January 2017 to 30 June iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2017 E) Amount and percentage of NAV invested in other schemes as at 30 June 2017 F) Amount and percentage of borrowings to NAV as at 30 June 2017 G) Amount of redemptions and subscriptions for the financial period from 01 January 2017 to 30 June 2017 Total amount of redemptions SGD 1,275,544 Total amount of subscriptions SGD 69,900 H) The amount and terms of related-party transactions for the financial period from 01 January 2017 to 30 June 2017 i) As at 30 June 2017, the Fund maintained current accounts with State Street Bank and Trust Company as follows: Bank balances SGD 166,692 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June 2017 iii) Investment in Initial Public Offerings managed by UOB Group iv) As at 30 June 2017, the brokerage income earned by UOB Kay Hian Pte Ltd was SGD

9 I) Expense ratios $ $ Total operating expenses 351, ,248 Average daily net asset value 17,903,885 19,638,323 Expense ratio 1.96% 2.25% 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 Fund s expense ratio at 30 June 2017 was based on total operating expenses divided by the average net asset value respectively 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 Fund does not pay any performance fee. The average net asset value is based on the daily balances. J) Turnover ratios $ $ Lower of total value of purchases or sales 2,623,771 2,134,705 Average daily net assets value 17,509,498 19,063,226 Turnover ratio 14.98% 11.20% 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. K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts 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 2017 and 30 June 2016 ii) expense ratios for the financial period ended 30 June 2017 and 30 June 2016 iii) turnover ratios for the financial period ended 30 June 2017 and 30 June 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 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 pre-determined payouts -8-

11 STATEMENT OF TOTAL RETURN For the half year ended 30 June 2017 (Un-audited) 30 June 30 June $ $ Income Dividends 370, ,719 Interest 2 - Total 370, ,719 Less: Expenses Management fee 130, ,531 Trustee fee 3,259 3,801 Audit fee 8,505 8,552 Registrar fee 7,490 7,490 Valuation fee 10,855 11,878 Custody fee 2,562 4,848 Transaction costs 20,554 12,219 Interest expenses - 10 Other expenses 22,194 46,371 Total 205, ,700 Net income/(losses) 164, ,019 Net gains/(losses) on value of investments Net gains/(losses) on investments (580,263) 467,152 Net gains/(losses) on financial derivatives 7,219 - Net foreign exchange gains/(losses) (14,597) (13,008) (587,641) 454,144 Total return/(deficit) for the period before income tax (423,201) 602,163 Less: Income tax (68,948) (77,820) Total return/(deficit) for the period (492,149) 524,343-9-

12 STATEMENT OF FINANCIAL POSITION As at 30 June 2017 (Un-audited) 30 June 31 December $ $ Assets Portfolio of investments 16,352,187 18,014,181 Receivables 81,989 65,756 Cash and bank balances 166, ,644 Total assets 16,600,868 18,290,581 Liabilities Payables 121, ,654 Total liabilities 121, ,654 Equity Net assets attributable to unitholders 16,479,134 18,176,

13 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 30 June 2017 (Un-audited) 30 June 31 December $ $ Net assets attributable to unitholders at the beginning of the financial period/year 18,176,927 19,446,651 Operations Change in net assets attributable to unitholders resulting from operations (492,149) 774,021 Unitholders contribution/(withdrawal) Creation of units 69, ,229 Cancellation of units (1,275,544) (2,251,974) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (1,205,644) (2,043,745) Total increase/(decrease) in net assets attributable to unitholders (1,697,793) (1,269,724) Net assets attributable to unitholders at the end of the financial period/year 16,479,134 18,176,

14 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Holdings at 30 June 2017 Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % By Geography - Primary Quoted Equities AUSTRALIA TELSTRA CORP LTD 43, , FINLAND ELISA OYJ 7, , FRANCE ILIAD SA , ORANGE SA 26, , TOTAL FRANCE 804, GERMANY DEUTSCHE TELEKOM AG 47,500 1,172, HONG KONG CHINA MOBILE LTD 52, , INDONESIA TELEKOMUNIKASI INDONESIA PERSERO TBK PT 1,175, , JAPAN KDDI CORP 22, , NIPPON TELEGRAPH & TELEPHONE CORP 19,500 1,268, SOFTBANK GROUP CORP 7, , TOTAL JAPAN 2,917, MEXICO AMERICA MOVIL SAB DE CV 15, , NORWAY TELENOR ASA 19, , SINGAPORE SINGAPORE TELECOMMUNICATIONS LTD 158, ,

15 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Holdings at 30 June 2017 Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % By Geography - Primary (continued) Quoted Equities SPAIN TELEFONICA SA 49, , UNITED KINGDOM VODAFONE GROUP PLC 248, , UNITED STATES ALPHABET INC , AT&T INC 52,300 2,716, COMCAST CORP 16, , VERIZON COMMUNICATIONS INC 34,340 2,111, TOTAL UNITED STATES 6,500, Total Equities 16,352, Portfolio of investments 16,352, Other net assets/(liabilities) 126, Net assets attributable to unitholders 16,479,

16 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Percentage of total net assets attributable to unitholders at 30 June 2017 % Percentage of total net assets attributable to unitholders at 31 December 2016 % By Geography - Primary (Summary) Quoted Equities Australia China Finland France Germany Hong Kong Indonesia Japan Mexico Netherlands Norway Singapore Spain Thailand United Kingdom United States Portfolio of investments Other net assets/(liabilities) Net assets attributable to unitholders

17 STATEMENT OF PORTFOLIO As at 30 June 2017 (Un-audited) Fair value at 30 June 2017 $ Percentage of total net assets attributable to unitholders at 30 June 2017 % Percentage of total net assets attributable to unitholders at 31 December 2016 % By Industry - Secondary Quoted Equities Consumer Discretionary 1,495, Information Technology 793, Telecommunication Services 14,063, Portfolio of investments 16,352, Other net assets/(liabilities) 126, Net assets attributable to unitholders 16,479,

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