United Global Portfolios

Transcription

1 United Global Portfolios United Singapore Bond Fund United Global Dividend Balanced Fund United Renminbi Bond Fund Semi Annual Report for the financial period 1 st July to 31 st December 2014

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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 (For Sub-Funds: United Singapore Bond Fund and United Global Dividend Balanced Fund) State Street Bank and Trust Company One Lincoln Street Boston, MA United States of America CUSTODIAN (For Sub-Fund: United Renminbi Bond 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 Singapore Bond 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 26 November 2004 Ann Comp Ret United Singapore Bond 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: Singapore Government Bond Index All UOB. For the six months ended 31 Dec 2014, the Fund s net asset value rose 2.48% in Singapore Dollar terms compared with a 1.34% return from the benchmark UOB Singapore Government Bond Index. The Fund outperformed during the period due to its underweight in Singapore Government Securities (SGS) versus the benchmark and allocating weights to corporate bonds and some exposure to foreign currency especially the US Dollar. The Singapore dollar bond market saw more first time issuers coming to tap the market, thereby broadening the issuer base. The sectors and credit quality of the issuers varied. We are more cautious on corporates in sectors that are facing challenges and also bond issues which are heavily subscribed by private banking clients. We maintained our prudent approach in credit selection and have kept to investing in quality corporate bonds for the portfolio weight allocated away from SGS. This has kept the overall average rating of the Fund at a high level. The Fund duration was maintained in a narrow range in the second half of 2014 and was slightly shorter than that of the benchmark. Notwithstanding the short duration stance versus the benchmark, the credit spreads of corporate bonds held in the Fund and a reduction of US dollar hedges towards the end of the year contributed to the Fund s outperformance. As of 31 December 2014, the Fund was approximately 98% invested with 26% in SGS. The Fund s yield was 2.7% and duration was 5.8 years. Economic and Market Review In the second half of 2014, the 10-year US Treasury (UST) bond yield moved lower by 36 basis points (bps) to 2.5% which is against the expectation of most market players at the beginning of the calendar year. The yield on SGS which historically showed a high correlation with its US counterpart displayed lower volatility during the period but underperformed the US Treasury bonds. The 10-year benchmark SGS yield fell a smaller 3.5 bps to 2.7% in the six months ended 31 December

5 The divergence in performance was attributable to the flight to UST as a safe haven asset as geopolitical tensions increased and global economic growth expectations fell. The fallout from the Russia/Ukraine situation, including economic sanctions on Russia, weak economic activity and the deflationary threat from Europe fed expectations of further easing by the European Central Bank (ECB) and pushed down government bond yields in the Eurozone. Despite a disparity in growth momentum, the US government bond yields were pulled down along with the other developed markets government bond yields such as the German bunds and Japanese government bonds. Despite the widening spread differential between these government bond markets, the ultra-low European and Japanese yields made the US Treasury yields look compelling even as the markets speculated on the timing of the US Federal Reserve s first rate hike expected in The sharp weakening in the Japanese yen driven by the Bank of Japan s surprise announcement of further Quantitative and Qualitative Easing (QQE), which depressed the Japanese government bond yield curve, and the Government Pension Investment Fund s shift in asset allocation away from domestic to overseas investments, further weakened Asian currencies such as the Singapore Dollar on top of other domestic factors. The attractiveness of SGS has historically been anchored by its safe haven status and currency appreciation trend. The weakening Singapore dollar and falling inflation even reaching -0.3% year-on-year in November were possible contributing factors towards the underperformance of SGS against UST. Outlook and Fund Strategy The year 2015 started on a cautious note with a decrease in risk appetite. In mid-january 2015, the World Bank revised downwards its forecast for 2015 global growth to 3.0% from 3.4%. By major geographical regions, the growth forecast for the United States was revised upwards while downward revisions were made to the Eurozone, China and Russia. Singapore is a small open economy that is sensitive to global growth. The continued crude oil price decline has had a de-anchoring effect on inflationary expectations globally. On the domestic front, the monetary authority of Singapore (MAS) expects headline inflation to be %. There is a risk that inflation will undershoot and a rising possibility of the MAS easing on monetary policy. The moves in yields of SGS and UST last year has improved the relative attractiveness of SGS and considering the potential demand from banks for SGS to meet regulatory requirements, the Fund s weight in SGS will be increased from last year. Against the backdrop of slower growth and benign inflation, we are increasing duration from a short duration stance to move closer to the benchmark duration and reducing foreign currency hedges on US Dollar bonds. Disclosures The foreign currency exposure in the Fund is partially hedged using foreign exchange forward contracts. Interest rate risk is partially hedged using interest rate futures. Commitment Approach with Netting Arrangements is used to calculate the global exposure to financial derivative instruments. 3

6 United Global Dividend Balanced 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 28 November 2005 Ann Comp Ret United Global Dividend Balanced Fund N/A 1.60 Benchmark N/A 2.11 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: 50% MSCI AC World Index & 50% 1 month SIBID. For the six months ended 31 December 2014, the net asset value of the Fund rose 3.9%, compared to the 2.2% increase in the composite benchmark of 50% MSCI AC World Index and 50% 1-month Singapore Interbank Bid Rate (SIBID). The equity allocation, United Global Dividend Equity Fund, rose by 6.5%, outperforming the MSCI AC World index return of 4.5%. The fixed income allocations, the United SGD Fund and United Asian Bond Fund, rose by 1.2%, outperforming the SIBID rate of 0.6%. The United SGD Fund rose 0.5%, compared with the benchmark 6-month SIBID rate which rose 0.1%. The United Asian Bond Fund rose 4.6%, compared with the 8.7% increase in the JP Morgan Asia Credit Index Total Return Composite, all in Singapore dollar terms. As at 31 December 2014, the exposure to equities via the United Global Dividend Equity Fund was 58%. Exposure to fixed income was 42%, with 33% in United SGD Fund and 9% in United Asian Bond Fund. The equity strategy (United Global Dividend Equity Fund) seeks to offer investors a source of income and capital appreciation by investing in a globally diversified portfolio that offers attractive dividend yields and potential for capital appreciation. As at 31 December 2014, the Fund was positioned in the following sectors: consumer staples (21.5%), financials (18.2%), healthcare (11.8%), industrials (10.2%), IT (8.6%), telecom services (8.0%) and others (21.6%), with the remainder in cash (0.1%). Geographically the Fund was positioned as follows: Americas (61.2%), Europe (23.4%), Asia Pacific ex Japan (11.6%), Japan (3.4%), EMEA (0.3%), with the remainder in cash (0.1%). The fixed income United SGD Fund adopted two broad strategies during the review period: (1) investing in fixed rate bonds of up to three years in maturity profile for portfolio yield enhancement; and (2) buying Eurodollar-denominated bonds with attractive yields while hedging foreign currency risk. As at 31 December 2014, 96.5% of the Fund was invested in corporate bonds, 3.2% in MAS bills. The Fund had a yield to maturity of 3.28% and effective duration of 1.94 years. 4

7 The other fixed income fund exposure United Asian Bond Fund held 38.5% in high grade credit, 45.7% in high yield credits, 5.8% in a unit trust fund and 10.2% in cash as at 31 December The Fund also had interest rate hedge that was around 3.3% of NAV. The country allocation of the Fund was 33.6% in China, 11.6% in Singapore, 9.0% in Australia, 8.8% in Hong Kong, 8.2% in Indonesia, 3.3% in Mongolia, others (17.0%) and the remainder (8.5%) in cash. Economic and Market Review Global equities ended the year higher, driven by a rally in developed markets, the US in particular. Returns in Europe and Japan in USD terms, were held back by currency losses. Mixed economic data in various regions reflected the unevenness of the global recovery. Leading economic indicators in the US improved while Europe and Japan remained lacklustre. Deflation risks remain a concern in Europe despite the European Central Bank (ECB) introducing more easing measures. The Bank of Japan (BOJ) eased monetary policy while the Japanese government postponed a second value-added tax (VAT) hike to We believe that 2014 was an unusual year for dividend yielding sectors, which benefitted largely due to the decline in the UST yields. The 10 year UST yield fell by 86 basis points to end the year at 2.17%. Absent another sharp decline in yields, we expect the returns of dividend yielding stocks to be more challenged. The credit market benefited from downward pressure on global government bond yields. Anticipation of quantitative easing (QE) by the ECB put downward pressure on developed market bond yields. In Germany the 10-year Bund yield declined steadily from 1.25% as of 30 June 2014 to 0.54% as at the end of Meanwhile, the 10-year US treasury yield fell 40 basis points (bps) from 2.5% at end June 2014 to 2.1% at the end of year. The US Federal Open Market Committee (FOMC) ended its QE Program in October In its December minutes, the FOMC noted that an underutilization of labour resources continue to diminish. However, US inflation continued to run below the committee s longer-run objective, partly reflecting declines in energy prices. The committee judged that it can be more patient in beginning to normalize monetary policy. While interest rates are expected to normalize at higher levels, a sharp adjustment is not expected. Asia credit spreads widened by 22.2 basis points (bps) in the second half of 2014 to bps at end- 2014, the widest spread since 1 October There were three defaults in Asia compared to four defaults in The Fund did not hold any of the defaulted bonds. Outlook and Strategy We are constructive on the global economic outlook and expect growth to improve in We expect healthy growth from the US and expect the overall pace of growth in key parts of Europe and Japan to be supported by easy monetary policies. At the same time we expect a number of factors to contribute to greater volatility in Political tensions in Europe, deflationary risks across the world, volatility in commodity prices and currencies, and the potential of US interest rate hikes, all add to uncertainties in

8 The Fund s strategy will thus remain balanced between investing in dividend-yielding equities and conservatively positioned in fixed income investments. At the present time, we have a preference for equities. In terms of the equity market outlook and strategy, the Global Dividend Equity Fund is focused on large cap dividend yielding stocks as dividend payers at this point of the economic cycle tend to be large cap companies, many of which have a diversified business mix. These companies also tend to be less financially leveraged. Given the margin of safety among the large dividend paying companies, we do not believe that there are significant risks of dividend cuts unless we experience a double dip recession. To the contrary, it is likely that corporate boards may seek to return capital as reinvestment opportunities fall short of cash flows. Short term interest rates globally, while on a slow rise, are currently still not much above zero, and some of these dividend payers are very attractive alternatives to holding cash or money market funds. In terms of the fixed income market outlook and strategy, we believe that the Asian credit market should remain supported by improving growth in Asia and low inflation. However, volatility in the currency and credit markets warrant careful monitoring and corporate credit selection will remain important. Given the heightened volatility in the market, we expect to remain overweight in the United SGD Fund, which has a more stable and shorter duration profile. When volatility improves and if inflation risks remain benign, we would rotate more into the Asian Bond Fund which attains higher yields and invests in longer duration credits, some of which may be below investment grade. Our overall strategy is to remain conservative and to attain stable dividends and income yield. If economic trends improve, we will lean to overweight equity dividends that have higher growth prospects. But if risks and volatility increase and if the economic cycle appears to be turning down, our strategy would be to overweight lower duration and lower risk fixed income investments. 6

9 United Renminbi Bond Fund A) Fund Performance SGD Class 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 03 May 2011 Ann Comp Ret United Renminbi Bond Fund N/A N/A 6.84 Benchmark N/A N/A 5.76 Source: Lipper, a Thomson Reuters Company, Bloomberg. 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: Since Inception July 2012: CNY 1 Year Offshore Deposit Rate; Aug Feb 2013: CNH 12 Month Deposit Rate; Feb Current: HSBC Offshore Renminbi Bond Index. USD Class 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 03 May 2011 Ann Comp Ret United Renminbi Bond Fund N/A N/A 4.63 Benchmark N/A N/A 3.53 Source: Lipper, a Thomson Reuters Company, Bloomberg. 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: Since Inception July 2012: CNY 1 Year Offshore Deposit Rate; Aug Feb 2013: CNH 12 Month Deposit Rate; Feb Current: HSBC Offshore Renminbi Bond Index. For the six months ended 31 December 2014, the Fund s net asset value rose 7.80% in SGD terms versus 7.35% for the HSBC CNH Index. The Fund s net asset value fell 0.59% in the first half of 2014 in SGD terms versus -1.81% for the HSBC CNH Index. During the period under review, the Fund s outperformance versus its benchmark was due to its underweight position in credits from China (The Fund had 59.2% of NAV invested in China credits versus 80% for the benchmark). 7

10 As of the end of December 2014, the Fund had 58.58% of its NAV in investment grade credits, 36.91% in non-investment grade credits and 4.51% in cash. Within investment grade, the Fund was underweight in A rated and better credits versus BBB rated credits, with 18.08% invested in A rated and above credits compared to 40.5% of the NAV held in BBB rated credits. As at end 2014, the Fund had 73.32% in CNH bonds, 22.17% in USD bonds and 4.51% in cash. As at December 2014, the country allocation of the Fund was: 59.22% in China, 5.48% in the US, 5.41% in Hong Kong, 4.88% in Singapore, 4.72% in Sweden, 3.93% in Malaysia, 3.15% in Korea, 2.39% in the UK, 2.38% in France, 2.33% in Australia and 1.60% in Indonesia. As of end December 2014, the Fund had an average yield of 6.70% and effective duration of 2.80 years. Average credit rating was BBB- and the Fund held 27 issues. Economic and Market Review The offshore renminbi (CNH) credit market performed well in the second half of 2014 (2H 2014), rising 7.26% in SGD terms from -1.81% in H For the full year in 2014, the CNH fixed income market rose 0.37% in USD terms, 3.02% in CNH terms and 5.32% in SGD terms. Average yield for the CNH bond market rose to 4.54% at end 2014 from 4.09% in June 2014 and 4.05% at end The CNH currency has performed well over the past six months. The currency fell 0.17% in 2H 2014 compared with losses of 2.22% in 1H The CNH is the second best performing Asian currency over the past six months, with only the HKD (-0.09%) enjoying a better performance in 2H For the full year in 2014, the CNH currency fell 2.57% against the USD. Economic and Market Outlook We remain constructive on the CNH market as we think investors, including global institutional fund managers and central banks, remain underinvested in CNH assets and hence will continue to seek CNH assets from both a return and asset diversification perspective. In fact, the European Central Bank recently announced that they are planning to add the RMB into its foreign reserves. In addition, the offshore CNH deposit pool is still much higher than CNH bonds outstanding, providing ample liquidity for CNH denominated assets. Furthermore, we think the RMB has bottomed in May 2014 and will likely strengthen moderately versus the USD in the medium term due to a stabilizing Chinese economy, supportive trade flows and the Chinese government s push for RMB internationalization. Recent economic data suggests that China economic growth slowed in the fourth quarter of But we think the economy should stabilize in the next couple of quarters on the back of the government s easing measures. We expect the CNH bond market to continue growing healthily in the next twelve months, as demand for CNH bonds is likely to remain strong on growing CNH liquidity. CNH deposit growth has accelerated since the second half of 2013 owing to the establishment of two more offshore clearing centres in 2013 (Taiwan and Singapore). We expect the flush liquidity continues to continue for longer, extended by the establishment of more offshore clearing centres in Germany, London, France, Korea, Luxembourg and Qatar. While we expect to see foreign companies continuing to tap the CNH market for funding, the CNH market in the next twelve months is likely to remain dominated by Chinese issuers, as the Chinese government s relaxation of cross-border guarantee rules in June 2014 is expected to boost Chinese entities offshore borrowing. 8

11 The CNH bond market is characterized by short tenor (average duration of less than 3 years), decent yield (average of over 4%) and good credit quality (about 80% of the issues are investment grade). Within the CNH market, we like certain Chinese state-owned enterprise (SOE) papers with duration of less than 3 years and yielding 4-6%. We intend to increase the weights in investment grade credits and reduce the weight in noninvestment grade credits in We are constructive on offshore RMB assets and we intend to selectively participate in new issues and switch out of certain existing holdings. Disclosures As the Fund is denominated in SGD and USD and most of the credits are denominated in CNH, we had an overlay of currency hedges in The Fund s global exposure to financial derivatives is calculated using Commitment Approach with netting arrangements, and has never exceeded 100% of the Fund s NAV at all times. As at end December 2014, currency hedge was 35.3% of the Fund s NAV. 9

12 B) Investments at fair value and as a percentage of NAV as at 31 December 2014 under review classified by i) Country United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund Fair % of Fair % of Fair % of Value NAV Value NAV Value NAV (S$) (S$) (S$) Australia 500, Singapore 73,970, ,442, Ireland ,276, Accrued interest receivable on quoted bonds 774, Portfolio of investments 75,245, ,442, ,276, Other net assets/(liabilities) 1,717, (72,808) (0.35) 698, Total 76,963, ,370, ,974, ii) Industry Financials 29,830, Government 19,546, Government Agency 6,470, Industrials 13,215, Telecom Services 1,974, Unit Trust ,442, ,276, Utilities 3,433, Accrued interest receivable on quoted bonds 774, Portfolio of investments 75,245, ,442, ,276, Other net assets/(liabilities) 1,717, (72,808) (0.35) 698, Total 76,963, ,370, ,974,

13 B) Investments at fair value and as a percentage of NAV as at 31 December 2014 under review classified by (continued) iii) Asset Class United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund Fair % of Fair % of Fair % of Value NAV Value NAV Value NAV (S$) (S$) (S$) Fixed Income/Unit Trust 74,471, ,442, ,276, Accrued interest receivables on quoted bonds 774, Other net assets/(liabilities) 1,717, (72,808) (0.35) 698, Total 76,963, ,370, ,974, iv) Credit rating of debt securities by S & P AAA 4,239, AA 6,468, AA- 500, A+ 2,679, BBB+ 1,015, NR 59,567, ,442, ,276, Total 74,471, ,442, ,276, v) Credit rating of debt securities by Moody s A2 971, A3 1,303, Aa1 3,035, Aa2 5,255, Aa3 2,679, Aaa 20,694, Baa1 2,557, Baa2 1,568, NR 36,405, ,442, ,276, Total 74,471, ,442, ,276,

14 C) Top Ten Holdings Top ten holdings as at 31 December 2014 and 31 December 2013 United Singapore Bond Fund 10 largest holdings at 31 December 2014 Percentage of total net assets attributable to Fair Value unitholders (S$) % SINGAPORE GOVERNMENT BOND 2.75% DUE 01/07/2023 6,234, SINGAPORE GOVERNMENT BOND 3.50% DUE 01/03/2027 5,440, SINGAPORE GOVERNMENT BOND 3% DUE 01/09/2024 4,779, CAPITALAND TREASURY LTD 4.076% DUE 20/09/2022 3,366, MAPLETREE INDUSTRIAL TRUST 3.75% DUE 08/03/2019 3,155, SINGAPORE GOVERNMENT BOND 2.875% DUE 01/07/2029 3,091, KEPPEL CORPORATION LTD 3.1% DUE 12/10/2020 3,062, TEMASEK FINANCIAL I LTD 2.375% DUE 23/01/2023 2,910, SP POWERASSETS LTD 2.70% DUE 14/09/2022 2,883, OVERSEA-CHINESE BANKING 3.15% DUE 11/03/2023 2,679, largest holdings at 31 December 2013 Percentage of total net assets attributable to Fair Value unitholders (S$) % SINGAPORE GOVERNMENT BOND 3.25% DUE 01/09/2020 8,747, SINGAPORE GOVERNMENT BOND 3% DUE 01/09/2024 8,133, SINGAPORE GOVERNMENT BOND 3.50% DUE 01/03/2027 6,123, KEPPEL CORPORATION LTD 3.1% DUE 12/10/2020 3,494, MAPLETREE INDUSTRIAL TRUST 3.75% DUE 08/03/2019 3,111, CAPITALAND TREASURY LTD 4.076% DUE 20/09/2022 2,963, STARHUB LTD 3.08% DUE 12/09/2022 2,934, TEMASEK FINANCIAL I LTD 4.3% DUE 25/10/2019 2,745, GLOBAL LOGISTIC PROPS 3.375% DUE 11/05/2016 2,609, HK LAND TREASURY SG 3.65% DUE 05/10/2015 2,602,

15 C) Top Ten Holdings (continued) United Global Dividend Balanced Fund 3 largest holdings at 31 December 2014 # Percentage of total net assets attributable to Fair Value unitholders (S$) % UNITED GLOBAL DIVIDEND EQUITY FUND 12,430, UNITED SGD FUND CLASS A (ACC) SGD 7,155, UNITED ASIAN BOND FUND SGD CLASS 1,856, # There were only 3 holdings as at 31 December largest holdings at 31 December Percentage of total net assets attributable to Fair Value unitholders (S$) % UNITED GLOBAL DIVIDEND EQUITY FUND 17,577, UNITED SGD FUND CLASS A (ACC) SGD 7,037, UNITED ASIAN BOND FUND SGD CLASS 1,729, There were only 3 holdings as at 31 December 2013 United Renminbi Bond Fund 2 largest holdings as at 31 December 2014* Percentage of total net assets attributable to Fair Value unitholders (S$) % UOB UNITED RENMINBI BOND FUND (SGD) 6,081, UOB UNITED RENMINBI BOND FUND (USD) 3,195, * There were only 2 holdings as at 31 December

16 C) Top Ten Holdings (continued) United Renminbi Bond Fund (continued) 2 largest holdings at 31 December 2013** Percentage of total net assets attributable to Fair Value unitholders (S$) % UOB UNITED RENMINBI BOND FUND (SGD) 9,929, UOB UNITED RENMINBI BOND FUND (USD) 3,637, **There were only 2 holdings as at 31 December 2013 D) Exposure to derivatives (i) Fair value of financial derivative contracts and as a percentage of NAV as at 31 December 2014 United Singapore Bond Fund Contracts or underlying principal Positive fair % of Negative fair % of amount value NAV value NAV (S$) (S$) (S$) Forward foreign exchange contracts 9,582, ,887 (0.30) United Renminbi Bond Fund Contracts or underlying principal Positive fair % of Negative fair % of amount value NAV value NAV (S$) (S$) (S$) Forward foreign exchange contracts 9,951,650 19, ,280 (0.10) (ii) There were net (loss)/gain on derivative contracts realised during the financial period ended 31 December 2014 United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund (S$) (S$) (S$) Net (loss)/gain on derivative contracts (332,153) - 289,989 14

17 D) Exposure to derivatives (continued) (iii) There were net (loss)/gain on derivative contracts outstanding during the financial period ended 31 December 2014 United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund (S$) (S$) (S$) Net (loss)/gain on derivative contracts (227,887) - 9,220 E) Amount and percentage of net asset value (NAV) invested in other schemes as at 31 December 2014 United Singapore Bond Fund Percentage of total net assets attributable to Fair Value unitholders (S$) % MAPLETREE INDUSTRIAL TRUST 3.75% DUE 08/03/2019 3,155, MAPLETREE COMMERCIAL TRUST 3.60% DUE 24/08/2020 1,554, SUNTEC REITS 3.10% DUE 08/08/2016 1,528, ASCENDAS REAL ESTATE INVESTMENT 4% DUE 03/02/2022 1,303, STARHILL GLOBAL REIT MTN 3.50% 26/02/2021 1,015, SUNTEC REIT MTN PTE LTD 3.35% 10/02/ , FIRST REAL ESTATE INVESTMENT 4.125% DUE 22/05/ , United Global Dividend Balanced Fund Percentage of total net assets attributable to Fair Value unitholders (S$) % UNITED ASIAN BOND FUND SGD CLASS 1,856, UNITED GLOBAL DIVIDEND EQUITY FUND 12,430, UNITED SGD FUND CLASS A (ACC) SGD 7,155, United Renminbi Bond Fund Percentage of total net assets attributable to Fair Value unitholders (S$) % UOB UNITED RENMINBI BOND FUND (SGD) 6,081, UOB UNITED RENMINBI BOND FUND (USD) 3,195,

18 F) Amount and percentage of borrowings to net asset value (NAV) as at 31 December 2014 N/A G) Amount of redemptions and subscriptions for the financial period 01 July 2014 to 31 December 2014 United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund (S$) (S$) (S$) Total amount of redemptions 11,002,398 2,632,810 12,272,496 Total amount of subscriptions 8,723, ,870 11,404,323 H) The amount and terms of related-party transactions for the financial period 01 July 2014 to 31 December 2014 i) As at 31 December 2014 the Fund maintained current accounts with the related parties as follows: United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund (S$) (S$) (S$) United Overseas Bank Limited Bank balances 17, ,818 9,536 HSBC Group Bank balances ,033 ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 31 December 2014 N/A 16

19 H) The amount and terms of related-party transactions for the financial period 01 July 2014 to 31 December 2014 (continued) iii) Investment in Initial Public Offerings managed by UOB Group N/A iv) As at 31 December 2014 there was no brokerage income earned by UOB Kay Hian Pte Ltd. I) Expense ratios United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund 31 December % 1.87% 1.81% 31 December % 1.73% 1.88% 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 Sub-Funds expense ratios and the weighted average of the underlying Funds unaudited expense ratios. The calculation of the Sub-Funds expense ratios at 31 December 2014 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 Sub-Funds do not pay any performance fee. The average net asset value is based on the daily balances. The expense ratios of the underlying Funds are obtained from Underlying Funds Manager. Other than United Asian Bond Fund and United Global Dividend Equity Fund, the rest of the underlying Funds expense ratios are unaudited. Total operating expenses, average net asset value and weighted average of the underlying Funds unaudited expense ratio are as below: United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund 31 December 31 December 31 December 31 December 31 December 31 December Total operating expenses $633,987 $815,504 $107,194 $118,182 $86,751 $107,772 Average net asset value $79,262,574 $109,310,882 $23,425,802 $28,321,258 $14,408,184 $19,632,069 Weighted average of the underlying Funds expense ratio NA NA 1.42% 1.31% 1.21% 1.33% 17

20 J) Turnover ratios United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund 31 December % 0.53% 66.29% 31 December % 33.09% 60.31% Note: The portfolio turnover ratios are 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 respectively as below: United Singapore United Global Dividend United Renminbi Bond Fund Balanced Fund Bond Fund 31 December 31 December 31 December 31 December 31 December 31 December Total value of sales or purchases of the underlying investments $12,636,600 $15,408,863 $117,593 $8,887,828 $8,350,000 $7,937,470 Average daily net asset value $77,623,047 $107,532,807 $22,235,433 $26,860,464 $12,596,104 $13,160,429 K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts N/A 18

21 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 31 December 2014 and as at 31 December 2013 United Global Dividend Balanced Fund The top 10 holdings as at 31 December 2014 and 31 December largest holdings at 31 December 2014 United Global Dividend Equity Fund Fair Value % of NAV ($) UNITEDHEALTH GROUP INC 681, HONEYWELL INTERNATIONAL INC 614, US BANCORP 553, M CO 544, APPLE INC 519, CVS HEALTH CORP 510, GENERAL ELECTRIC CO 502, PROCTER & GAMBLE CO/THE 482, GIVAUDAN-REG 478, NESTLE SA-REG 408, largest holdings at 31 December 2013 United Global Dividend Equity Fund Fair Value % of NAV ($) HARLEY DAVIDSON INCORPORATION 786, HONEYWELL INTERNATIONAL INCORPORATION 766, M COMPANY 708, HOME DEPOT INCORPORATION/THE 696, GENERAL ELECTRIC COMPANY 651, VODAFONE GROUP PLC 644, COMCAST CORPORATION 639, HENKEL AG & COMPANY KGAA 588, US BANCORP/MN 586, AMADEUS IT HOLDING SA 576, 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. 19

22 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) i) top 10 holdings at fair value and as percentage of NAV as at 31 December 2014 and as at 31 December 2013 (continued) United SGD Fund United SGD Fund Class A (Acc) SGD 10 largest holdings at 31 December 2014 Fair Value % of NAV (US$) TINGYI CAYMAN ISLANDS HOLDING CORP 3.875% DUE 20/06/ ,249, CHINA OVERSEAS FINANCE CAYMAN IV LIMITED 4.875% DUE 15/02/ ,131, COMPETITION TEAM TECHNOLOGIES LIMITED 2.125% DUE 13/12/ ,743, HEBEI IRON & STEEL HONG KONG INTERNATIONAL TRADE CO LIMITED 2.75% DUE 27/10/ ,327, NATIONAL CAPITAL TRUST II DELAWARE 5.486% DUE 29/12/2049 FRN 26,248, ZHEJIANG ENERGY GROUP HONG KONG LIMITED 2.3% DUE 30/09/ ,210, GREENLAND GLOBAL INVESTMENT LIMITED 3.5% DUE 17/10/ ,103, INDIAN RAILWAY FINANCE CORP LIMITED 3.417% DUE 10/10/ ,182, CHINATRUST COMMERCIAL BANK HONG KONG 5.625% DUE 29/03/2049 FRN 24,896, CHINA RESOURCES LAND LIMITED 4.625% DUE 19/05/ ,857, 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. 20

23 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) i) top 10 holdings at fair value and as percentage of NAV as at 31 December 2014 and as at 31 December 2013 (continued) United SGD Fund United SGD Fund Class A (Acc) SGD 10 largest holdings at 31 December 2013 Fair Value % of NAV (US$) SUN HUNG KAI PROPERTIES CAPITAL MARKET LIMITED 3.5% DUE 02/11/ ,426, NATIONAL CAPITAL TRUST LI DELAWARE 5.486% DUE 29/12/2049 FRN 25,631, CHINA RESOURCES LAND LIMITED 4.625% DUE 19/05/ ,043, CHINATRUST COMMERCIAL BANK HONG KONG 5.625% DUE 29/03/2049 FRN 23,659, STREET SQUARE PTE LIMITED 3.02% DUE 05/05/ ,050, DUBAI ELECTRICITY & WATER AUTHORITY 8.5% DUE 22/04/ ,592, ZIJIN INTERNATIONAL FINANCE COMPANY LIMITED 4.25% DUE 30/06/ ,959, KAZMUNAYGAS NATIONAL COMPANY JSC 11.75% DUE 23/01/ ,417, BIOSENSORS INVESTMENT SINGAPORE PTE LIMITED 4.875% DUE 23/01/ ,340, OUE LIMITED 4.3% DUE 15/04/ ,103, 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. 21

24 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) i) top 10 holdings at fair value and as percentage of NAV as at 31 December 2014 and as at 31 December 2013 (continued) United Renminbi Bond Fund UOB United Renminbi Bond Fund 10 largest holdings at 31 December 2014 Fair Value % of NAV (US$) QILU INTL. FIN. BV 6.25% 10/09/2017 1,300, JINCHUAN GRP. 4.75% 17/07/2017 1,297, ZHUHAI DA HENG QIN 4.75% 11/12/2017 1,129, CATERPILLAR FINL. 3.40% 25/11/2017 1,124, ITNL INTL. PTE 8.00% 17/07/2017 1,032, FUTURE LD DEV HLDGS LTD 9.75% DUE 23/04/ , VOLVO TSY. 3.80% 22/11/ , UNICAN LTD 5.6% MTN 18/09/ , CAGAMAS GBL. 3.70% 22/09/ , LOGAN PROPERTY HLDGS CO LIMITED 9.75% 08/12/ , UOB United Renminbi Bond Fund 10 largest holdings at 31 December 2013 Fair Value % of NAV (US$) ANSTOCK 4.25% 20/09/2016 2,192, BP CAP. MKTS. 3.95% 08/10/2018 2,051, LANXESS FIN. 3.95% 16/02/2015 2,023, VOLVO TSY. 3.80% 22/11/2015 1,838, MITSUI & 4.25% 01/03/2017 1,720, SK GBL. CHEMICAL INV. HONG KONG 4.125% 26/09/2016 1,698, RENAULT SA 4.65% BDS 11/04/16 CNY ,691, STANDARD CHARTERED PLC 2.625% 31/05/2016 1,647, LAI FUNG HLDGS % 25/04/2018 1,647, BIG WILL INVESTMENTS LTD 7.0% 29/04/2014 1,517,

25 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 31 December 2014 and 31 December 2013 United Global Dividend Balanced Fund United Global Dividend Equity Fund 31 December % 31 December % United SGD Fund Class A (Acc) SGD 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 ). The calculation of the expense ratios at 31 December 2014 and 2013 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. iii) turnover ratios for the financial period ended 31 December 2014 and 31 December 2013 United Global Dividend Balanced Fund United Global Dividend Equity Fund 31 December % 31 December % United SGD Fund Class A (Acc) SGD 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 divided by the average daily net asset value. 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. 23

26 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 are no soft dollars, rebates, commissions or other monetary incentives generated by the Sub-Funds. 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 24

27 STATEMENTS OF TOTAL RETURN For the half year ended 31 December 2014 (Un-audited) United Singapore United Global Dividend Bond Fund Balanced Fund 31 December 31 December 31 December 31 December $ $ $ $ Income Dividends - 11,771 38, ,479 Interest ,771 38, ,487 Less: Expenses Management fee 195, , , ,269 Less: Management fee rebate - - (129,574) (150,773) Trustee fee 15,655 21,669 4,480 5,416 Audit fee 6,302 6,097 6,302 6,097 Registrar fee 7,541 7,541 7,541 7,541 Valuation fee 48,921 67,716 14,001 16,927 Custody fee 10,394 14, Interest expenses Other expenses 19,637 29,553 9,307 4, , ,591 52,257 59,346 Net (loss)/income (304,133) (405,820) (13,456) 129,141 Net gains or losses on value of investments and financial derivatives Net gain on investments 2,763,566 1,564, ,886 1,000,655 Net (loss)/gain on forward foreign exchange contracts (555,957) 52, Net loss on future contracts (4,083) (79,656) - - Net foreign exchange gain/(loss) 20,265 (3,404) 1, ,223,791 1,533, ,939 1,001,647 Total return for the period before income tax 1,919,658 1,127, ,483 1,130,788 Less: Income tax (45,215) Add: Income tax provision write back ,000 Total return for the period after income tax before distribution 1,919,658 1,127, ,483 1,329,573 25

28 STATEMENTS OF TOTAL RETURN For the half year ended 31 December 2014 (Un-audited) United Renminbi Bond Fund 31 December 31 December $ $ Income Interest Less: Expenses Management fee 63,386 66,160 Less: Management fee rebate (60,581) (61,140) Trustee fee 2,536 2,646 Audit fee 6,401 6,199 Registrar fee 7,531 7,531 Valuation fee 7,923 8,270 Transaction cost 2 - Other expenses 9,775 8,383 36,973 38,049 Net loss (36,525) (37,917) Net gains or losses on value of investments and financial derivatives Net gain on investments 699, ,080 Net gain on forward foreign exchange contracts 299,209 23,986 Net foreign exchange loss (8,169) (10,901) 990, ,165 Total return for the period before income tax 953, ,248 Less: Income tax - - Total return for the period 953, ,248 26

29 STATEMENTS OF FINANCIAL POSITION As at 31 December 2014 (Un-audited) United Singapore United Global Dividend Bond Fund Balanced Fund 31 December 30 June 31 December 30 June $ $ $ $ ASSETS Portfolio of investments 75,245,870 74,526,962 21,442,854 23,258,615 Sales awaiting settlement ,000 Receivables 246, ,897 62, ,014 Financial derivatives at fair value - 9, Margin deposits 180, , Cash and bank balances 1,739,103 2,216, , ,970 Total Assets 77,412,348 77,811,529 21,648,044 23,929,599 LIABILITIES Purchases awaiting settlement - 265, Payables 221, , , ,226 Proposed distribution payable ,761 77,914 Financial derivatives at fair value 227, Total Liabilities 449, , , ,140 EQUITY Net assets attributable to unitholders 76,963,271 77,322,137 21,370,046 23,599,459 27

30 STATEMENTS OF FINANCIAL POSITION As at 31 December 2014 (Un-audited) United Renminbi Bond Fund 31 December 30 June $ $ ASSETS Portfolio of investments 9,276,315 9,375,369 Receivables 56,923 77,897 Financial derivatives at fair value 19,500 - Cash and bank balances 755, ,901 Total Assets 10,108,308 10,094,167 LIABILITIES Payables 123, ,875 Financial derivatives at fair value 10,280 - Total Liabilities 133, ,875 EQUITY Net assets attributable to unitholders 9,974,975 9,889,292 28

31 STATEMENTS OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 31 December 2014 (Un-audited) United Singapore United Global Dividend Bond Fund Balanced Fund 31 December 30 June 31 December 30 June $ $ $ $ Net assets attributable to unitholders at the beginning of the financial period/year 77,322, ,270,468 23,599,459 27,769,386 Operations Change in net assets attributable to unitholders resulting from operations 1,919,658 3,536, ,483 1,860,459 Unitholders contributions/(withdrawals) Creation of units 8,723,874 21,025, , ,647 Cancellation of units (11,002,398) (58,510,455) (2,632,810) (5,570,518) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (2,278,524) (37,484,782) (2,520,940) (5,004,871) Distribution - - (446,956) (1,025,515) Total decrease in net assets attributable to unitholders (358,866) (33,948,331) (2,229,413) (4,169,927) Net assets attributable to unitholders at the end of the financial period/year 76,963,271 77,322,137 21,370,046 23,599,459 29

32 STATEMENTS OF MOVEMENTS OF UNITHOLDERS FUNDS For the half year ended 31 December 2014 (Un-audited) United Renminbi Bond Fund 31 December 30 June $ $ Net assets attributable to unitholders at the beginning of the financial period/year 9,889,292 20,143,633 Operations Change in net assets attributable to unitholders resulting from operations 953, ,505 Unitholders contributions/(withdrawals) Creation of units 11,404,323 19,560,984 Cancellation of units (12,272,496) (30,044,830) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (868,173) (10,483,846) Total increase/(decrease) in net assets attributable to unitholders 85,683 (10,254,341) Net assets attributable to unitholders at the end of the financial period/year 9,974,975 9,889,292 30

33 STATEMENTS OF PORTFOLIO As at 31 December 2014 (Un-audited) United Singapore Bond Fund Percentage of total net assets Nominal attributable to holdings at Fair value at unitholders at 31 December 31 December 31 December By Industry - Primary $ % Quoted Bonds FINANCIALS ASCENDAS REAL ESTATE INVESTMENT 4% DUE 03/02/2022 1,250,000 1,303, CAPITALAND TREASURY LTD 4.076% DUE 20/09/2022 2,500,000 3,366, CAPITAMALLS ASIA TREASURY 3.8% DUE 12/01/2022 1,750,000 1,811, CCT MTN PTE LTD 3.64% DUE 18/02/2015 1,000,000 1,003, CMT MTN PTE LTD 3.731% DUE 21/03/ , , COMMONWEALTH BANK AUSTRALIA 2.875% DUE 28/01/ , , DBS GROUP HOLDINGS LTD 2.246% DUE 16/07/2019 1,000,000 1,321, FCL TREASURY PTE LTD 3.70% DUE 05/04/ , , FIRST REAL ESTATE INVESTMENT 4.125% DUE 22/05/ , , GLOBAL LOGISTIC PROPERTIES 3.375% DUE 11/05/2016 5,000,000 1,058, KEPPEL LAND FINANCIAL 3.259% DUE 11/12/2019 1,250,000 1,650, KEPPEL LAND LTD CB 1.875% DUE 29/11/2015 1,900,000 1,900, LEND LEASE RETAIL INVESTMENT 3.28% DUE 03/09/2021 2,250,000 2,242, MAPLETREE COMMERCIAL TRUST 3.60% DUE 24/08/2020 1,500,000 1,554, MAPLETREE INDUSTRIAL TRUST 3.75% DUE 08/03/2019 3,000,000 3,155, OVERSEA-CHINESE BANKING 3.15% DUE 11/03/2023 2,000,000 2,679, SABANA SUKUK PTE LTD 4.00% DUE 19/03/2018 1,000, , STARHILL GLOBAL REIT MTN 3.50% DUE 26/02/2021 1,000,000 1,015, SUNTEC REIT MTN PTE LTD 3.35% DUE 10/02/ , , SUNTEC REITS 3.10% DUE 08/08/2016 1,500,000 1,528, TOTAL FINANCIALS 29,830,