United Asia Top-50 Fund

Transcription

1 United Asia Top-50 Fund Annual Report for the financial year ended 30 th 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 Eric Tham Kah Jin 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 AUDITOR PricewaterhouseCoopers LLP 8 Cross Street #17-00, PWC Building Singapore SOLICITOR TO THE MANAGER Tan Peng Chin LLC 30 Raffles Place #11-00, Chevron House Singapore SOLICITOR TO THE TRUSTEE Shook Lin & Bok LLP 1 Robinson Road #18-00, AIA Tower Singapore

4 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 22 November 1999 Ann Comp Ret United Asia Top-50 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 AC Far East. For the twelve months ended 30 June 2017, the net asset value of the Fund increased by 20.19%, compared with a 26.48% gain in the benchmark MSCI Far East index in Singapore dollar terms. The Fund s underperformance against the index was mainly due to stock selection in Consumer Discretionary, Energy, Financials and Materials. This underperformance was partially offset by positive stock contribution from Industrials, Information Technology and Utilities. In terms of regional allocation, the Fund s performance benefited from its overweight position in India, Indonesia and Taiwan, and its underweight positions in China and Japan. However, our underweight positions in Korea, Malaysia and Taiwan had a negative impact on performance. Key contributors to performance included Samsung Electronics and Alibaba Group (Information Technology), Bank Rakyat International and Bank Negara Indonesia (Financials), Power Grid Corporation of India (Utilities) and Anta Sports (Consumer Discretionary). Key detractors included Coal India and Korea Zinc (Materials), CNOOC (Energy) and British American Tobacco (Consumer Staples). As at end June 2017, the Fund had the following sector allocation: Financials (23.86%), Information Technology (16.61%), Consumer Discretionary (13.06%), Industrials (12.08%), Consumer Staples (7.53%), Energy (7.46%), others (16.10%), with the remainder in cash (3.30%). The Fund had the following country asset allocation: Japan (36.65%), India (15.36%), Indonesia (10.98%), Hong Kong (8.89%), South Korea (8.24%), Taiwan (5.45%), others (11.13%), and the remainder in cash (3.30%). Economic and Market Review The Asia Far East equity markets increased 26.5% in Singapore dollar terms in the twelve months under review, narrowly underperforming the World Equity Index which increased by 26.7% in Singapore dollar terms over the same period. In benchmark terms, Taiwan was the best performing country. The worst performance came from the Philippines, with Malaysia also performing poorly. In terms of sector performance, Financials, Information Technology and Materials outperformed. Underperforming sectors included Consumer Staples, Health Care, Telecommunication Services and Utilities. Performance across the various Asian markets showed a marked divergence, with Taiwan, China and Korea all outperforming strongly, and with Thailand, Malaysia and Singapore underperforming. The Philippines was the only market to show a decline in absolute terms. -2-

5 A) Fund Performance (continued) North Asia drove the bulk of performance during the reporting period. The China market outperformed amid better than expected economic growth, improvement in the Purchaser s Price Index (PPI), strong earnings and its currency stability. There was initial concern about heavy currency outflows in the early part of the reporting period, but the market was later buoyed by stronger than expected housing market. Concerns about the shadow banking also proved short-lived. MSCI s announcement that the country s A-shares would be added to its emerging market index boosted investor sentiment. The Hong Kong market was amongst the best performers driven by financial and real estate stocks. Taiwan s gains were driven by a pick-up in technology activity, with optimism ahead of Apple s iphone8 launch. Korea was the strongest performer in the region despite concerns of geo-political tensions surrounding Pyongyang. The market was driven by strong earnings in the technology sector. The election of President Moon also suggested a possible easing in geopolitical tensions within the Korean Peninsula. Expectations of President Moon s proactive stance on improving the country s corporate governance also resonated well with investors. Japan started the reporting period strongly, helped by Prime Minister Abe s decision to delay his planned sales tax hike until Sentiment further improved after the ruling party (LDP) won a landslide victory in the Upper House elections in July The Bank of Japan s (BOJ) decision to increase ETF purchases and launch open-ended quantitative easing (QE) was an additional catalyst. However, Japanese corporate competitiveness was hurt by a strengthening Yen in the second half of the reporting period, and the BOJ s credibility was undermined by a domestic inflation rate that was continually below its target. Economic data remained soft with both retail sales and industrial production below expectations. Progress on implementing structural economic reform continued to disappoint given domestic political headwinds. Although most ASEAN markets saw positive index returns, the region underperformed North Asian markets with a lower weight on technology. Thailand s strong performance in the second half of 2016 gave way to a relatively flat performance in the first half of 2017 as corporate earnings disappointed. In Indonesia, the successful implementation of the tax amnesty helped domestic liquidity, and stronger resource prices helped earnings, particularly for the thermal coal producers. Singapore recovered from a weak second half in 2016, lifted by improved economic growth in the first half of Malaysia was initially overshadowed over corruption woes surrounding 1MDB, the state-linked investment vehicle. Although stock market performance improved in the first half of 2017 with increased foreign direct investments and expected increased government investment ahead of the next election, this was still insufficient to pull relative performance up to the level of its peers. The Philippine market swung into losses given the uncertainty caused by President Duterte s economic and foreign policies, with foreign investors turning cautious given relatively high market valuations. The market was also impacted by disappointing 1Q17 GDP numbers and weak corporate earnings. The current account slipped to a deficit and overseas remittances contracted, putting pressure on the peso. Outlook and Fund Strategy Asia Pacific benefits from higher economic growth rates, supportive demographics and few signs of economic stress. As such, Asia Pacific equities should continue to represent a good investment opportunity, at valuations that are attractive relative to historic levels. Following Trump s election in November 2016, there was concern about the US reflation trade, with a related stronger US Dollar and potential trade restrictions. However, these concerns have subsided, and it does not appear likely that the Trump administration s legislative program will gain much traction over the coming twelve months. Continuing mixed US economic data also suggests relatively modest monetary tightening. This should allow for relatively stable currency conditions in the Asian region, with business-as-normal trading conditions. Current low inflation rates in Asia mean regional central banks are unlikely to raise interest rates in a disruptive manner. China s policy makers continue to face the difficult task of achieving above 6.0% GDP growth while promoting domestic consumption, restraining unofficial credit growth, improving the environment and tackling corruption. The Fund will be watchful for the occasional hiccup resulting from this balancing act, but remains positive on future growth given the nature of China s command economy. The government has the ability to ease monetary conditions as necessary, and also to promote important expansionary initiative such as the One Belt One Road initiative. The key risks for China are a resumption of disorderly capital outflow, resulting currency volatility and a worse-than-expected slowdown resulting from disorderly domestic credit markets. -3-

6 A) Fund Performance (continued) Financial markets in Japan continue to be supported by the BOJ s loose monetary policies, and the close cooperation between the BOJ and domestic pension funds. The BOJ has pushed out its 2.0% inflation target on six occasions since launching Quantitative Easing in 2013, and currently does not expect to meets this inflation target until the fiscal year ending Progress on implementing structural reforms remain slow despite the ageing population and declining labour force. The Fund will retain exposure to Japanese companies that focus on the ageing population, as well as to companies involved in automation and robotics. We are cautious on Hong Kong due to the strong run in property prices over the past year, and the likelihood of slower price appreciation going forward. We are also cautious on Taiwan given the strong run-up in valuations ahead of the iphone8 launch. Korea is still attractively valued, but we are neutral due to a more cautious view on technology, and the continuing possibility of political uncertainty. We are positive on India, even as valuations are relatively demanding given the growing domestic investment flows, however certain attractive sectors such as power remain at a discount to the broader market. In ASEAN, we remain optimistic on Indonesia and Thailand on lower interest rates. Improved commodity prices and good domestic demand should flow through to spending and investment. In Malaysia, the Fund will look to add targeted exposure to take advantage of pre-election stimulus. We remain cautious on the Philippines given domestic security concerns and relatively high equity valuations relative to the region. In terms of sector allocation, the Fund is overweight on the Consumer Staples, Information Technology and Financials sectors and underweight on the Real Estate, Health Care and Industrials sectors. The Fund s investment approach continues to be driven by sector allocation and bottom-up stock selection. We continue to allocate capital to high-quality and sustainable growth companies that are reasonably priced. Our focus is on companies with strong competitive advantages, healthy cash flow and proven track record. -4-

7 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$) % of NAV China 672, Hong Kong 1,417, India 2,449, Indonesia 1,749, Japan 5,843, Luxembourg 193, Philippines 142, Singapore 242, South Korea 1,314, Taiwan 868, Thailand 522, Portfolio of investments 15,416, Other net assets/(liabilities) 526, Total 15,942, ii) Industry Fair Value (S$) % of NAV Consumer Discretionary 2,082, Consumer Staples 1,199, Energy 1,189, Financials 3,804, Health Care 588, Industrials 1,926, Information Technology 2,647, Materials 487, Real Estate 309, Telecommunication Services 755, Utilities 426, Portfolio of investments 15,416, Other net assets/(liabilities) 526, Total 15,942,

8 B) Investments at fair value and as a percentage of net asset value ( NAV ) as at 30 June 2017 under review classified by (continued) iii) Asset Class Fair Value (S$) % of NAV Quoted equities 15,416, Other net assets/(liabilities) 526, Total 15,942, iv) Credit rating of quoted bonds N/A C) Top Ten Holdings 10 largest holdings as at 30 June 2017 Fair Value (S$) Percentage of total net assets attributable to unitholders % SAMSUNG ELECTRONICS CO LTD 829, CNOOC LTD 740, AXIS BANK LTD 680, HOUSING DEVELOPMENT FINANCE CORP 621, PT BANK RAKYAT INDONESIA (PERSERO) TBK. 608, PT BANK NEGARA INDONESIA (PERSERO) TBK. 553, ALIBABA GROUP HOLDING LTD 499, DAIKIN INDUSTRIES LTD 477, POWER GRID CORP OF INDIA LTD 426, TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD 415,

9 C) Top Ten Holdings (continued) 10 largest holdings as at 30 June 2016 Percentage of total net assets attributable to Fair Value unitholders (S$) % PT BANK RAKYAT INDONESIA 749, AXIS BANK LIMITED 626, PT BANK NEGARA INDONESIA 596, POWER GRID CORP OF INDIA LTD 510, SAMSUNG ELECTRONICS CO LTD 501, ASTELLAS PHARMA INC 476, KOREA ZINC CO LTD 474, ALIBABA GROUP HOLDING LTD 460, NIPPON TELEGRAPH & TELEPHONE CORP 459, TAIWAN SEMICONDUCTOR MFG CO LTD 454, D) Exposure to derivatives i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2017 Contract or underlying principal amount Positive fair value % of NAV Negative fair value $ $ $ % of NAV Foreign currency contracts 66, * - - * denotes amount less than 0.01% ii) There was a net realised loss of SGD 7,460 on derivative contracts during the financial year ended 30 June iii) There was a net unrealised gain of SGD 600 on outstanding derivative contracts marked to market as at 30 June E) Amount and percentage of NAV invested in other schemes as at 30 June 2017 Please refer to the Statement of Portfolio. F) Amount and percentage of borrowings to NAV as at 30 June 2017 N/A G) Amount of redemptions and subscriptions for the financial year ended 30 June 2017 Total amount of redemptions SGD 2,025,532 Total amount of subscriptions SGD 7,444-7-

10 H) The amount and terms of related-party transactions for the financial year ended 30 June 2017 Please refer to Note 9 of the Notes to the Financial Statements. I) Expense ratios Please refer to Note 10 of the Notes to the Financial Statements. J) Turnover ratios Please refer to Note 10 of the Notes to the Financial Statements. K) Any material information that will adversely impact the valuation of the scheme such as contingent liabilities of open contracts N/A L) For schemes which invest more than 30% of their deposited property in another scheme, the following key information on the second-mentioned scheme ( the underlying scheme ) 1 should be disclosed as well i) top 10 holdings at fair value and as percentage of NAV as at 30 June 2017 and 30 June 2016 N/A ii) expense ratios for the financial year ended 30 June 2017 and 30 June 2016 N/A iii) turnover ratios for the financial year ended 30 June 2017 and 30 June 2016 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. 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 N/A -8-

11 REPORT OF THE TRUSTEE The Trustee is under a duty to take into custody and hold the assets of United Asia Top-50 Fund (the Fund ) in trust for the unitholders. In accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on Collective Investment Schemes, the Trustee shall monitor the activities of the Manager for compliance with the limitations imposed on the investment and borrowing powers as set out in the Trust Deed in each annual accounting year and report thereon to unitholders in an annual report. To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Fund during the year covered by these financial statements, set out on pages 13 to 35, 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 STATE STREET TRUST (SG) LIMITED Authorised signatory 27 September

12 STATEMENT BY THE MANAGER In the opinion of UOB Asset Management Ltd, the accompanying financial statements set out on pages 13 to 35, comprising the Statement of Total Return, Statement of Financial Position, Statement of Movements of Unitholders Funds, Statement of Portfolio and Notes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial position and portfolio holdings of United Asia Top-50 Fund (the Fund ) as at 30 June 2017, and the financial performance and movements of unitholders funds for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants. At the date of this statement, there are reasonable grounds to believe that the Fund will be able to meet its financial obligations as and when they materialise. For and on behalf of the Manager UOB ASSET MANAGEMENT LTD THIO BOON KIAT Authorised signatory 27 September

13 INDEPENDENT AUDITOR S REPORT TO THE UNITHOLDERS OF UNITED ASIA TOP-50 FUND Our Opinion In our opinion, the accompanying financial statements of the United Asia Top-50 Fund (the Fund ), are properly drawn up in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants, so as to present fairly, in all material respects, the financial position and portfolio holdings of the Fund as at 30 June 2017, and of the financial performance and movements of unitholders funds for the financial year ended on that date. What we have audited The financial statements of the Fund comprise: the Statement of Total Return for the financial year ended 30 June 2017; the Statement of Financial Position as at 30 June 2017; the Statement of Movements of Unitholders Funds for the financial year ended 30 June 2017; the Statement of Portfolio as at 30 June 2017; and the notes to the financial statements, including a summary of significant accounting policies. Basis for Opinion We conducted our audit in accordance with Singapore Standards on Auditing ( SSAs ). Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence We are independent of the Fund in accordance with the Accounting and Corporate Regulatory Authority Code of Professional Conduct and Ethics for Public Accountants and Accounting Entities ( ACRA Code ) together with the ethical requirements that are relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ACRA Code. Other Information The Fund s Manager (the Manager ) is responsible for the other information. The other information comprises all sections of the annual report but does not include the financial statements and our auditor s report thereon. Our opinion on the financial statements does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Manager for the Financial Statements 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. -11-

14 INDEPENDENT AUDITOR S REPORT TO THE UNITHOLDERS OF UNITED ASIA TOP-50 FUND In preparing the financial statements, the Manager is responsible for assessing the Fund s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intends to terminate the Fund or to cease the Fund s operations, or has no realistic alternative but to do so. The Manager s responsibilities include overseeing the Fund s financial reporting process. Auditor s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SSAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager. Conclude on the appropriateness of the Manager s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. PricewaterhouseCoopers LLP Public Accountants and Chartered Accountants Singapore, 27 September

15 STATEMENT OF TOTAL RETURN For the financial year ended 30 June Note $ $ Income Dividends 342, ,591 Interest Total 342, ,601 Less: Expenses Management fee 9 238, ,468 Trustee fee 9 6,174 6,439 Audit fee 13,999 14,000 Registrar fee 9 16,217 15,000 Valuation fee 9 19,915 20,122 Custody fee 9 10,681 14,629 Transaction costs 67,103 76,490 Interest expenses Other expenses 67,010 61,156 Total 440, ,314 Net income/(losses) (97,177) (96,713) Net gains/(losses) on value of investments Net gains/(losses) on investments 3,015,589 (1,027,278) Net gains/(losses) on financial derivatives (6,860) - Net foreign exchange gains/(losses) 9,980 (36,492) 3,018,709 (1,063,770) Total return/(deficit) for the year before income tax 2,921,532 (1,160,483) Less: Income tax 3 (47,583) (48,164) Total return/(deficit) for the year 2,873,949 (1,208,647) The accompanying notes form an integral part of these financial statements. -13-

16 STATEMENT OF FINANCIAL POSITION As at 30 June Note $ $ Assets Portfolio of investments 15,416,578 14,517,634 Sales awaiting settlement 66,083 - Receivables 4 91,658 34,517 Cash and bank balances 496, ,345 Financial derivatives at fair value Total assets 16,071,483 15,181,496 Liabilities Payables 5 128,883 94,757 Total liabilities 128,883 94,757 Equity Net assets attributable to unitholders 7 15,942,600 15,086,739 The accompanying notes form an integral part of these financial statements. -14-

17 STATEMENT OF MOVEMENTS OF UNITHOLDERS FUNDS For the financial year ended 30 June Note $ $ Net assets attributable to unitholders at the beginning of the financial year 15,086,739 17,795,578 Operations Change in net assets attributable to unitholders resulting from operations 2,873,949 (1,208,647) Unitholders contribution/(withdrawal) Creation of units 7,444 12,841 Cancellation of units (2,025,532) (1,513,033) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (2,018,088) (1,500,192) Total increase/(decrease) in net assets attributable to unitholders 855,861 (2,708,839) Net assets attributable to unitholders at the end of the financial year 7 15,942,600 15,086,739 The accompanying notes form an integral part of these financial statements. -15-

18 STATEMENT OF PORTFOLIO As at 30 June 2017 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 CHINA ALIBABA GROUP HOLDING LTD 2, , ANTA SPORTS PRODUCTS LTD 38, , TOTAL CHINA 672, HONG KONG AIA GROUP LTD 26, , CNOOC LTD 491, , TECHTRONIC INDUSTRIES CO LTD 65, , TOTAL HONG KONG 1,417, INDIA AXIS BANK LTD 61, , BHARAT PETROLEUM CORP LTD 16, , COAL INDIA LTD 44, , EMAMI LTD 11, , HOUSING DEVELOPMENT FINANCE CORP 18, , POWER GRID CORP OF INDIA LTD 95, , TOTAL INDIA 2,449, INDONESIA MATAHARI DEPARTMENT STORE TBK 107, , PT BANK NEGARA INDONESIA (PERSERO) TBK. 812, , PT BANK RAKYAT INDONESIA (PERSERO) TBK. 386, , SEMEN INDONESIA PERSERO TBK PT 160, , TELEKOMUNIKASI INDONESIA PERSERO TBK PT 567, , TOTAL INDONESIA 1,749, JAPAN ALPS ELECTRIC CO LTD 6, , ASTELLAS PHARMA INC 9, , The accompanying notes form an integral part of these financial statements. -16-

19 STATEMENT OF PORTFOLIO As at 30 June 2017 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 JAPAN (continued) DAIKIN INDUSTRIES LTD 3, , GLP J-REIT , GMO INTERNET INC 22, , HOSHIZAKI CORP 3, , JAPAN HOTEL REIT INVESTMENT CO , JAPAN TOBACCO INC 6, , KAO CORP 4, , KDDI CORP 4, , KOSE CORP 1, , MARUWA UNYU KIKAN CO LTD 4, , NIPPON TELEGRAPH & TELEPHONE CORP 5, , PARK24 CO LTD 8, , RAKUTEN INC 18, , SANTEN PHARMACEUTICAL CO LTD 9, , SECOM CO LTD 3, , SHIONOGI & CO LTD 3, , SUBARU CORP 3, , SUMITOMO MITSUI FINANCIAL GROUP 7, , SUZUKI MOTOR CORP 4, , TOTAL JAPAN 5,843, LUXEMBOURG SAMSONITE INTERNATIONAL SA 33, , PHILIPPINES METROPOLITAN BANK & TRUST CO 59, , SINGAPORE SINGAPORE TELECOMMUNICATIONS LTD 62, , SOUTH KOREA COWAY CO LTD 1, , HYUNDAI STEEL CO 4, , The accompanying notes form an integral part of these financial statements. -17-

20 STATEMENT OF PORTFOLIO As at 30 June 2017 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 SOUTH KOREA (continued) SAMSUNG ELECTRONICS CO LTD , TOTAL SOUTH KOREA 1,314, TAIWAN AIRTAC INTERNATIONAL GROUP 12, , SILICON MOTION TECHNOLOGY CORP 3, , TAIWAN SEMICONDUCTOR MANUFACTURING CO LTD 44, , TOTAL TAIWAN 868, THAILAND KASIKORNBANK PCL - FOREIGN 29, , THE SIAM COMMERCIAL BANK PCL 45, , TOTAL THAILAND 522, Total Equities 15,416, Portfolio of investments 15,416, Other net assets/(liabilities) 526, Net assets attributable to unitholders 15,942, The accompanying notes form an integral part of these financial statements. -18-

21 STATEMENT OF PORTFOLIO As 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 30 June 2016 % By Geography - Primary (Summary) Quoted Equities China Hong Kong India Indonesia Japan Luxembourg Malaysia Philippines Singapore South Korea Taiwan Thailand Portfolio of investments Other net assets/(liabilities) Net assets attributable to unitholders The accompanying notes form an integral part of these financial statements. -19-

22 STATEMENT OF PORTFOLIO As at 30 June 2017 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 30 June 2016 % By Industry - Secondary Quoted Equities Consumer Discretionary 2,082, Consumer Staples 1,199, Energy 1,189, Financials 3,804, Health Care 588, Industrials 1,926, Information Technology 2,647, Materials 487, Real Estate 309, Telecommunication Services 755, Utilities 426, Portfolio of investments 15,416, Other net assets/(liabilities) 526, Net assets attributable to unitholders 15,942, The accompanying notes form an integral part of these financial statements. -20-

23 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June 2017 These notes form an integral part of and should be read in conjunction with the accompanying financial statements. 1 General United Asia Top-50 Fund (the Fund ) is a Singapore-registered trust fund constituted under a Trust Deed dated 28 September 1999 between UOB Asset Management Ltd (the Manager ) and HSBC Institutional Trust Services (Singapore) Limited (the Retired Trustee ). The Deed is governed by the laws of the Republic of Singapore. With effect from 1 April 2017, the Trustee of the Fund has changed from HSBC Institutional Trust Services (Singapore) Limited (the Retired Trustee ) to State Street Trust (SG) Limited (the Trustee ). The Fund is included by the Central Provident Fund ( CPF ) Board under the CPF Investment Scheme ( CPFIS ) - Ordinary account for subscription by unitholders using their CPF monies. The Fund is included under List B of the CPFIS funds. Funds included in List B of CPFIS are not allowed to accept new CPF monies. The Fund s investment objective is to achieve long-term appreciation by investing, directly or indirectly, in Authorised Investments issued by not more than 50 in total of the top corporations or any other entities either unincorporated or incorporated in or whose principal operations are in, Asia, as may from time to time be determined by the Manager. These companies can be listed in any of the stock exchanges of the world. Subscriptions and redemptions of the units are denominated in the Singapore Dollar. 2 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 held at fair value through profit or loss, and in accordance with the recommendations of Statement of Recommended Accounting Practice 7 Reporting Framework for Unit Trusts issued by the Institute of Singapore Chartered Accountants in June 2016 ( RAP 7 ) for the financial year beginning on or after 1 July The Fund has adopted the following Singapore Financial Reporting Standards ( FRS ) and related amendments in accordance with the recommendations of the RAP 7: (i) Consolidation and disclosure of interests in other entities FRS 110 Consolidated financial statements FRS 112 Disclosure of interests in other entities Amendments to FRS 110, FRS 112 and FRS 27 Investment entities FRS 110 and the amendments define an investment entity and introduce an exception from the consolidation requirements for investments entities. FRS 112 and the amendments require entities to disclose significant judgements and assumptions made in determining whether the entity controls, jointly controls, significantly influences or has some interests in other entities. Entities are also required to provide disclosure around certain structured entities. The amendments to FRS 112 introduce new disclosure requirements related to investment entities. (ii) Offsetting financial assets and liabilities disclosures Amendments to FRS 32 Financial instruments: Presentation - Offsetting financial assets and financial liabilities Amendments to FRS 107 Disclosures - Offsetting financial assets and financial liabilities The amendments to FRS 32 provide clarification on the offsetting criteria in FRS 32 and address inconsistencies in their application. -21-

24 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Significant accounting policies (continued) (a) Basis of preparation (continued) (ii) Offsetting financial assets and liabilities disclosures (continued) The amendments to FRS 107 require additional disclosures to enable users of the financial statements to evaluate the effect or the potential effects of netting arrangements, including rights of set-off associated with an entity s recognised financial assets and recognised financial liabilities, on the entity s financial position. The adoption of these new or amended FRS impacted the Fund s level of disclosures in certain of the above noted areas, but did not result in substantial changes to the accounting policies of the Fund and had no material effect on the amounts reported for the current or prior years. (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 Purchases 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 changes in fair value on investments are included in the Statement 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 sale of investments are computed on the basis of the difference between the weighted average cost and selling price gross of transaction costs, and are taken up in the Statement of Total Return. (d) Basis of valuation of investments The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of trading on the financial year end date. The quoted market price used for investments held by the Fund is the last traded market price for both financial assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstances where the last traded price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread that is most representative of fair value. (e) Foreign currency translation (i) Functional and presentation currency The Fund s investors are mainly from Singapore with the subscriptions and redemptions of the units denominated in the Singapore Dollar. The performance of the Fund is measured and reported to the investors in the Singapore Dollar. The Manager considers the Singapore Dollar as the currency of the primary economic environment in which the Fund operate. The financial statements are presented in the Singapore Dollar, which is the Fund s functional and presentation currency. -22-

25 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Significant accounting policies (continued) (e) Foreign currency translation (continued) (ii) Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Total Return. Translation differences on non-monetary financial assets and liabilities are also recognised in the Statement of Total Return within Net gains/losses on investments. (f) Expenses charged to the Fund All direct expenses relating to the Fund are charged directly to the Statement of Total Return. In addition, certain expenses shared by all unit trusts managed by the Manager are allocated to each fund based on the respective fund s net asset value. (g) Financial derivatives Financial derivatives including forwards and swaps may be entered into for the purposes efficient portfolio management, tactical asset allocation or specific hedging of financial assets held as determined by the Manager and in accordance with the provision of the Trust Deed and the Code on Collective Investment Schemes. Financial derivatives outstanding on the financial year end date are valued at the forward rate or at the current market prices using the mark-to-market method, as applicable, and the resultant gains and losses are taken up in the Statement of Total Return. (h) Distributions The Manager has the absolute discretion to determine whether a distribution is to be made. In such an event, an appropriate amount will be transferred to a distribution account, to be paid out on the distribution date. The amount shall not be treated as part of the property of the Fund. Distributions are accrued for at the financial year end date if the necessary approvals have been obtained and a legal or constructive obligation has been created. (i) Offsetting financial instruments Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must be enforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Fund or the counterparty. 3 Income tax $ $ Overseas income tax 47,583 48,164 The Fund was granted the status of Designated Unit Trust ( DUT ) in Singapore. The Trustee of the Fund ensures that the Fund fulfill their reporting obligations under the DUT Scheme. -23-

26 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Income tax (continued) Under the DUT Scheme, subject to certain conditions and reporting obligations being met, certain income of the DUT Fund is not taxable in accordance with Sections 35(12) and 35(12A) of the Income Tax Act. Such income includes: (i) (ii) (iii) (iv) (v) (vi) gains or profits derived from Singapore or elsewhere from the disposal of securities; interest (other than interest for which tax has been deducted under Section 45 of the Income Tax Act); dividends derived from outside Singapore and received in Singapore; gains or profits derived from foreign exchange transactions, transactions in futures contracts, transactions in interest rate or currency forwards, swaps or option contracts and transactions in forwards, swaps or option contracts relating to any securities or financial index; discount, prepayment fee, redemption premium and break cost from qualifying debt securities issued during the prescribed period; and distributions from foreign unit trusts derived from outside Singapore and received in Singapore. The overseas income tax represents tax withheld on foreign sourced income. 4 Receivables $ $ Dividends receivable 91,658 34,504 Other receivables ,658 34,517 5 Payables $ $ Amount payable for cancellation of units 33,770 14,460 Amount due to the Manager 64,448 61,054 Amount due to Trustee 1,388 1,503 Tax payables 13,304 - Other creditors and accrued expenses 15,973 17, ,883 94,

27 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Fair value of financial derivatives Financial derivatives contracts comprise foreign currency contracts for the sale and purchase of foreign currencies. The contract or underlying principal amounts of these financial derivatives and their corresponding gross positive or negative fair values at the financial year end date are analysed below. Contract or underlying principal amount Contract or underlying Positive Negative principal Positive fair value fair value amount fair value Negative fair value $ $ $ $ $ $ Foreign currency contracts 66, Units in issue During the financial year ended 30 June 2017 and 2016, the numbers of units issued, redeemed and outstanding were as follows: Units at the beginning of the financial year 20,841,156 22,879,825 Units created 9,010 17,084 Units cancelled (2,491,943) (2,055,753) Units at the end of the financial year 18,358,223 20,841,156 $ $ Net assets attributable to unitholders 15,942,600 15,086,739 Net assets value per unit A reconciliation of the net assets attributable to unitholders per unit per the financial statements and the net assets attributable to unitholders per unit for issuing/redeeming units at the financial year end date is prepared below: $ $ Net assets attributable to unitholders per financial statements per unit Under accrual for legal and professional fee Net assets attributable to unitholders for issuing/redeeming per unit

28 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management The Fund s activities expose it to a variety of market risks (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The Fund s overall risk management programme seeks to minimise potential adverse effects on the Fund s financial performance. The Fund may use futures contracts, financial options contracts and/or foreign currency contracts subject to the terms of the Trust Deed to moderate certain risk exposures. Specific guidelines on exposures to individual securities and certain industries are in place for the Fund at any time as part of the overall financial risk management to reduce the Fund s risk exposures. The Fund s assets principally consist of financial instruments such as equity investments and cash. They are held in accordance with the published investment policies of the Fund. The allocation of assets between the various types of investments is determined by the Manager to achieve its investment objectives. (a) Market risk Market risk is the risk of loss arising from uncertainty concerning movements in market prices and rates, including observable variables such as interest rates, credit spreads, exchange rates, and others that may be only indirectly observable such as volatilities and correlations. Market risk includes such factors as changes in economic environment, consumption pattern and investor s expectation etc. which may have significant impact on the value of the investments. The Fund s investments are substantially dependent on changes in market prices and are monitored by the Manager on a regular basis so as to assess changes in fundamentals and valuation. Although the Manager makes reasonable efforts in the choice of investments, events beyond reasonable control of the Manager could affect the prices of the underlying investments and hence the asset value of the Fund. Guidelines are set to reduce the Fund s risk exposures to market volatility such as diversifying the portfolio by investing across various geographies, alternatively, the Fund may be hedged using derivative strategies. (i) Foreign exchange risk The Fund has monetary financial assets and liabilities denominated in currencies other than the Singapore Dollar and it may be affected favourably or unfavourably by exchange rate regulations or changes in the exchange rates between the Singapore Dollar and such other currencies. The Manager may at his discretion, implement a currency management strategy either to reduce currency volatility or to hedge the currency exposures of the Fund. -26-

29 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management (continued) (a) Market risk (continued) (i) Foreign exchange risk (continued) The table below summarises the Fund s exposure to foreign currencies at the end of the financial year. As at 30 June 2017 SGD JPY IDR INR HKD Others Total $ $ $ $ $ $ $ Assets Portfolio of investments 242,347 5,843,481 1,749,953 2,449,544 1,783,740 3,347,513 15,416,578 Sales awaiting settlement , ,083 Receivables - 51, ,081 16,884 91,658 Cash and bank balances 359, ,947-8, ,564 Total Assets 602,231 5,894,833 1,816,036 2,577,832 1,806,821 3,373,130 16,070,883 Liabilities Payables 115,578 8, ,477 2, ,883 Total Liabilities 115,578 8, ,477 2, ,883 Net assets 486,653 5,886,821 1,816,036 2,577,832 1,804,344 3,370,314 Foreign currency contracts (notional value) 66,683 - (66,683) Net currency exposure 553,336 5,886,821 1,749,353 2,577,832 1,804,344 3,370,

30 NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 30 June Financial risk management (continued) (a) Market risk (continued) (i) Foreign exchange risk (continued) As at 30 June 2016 SGD JPY IDR INR HKD Others Total $ $ $ $ $ $ $ Assets Portfolio of investments 777,130 6,177,360 1,665,031 2,020,562 1,104,427 2,773,124 14,517,634 Receivables 13 7,710-2,393 10,442 13,959 34,517 Cash and bank balances 377,006 14,293 2, , ,345 Total Assets 1,154,149 6,199,363 1,667,834 2,022,955 1,114,869 3,022,326 15,181,496 Liabilities Payables 94, ,757 Total Liabilities 94, ,757 Net currency exposure 1,059,392 6,199,363 1,667,834 2,022,955 1,114,869 3,022,326 Investments, which is the significant item in the Statement of Financial Position is exposed to currency risk and other price risk. The other price risk sensitivity analysis includes the impact of currency risk on non-monetary investments. The Fund s net financial assets comprise significantly non-monetary investments, hence currency risk sensitivity analysis has not been performed on the remaining financial assets. (ii) Price risk Price risk is the risk of potential adverse changes to the value of financial investments because of changes in market conditions and volatility in security prices. The table below summarises the impact of increases/decreases from the Fund s investments in equities on the Fund s net assets attributable to unitholders at 30 June 2017 and The analysis is based on the assumption that the index components within the benchmark increased/decreased by a reasonable possible shift, with all other variables held constant and that the fair value of the Fund s investments moved according to the historical correlation with the index Net impact to net assets attributable to unitholders 2016 Net impact to net assets attributable to unitholders Benchmark component $ % $ % MSCI AC Far East 2,713, ,584, (iii) Interest rate risk Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. -28-