United ASEAN Fund - UOB Group · BANK CENTRAL ASIA TBK PT 3,044,587 4.11 KEPPEL CORP LTD 2,502,500...

United ASEAN FundSemi Annual Report

for the half year ended 30th June 2018

MANAGERUOB Asset Management LtdRegistered Address:80 Raffles PlaceUOB PlazaSingapore 048624Company Registration No. : 198600120ZTel: 1800 22 22 228

DIRECTORS OF UOB ASSET MANAGEMENTLee Wai FaiEric Tham Kah JinPeh Kian HengThio Boon Kiat

TRUSTEEState Street Trust (SG) Limited168 Robinson Road#33-01, Capital TowerSingapore 068912

CUSTODIAN / ADMINISTRATOR / REGISTRARState Street Bank and Trust Company, acting through its Singapore Branch168 Robinson Road#33-01, Capital TowerSingapore 068912

AUDITORPricewaterhouseCoopers LLP7 Straits View, Marina OneEast Tower, Level 12Singapore 018936

United ASEAN Fund(Constituted under a Trust Deed in the Republic of Singapore)

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A) Fund Performance

Fund Performance/Benchmark Returns

3 mth%

Growth

6 mth%

Growth

1 yr%

Growth

3 yrAnn

CompRet

5 yrAnn

CompRet

10 yrAnn

CompRet

SinceInception

2 June 1986Ann

CompRet

United ASEAN Fund -8.53 -8.95 0.00 1.57 -0.27 1.18 6.80Benchmark -7.60 -7.67 0.78 2.62 1.67 4.04 4.69

Source: Morningstar.

Note: The performance returns of the Fund are in Singapore Dollar based on a NAV-to-NAV basis with dividends and distributionsreinvested, if any.The benchmark of the Fund: Jun 86 – Jan 93: 100% DBS 50; Feb 93 – Aug 98: 50% DBS 50, 50% KLEMAS;Sep 98 – May 00: 100% DBS 50; Jun 00 – May 06: 50% STI Index, 50% KLEMAS; Jun 06 – Jun 13: 50% STI Index, 50% KLCI;Jul13 – Present: MSCI South East Asia.

For the six months ended 30 June 2018, the net asset value of the Fund fell 8.95% compared with a7.67% decrease in the benchmark MSCI South East Asia Index.

The Fund’s underperformance for the period under review was largely attributed to negative stockselection.

On a stock basis, the Fund’s investments in DBS Group (Singapore), PTT Exploration &Production (Thailand), Mitra Adiperkasa (Indonesia), Top Glove (Malaysia) and WilconDepot (Philippines) were key contributors to performance.

However the outperformance was offset by the following key detractors: Gamuda Bhd, CIMBGroup (Malaysia), Telekomunikasi Indonesia (Indonesia) and Metropolitan Bank &Trust (Philippines).

Country allocation contributed a positive effect. Our overweight position in the Singapore marketcontributed positively as the market outperformed. Likewise, the Fund’s underweight position in thePhilippines contributed positively given the Philippines market’s underperformance. However the Fund’sunderweight position in Malaysia detracted as this market eventually outperformed its ASEAN peers.

As at end June 2018, the Fund was 96.87% invested. In terms of markets, the Fund’s allocation stood atSingapore (34.45%), Thailand (20.47%), Malaysia (17.88%), Indonesia (15.59%) and Philippines(8.48%), with the remainder in cash (3.13%).

In terms of sectors, the Fund’s allocation stood at Financials (41.35%), Consumer Discretionary(10.20%), Real Estate (9.89%), Industrials (8.60%), Consumer Staples (7.94%),Telecommunication Services (6.17%), Materials (4.97%), Energy (4.64%) and others (3.11%), withthe remainder in cash (3.13%).

Economic and Market Review

Despite a strong start in January, equity markets in Asia underperformed their global counterparts as risksentiment dampened. Asian markets erased gains made from 2017 as volatility levels spiked beginning


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A) Fund Performance (continued)

in February with the corrections griping the entire market. A wave of concerns surfaced during the period;an escalation of trade spats between the US and China, an emerging markets rout which threatened tospread to Asia, fears of normalising US interest rates that would encourage outflows from the region.

10-year US Treasury yields rose significantly during the period as the US Federal Reserve (Fed) raisedinterest rates twice (in March and June) with a new Fed Chairman who voiced a preference forcommunicating better guidance for the markets.

With the exception of the Japanese Yen andMalaysian Ringgit, the US dollar strengthened against nearlyall Asian currencies. The Indian Rupee and Philippine peso lost the most against the greenback. In thecommodities market, metals climbed-copper, aluminium, gold and zinc rallied.

Higher oil prices also weighed on Asian markets. Oil sustained gains after a series of Organisation of thePetroleum Exporting Countries (OPEC) made efforts at production cuts to drain a global glut of supply.Prices rose amid escalating geopolitical tensions and fears of supply disruptions in the energy richMiddleEast.

The earnings revision for Asian markets which was strong at the start of 2018 has trailed global markets,largely due to moderating export growth momentum. Southeast Asia witnessed the brunt of the selloffdespite stronger FX reserves and corporate balance sheets as compared to the broader Emergingmarkets, in particular, Indonesia and Philippines with twin deficits and lower foreign currency (FX) reservecoverage were the hardest hit.

Closer to home, South East Asia markets lagged behind their counterparts in North Asia.

Singapore and Malaysia were the best performing markets. In Singapore, the environment of risinginterest rates proved to be beneficial to the three local banks which recorded stronger net interestmargins. The recovery in the oil price also helped to alleviate investor concerns on the banks’ loanexposure to the depressed offshore and marine sector. Despite an increase in transaction volumes andprices, Singapore’s listed real estate developers failed to outperform as concerns grew that thegovernment could introduce more property cooling measures.

Over in Malaysia, a new government was elected to replace the incumbent party during the GeneralElections in May. Certain sectors such as the infrastructure and construction sectors were negativelyaffected after the new government announced wide ranging reviews and delays or cancellations of majorprojects. However the broader market still outperformed.

The Philippines registered the biggest losses. Headwinds from a peso depreciation and a record tradedeficit spooked investors. Meanwhile, the Indonesia market saw little reason to cheer as its trade balancefell into a deficit on rising oil and gas imports. After initial gains in the first two months, Thailand reversedits performance despite growing domestic demand and accelerating export growth.

Outlook and Fund Strategy

The earnings revision in ASEAN that was strong at the beginning of 2018 has trailed global markets,largely due to moderating export growth momentum. Despite this, earnings revisions remain positive andmarket valuations are still relatively reasonable.


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A) Fund Performance (continued)

Despite improved underlying economic fundamentals in ASEAN, market performance has beenimpacted by heavy foreign selling. The US dollar strength and the emerging market (EM) contagiontriggered by Turkey and Argentina has resulted in capital flight from ASEAN, especially from Indonesiaand the Philippines.

On the US and China trade war, while we assess the growth and earnings impact on the market is muted,a long drawn out trade war and escalating retaliation beyond trade is damaging for both countries and allmarket participants. Our base case remains that there should not be a full blown trade war, and thereshould be some negotiated settlement assuming rationality from both sides. Nonetheless, weacknowledge that trade tensions may persist for some time and will be an overhang on the ASEANmarkets in the near term.

In ASEAN, we favour countries with stable currencies, current account surpluses and positive earningsrevisions. The main risks are trade wars, spikes in 10-year UST yields, a strengthening US dollar andgeopolitical challenges that would derail global growth momentum. We continue to remain constructiveon ASEAN given the backdrop of still healthy global GDP growth, the region’s continued positive earningsrevisions and the robust longer term growth drivers of positive demographics and consumption.


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B) Investments at fair value and as a percentage of net asset value (“NAV”) as at 30 June 2018under review classified by

i) Country

Fair Value(S$)

% of NAV

Indonesia 11,550,286 15.59Malaysia 13,241,488 17.88Philippines 6,284,764 8.48Singapore 25,517,466 34.45Thailand 15,166,834 20.47Portfolio of investments 71,760,838 96.87Other net assets/(liabilities) 2,316,447 3.13Total 74,077,285 100.00

ii) Industry

Fair Value(S$)

% of NAV

Consumer Discretionary 7,559,863 10.20Consumer Staples 5,883,509 7.94Energy 3,435,146 4.64Financials 30,632,437 41.35Health Care 1,065,417 1.44Industrials 6,369,808 8.60Materials 3,680,830 4.97Real Estate 7,325,371 9.89Telecommunication Services 4,573,054 6.17Utilities 1,235,403 1.67Portfolio of investments 71,760,838 96.87Other net assets/(liabilities) 2,316,447 3.13Total 74,077,285 100.00


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B) Investments at fair value and as a percentage of net asset value (“NAV”) as at 30 June 2018under review classified by (continued)

iii) Asset Class

Fair Value(S$) % of NAV

Quoted Equities 71,760,838 96.87Other net assets/(liabilities) 2,316,447 3.13Total 74,077,285 100.00

iv) Credit rating of quoted bonds

N/A

C) Top Ten Holdings

10 largest holdings as at 30 June 2018

Fair Value(S$)

Percentage oftotal net assetsattributable tounitholders

%

DBS GROUP HOLDINGS LTD 5,588,100 7.54UNITED OVERSEAS BANK LTD 4,248,846 5.74OVERSEA-CHINESE BANKING CORP LTD 3,201,000 4.32BANK CENTRAL ASIA TBK PT 3,044,587 4.11KEPPEL CORP LTD 2,502,500 3.38SINGAPORE TELECOMMUNICATIONS LTD 2,156,000 2.91BANK MANDIRI PERSERO TBK PT 1,955,333 2.64AYALA LAND INC 1,936,634 2.61CIMB GROUP HOLDINGS BHD 1,840,339 2.49UOL GROUP LTD 1,828,800 2.47


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C) Top Ten Holdings (continued)

10 largest holdings as at 30 June 2017

Fair Value

Percentage oftotal net assetsattributable tounitholders

(S$) %

UNITED OVERSEAS BANK LTD 5,104,341 5.57TELEKOMUNIKASI INDONESIA PERSERO TBK PT 4,361,373 4.76DBS GROUP HOLDINGS LTD 3,940,600 4.30ASTRA INTERNATIONAL TBK PT 3,227,113 3.52SINGAPORE TELECOMMUNICATIONS LTD 3,112,000 3.39UOL GROUP LTD 2,979,600 3.25BANK MANDIRI PERSERO TBK PT 2,963,675 3.23OVERSEA-CHINESE BANKING CORP LTD 2,913,300 3.18MALAYAN BANKING BHD 2,718,129 2.97BANK CENTRAL ASIA TBK PT 2,493,826 2.72

D) Exposure to derivatives

i) Fair value of derivative contracts and as a percentage of NAV as at 30 June 2018

N/A

ii) There was a net realised loss of SGD 6,218 on derivative contracts during the financial period from1 January 2018 to 30 June 2018.

iii) Net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2018

N/A

E) Amount and percentage of NAV invested in other schemes as at 30 June 2018

N/A

F) Amount and percentage of borrowings to NAV as at 30 June 2018

N/A


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G) Amount of redemptions and subscriptions for the financial period from 1 January 2018 to30 June 2018

Total amount of redemptions SGD 11,016,065Total amount of subscriptions SGD 1,978,481

H) The amount and terms of related-party transactions for the financial period from 1 January2018 to 30 June 2018

i) As at 30 June 2018, the Fund maintained current accounts with its related parties as follows:

State Street Bank and Trust Company, Singapore BranchCash and bank balances SGD 3,023,734

United Overseas Bank LimitedMargin accounts SGD 136,350

ii) Investment in Initial Public Offerings managed by UOB Group

N/A

iii) As at 30 June 2018, the brokerage income earned by UOB Kay Hian Pte Ltd was SGD 10,397.


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I) Expense ratios

2018 2017$ $

Total operating expenses 1,144,529 987,247Average daily net asset value 87,366,246 89,731,700Expense ratio 1.31% 1.10%

Note: The expense ratio has been computed based on the guidelines laid down by the Investment Management Association ofSingapore (“IMAS”). The calculation of the Fund’s expense ratio at 30 June 2018 was based on total operating expensesdivided by the average net asset value respectively for the financial period. The total operating expenses do not include(where applicable) brokerage and other transaction costs, performance fee, interest expense, distribution paid out tounitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and taxdeducted at source or arising out of income received. The Fund does not pay any performance fee. The average net assetvalue is based on the daily balances.

J) Turnover ratios

2018 2017$ $

Lower of total value of purchases or sales 27,008,718 22,180,931Average daily net assets value 83,947,339 90,942,422

Turnover ratio 32.17% 24.39%

Note: The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective InvestmentSchemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales ofthe underlying investments divided by the average daily net asset value.

K) Any material information that will adversely impact the valuation of the scheme such ascontingent liabilities of open contracts

N/A

L) For schemes which invest more than 30% of their deposited property in another scheme, thefollowing 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 2018 and 30 June 2017

N/A

ii) Expense ratios for the financial period ended 30 June 2018 and 30 June 2017

N/A


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L) For schemes which invest more than 30% of their deposited property in another scheme, thefollowing key information on the second-mentioned scheme (“the underlying scheme”)1should be disclosed as well (continued)

iii) Turnover ratios for the financial period ended 30 June 2018 and 30 June 2017

N/A

1 Where the underlying scheme is managed by a foreign manager which belongs to the same group of companies as, or hasa formal arrangement or investment agreement with, the Singapore manager, the above information should be disclosed onthe underlying scheme. In other cases, such information on the underlying scheme should be disclosed only if it is readilyavailable to the Singapore manager.

M) Soft dollar commissions/arrangements

UOB Asset Management has entered into soft dollars arrangements with selected brokers fromwhom products and services are received from third parties. The products and services relateessentially to computer hardware and software to the extent that they are used to support theinvestment decision making process, research and advisory services, economic and politicalanalyses, portfolio analyses including performance measurements, market analyses, data andquotation services, all of which are believed to be helpful in the overall discharge of UOB AssetManagement’s duties to clients. As such services generally benefit all of UOB Asset Management’sclients in terms of input into the investment decision making process, the soft credits utilised are notallocated on a specific client basis. The Manager confirms that trades were executed on a bestexecution basis and there was no churning of trades.

N) Where the scheme offers pre-determined payouts, an explanation on the calculation of theactual payouts received by participants and any significant deviation from thepre-determined payouts

N/A


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STATEMENT OF TOTAL RETURN

For the half year ended 30 June 2018 (Un-audited)

30 June 30 June2018 2017$ $

IncomeDividends 1,533,457 1,456,675Interest 85 7Total 1,533,542 1,456,682

Less: ExpensesManagement fee 416,468 450,885Less: Management fee rebate 316 (14,672)Trustee fee 14,489 16,884Audit fee 9,968 9,247Registrar fee 7,459 7,490Custody fee 28,021 17,337Transaction costs 258,393 144,061Other expenses 76,874 18,854Total 811,988 650,086

Net income/(losses) 721,554 806,596

Net gains/(losses) on value of investments and financialderivativesNet gains/(losses) on investments (7,735,589) 7,390,230Net gains/(losses) on financial derivatives (6,218) (1,111)Net foreign exchange gains/(losses) 9,694 (60,489)

(7,732,113) 7,328,630

Total return/(deficit) for the period before income tax (7,010,559) 8,135,226Less: Income tax (103,460) (127,507)Total return/(deficit) for the period (7,114,019) 8,007,719


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STATEMENT OF FINANCIAL POSITION

As at 30 June 2018 (Un-audited)

30 June 31 December2018 2017$ $

AssetsPortfolio of investments 71,760,838 88,516,302Sales awaiting settlement - 2,879,969Receivables 129,421 145,014Cash and bank balances 3,023,734 125,345Margin accounts 136,350 133,640Financial derivatives at fair value - 579Total assets 75,050,343 91,800,849

LiabilitiesPurchases awaiting settlement 525,564 -Bank overdrafts - 743,106Payables 447,494 824,529Financial derivatives at fair value - 4,326Total liabilities 973,058 1,571,961

EquityNet assets attributable to unitholders 74,077,285 90,228,888


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STATEMENT OF MOVEMENTS OF UNITHOLDERS’ FUNDS

For the half year ended 30 June 2018 (Un-audited)

30 June 31 December2018 2017$ $

Net assets attributable to unitholders at the beginning of thefinancial period/year 90,228,888 87,355,347

OperationsChange in net assets attributable to unitholders resulting fromoperations (7,114,019) 16,482,843

Unitholders’ contributions/(withdrawals)Creation of units 1,978,481 6,102,777Cancellation of units (11,016,065) (19,712,079)

Change in net assets attributable to unitholders resulting from netcreation and cancellation of units (9,037,584) (13,609,302)

Total increase/(decrease) in net assets attributable to unitholders (16,151,603) 2,873,541

Net assets attributable to unitholders at the end of the financialperiod/year 74,077,285 90,228,888


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STATEMENT OF PORTFOLIO


Holdings at Fair value at

Percentage oftotal net assetsattributable tounitholders at

30 June2018

30 June2018$

30 June2018%

By Geography - Primary

Quoted Equities

INDONESIAASTRA INTERNATIONAL TBK PT 2,700,000 1,695,574 2.29BANK CENTRAL ASIA TBK PT 1,490,000 3,044,587 4.11BANK MANDIRI PERSERO TBK PT 3,000,000 1,955,333 2.64GUDANG GARAM TBK PT 135,000 863,843 1.16INDOFOOD CBP SUKSES MAKMUR TBK PT 900,000 757,870 1.02MITRA ADIPERKASA TBK PT 12,000,000 1,027,620 1.39PT BANK RAKYAT INDONESIA (PERSERO)TBK. 1,500,000 405,339 0.55SEMEN INDONESIA PERSERO TBK PT 550,000 372,869 0.50TELEKOMUNIKASI INDONESIA PERSEROTBK PT 4,000,000 1,427,251 1.93

TOTAL INDONESIA 11,550,286 15.59

MALAYSIAALLIANCE BANK MALAYSIA BHD 500,000 681,834 0.92CAHYA MATA SARAWAK BHD 600,000 475,934 0.64CIMB GROUP HOLDINGS BHD 1,000,400 1,840,339 2.49DENKO INDUSTRIAL CORP BHD 1,400,000 675,759 0.91GENTING BHD 380,000 1,078,716 1.46GENTING MALAYSIA BHD 950,000 1,564,844 2.11MALAYAN BANKING BHD 530,000 1,610,074 2.18MALAYSIA AIRPORTS HOLDINGS BHD 250,000 742,592 1.00PUBLIC BANK BHD 50,000 394,249 0.53RHB BANK BHD 800,000 1,474,382 1.99TENAGA NASIONAL BHD 250,000 1,235,403 1.67TOP GLOVE CORP BHD 260,000 1,065,417 1.44


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30 June2018

30 June2018$

30 June2018%

By Geography - Primary (continued)Quoted Equities

MALAYSIA (continued)YINSON HOLDINGS BHD 260,000 401,945 0.54

TOTAL MALAYSIA 13,241,488 17.88

PHILIPPINESAYALA LAND INC 2,000,000 1,936,634 2.61BANK OF THE PHILIPPINE ISLANDS 460,663 1,041,609 1.41METROPOLITAN BANK & TRUST CO 876,056 1,642,881 2.22ROBINSONS RETAIL HOLDINGS INC 370,000 751,531 1.01WILCON DEPOT INC 3,000,000 912,109 1.23

TOTAL PHILIPPINES 6,284,764 8.48

SINGAPORECAPITALAND COMMERCIAL TRUST 366,600 608,556 0.82CITY DEVELOPMENTS LTD 160,000 1,748,800 2.36COMFORTDELGRO CORP LTD 470,000 1,104,500 1.49DBS GROUP HOLDINGS LTD 210,000 5,588,100 7.54GENTING SINGAPORE LTD 1,050,000 1,281,000 1.73KEPPEL CORP LTD 350,000 2,502,500 3.38OVERSEA-CHINESE BANKING CORP LTD 275,000 3,201,000 4.32PROPNEX LTD 800,000 525,564 0.71SINGAPORE TECHNOLOGIESENGINEERING LTD 220,000 723,800 0.98SINGAPORE TELECOMMUNICATIONS LTD 700,000 2,156,000 2.91UNITED OVERSEAS BANK LTD 158,776 4,248,846 5.74


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30 June2018

30 June2018$

30 June2018%


SINGAPORE (continued)UOL GROUP LTD 240,000 1,828,800 2.47

TOTAL SINGAPORE 25,517,466 34.45

THAILANDADVANCED INFO SERVICE PCL 130,000 989,803 1.34AIRPORTS OF THAILAND PCL 500,000 1,296,416 1.75BANGKOK BANK PCL 100,000 804,601 1.09CHAROEN POKPHAND FOODS PCL 800,000 796,781 1.08CP ALL PCL 540,000 1,633,484 2.21INDORAMA VENTURES PCL 350,000 788,653 1.06KASIKORNBANK PCL - NVDR 220,000 1,756,540 2.37PTT EXPLORATION & PRODUCTION PCL 200,000 1,156,485 1.56PTT GLOBAL CHEMICAL PCL 200,000 600,878 0.81PTT PCL 620,000 1,224,804 1.65PTT PCL NVDR 330,000 651,912 0.88SIAM COMMERCIAL BANK PCL/THE 193,300 942,723 1.27SUPALAI PCL 700,000 677,017 0.91THAI BEVERAGE PCL 1,500,000 1,080,000 1.46


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30 June2018

30 June2018$

30 June2018%


THAILAND (continued)THE SIAM CEMENT PCL 45,000 766,737 1.03

TOTAL THAILAND 15,166,834 20.47

Total Equities 71,760,838 96.87

Portfolio of investments 71,760,838 96.87Other net assets/(liabilities) 2,316,447 3.13Net assets attributable to unitholders 74,077,285 100.00


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Percentage oftotal net assetsattributable tounitholders at30 June2018%

Percentage oftotal net assetsattributable tounitholders at31 December

2017%

By Geography - Primary (Summary)Quoted Equities

Indonesia 15.59 20.00Malaysia 17.88 13.30Philippines 8.48 9.82Singapore 34.45 32.19Thailand 20.47 22.79Portfolio of investments 96.87 98.10Other net assets/(liabilities) 3.13 1.90Net assets attributable to unitholders 100.00 100.00


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Fair value at30 June2018$

Percentage oftotal net assetsattributable tounitholders at30 June2018%

Percentage oftotal net assetsattributable tounitholders at31 December

2017%

By Industry - SecondaryQuoted Equities

Consumer Discretionary 7,559,863 10.20 7.53Consumer Staples 5,883,509 7.94 6.12Energy 3,435,146 4.64 5.67Financials 30,632,437 41.35 41.57Health Care 1,065,417 1.44 -Industrials 6,369,808 8.60 7.32Information Technology - - 2.99Materials 3,680,830 4.97 2.29Real Estate 7,325,371 9.89 16.28Telecommunication Services 4,573,054 6.17 6.98Utilities 1,235,403 1.67 1.35Portfolio of investments 71,760,838 96.87 98.10Other net assets/(liabilities) 2,316,447 3.13 1.90Net assets attributable to unitholders 74,077,285 100.00 100.00


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United ASEAN Fund - UOB Group · BANK CENTRAL ASIA TBK PT 3,044,587 4.11 KEPPEL CORP LTD 2,502,500...

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