united asia top 50 fund · korea and malaysia were the worst-performing markets. in terms of sector...

UnitedAsia Top 50Fund

Semi Annual Report

for the financial period 1st July to 31st December 2014

UNITED ASIA TOP 50 FUND(Constituted under a Trust Deed in the Republic of Singapore)

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MANAGERUOB Asset Management LtdRegistered Address:80 Raffles PlaceUOB PlazaSingapore 048624Company Registration No. : 198600120Z

OPERATIONS ADDRESS80 Raffles Place#06-00, UOB Plaza 2Singapore 048624Tel: 1800 22 22 228

DIRECTORS OF UOB ASSET MANAGEMENTTerence Ong Sea EngCheo Chai HongThio Boon Kiat

TRUSTEE / REGISTRARHSBC Institutional Trust Services (Singapore) Limited21 Collyer Quay#10-02, HSBC BuildingSingapore 049320

CUSTODIANState Street Bank and Trust CompanyOne Lincoln StreetBoston, MA 02111United States of America

AUDITORSPricewaterhouseCoopers LLP8 Cross Street#17-00, PWC BuildingSingapore 048424

SOLICITORS TO THE MANAGERTan Peng Chin LLC30 Raffles Place#11-00, Chevron HouseSingapore 048622

SOLICITORS TO THE TRUSTEEAllen & Gledhill LLPOne Marina Boulevard#28-00Singapore 018989


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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 2.04 3.73 3.88 7.41 -1.40 -0.26 -1.55

Benchmark 2.78 2.85 4.47 10.26 4.42 2.72 0.34

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: MSCI AC Far East.

For the six months ended 31 December 2014, the net asset value of the Fund rose 3.7%, compared with a 2.8% increase in the benchmark MSCI Far East index in Singapore dollar terms.

The Fund’s outperformance was due to currency, sector allocation and stock selection effects. In terms of regional allocation, the Fund benefited from its overweight position in India and underweight position in Korea. This was negatively offset by the Fund’s overweight in Hong Kong. In terms of sector allocation, the Fund benefited from its overweight position in healthcare and underweight in energy.

Stock selection effects were positive, coming mainly from the industrials, consumer staples and healthcare sectors. This was offset by negative selection in financials, consumer discretionary and energy sectors.

Key contributors to performance included Baidu (information technology), Fuji Heavy (consumer discretionary) and Axis Bank (financials). Key detractors included Sands China (consumer discretionary), Makita (industrials) and Galaxy Entertainment (consumer discretionary).

During the period, the Fund reduced its overweight position in consumer discretionary and raised its weight in healthcare. We also made selective changes to our stock holdings.

As at end December 2014, the Fund had the following sector allocation: financials (26.9%), information technology (15.8%), consumer discretionary (18.9%), industrials (13.2%), consumer staples (6.8%), healthcare (6.4%), and others (10.6%) with the remainder in cash (1.4%).

The Fund had the following country asset allocation: Japan (44.6%), Indonesia (10.8%), India (8.9%), China (7.8%), Taiwan (6.9%), the Philippines (5.4%), others (14.2%) and the remainder in cash (1.4%).


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Economic and Market Review

After a weak start to 2014, markets started to recover towards the middle of the year with improving global economic data and easing of geopolitical risks. However, global markets saw a sharp correction in September, which coincided with the announcement by the US Federal Reserve (Fed) to end quantitative easing (QE). The US dollar strengthened relative to Asian currencies on stronger US economic data and market concern on an early rate hike in 2015.

With the US Fed scaling back on its liquidity injection, Japan surprised the markets by announcing further monetary easing to fight declining inflation expectations in the month of November. In addition, Japan announced new allocation shifts by the Government Pension Investment Fund (GPIF) towards domestic equities which bodes well for the asset class. Meanwhile, the ruling Liberal Democratic Party (LDP) won an early election in December and pushed back the second value-added tax (VAT) hike which was due in 2015. The decision was taken on the back of the first VAT hike in April 2014 that had pushed the economy back into a technical recession.

The period under review also saw oil prices declining substantially on the back of an oversupply situation against tepid demand growth in the market. As a result, net oil exporters such as Malaysia suffered a sell-off in their respectively currencies. On the other hand, net oil importers such as Indonesia and India benefited from the lower oil prices and took the opportunity to push through fuel subsidies reforms which would improve the government budgets.

Economic growth within Asia ex-Japan remains uneven with different countries at various stages of the business cycle. Countries such as India and Indonesia which are further up the curve of adjustment through appropriate fiscal and monetary policies, benefited from a reversal of capital outflows as a result of the US Fed’s tightening. The Philippines remains a bright spot within the region as its economy remains resilient on the back of strong domestic consumption and investments. Markets in China and Hong Kong rallied strongly into the year-end despite the weak economic data as the Chinese government continued to back stop any decline in its economy with an unexpected rate cut to improve liquidity and revive its economy.

In terms of market performance, Japan lagged Asia ex-Japan as a whole. The best-performing Asia ex-Japan markets for the period under review were China, the Philippines and Indonesia. India, Thailand and Hong Kong also outperformed. Korea and Malaysia were the worst-performing markets.

In terms of sector performance, financials, utilities and telecommunications outperformed. Underperforming sectors included energy, staples and industrials.

Outlook and Fund Strategy

We believe that Asia markets continue to offer opportunities for growth with the region trading at attractive valuations. Growth in 2015 is expected to improve across most of the region except in China and Malaysia. Most of the Asia Far East economies are expected to benefit from a drop in global oil prices, with the exception of Malaysia. The lower oil prices are expected to lift growth, ease inflation pressures and alleviate fiscal and current account concerns across Asia.

We continue to overweight Thailand, Indonesia and the Philippines, which are expected to be the major beneficiaries of low oil prices. Similarly, we favour India, which is riding on macro tailwinds with lower energy and gold prices. We are less optimistic on Korea and believe that domestic tailwinds from lower oil prices are balanced against Korean exporters’ deteriorating competitiveness with the depreciating Japanese yen.


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Elsewhere, we are neutral on China and cautious on Hong Kong. The structural challenges faced by China persist with credit and economic growth continuing to slow, though the surprise cut in interest rates by the central bank in November last year could potentially alleviate some of these concerns. We think the Hong Kong market is more vulnerable to a US rate increase and China’s slowdown, while the overhang from the Occupy Central movement also heightens political risk.

While we are less positive on Japan compared to the rest of the Asia Pacific region, given the less attractive relative valuations and longer-term growth prospects, we expect the drag from the first VAT hike on the Japan economy to gradually fade in 2015. Monetary easing, fiscal stimulus, a postponement of the second consumption tax hike, the weak yen and the sharp fall in energy prices are near-term positives for the economy. Liquidity conditions for Japanese equities also appear favorable due to the expected increase in domestic equity purchases by the GPIF and the Bank of Japan. Our preference from a bottom-up perspective includes weak-Yen beneficiaries, domestic infrastructure/capital expenditure related companies, and companies with the potential to increase share buybacks and dividends.

In terms of sector allocation, the Fund is overweight the technology, consumer discretionary, healthcare, and consumer staples sectors while underweight the materials, utilities, telecommunications, and energy 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.


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B) Investments at fair value and as a percentage of NAV as at 31 December 2014 under review classified by

Fair Value % of NAV (S$)

i) Country

China 1,406,678 7.76 Hong Kong 907,322 5.01 India 1,616,410 8.92 Indonesia 1,949,423 10.76 Japan 8,082,613 44.61 Philippines 975,672 5.39 Singapore 183,300 1.01 South Korea 213,317 1.18 Taiwan 1,242,685 6.86 Thailand 363,585 2.01 United Kingdom 915,473 5.05

Portfolio of investments 17,856,478 98.56 Other net assets 260,272 1.44

Total 18,116,750 100.00

ii) Industry

Consumer Discretionary 3,430,103 18.94Consumer Staples 1,232,040 6.80Energy 306,834 1.69 Financials 4,866,546 26.86 Healthcare 1,154,088 6.37 Industrials 2,389,660 13.18 Information Technology 2,853,661 15.76 Materials 280,097 1.55 Telecommunication Services 630,612 3.48 Unit Trust 458,431 2.53 Utilities 254,406 1.40

Portfolio of investments 17,856,478 98.56Other net assets 260,272 1.44

Total 18,116,750 100.00

iii) Asset Class

Equities 17,398,047 96.03Unit Trust 458,431 2.53

Other net assets 260,272 1.44

Total 18,116,750 100.00


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B) Investments at fair value and as a percentage of NAV as at 31 December 2014 under review classified by (continued)

iv) Credit rating of debt securities

N/A

C) Top Ten Holdings

The top 10 holdings as at 31 December 2014 and 31 December 2013

10 largest holdings at 31 December 2014 Percentage of total net assets attributable to Fair Value unitholders (S$) %

HSBC HOLDINGS PLC 915,473 5.05KUBOTA CORPORATION 720,126 3.97SUMITOMO MITSUI FINANCIAL GROUP INC 705,957 3.90PT BANK RAKYAT INDONESIA 697,893 3.85TOYOTA MOTOR CORP 626,492 3.46SAWAI PHARMACEUTICAL CO LTD 559,925 3.09RAKUTEN INC 529,965 2.93TAIWAN SEMICONDUCTOR MFG CO LTD 484,805 2.68AXIS BANK LIMITED 482,762 2.66METROPOLITAN BANK & TRUST COMPANY 478,358 2.64

10 largest holdings at 31 December 2013

Percentage of total net assets attributable to Fair Value unitholders (S$) %

SAWAI PHARMACEUTICAL CO LTD 702,506 3.44BAIDU INC ADR 680,062 3.33THE BANK OF YOKOHAMA 668,750 3.27SAMSUNG ELECTRONICS 663,139 3.24GALAXY ENTERTAINMENT GROUP LIMITED 656,870 3.21TOYOTA MOTOR CORP 640,111 3.13TAIWAN SEMICONDUCTOR MFG CO LTD 607,841 2.97HUTCHISON WHAMPOA LTD 583,544 2.85HONDA MOTOR CO LTD 556,563 2.72HITACHI 545,042 2.67


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D) Exposure to derivatives

i) fair value of derivative contracts and as a percentage of NAV as at 31 December 2014

N/A

ii) net gains/(losses) on derivative contracts realised during the financial year ended 31 December 2014

N/A

iii) net gains/(losses) on outstanding derivative contracts marked to market as at 31 December 2014

N/A

E) Amount and percentage of net asset value (NAV) invested in other schemes as at 31 December 2014

Fair Value % of NAV (S$)

NOMURA NEXT FD JPX-NIKKEI INDEX 400 ETF 458,431 2.53

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 period 01 July 2014 to 31 December 2014

Total amount of redemptions SGD 2,172,943 Total amount of subscriptions SGD 582,980

H) The amount and terms of related-party transactions for the period 01 July 2014 to 31 December 2014

i) As at 31 December 2014 the Fund maintained current account with the United Overseas Bank Limited as follows:

Bank balances SGD 4,756

ii) Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 31 December 2014

N/A

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.


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I) Expense ratios

31 December 2014 2.31%31 December 2013 2.04%

Note: The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of Singapore (“IMAS”). The calculation of the expense ratio at 31 December 2014 was based on total operating expenses of $436,967 (2013: $430,185) divided by the average net asset value of $18,957,200 (2013: $21,072,623) for the year. The total operating expenses do not include (where applicable) brokerage and other transactions costs, performance fee, interest expense, distribution paid out to unitholders, foreign exchange gains/losses, front or back end loads arising from the purchase or sale of other funds and tax deducted at source or arising out of income received. The Fund does not pay any performance fee. The average net asset value is based on the daily balances.

J) Turnover ratios

31 December 2014 35.66%31 December 2013 51.30%

Note: The portfolio turnover ratio is calculated in accordance with the formula stated in the Code on Collective Investment Schemes. The calculation of the portfolio turnover ratio was based on the lower of the total value of purchases or sales of the underlying investments, being purchases of $6,609,242 (2013: purchases of $10,651,880) divided by the average daily net asset value of $18,533,126 (2013: $20,763,972).

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 31 December 2014 and 31 December 2013

N/A

ii) expense ratios for the period ended 31 December 2014 and 31 December 2013

N/A

iii) turnover ratios for the period ended 31 December 2014 and 31 December 2013

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.


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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


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STATEMENT OF TOTAL RETURNFor the half year ended 31 December 2014 (Un-audited) 31 December 31 December 2014 2013 $ $

Income Dividends 154,101 154,201 Interest 1 7

154,102 154,208

Less: ExpensesManagement fee 140,121 156,964 Trustee fee 3,737 4,186 Audit fee 6,906 6,651 Registrar fee 7,541 7,541 Valuation fee 11,677 13,080 Custody fee 7,763 9,056 Interest expenses - 105 Transaction cost 51,499 73,053 Other expenses 26,615 39,513

255,859 310,149

Net loss (101,757) (155,941)

Net gains or losses on value of investments Net gain on investments 817,099 1,005,193 Net foreign exchange loss (12,312) (25,347)

804,787 979,846

Total return for the period before income tax 703,030 823,905 Less: Income tax (16,708) (11,212)

Total return for the period 686,322 812,693


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STATEMENT OF FINANCIAL POSITIONAs at 31 December 2014 (Un-audited)

31 December 30 June 2014 2014 $ $

ASSETSPortfolio of investments 17,856,478 18,779,369 Receivables 5,619 29,159 Cash and bank balances 414,799 317,640

Total Assets 18,276,896 19,126,168

LIABILITIESPayables 160,146 105,777

Total Liabilities 160,146 105,777

EQUITY Net assets attributable to unitholders 18,116,750 19,020,391


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STATEMENT OF MOVEMENTS OF UNITHOLDERS’ FUNDSFor the half year ended 31 December 2014 (Un-audited)

31 December 30 June 2014 2014 $ $Net assets attributable to unitholders at the beginning of the financial period/year 19,020,391 20,709,127 OperationsChange in net assets attributable to unitholders resulting from operations 686,322 818,865

Unitholders’ contributions/(withdrawals)Creation of units 582,980 47,405 Cancellation of units (2,172,943) (2,555,006)

Change in net assets attributable to unitholders resulting from net creation and cancellation of units (1,589,963) (2,507,601)

Total decrease in net assets attributable to unitholders (903,641) (1,688,736)

Net assets attributable to unitholders at the end of the financial period/year 18,116,750 19,020,391


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STATEMENT OF PORTFOLIOAs at 31 December 2014 (Un-audited)

Percentage of total net assets attributable to Holdings at Fair value at unitholders at 31 December 31 December 31 December 2014 2014 2014 $ %By Geography – PrimaryQuoted Equities

CHINAALIBABA GROUP HOLDING LTD 47 6,473 0.04 ANTA SPORTS PRODUCTS LIMITED 114,000 266,871 1.47 BAIDU INC ADR 1,172 354,041 1.95 CNOOC LTD 172,000 306,834 1.69 TENCENT HOLDINGS LIMITED 18,400 353,709 1.95 WANT WANT CHINA HOLDINGS LIMITED 68,000 118,750 0.66

TOTAL CHINA 1,406,678 7.76

HONG KONGGALAXY ENTERTAINMENT GROUP LIMITED 40,000 298,345 1.65 SAMSONITE INTERNATIONAL SA 68,700 269,998 1.49 SANDS CHINA LTD 52,000 338,979 1.87

TOTAL HONG KONG 907,322 5.01

INDIAAXIS BANK LIMITED 45,774 482,762 2.66 HOUSING DEVELOPMENT FINANCE CORP LTD 15,553 370,867 2.05 ITC LTD 51,140 395,821 2.18 TATA CONSULTANCY SERVICES LTD 6,833 366,960 2.03

TOTAL INDIA 1,616,410 8.92

INDONESIAPT BANK MANDIRI 320,600 369,601 2.04 PT BANK RAKYAT INDONESIA 559,900 697,893 3.85 PT KALBE FARMA TBK 873,600 171,047 0.95 PT PERUSAHAAN GAS NEGARA 396,300 254,406 1.40 PT SEMEN INDONESIA (PERSERO) TBK 161,600 280,097 1.55 PT TELKOMUNIKASI INDONESIA 575,400 176,379 0.97

TOTAL INDONESIA 1,949,423 10.76


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Percentage of total net assets attributable to Holdings at Fair value at unitholders at 31 December 31 December 31 December 2014 2014 2014 $ %By Geography – Primary (continued)Quoted Equities

JAPANAJINOMOTO CO INC 13,000 322,270 1.78 ASICS CORPORATION 6,900 220,773 1.22 ASTELLAS PHARMA INC 22,700 423,116 2.33 CREDIT SAISON CO LTD 7,500 187,251 1.03 DAIKIN INDUSTRIES LTD 4,100 353,902 1.95 DENSO CORPORATION 3,500 218,634 1.21 FUJI HEAVY INDUSTRIES LTD 9,400 446,729 2.46 KUBOTA CORPORATION 37,000 720,126 3.97 MAKITA CORPORATION 5,200 314,943 1.74 MURATA MFG CO 2,400 351,459 1.94 NABTESCO CORPORATION 5,900 191,646 1.06 NOMURA NEXT FD JPX-NIKKEI INDEX 400 ETF 3,238 458,431 2.53 RAKUTEN INC 28,500 529,965 2.93 SAWAI PHARMACEUTICAL CO LTD 7,300 559,925 3.09 SEVEN & I HOLDINGS CO LTD 4,000 192,684 1.06 SMC CORPORATION 1,000 353,338 1.95 SOFTBANK CORP 3,400 270,933 1.50 SUMITOMO MITSUI FINANCIAL GROUP INC 14,600 705,957 3.90 TOYOTA MOTOR CORP 7,500 626,492 3.46 YAHOO JAPAN CORPORATION 69,800 335,577 1.85 YASKAWA ELECTRIC CORPORATION 17,400 298,462 1.65

TOTAL JAPAN 8,082,613 44.61

PHILIPPINESBANK OF PHILIPPINE ISLANDS 105,870 294,799 1.63 METROPOLITAN BANK & TRUST COMPANY 194,558 478,358 2.64 UNIVERSAL ROBINA CORPORATION 34,880 202,515 1.12

TOTAL PHILIPPINES 975,672 5.39


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Percentage of total net assets attributable to Holdings at Fair value at unitholders at 31 December 31 December 31 December 2014 2014 2014 $ %By Geography – Primary (continued)Quoted Equities

SINGAPORESINGAPORE TELECOMMUNICATIONS LTD 47,000 183,300 1.01

SOUTH KOREAHYUNDAI MOTOR COMPANY 1,047 213,317 1.18

TAIWANAIRTAC INTERNATIONAL GROUP 38,000 455,705 2.51 RADIANT OPTO-ELECTRONICS CORP 71,000 302,175 1.67 TAIWAN SEMICONDUCTOR MFG CO LTD 82,000 484,805 2.68

TOTAL TAIWAN 1,242,685 6.86

THAILANDSIAM COMMERCIAL BANK PCL 49,600 363,585 2.01

UNITED KINGDOMHSBC HOLDINGS PLC 72,400 915,473 5.05

Portfolio of investments 17,856,478 98.56 Other net assets 260,272 1.44

Net assets attributable to unitholders 18,116,750 100.00


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Percentage of Percentage of total net assets total net assets attributable to attributable to unitholders at unitholders at 31 December 30 June 2014 2014 % %By Geography – Primary (Summary) Quoted Equities

China 7.76 9.32 Hong Kong 5.01 12.66 India 8.92 6.79 Indonesia 10.76 8.17 Japan 44.61 45.78 Philippines 5.39 4.87 Singapore 1.01 1.10 South Korea 1.18 4.34 Taiwan 6.86 4.68 Thailand 2.01 1.02 United Kingdom 5.05 -

Portfolio of investments 98.56 98.73 Other net assets 1.44 1.27

Net assets attributable to unitholders 100.00 100.00


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Percentage of Percentage of total net assets total net assets attributable to attributable to Fair value at unitholders at unitholders at 31 December 31 December 30 June 2014 2014 2014 $ % %By Industry - SecondaryQuoted Equities

Consumer Discretionary 3,430,103 18.94 22.41 Consumer Staples 1,232,040 6.80 6.89 Energy 306,834 1.69 1.10 Financials 4,866,546 26.86 26.18 Healthcare 1,154,088 6.37 3.84 Industrials 2,389,660 13.18 11.06 Information Technology 2,853,661 15.76 21.39 Materials 280,097 1.55 - Telecommunication Services 630,612 3.48 3.61 Unit Trust 458,431 2.53 - Utilities 254,406 1.40 2.25

Portfolio of investments 17,856,478 98.56 98.73 Other net assets 260,272 1.44 1.27 Net assets attributable to unitholders 18,116,750 100.00 100.00


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