United
Singapore
Growth Fund
Semi Annual Report
for the period 1st January to
30th June 2012
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
MANAGER
UOB Asset Management Ltd
Registered Address:
80 Raffles Place
UOB Plaza
Singapore 048624
Company Registration No. : 198600120Z
OPERATIONS ADDRESS
80 Raffles Place
#06-00, UOB Plaza 2
Singapore 048624
Tel: 1800 22 22 228
DIRECTORS OF UOB ASSET MANAGEMENT
Terence Ong Sea Eng
Yeo Eng Cheong
Thio Boon Kiat
TRUSTEE
HSBC Institutional Trust Services (Singapore) Limited
21 Collyer Quay
#14-01, HSBC Building
Singapore 049320
AUDITORS
PricewaterhouseCoopers LLP
8 Cross Street
#17-00, PWC Building
Singapore 048424
SOLICITORS TO THE MANAGER
Tan Peng Chin LLC
30 Raffles Place
#11-00, Chevron House
Singapore 048622
SOLICITORS TO THE TRUSTEE
Shook Lin & Bok LLP
1 Robinson Road
#18-00, AIA Tower
Singapore 048542
1
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
A) Fund Performance
Fund
Performance/
Benchmark
Returns
United Singapore
Growth Fund
Benchmark
3 mth
6 mth
1 yr
%
%
Growth Growth
%
Growth
3 yr
Ann
Comp
Ret
5 yr
Ann
Comp
Ret
10 yr
Ann
Comp
Ret
Since
Inception
28 February 1990
Ann
Comp
Ret
-3.68
9.38
-9.73
8.51
-3.98
7.69
6.76
-3.19
10.46
-4.81
10.54
-1.12
7.99
4.61
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: Straits Times Index
For the six months ended 30 June 2012, the net asset value of the Fund rose 9.4% compared with a
10.5% increase in the benchmark FSSTI.
The Fund’s underperformance for the period under review was due to a weak performance in the
second quarter. The underperformance arose because the Fund was overweight in the Industrial
cyclical stocks, which underperformed the more defensive sectors. The Fund’s allocation was the main
contributor to underperformance, while positive stock selection partially mitigated this. The Fund’s
underweight in Financials and overweight in the Energy sector over the review period detracted from
performance.
The Fund’s positive stock selection effect partially mitigated the underperformance. Stocks that
contributed to performance include Singapore banks DBS Group, UOB and OCBC, and offshore
marine players Keppel Corp and Sembcorp Industries.
Stocks that detracted from the Fund’s performance include commodity companies Wilmar
International, Golden Agri-Resources and Olam International, casino operator Genting Singapore,
and medical device maker Biosensors International.
As at end June 2012, the Fund was 91.4% invested. In terms of sectors, the Fund’s allocation stood at
Financials (41.5%), Industrials (24.0%), Telecommunication Services (10.0%), Consumer Staples
(6.5%), Consumer Discretionary (7.1%), Energy (1.8%), Healthcare (0.5%) and the remainder (8.6%)
in cash.
Market Review
Asian equity markets started the year strongly, chalking up double-digit percentage gains in the first
two months of the year as economic data improved and following policy easing. Gains were largely
eroded in May as Eurozone woes once again took centre stage on fear of Greece leaving the Euro
common currency. Concurrently, economic data and leading indicators broadly started to weaken.
2
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
The sharp rally in January and February was from distressed valuation levels in late 2011 during a
period of intense risk aversion. With the US economy continuing to recover, concern of a Euro break-up
abating and China’s central bank moving to ease monetary conditions, markets moved sharply higher.
US economic growth in 4Q11 rose to 2.8%, above expectations, and the fastest pace since 2Q10. The
Fed’s announcement that it would keep the Fed Funds Target Rate unchanged at 0-0.25% through
2014 and the chairman’s comment that he is leaving the option open for a third round of quantitative
easing (QE3) contributed significantly to the change in market sentiment. Meanwhile the European
Central Bank’s (ECB) announced a second liquidity injection via the Long Term Repurchase Operation
(LTRO).
As has been the case for the past year, Eurozone issues remain the most dominant factor influencing
equity market direction. Greece again returned to the spotlight after the country failed to form a
government following parliamentary elections in May. The increased popularity of anti-austerity parties
raised fears of a Greek exit from the Euro and roiled financial markets. In June, a second round election
produced a coalition government that appears committed to staying in the Euro.
Attention then shifted to Spain and Italy where borrowing costs surged as investors became increasingly
worried about contagion risk. Moody’s downgraded Spain’s sovereign debt rating to Baa3 in June,
further adding to market volatility.
Meanwhile in the US, economic data generally pointed to an economy on the mend. Signs that the
recovery was broadening out as employment and wage gains fed through to consumption growth
reinforced this view. However, the US purchasing managers’ index (PMI) which had trended higher
through April has pulled back slightly in May. Similarly, growth in consumer expenditure started to
moderate, as did both manufacturing and export growth rates.
Asia too experienced a significant change in outlook. The strong economic outlook in the first quarter
moderated sharply into the second quarter. Uncertainty arising from the Eurozone debt crisis, weaker
external demand (trade) and a moderation in domestic demand caused key leading indicators to
dip. Growth indicators in China, India, Taiwan and Singapore have negatively surprised. Industrial
production in the big four economies of China, India, South Korea and Taiwan softened, while those
in the ASEAN economies of Indonesia, the Philippines, Malaysia and Thailand have in general held up
better. The weaker industrial data has to a large extent been influenced by weaker external demand.
Exports have been growing at negative or single-digit growth rates across most of the region. And while
still a bright spot, domestic consumption too has been decelerating.
Closer to home, the weakness in global growth has clearly impacted the Singapore economy which
posted a slowdown in GDP growth for the second quarter. According to advance government flash
estimates, the Singapore economy declined 1.1% qoq for the second quarter, a drop which has
already led to economists revising downwards their 2012 full year GDP growth estimate from above 3%
previously to just slightly above 2%. While this is still in line with the official government forecast growth
range of 1-3%, we are concerned that the slowdown may adversely impact Singapore corporate
earnings.
3
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
Fund Strategy and Outlook
Growth expectations for emerging economies and Asia in particular have moderated significantly from
the very buoyant levels registered in 2011. The shift in growth rates appears to be in part structural.
Many economies, most notably China, are transitioning from investment/export driven growth strategies
to income/consumption driven growth models. This transition implies lower potential growth rates over
the medium to long term.
The main mechanism of transmission of the Eurozone’s problems has been through trade linkages.
Asia’s exports to the developed world have been tracking below trend. The slowdown in Eurozone
growth is being multiplied by a drop in the Euro, which is putting downward pressure on Europe’s
import demand. The high export dependency of Asia (Singapore in particular) suggests that growth
rates will correlate with this weaker external backdrop.
The impact of prior wage and input price increases, coupled with a slowdown in final demand, is
creating renewed margin challenges for the corporate sector. Profit margins across all major sectors
started to narrow in the first quarter, and earnings continue to be adjusted downwards. The first quarter
reporting season can best be characterized as one of more misses than beats in terms of expectations.
Although the pace of revisions has slowed, this pressure is expected to persist given the weaker
growth backdrop.
The Fund’s strategy is to remain focused on identifying high quality growth opportunities for investment.
Given the cyclical slowdown in operating conditions, we have reduced exposure to sectors and
companies that are more at risk due to this change. We have adopted a barbell strategy, where the
approach is to remain defensively focused while simultaneously holding a balanced tactical weight in
growth companies with solid fundamentals and superior earnings visibility.
On the selection of defensive stocks, we favour the telecommunications sector and real estate
investment trusts (REITs) which offer attractive dividend yields backed by sustainable cash flows.
Key holdings include SingTel, Mapletree Commercial Trust and CDL Hospitality Trust.
The Fund also continues to target growth opportunities in the offshore & marine sector, which is
poised to benefit from an upswing in deepwater oil exploration, increased capex spending from oil
companies and demand for equipment. Our key holdings include Keppel Corp, Sembcorp Industries
and STX OSV in this space.
The Asian market trajectory will continue to be influenced by global economic developments. Over
time, the evolution of economic conditions locally will start to become a more important driver. The
growth drivers that are so evident in Asia – the positive demographics, the rising purchasing power and
growth in consumption - should remain a positive backdrop for investors for some time. While there
may be bumps on the road ahead, Asia will likely remain an important destination for investors in the
years ahead.
Singapore, given its well established trade links and strategic geographical location, is well positioned
to benefit from Asia’s long term positive growth drivers. Moreover being part of ASEAN will be another
plus for Singapore as the regional grouping has been relatively resilient in the current economic turmoil
given the robust levels of domestic demand.
4
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
B) Investments at fair value and as a percentage of NAV as at 30 June 2012 under review
classified by
i)Country
Fair Value
(S$)
% of NAV
Hong Kong
Singapore
18,907,750 109,626,212 13.44
77.94
Portfolio of investments
Other net assets
128,533,962 12,127,892 91.38
8.62
Total
140,661,854 100.00
9,976,200 9,104,780 2,522,500 58,359,883 680,999 33,694,072 14,195,528 7.09
6.48
1.79
41.49
0.48
23.96
10.09
Portfolio of investments
Other net assets
128,533,962 12,127,892 91.38
8.62
Total
140,661,854 100.00
Equities
Other net assets
128,533,962 12,127,892 91.38
8.62
Total 140,661,854 100.00
ii)Industry
Consumer Discretionary
Consumer Staples
Energy
Financials
Healthcare
Industrials
Telecommunication Services
iii) Asset Class
iv)
Credit rating of debt securities
N/A
5
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
C) Top Ten Holdings
The top 10 holdings as at 30 June 2012 and 30 June 2011
10 largest holdings at 30 June 2012
Percentage of
total net assets
attributable to
Fair Value
unitholders
(S$)
%
SINGAPORE TELECOMMUNICATIONS LIMITED DBS GROUP HOLDINGS LIMITED OVERSEAS-CHINESE BANKING CORPORATION LIMITED
UNITED OVERSEAS BANK LIMITED KEPPEL CORPORATION LIMITED JARDINE MATHESON HOLDINGS LIMITED HONGKONG LAND HOLDINGS LIMITED GENTING SINGAPORE PLC CAPITALAND LIMITED JARDINE STRATEGIC HOLDINGS LIMITED 14,195,528
12,748,999
12,295,249
11,211,357
9,037,600
8,215,958
6,441,678
4,794,000
4,680,600
4,250,114
10.09
9.06
8.74
7.97
6.43
5.84
4.58
3.41
3.33
3.02
10 largest holdings at 30 June 2011
Fair Value (S$)
DBS GROUP HOLDINGS LIMITED OVERSEAS-CHINESE BANKING CORPORATION LIMITED
KEPPEL CORPORATION LIMITED UNITED OVERSEAS BANK LIMITED JARDINE MATHESON HOLDINGS LIMITED NOBLE GROUP LIMITED SINGAPORE TELECOMMUNICATIONS LIMITED SINGAPORE AIRLINES LIMITED HONGKONG LAND HOLDINGS LIMITED OVERSEAS UNION ENTERPRISE LTD
6
16,205,340
15,178,510
12,513,284
12,023,587
10,076,141
6,959,831
6,746,513
6,296,913
5,926,853
5,845,350
Percentage of
total net assets
attributable to
unitholders
%
10.73
10.05
8.28
7.96
6.67
4.61
4.47
4.17
3.92
3.87
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
D)Exposure to derivatives
i)
fair value of derivative contracts and as a percentage of NAV as at 30 June 2012
N/A
ii)
net gains/(losses) on derivative contracts realised during the financial period ended 30 June
2012
N/A
iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2012
N/A
E) Amount and percentage of net asset value (NAV) invested in other schemes as at 30 June
2012
Fair Value
SGD
% of NAV
CAPITACOMMERCIAL TRUST
CDL HOSPITALITY TRUST
MAPLETREE COMMERCIAL TRUST
1,518,000 2,073,500 1,462,500 1.08
1.47
1.04
F) Amount and percentage of borrowings to net asset value (NAV) as at 30 June 2012
N/A
G) Amount of redemptions and subscriptions for the period 01 January 2012 to 30 June 2012
Total amount of redemptions
Total amount of subscriptions
SGD
SGD
11,041,454
11,598,457
H) The amount and terms of related-party transactions for the period 01 January 2012 to 30
June 2012
i)
As at 30 June 2012 the Fund maintained current accounts with the United Overseas Bank
Limited as follows:
Bank balances
ii)
SGD
66,153
Purchase/holdings of UOBAM unit trusts by UOB or its affiliated companies as at 30 June
2012
N/A
iii) Investment in Initial Public Offerings managed by UOB Group.
N/A
iv)
As at 30 June 2012 the brokerage income earned by UOB Kay Hian Pte Ltd was SGD 4,034.
7
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
I)
Expense ratios
30 June 2012
30 June 2011
1.21%
1.24%
Note :The expense ratio is computed in accordance with the IMAS guidelines on disclosure of expense ratios dated 25 May 2005.
Brokerage and other transaction costs, interest expense, foreign exchange gains/losses, tax deducted at source or arising on
income received and dividends paid to unitholders are not included in the expense ratio. The Fund does not pay any performance
fees.
J) Turnover ratios
30 June 2012
30 June 2011
21.32%
17.62%
Note : The turnover ratio is calculated in accordance with the formula stated in the “Code on Collective Investment Schemes”.
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 2012 and 30 June 2011.
N/A
ii)
expense ratios for the period ended 30 June 2012 and 30 June 2011. A footnote should state
(where applicable) that the expense ratio does not include brokerage and other transaction
costs, performance fee, foreign exchange gains/losses, front or back end loads arising from
or arising out of income received.
N/A
iii) turnover ratios for the period ended 30 June 2012 and 30 June 2011.
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.
8
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
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 product 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.
9
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
STATEMENT OF TOTAL RETURN
For the half year ended 30 June 2012 (Un-audited)
Note
30 June 2012
$
30 June
2011
$
Income
Dividends
2,392,717 2,570,455
Interest 34 22
2,392,751 2,570,477
Less: Expenses
Management fee
10
Trustee fee
10
Audit fee
Registrar fee
10
Custody fee
Interest expenses
Goods and services tax
Other expenses
707,841 28,314 7,131 7,490 19,811 30 2,044 56,632 759,531
30,381
7,444
7,490
38,017
173
61,266
67,345
829,293 971,647
Net income
1,563,458 1,598,830
Net gains or losses on value of investments
Net realised (loss)/gain on investments
Net change in fair value on investments Net foreign exchange losses
(3,319,527)
13,824,656 (44,270)
4,434,012
(5,228,670)
(40,031)
Net gain/(loss) on value of investments
10,460,589 (834,689)
Total return for the period before income tax
Less : Income tax
3
Add : Refund of Income tax
12,024,317 (16,503)
24,734 764,141
(40,191)
64,650
Total return for the period before distribution
Less: Distribution
4
12,032,548 (2,725,292)
788,600
-
Total return for the period
9,307,256 788,600
The accompanying notes form an integral part of these financial statements.
10
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
BALANCE SHEET
As at 30 June 2012 (Un-audited)
Note
30 June 2012
$
31 December
2011
$
ASSETS
Portfolio of investments
128,533,962 122,002,504
Receivables5
199,602 367,238
Cash and bank balances
12,542,107 8,873,003
Total Assets
141,275,671 131,242,745
LIABILITIES
Payables
Net assets attributable to unitholders
6
7
613,817 140,661,854 445,150
130,797,595
Total Liabilities
141,275,671 131,242,745
The accompanying notes form an integral part of these financial statements.
11
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
PORTFOLIO STATEMENT
As at 30 June 2012 (Un-audited)
Percentage of
total net assets
attributable to
Holdings at
Fair value at unitholders at
30 June
30 June
30 June
2012
2012
2012
$
%
By Geography - Primary
Quoted Equities
HONG KONG
HONGKONG LAND HOLDINGS LIMITED 900,000 6,441,678 JARDINE MATHESON HOLDINGS LIMITED 134,000 8,215,958 JARDINE STRATEGIC HOLDINGS LIMITED 110,000 4,250,114 TOTAL HONG KONG
18,907,750 4.58
5.84
3.02
13.44
SINGAPORE
BIOSENSORS INTERNATIONAL GROUP
600,000 680,999 0.48
BUMITAMA AGRI LTD
2,436,000 2,387,280 1.70
CAPITACOMMERCIAL TRUST
1,200,000 1,518,000 1.08
CAPITALAND LIMITED 1,740,000 4,680,600 3.33
CAPITAMALLS ASIA LTD
1,800,000 2,808,000 2.00
CDL HOSPITALITY TRUST
1,100,000 2,073,500 1.47
DBS GROUP HOLDINGS LIMITED 919,178 12,748,999 9.06
EZION HOLDINGS LIMITED
2,000,000 1,840,000 1.31
FRASER AND NEAVE LIMITED 250,000 1,742,500 1.24
GENTING SINGAPORE PLC 3,400,000 4,794,000 3.41
GLOBAL LOGISTIC PROPERTIES LIMITED 1,500,000 3,120,000 2.22
GOLDEN AGRI-RESOURCES LTD
5,500,000 3,657,500 2.60
JARDINE CYCLE & CARRIAGE LTD 80,000 3,704,000 2.63
KEPPEL CORPORATION LIMITED 880,000 9,037,600 6.43
MAPLETREE COMMERCIAL TRUST
1,500,000 1,462,500 1.04
OVERSEAS-CHINESE BANKING CORPORATION
LIMITED
1,400,370 12,295,249 8.74
SAKARI RESOURCES LTD 500,000 682,500 0.48
SEMBCORP INDUSTRIES LIMITED 700,000 3,591,000 2.55
SEMBCORP MARINE LTD
450,000 2,151,000 1.53
SIA ENGINEERING COMPANY
230,000 915,400 0.65
SINGAPORE AIRLINES LIMITED 150,000 1,555,500 1.11
SINGAPORE PRESS HLDGS LTD 380,000 1,478,200 1.05
SINGAPORE TELECOMMUNICATIONS LIMITED 4,314,750 14,195,528 10.09
STX OSV HOLDINGS LIMITED
1,500,000 2,235,000 1.59
UNITED OVERSEAS BANK LIMITED 600,823 11,211,357 7.97
WILMAR INTERNATIONAL LIMITED
850,000 3,060,000 2.18
TOTAL SINGAPORE
109,626,212 The accompanying notes form an integral part of these financial statements.
12
77.94
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
PORTFOLIO STATEMENT
As at 30 June 2012 (Un-audited)
Percentage of
total net assets
attributable to
Holdings at
Fair value at unitholders at
30 June
30 June
30 June
2012
2012
2012
$
%
By Geography - Primary (continued)
Quoted Equities
Portfolio of investments
Other net assets
128,533,962 12,127,892 91.38
8.62
Net assets attributable to unitholders
140,661,854 100.00
The accompanying notes form an integral part of these financial statements.
13
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
PORTFOLIO STATEMENT
As at 30 June 2012 (Un-audited)
Percentage of total net assets
attributable to
unitholders at
30 June
2012
%
By Geography - Primary (Summary) Quoted Equities
Percentage of
total net assets
attributable to
unitholders at
31 December
2011
%
Hong Kong
Singapore
13.44 77.94 12.82
80.46
Portfolio of investments
Other net assets
91.38 8.62 93.28
6.72
Net assets attributable to unitholders
100.00 100.00
The accompanying notes form an integral part of these financial statements.
14
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
PORTFOLIO STATEMENT
As at 30 June 2012 (Un-audited)
Fair value at
30 June
2012
$
By Industry - Secondary
Quoted Equities
Percentage of
total net assets
attributable to
unitholders at
30 June
2012
%
Percentage of
total net assets
attributable to
unitholders at
31 December
2011
%
9,976,200 9,104,780 2,522,500 58,359,883 680,999 33,694,072 14,195,528 7.09 6.48 1.79 41.49 0.48 23.96 10.09 10.61
11.59
1.76
32.97
26.16
10.19
Portfolio of investments
Other net assets
128,533,962 12,127,892 91.38 8.62 93.28
6.72
Net assets attributable to unitholders
140,661,854 100.00 100.00
Consumer Discretionary
Consumer Staples
Energy
Financials
Healthcare
Industrials
Telecommunication Services
The accompanying notes form an integral part of these financial statements.
15
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
These notes form an integral part of and should be read in conjunction with the accompanying financial
statements.
1.General
United Singapore Growth Fund (the “Fund”) is a Singapore registered trust fund constituted by a
Trust Deed dated 19 December 1989 between UOB Asset Management Ltd (the “Manager”) and
HSBC Institutional Trust Services (Singapore) Limited (the “Trustee”). The Deed is governed by the
laws of the Republic of Singapore.
The primary activity of the Fund is to invest in shares of companies listed or quoted on Singapore
Exchange Securities Trading Limited. There will be no limit on foreign currency denominated
investments in respect of the Fund.
2.
The Fund changed its name from United Growth Fund to United Singapore Growth Fund from 1st
June 2012.
Significant accounting policies
(a) Basis of accounting
The financial statements have been prepared under the historical cost convention, modified
by the revaluation of financial assets at fair value through profit or loss, and in accordance
with the Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit
Trusts” (“RAP 7”) issued by the Institute of Certified Public Accountants of Singapore.
The financial statements are expressed in Singapore dollars.
(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
Purchase of investments are recognised on trade date. Investments are recorded at fair
value on initial recognition.
(ii) Subsequent measurement
Investments are subsequently carried at fair value. Net change in fair value on investments
are included in the Statement of Total Return in the period in which they arise.
16
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
2.
Significant accounting policies (continued)
(c) Investments (continued)
(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 net of transaction costs, and are
taken up in the Statement of Total Return.
(d) Basis of valuation of investments
The fair value of financial instruments traded in active markets is based on quoted market
prices at the balance sheet date. The quoted market price for these investments held by the
Fund is the current market quoted bid price. (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 Singapore dollars and United States dollars.
The performance of the Fund is measured and reported to the investors in Singapore
dollars. The Manager considers the Singapore dollars to be the currency of the
primary economic environment in which the Fund operates. The financial statements
are presented in Singapore dollars, which is the Fund’s functional and presentation
currency.
(ii) Transactions and balances
(f)
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
period/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 such as equities are also recognised in the
Statement of Total Return within the fair value net gain or loss. 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.
17
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
2.
Significant accounting policies (continued)
(g) Distribution policy
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. This amount shall not be treated as part of the property of
the Fund.
3. Income tax
30 June
2012
$
16,503 Singapore income tax
30 June
2011
$
40,191
The Fund was granted the status of a Designated Unit Trust and, therefore, the following income is
exempt from tax in accordance with section 35(12) of the Income Tax Act (Cap 134):
(i) gains or profits derived from Singapore or elsewhere from the disposal of securities;
(ii) interest (other than interest for which tax has been deducted under Section 45 of the
Singapore Income Tax Act); and
(iii) dividends derived from outside Singapore and received in Singapore.
The Singapore income tax represents tax deducted at source for Singapore sourced dividends. 4.Distribution
30 June
2012
$
Distribution of income amounting to $6.00 per 100 units on 45,421,528 units
(30 June 2011: Nil)
2,725,292 -
5.Receivables
30 June
2011
$
30 June
2012
$
31 December
2011
$
Amounts receivable for creation of units
Dividend receivable
166,158 33,444 73,835
293,403
199,602 367,238
18
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
6.
Payables
30 June
2012
$
Amounts payable for cancellation of units
Amount due to Manager
Amount due to Trustee
Other creditors and accrued expenses
233,384 355,481 14,081 10,871 613,817 7.
Net assets attributable to unitholders
30 June
2012
$
At the beginning of the financial period/year
67,028
346,630
13,441
18,051
445,150
31 December
2011
$
130,797,595 158,774,037
Operations
Change in net assets attributable to unitholders resulting from operations
9,307,256 (26,083,536)
Unitholders’ contributions/(withdrawals)
Creation of units
11,598,457 Cancellation of units
(11,041,454)
Change in net assets attributable to unitholders resulting
from net creation and cancellation of units
557,003 Total increase/(decrease) in net assets attributable attributable to unitholders
At the end of the financial period/year
Units in issue (Note 8)
31 December
2011
$
47,635,023
(49,527,929)
(1,892,906)
9,864,259 (27,976,442)
140,661,854 130,797,595
45,281,656 45,113,935
$$
Net asset attributable to unitholders per unit
19
3.11
2.90
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
8. Units in issue
30 June
2012
31 December
2011
Units at beginning of the period/year
Units created
Units cancelled
45,113,935 45,437,223
3,644,795 13,950,367
(3,477,074)(14,273,655)
Units at end of the period/year
45,281,656 9.
Financial risk management
The Fund’s activities expose it to a variety of financial risk (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 financial futures contracts, financial options contracts and/or currency forward contracts
subject to the terms of the Prospectus 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 their
investment objectives.
45,113,935
(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. The Fund’s investments 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 securities denominated in currencies other than the Singapore dollars and
it may be affected favourably or unfavourably by exchange rate regulations or changes
in the exchange rates between the Singapore dollars 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.
20
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
9.
Financial risk management (continued)
(a) Market risk (continued)
(i)
Foreign exchange risk (continued)
The table below summarises the on-balance sheet exposure to currency risks for the Fund.
As at 30 June 2012
Assets
Portfolio of investments
Receivables
Cash and bank balances
Total Assets
SGD
$
usdTotal
$
$
109,626,212 164,554 12,264,255 122,055,021 18,907,750 35,048 277,852 19,220,650 128,533,962
199,602
12,542,107
141,275,671
Liabilities
Payables
586,094 Net assets attributable to unitholders 140,661,854 Total Liabilities
141,247,948 Net currency exposure
(19,192,927)
27,723 -
27,723 19,192,927
613,817
140,661,854
141,275,671
As at 31 December 2011
SGD
$
Assets
Portfolio of investments
Receivables
Cash and bank balances
Total Assets
usdTotal
$
$
105,237,338 364,073 7,657,062 113,258,473 16,765,166 3,165 1,215,941 17,984,272 122,002,504
367,238
8,873,003
131,242,745
Liabilities
Payables
437,015 Net assets attributable to unitholders 130,797,595 Total Liabilities
131,234,610 8,135 -
8,135 445,150
130,797,595
131,242,745
Net currency exposure
(17,976,137)
21
17,976,137 United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
9.
Financial risk management (continued)
(a) Market risk (continued)
(i)
Foreign exchange risk (continued)
Investments, which is the significant item in the balance sheet is exposed to currency risk
and other price risk. Price risk sensitivity analysis includes the impact of currency risk on
non-monetary investments. The Fund’s net financial assets comprise significantly nonmonetary 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
underlying investments in equities on the Fund’s net assets attributable to unitholders
at 30 June 2012 and 31 December 2011. 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. Benchmark component
Straits Times Index
30 June 2012
31 December 2011
Net impact to Net impact to
net assets
net assets
attributable
attributable
to unitholders
to unitholders
$% $%
23,393,18120 22,936,471 20
(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.
Other than the cash balances, the Fund’s financial assets and liabilities are largely noninterest bearing. Hence, the Fund is not subjected to significant risk due to fluctuations
in the prevailing levels of market interest rates.
22
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
9.
Financial risk management (continued)
(b) Liquidity risk
The Fund is exposed to daily cash redemptions and disbursements for the settlements of
purchases. The Manager therefore ensures that the Fund maintains sufficient cash and cash
equivalents and that it is able to obtain cash from the sale of investments held to meet its
liquidity requirements. Reasonable efforts will be taken to invest in securities which are traded
in a relatively active market and which can be readily disposed of. The Fund’s investments in listed securities are considered to be readily realisable as they are
listed on established regional stock exchanges. The table below analyses the Fund’s financial liabilities into relevant maturity groupings
based on the remaining period at the balance sheet date to the contractual maturity date.
The amounts in the table are the contractual undiscounted cash flows. Balances due within
12 months equal their carrying balances, as the impact of discounting is not significant.
As at 30 June 2012
Less than 3 months
1-5
Above
3 months
to 1 year
years
5 years
$
$
$
$
Payables
Net assets attributable to unitholders
As at 31 December 2011
Payables
Net assets attributable to unitholders
613,817 -
-
-
140,661,854 -
-
-
Less than 3 months
$
3 months
to 1 year
$
1-5
years
$
Above
5 years
$
445,150 -
-
-
130,797,595 -
-
-
23
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
9.
Financial risk management (continued)
(c) Credit risk
The Fund takes on exposure to credit risk, which is the risk that a counterparty will be
unable to pay amounts in full when due. The Fund’s credit risk is concentrated on amounts
or securities receivable on the sale and purchase of investments respectively. In order to
mitigate exposure to credit risk, all transactions in listed securities are settled/paid for upon
delivery and transacted with approved counterparties using an approved list of brokers that
are regularly assessed and updated by the Manager.
The table below summarises the credit rating of banks and custodians in which the Fund’s
assets are held as at 30 June 2012 and 31 December 2011.
The credit ratings are based on the Bank Financial Strength ratings published by the rating
agency.
As at 30 June 2012
Credit rating
Bank
State Street Bank & Trust Co. B
United Overseas Bank Limited B
Custodian State Street Bank & Trust Co.
B
As at 31 December 2011
Credit rating
Bank
State Street Bank & Trust Co. B
United Overseas Bank Limited B
JP Morgan B
Custodian State Street Bank & Trust Co.
B
Source of
credit rating
Moody’s
Moody’s
Moody’s
Source of
credit rating
Moody’s
Moody’s
Moody’s
Moody’s
The maximum exposure to credit risk at the reporting date is the carrying amount of the
financial assets.
24
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
9.
Financial risk management (continued)
(d) Capital management
The Fund’s capital is represented by the net assets attributable to unitholders. The Fund
strives to invest the subscriptions of redeemable participating units in investments that meet
the Fund’s investment objectives while maintaining sufficient liquidity to meet unitholder
redemptions.
10. Related party transactions
(a) The Manager and the Trustee of the Fund are UOB Asset Management Ltd and HSBC
Institutional Trust Services (Singapore) Limited respectively. UOB Asset Management Ltd is a
subsidiary of United Overseas Bank Limited and HSBC Institutional Trust Services (Singapore)
Limited is a subsidiary of HSBC Holdings Plc.
Management fee is paid to the Manager, while trustee fee is paid to the Trustee and the
registrar fee is paid to HSBC Institutional Trust Services (Singapore) Limited, a subsidiary
of HSBC Holdings Plc. These fees paid or payable by the Fund shown in the Statement of
Total Return and in the respective Notes to the Financial Statements are on terms set out
in the Trust Deed. All other related party transactions are shown elsewhere in the financial
statements.
(b) As at the end of the financial period/year, the Fund maintained the following accounts with the
related party:
30 June
2012
$
United Overseas Bank Limited
Bank
balances
66,153
31 December
2011
$
61,508
(c) The following transactions took place during the financial period between the Fund and
United Overseas Bank Limited at terms agreed between the parties:
30 June
30 June
2012
2011
$
$
30 Bank
charges
25
30
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
NOTES TO THE FINANCIAL STATEMENTS
For the half year ended 30 June 2012 (Un-audited)
10. Related party transactions (continued)
(d) UOB Kay Hian Pte Ltd is an affiliate company of United Overseas Bank Limited.
As at the end of the financial period, the Fund has brokerage fee paid or payable to UOB Kay
Hian Pte Ltd as follows:
30 June
2012
$
4,034
Brokerage
charges
11. Financial ratios
30 June
2012
1.21%
21.32%
Expense ratio1
Turnover ratio2
30 June
2011
$
26,609
30 June
2011
1.24%
17.62%
1
The expense ratio is computed in accordance with the IMAS guidelines on disclosure of expenses ratios dated 25 May 2005.
Brokerage and other transaction costs, interest expense, foreign exchange gains/losses, tax deducted at source or arising on
income received and dividends paid to unitholders are not included in the expense ratio. The Fund does not pay any performance
fees.
2
The turnover ratio is calculated in accordance with the formula stated in the “Code on Collective Investment Schemes”.
26
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
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27
United Singapore Growth Fund
(Formerly known as United Growth Fund)
(Constituted under a Trust Deed in the Republic of Singapore)
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28