UOB Optimix Contrarian Fund - UOB Asset Management Optimix Contrarian Fund (Constituted under a...

UOBOptimix Contrarian FundSemi Annual Report

for the period 1st January to 30th June 2007

UOB Optimix Contrarian Fund(Constituted under a Trust Deed in the Republic of Singapore)

1

MANAGERUOB Asset Management LimitedRegistered Address:80 Raffl es PlaceUOB PlazaSingapore 048624Company Registration No. : 198600120Z

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

DIRECTORS OF UOB ASSET MANAGEMENTTerence Ong Sea EngYeo Eng CheongThio Boon Kiat

TRUSTEEHSBC Institutional Trust Services (Singapore) Limited21 Collyer Quay#14-01, HSBC BuildingSingapore 049320

AUDITORSPricewaterhouseCoopers8 Cross Street#17-00, PWC BuildingSingapore 048424

SOLICITORS TO THE MANAGERShook Lin & Bok1 Robinson Road#18-00 AIA TowerSingapore 048542 SOLICITORS TO THE TRUSTEEAllen & GledhillOne Marina Boulevard#28-00Singapore 018989


2

A) Fund Performance

FundPerformance/BenchmarkReturns

3 mth %

Growth

6 mth %

Growth

1 yr%

Growth

3 yr Ann

CompRet

5 yr Ann

CompRet

10 yr Ann

CompRet

SinceInception

11 December 1997Ann

CompRet

UOB Optimix Contrarian Fund 18.64 19.35 26.27 23.10 15.68 NA 3.70

Benchmark 7.30 8.36 18.94 11.39 9.65 NA 5.51

Source: Lipper

Note: The performance returns of the Fund are in Singapore dollars based on a bid-to-bid price with net dividends reinvested. The Benchmark of the Fund: MSCI AC World Index.

For the half year ended 30 June 2007, the unit price of the Fund rose 19.4% on a bid-to-bid basis, outperforming the MSCI AC World Free Index which rose 8.4%, in Singapore dollar terms. The Fund’s 11% out-performance was primarily due to overweight positions in Asia, which did better relative to the Americas & Europe. We were also assisted by our relative overweight positions in Energy and Materials. The Fund also benefi ted from good bottom-up stock pickings.

Our holdings in the following stocks contributed to the Fund’s outperformance: CH Offshore (+64%), Alcan (+53%), KS Energy (+50%), CVRD (+50%), SembCorp Industries (+48%), NHN (+48%), First Quantum (+45%). Valero (+44%), Apple (+44%), LG Electronics (+39%), BHP (+38%), American Movil (+37%), Volkswagen (+37%) and Alcoa (+35%).

As at end June 2007, the Fund was invested in Energy (28%), Materials (21%), Telecoms & IT (20%), Consumer (8%), Financials (9%), Industrials (10%), Healthcare (3%) and we held 1% cash. Geographically, we are exposed to Asia (46%), the Americas (41%) and Europe (12%).

Market Review

The momentum of equity markets in 2006 continued into the fi rst half of 2007. In the 6 month period under review, global equity markets, as measured by the MSCI AC World Free Index rose 8% in Singapore dollar terms. The respective regional bourses recorded mixed performance with the MSCI AC Far East Free ex-Japan Index being the strongest, up 16% in Singapore dollar terms. This was followed by MSCI Europe Index which rose 13% whilst the S&P 500 Index posted a gain of 7%. The Nikkei saw the weakest relative gain of 2% in Singapore dollar terms.

We are encouraged that our strategic overweight positions in the Commodity space – Energy & Materials - continued to pay off and facilitated Fund’s out-performance. Commodity prices continued their upward climb in 2007, their 5th consecutive year in the current bull cycle. The prices of many commodities continued to reach multi-decade highs, benefi ting from resilient demand in the face of muted supply response. The HSBC Global Mining Index, the proxy for mining equities, rose 29.3% in Singapore dollar terms, in the fi rst half of 2007.


3

In terms of portfolio action, we added the following names and increased our weights further during the period: Apple Computers, Hewlett Packard, American Movil, Akamai Technologies, Rickmers Maritime, Centurion Energy, Sinopec, XTO Energy, First Quantum, Wyeth, Roche, Novartis, Global Payments, Barclays and Volkswagen.

The Fund reaped good returns from being tactically positioned in some of these value propositions which we anticipated would have a high probability of merger & acquisition (M&A) activity. One example which proved profi table was Falconbridge, which was initially bid for by Inco. However Xstrata made a higher counter-bid and won Falconbridge. Glamis merged with Goldcorp, and a new Senior producer was created and one which was the lowest cost in the industry. Goldcorp was subsequently re-rated by investors. Alcoa tried to engineer a friendly merger with Alcan but failed and decided to turn hostile. Alcan managed to fend Alcoa off by fi nding a white knight in Rio Tinto. Rio was in turn re-rated as investors like the diversifi cation and growth profi le of the combined business. The market is rife with speculation that Alcoa could be taken out by BHP Billiton. We own Falconbridge, Glamis, Goldcorp, Rio Tinto, BHP Billiton, Alcoa and Alcan.

Outlook and Strategy

The investment focus and style of the Fund is largely value-oriented, often contrarian and bottom-up driven. We embrace the broader concept of contrarian, namely as being “different from consensus”. If the consensus is bearish and we are less bearish, we will take a contrarian position. Conversely, if consensus is bullish but we are more bullish, we can be long and still be contrarian. Hence we invest in stocks that have fallen substantially into value territory. We buy into these depressed valuations with a conviction that they have passed their trough levels and will mean revert in due course. We will also invest when we are convinced that the market is more pessimistic than is otherwise warranted. We can also take what is perceived as momentum (“non-value”) positions if we are more bullish than the consensus and are convinced that results will surprise on the upside and that the market will re-rate the stocks.

Notwithstanding the maturity of the current bull commodity cycle, we still view the Resources (Energy & Commodities) industry as value investment as we believe the consensus is under-estimating the longevity of the current cycle. We are contrarian as we are more bullish than the consensus and we believe that the resources story still has legs left to run. We are convinced that, similar to the current “higher for longer” crude oil phenomenon, commodities prices will stay obstinately stronger for the next few years. We expect the long-run equilibrium prices for commodities to be signifi cantly higher. The recent record multi-year highs in commodity prices refl ect years of underinvestment, structural tightness and bottlenecks in the entire supply chain – mining, infrastructure, transportation and refi ning. As such, we believe mining equities represent a good investment and we expect to see multi-year record earnings & multiple expansions. Rising input cost pressures, scarcity of skilled labour, lower ore grades and longer supply lead time because of environmental regulations are some of the challenges which we believe will keep supply tight in the foreseeable short term. On the other side of the equation, demand from China, India and the other emerging economies remains unabated despite high prices.

In the Resources space, we continue to like our exposure to First Quantum, Woodside Petroleum, Thai Oil, ConocoPhillips, ExxonMobil, Noble Corp, BP, CNOOC, PetroChina, Apache, Valero Energy, Baker Hughes, Newcrest Mining, Barrick, Newmont Mining, Lingbao Gold, Alumina, CVRD, BHP Billiton, Rio Tinto, Anglo American, XTO Energy, Encana, Quicksilver, CH Offshore, KS Energy, Sembcorp Industries, Rickmers Maritime, Thai Oil and Sinopec.


4

In the consumer space, we like consumer cyclicals and the IT segments which offer value-added, lifestyle products as there is a growing number of consumers with a higher propensity to spend. The two large markets, China & India, continue to show rising disposal income and healthy retail appetite. We have added Apple Computers, American Movil, Akamai Technologies and Hewlett Packard to our list of preferred names along with Shinsegae, Hyundai Motor, NHN, LG Electronics and Samsung Electronics.

We are also keen on the Healthcare space and have added Wyeth and Roche. We believe these companies have a strong pipeline of products, some of which could be potential blockbusters. The ageing demographics of the developed nations and the wealth of the baby boomers (who are now entering their 60s) will underpin the demand for healthcare products.

We also believe value can be found in companies in the throes of restructuring and one such example is Volkswagen. We believe the market is under-estimating the potential of cost synergies to be extracted. We anticipate the emergence of a leaner, more effi cient entity and see potential re-rating by the market.

In the Financials space, we remain optimistic of the liquidity of the Chinese economy and have exposure via Hong Kong Exchanges & Clearing and Bank of China. In Europe, we also like the niche operator Banco Bilbao Vizcaya, and Barclays. Currently, there is a bidding war between Royal Bank Group and Barclays for ABN Amro. In the US, we like Global Payments.

Finally, we are also expecting M&A activity to continue as companies have record cash and M&A is an effi cient way to grow. Private equity funds have also been rising in size. We have some tactical positions in potential targets.


5

B) Investments at fair value and as a percentage of NAV as at 30 June 2007 under review classifi ed by

Fair Value % of NAV (S$) i) Country

Australia 133,676 5.45 Brazil 88,439 3.61 Canada 207,746 8.48 China 144,956 5.92 Germany 41,390 1.69 Hong Kong 119,004 4.86 Mexico 46,636 1.90 Singapore 241,836 9.87 South Korea 343,372 14.01 Spain 49,409 2.02 Switzerland 39,537 1.61 Taiwan 102,388 4.18 Thailand 33,418 1.36 United Kingdom 159,181 6.50 United States 668,159 27.27

Portfolio of investments 2,419,147 98.73Other net assets 31,124 1.27

Total 2,450,271 100.00

ii) Industry

Consumer Discretionary 197,277 8.05 Energy 684,371 27.93 Financials 217,258 8.88 Healthcare 74,617 3.04 Industrials 241,836 9.87 Information Technology 439,405 17.93 Materials 517,747 21.13 Telecommunication Services 46,636 1.90

Portfolio of investments 2,419,147 98.73Other net assets 31,124 1.27

Total 2,450,271 100.00

iii) Asset Class

Equities 2,419,147 98.73Other net assets 31,124 1.27

Total 2,450,271 100.00


6

B) Investments at fair value and as a percentage of NAV as at 30 June 2007 under review classifi ed by (continued)

iv) Credit rating of debt securities

N/A

C) Top Ten Holdings

The top 10 holdings as at 30 June 2007 and 30 June 2006

Percentage of total net assets attributable to 10 largest holdings at 30 June 2007 Fair Value unitholders (S$) %

HONG KONG EXCHANGES AND CLEARING LIMITED 119,004 4.86 NHN CORPORATION 109,854 4.48 COMPANHIA VALE DO RIO DOCE 88,439 3.61 KS ENERGY SERVICES LIMITED 84,566 3.45 SAMSUNG ELECTRONICS CO 77,631 3.17 RIO TINTO PLC 73,514 3.00 HON HAI PRECISION INDUSTRY CO LTD 70,432 2.88 SEMBCORP INDUSTRIES LIMITED 67,800 2.77 GWANGJU SHINSEGAE CO LIMITED 67,583 2.76 CONOCOPHILLIPS 63,104 2.57

Percentage of total net assets attributable to 10 largest holdings at 30 June 2006 Fair Value unitholders (S$) %

BHP BILLITON LIMITED 116,864 4.10BAKER HUGHES INC 115,441 4.05RIO TINTO PLC 113,806 3.99CIA VALE DO RIO DOCE 108,634 3.81NHN CORPORATION 107,230 3.76NOBLE CORPORATION 105,784 3.71VALERO ENERGY CORPORATION 91,292 3.20CONOCOPHILLIPS 89,726 3.15APACHE CORPORATION 87,490 3.07PETROCHINA COMPANY LIMITED 83,984 2.95


7

D) Exposure to derivatives

i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2007 N/A ii) net gains/(losses) on derivative contracts realised during the fi nancial period ended 30 June 2007 N/A iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2007 N/A

E) Amount and percentage of net asset value (NAV) invested in other schemes as at 30 June 2007

N/A

F) Amount and percentage of borrowings to net asset value (NAV) as at 30 June 2007

N/A

G) Amount of redemptions and subscriptions for the period 01 January 2007 to 30 June 2007

Total amount of redemptions SGD 528,575 Total amount of subscriptions SGD 196,622

H) The amount and terms of related-party transactions for the period 01 January 2007 to 30 June 2007

i) As at 30 June 2007 the Fund maintained current accounts with the United Overseas Bank Limited and HSBC group as follows :

United Overseas Bank Limited Bank balances SGD 34,253

HSBC group Bank balances SGD 12,680

ii) Purchase/holdings of UOBAM unit trusts by UOB or its affi liated companies as at 30 June 2007

N/A

iii) Investment in Initial Public Offerings managed by UOB Group.

N/A iv) As at 30 June 2007 the brokerage income earned by UOB Kay Hian Pte Ltd was SGD 28.08.


8

I) Expense ratios

30 June 2007 3.89% 30 June 2006 2.72%

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 excluded in the expense ratio. The Fund does not pay performance fees.

J) Turnover ratios

30 June 2007 10.40% 30 June 2006 27.46%

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 2007 and 30 June 2006

N/A

ii) expense ratios for the period 30 June 2007 and 30 June 2006. 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 30 June 2007 and 30 June 2006

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.


9

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 benefi t 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 specifi c client basis. The Manager confi rm that trades were executed on the best available terms and there was no churning of trades.


10

STATEMENT OF TOTAL RETURNFOR THE HALF YEAR ENDED 30 JUNE 2007 (UN-AUDITED)

Notes 30 June 30 June 2007 2006 $ $

Investment incomeDividends 20,116 33,149 Interest 36 12

20,152 33,161

Less: Expenses Management fees 9 18,094 25,637 Trustee fees 9 3,016 4,273 Audit fees 6,316 4,605 Custody fees 1,336 1,417 Valuation fees 9 1,508 2,136 Interest expenses 414 1,020 Other expenses 494 1,658

31,178 40,746

Net losses (11,026) (7,585)

Net gains or losses on value of investmentsNet realised gains on investments 162,921 707,760 Net change in fair value on investments 260,765 (441,152)Net foreign exchange losses (4,481) (32,945)

Net gains on value of investments 419,205 233,663

Total return for the period before income tax 408,179 226,078 Less : Income tax 3 (2,175) (4,215)

Total return for the period 406,004 221,863

The accompanying notes form an integral part of these fi nancial statements.


11

BALANCE SHEETAS AT 30 JUNE 2007 (UN-AUDITED)

Notes 30 June 31 December 2007 2006 $ $ASSETSPortfolio of investments 2,419,147 2,405,985 Receivables 4 6,924 4,009 Cash and bank balances 46,933 9,700

Total Assets 2,473,004 2,419,694

LIABILITIES Payables 5 22,733 43,474 Net assets attributable to unitholders 6 2,450,271 2,376,220

Total Liabilities 2,473,004 2,419,694



12

PORTFOLIO STATEMENTAS AT 30 JUNE 2007 (UN-AUDITED)

Percentage of total net assets attributable to Holdings at Fair value at unitholders 30 June 30 June at 30 June 2007 2007 2007 $ %By Geography - Primary Quoted Equities

AUSTRALIA ALUMINA LIMITED 1,700 17,184 0.70BHP BILLITON LIMITED 1,270 57,678 2.35NEWCREST MINING LIMITED 1,320 38,949 1.59WOODSIDE PETROLEUM LIMITED 335 19,865 0.81

TOTAL AUSTRALIA 133,676 5.45

BRAZIL COMPANHIA VALE DO RIO DOCE 1,300 88,439 3.61

CANADA ALCAN INC 342 42,559 1.74ENCANA CORPORATION 306 28,747 1.17FIRST QUANTUM MINERALS LIMITED 380 49,664 2.03GOLDCORP INC 1,335 48,370 1.97NEXEN INC 318 15,075 0.62ULTRA PETROLEUM CORPORATION 277 23,331 0.95

TOTAL CANADA 207,746 8.48

CHINA BANK OF CHINA 23,000 17,459 0.71CHINA PETROLEUM & CHEMICAL CORPORATION 26,000 44,049 1.80CHINA CITIC BANK 2,000 2,340 0.10CNOOC LIMITED 17,000 29,433 1.20LINGBAO GOLD CO LIMITED 2,000 2,352 0.10PETROCHINA COMPANY LIMITED 22,000 49,323 2.01

TOTAL CHINA 144,956 5.92

GERMANYVOLKSWAGEN AG 170 41,390 1.69

HONG KONGHONG KONG EXCHANGES AND CLEARING LIMITED 5,500 119,004 4.86



13


Percentage of total net assets attributable to Holdings at Fair value at unitholders 30 June 30 June at 30 June 2007 2007 2007 $ %By Geography - Primary (continued) Quoted Equities

MEXICOAMERICA MOVIL- ADR SERIES L 493 46,636 1.90

SINGAPORECH OFFSHORE LIMITED 77,000 56,980 2.32KS ENERGY SERVICES LIMITED 22,372 84,566 3.45RICKMERS MARITIME 19,000 32,490 1.33SEMBCORP INDUSTRIES LIMITED 12,000 67,800 2.77

TOTAL SINGAPORE 241,836 9.87

SOUTH KOREA GWANGJU SHINSEGAE CO LIMITED 230 67,583 2.76HYUNDAI MOTOR COMPANY 490 59,215 2.42LG ELECTRONICS INC 230 29,089 1.18NHN CORPORATION 395 109,854 4.48SAMSUNG ELECTRONICS CO 83 77,631 3.17

TOTAL SOUTH KOREA 343,372 14.01

SPAINBANCO BILBAO VIZCAYA SA 1,315 49,409 2.02

SWITZERLANDROCHE HOLDINGS AG GENNUSSCHEINE NP 146 39,537 1.61

TAIWANHON HAI PRECISION INDUSTRY CO LTD 5,348 70,432 2.88SHIN ZU SHING CO LIMITED 2,725 31,956 1.30

TOTAL TAIWAN 102,388 4.18

THAILANDTHAI OIL PUBLIC COMPANY LIMITED 10,700 33,418 1.36



14


Percentage of total net assets attributable to Holdings at Fair value at unitholders 30 June 30 June at 30 June 2007 2007 2007 $ %By Geography - Primary (continued) Quoted Equities

UNITED KINGDOMANGLO AMERICAN PLC 299 27,003 1.10BARCLAYS 1,360 29,046 1.19BP PLC 1,602 29,618 1.21RIO TINTO PLC 626 73,514 3.00

TOTAL UNITED KINGDOM 159,181 6.50

UNITED STATESAKAMAI TECHNOLOGIES INC 600 44,635 1.82ALCOA INC COM 471 29,160 1.19APACHE CORPORATION 481 59,949 2.45APPLE COMPUTER INC 270 50,397 2.06BAKER HUGHES INC 282 36,273 1.48BARRICK GOLD CORPORATION 695 30,879 1.26CONOCOPHILLIPS 526 63,104 2.57EXXON MOBIL CORPORATION 401 51,420 2.10GLOBAL PAYMENTS INC 585 35,413 1.44HEWLETT PACKARD 280 19,087 0.78NEWMONT MINING CORPORATION 201 11,996 0.49NOBLE CORPORATION 349 51,963 2.12QUICKSILVER RESOURCES INC 453 30,845 1.26VALERO ENERGY CORPORATION 548 61,888 2.53XTO ENERGY INC 611 56,070 2.29WYETH 400 35,080 1.43

TOTAL UNITED STATES 668,159 27.27

Portfolio of investments 2,419,147 98.73 Other net assets 31,124 1.27

Net assets attributable to unitholders 2,450,271 100.00



15


Percentage of Percentage of total net assets total net assets attributable to attributable to unitholders at unitholders at 30 June 31 December 2007 2006 % %By Geography - Primary (Summary) Quoted Equities Australia 5.45 7.16 Brazil 3.61 3.26 Canada 8.48 8.34 China 5.92 9.31 Germany 1.69 1.98 Hong Kong 4.86 3.89 Mexico 1.90 - Singapore 9.87 6.46 South Korea 14.01 15.64 Spain 2.02 3.91 Switzerland 1.61 3.93 Taiwan 4.18 3.64 Thailand 1.36 1.40 United Kingdom 6.50 4.18 United States 27.27 28.15

Portfolio of investments 98.73 101.25 Other net assets/(liabilities) 1.27 (1.25)

Net assets attributable to unitholders 100.00 100.00



16


Percentage of Percentage of total net assets total net assets attributable to attributable to Fair value at unitholders at unitholders at 30 June 30 June 31 December 2007 2007 2006 $ % %By Industry - SecondaryQuoted Equities

Consumer Discretionary 197,277 8.05 7.73 Energy 684,371 27.93 33.98 Financials 217,258 8.88 8.61 Healthcare 74,617 3.04 7.96 Industrials 241,836 9.87 6.46 Information Technology 439,405 17.93 15.75 Materials 517,747 21.13 20.76 Telecommunication Services 46,636 1.90 - Portfolio of investments 2,419,147 98.73 101.25 Other net assets/(liabilities) 31,124 1.27 (1.25) Net assets attributable to unitholders 2,450,271 100.00 100.00



17

NOTES TO THE FINANCIAL STATEMENTSFOR THE HALF YEAR ENDED 30 JUNE 2007 (UN-AUDITED)

These notes form an integral part of and should be read in conjunction with the accompanying fi nancial statements.

1. General

UOB Optimix Contrarian Fund (the “Fund”) is a Singapore-registered trust fund constituted by a Trust Deed dated 18 March 1997 between UOB Asset Management Limited (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 markets or securities that have underperformed or fallen substantially. The investment policy of the Fund is to adopt a value-oriented investment strategy by searching for securities that have good recovery potential while maintaining risk diversifi cation.

2. Signifi cant accounting policies

(a) Basis of accounting

The fi nancial statements have been prepared under the historical cost convention, modifi ed by the revaluation of fi nancial assets at fair value through profi t 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 Certifi ed Public Accountants of Singapore.

The fi nancial statements are expressed in Singapore dollars.

(b) Recognition of income

Dividend income is taken up gross of tax in the Statement of Total Return in the accounting year which the security is quoted ex-dividend. Interest income is recognised on a time proportion basis using effective interest method.

(c) Investments

Investments are classifi ed as fi nancial assets at fair value through profi t or loss.

(i) Initial recognition

Purchase of investments are recognised on trade date. Investments are recorded at fair value on initial recognition.


18


2. Signifi cant accounting policies (continued)

(c) Investments (continued)

(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 year in which they arise.

(iii) Derecognition

Investments are derecognised on the trade date of disposal. The resultant realised gains and losses on the sales of investments are computed on the bases 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 fi nancial 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.

The performance of the Fund is measured and reported to the investors in Singapore dollars. The Manager considers the Singapore Dollar to be the currency of the primary economic environment in which the Fund operates. The Fund’s functional and presentation currencies are the Singapore Dollar.

(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 fi nancial assets and liabilities such as equities are also recognised in the Statement of Total Return within the fair value net gain or loss.


19


2. Signifi cant accounting policies (continued)

(f) Financial derivatives

Financial derivatives including forwards and swaps are entered into for the purpose of effi cient portfolio management, tactical asset allocation or specifi c hedging of fi nancial assets held as determined by the Manager and in accordance with the provisions of the Trust Deed.

Financial derivatives outstanding at the balance sheet date are valued at forward rates of at 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.

(g) 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 funds’ net asset values.

3. Income tax 30 June 30 June 2007 2006 $ $

Singapore income tax 106 385 Overseas income tax 2,069 3,830 Total Income tax 2,175 4,215

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 profi ts 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. The overseas income tax represents tax withheld on foreign sourced income.


20


4. Receivables 30 June 31 December 2007 2006 $ $

Amount due from unitholders 6,074 772 Dividends receivable 850 3,237 6,924 4,009

5. Payables 30 June 31 December 2007 2006 $ $

Amount due to unitholders 5,182 19,189 Amount due to Manager 8,825 10,597 Amount due to Trustee 1,427 1,533 Other creditors and accrued expenses 7,299 12,155 22,733 43,474


21


6. Net assets attributable to unitholders 30 June 31 December 2007 2006 $ $

At the beginning of the fi nancial period/year 2,376,220 3,769,427 Operations Change in net assets attributable to unitholders resulting from operations 406,004 359,139 Unitholders’ contributions/(withdrawals) Creation of units 196,622 1,015,918 Cancellation of units (528,575) (2,768,264) Change in net assets attributable to unitholders resulting from net creation and cancellation of units (331,953) (1,752,346) Total increase/(decrease) in net assets attributable to unitholders 74,051 (1,393,207) At the end of the fi nancial period/year 2,450,271 2,376,220 Units in issue (Note 7) 1,823,920 2,110,949

$ $

Net assets attributable to unitholders per unit 1.34 1.13

7. Units in issue 30 June 31 December 2007 2006

Units at beginning of period/year 2,110,949 3,745,506 Units created 157,800 966,149 Units cancelled (444,829) (2,600,706) Units at end of period/year 1,823,920 2,110,949


22


8. Financial risk management

The overall responsibility for the implementation of the Fund’s fi nancial risk management policies lies with the Manager who, amongst other things, focuses on the unpredictability of fi nancial markets and seeks to minimise potential adverse effects on the fi nancial performance of the Fund. These policies are as per stated in the prospectus of the Fund. Specifi c guidelines on exposures to individual securities and certain industries are in place for the Fund at any time as part of the overall fi nancial risk management to reduce the Fund’s risk exposures.

(a) Foreign exchange risk

The Fund has securities denominated in currencies other than Singapore dollars and the Fund 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.

The table below summarises the Fund’s exposure to currency risks.

As at 30 June 2007

SGD USD HKD KRW Others Total $ $ $ $ $ $ Assets Portfolio of investments 241,836 826,566 263,960 343,372 743,413 2,419,147 Receivables 6,074 255 - 584 11 6,924 Cash and bank balances 38,484 1,632 3,276 - 3,541 46,933 Total Assets 286,394 828,453 267,236 343,956 746,965 2,473,004 Liabilities Payables 22,672 61 - - - 22,733 Net assets attributable to unitholders 2,450,271 - - - - 2,450,271 Total Liabilities 2,472,943 61 - - - 2,473,004


23


8. Financial risk management (continued)

(a) Foreign exchange risk (continued)

As at 31 December 2006

SGD USD HKD Others Total $ $ $ $ $Assets Portfolio of investments 153,535 766,736 313,791 1,171,923 2,405,985 Receivables 772 254 - 2,983 4,009 Cash and bank balances 8,217 43 13 1,427 9,700 Total Assets 162,524 767,033 313,804 1,176,333 2,419,694

LiabilitiesPayables 43,083 309 - 82 43,474 Net assets attributable to unitholders 2,376,220 - - - 2,376,220 Total Liabilities 2,419,303 309 - 82 2,419,694

(b) Market risk

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 reduce its exposure to market risk using derivative strategies.

(c) Interest rate risk

The Fund’s fi nancial assets and liabilities are largely non-interest bearing. Hence, the Fund is not subjected to risk due to fl uctuations in the prevailing levels of market interest rates.

(d) Liquidity risk

The Fund is exposed to daily cash redemptions and cash disbursements for the settlements of purchases. The Manager therefore ensures that the Fund maintains suffi cient 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.


24


8. Financial risk management (continued)

(d) Liquidity risk (continued)

The Fund’s investments in listed securities are considered to be readily realisable as they are listed on established regional stock exchanges.

The Manager may from time to time employ derivatives to implement a portfolio strategy to reduce risk or for the purpose of effi cient portfolio management. Market liquidity of complex derivatives are signifi cantly less than traditional investment instruments and such positions may therefore require a long time to reverse than what would be typically expected for traditional investment instruments. No such investments were held at the balance sheet date.

(e) 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.

9. Related party transactions

(a) The Manager and the Trustee of the Fund are UOB Asset Management Limited and HSBC Institutional Trust Services (Singapore) Limited respectively. UOB Asset Management Limited is a subsidiary of United Overseas Bank Limited and HSBC Institutional Trust Services (Singapore) Limited is a subsidiary of HSBC Holdings Plc.

Management and valuation fees are paid to the Manager, while trustee fees are paid to the Trustee. With effect from 1 January 2007, registrar fee is paid to HSBC Securities Services (Transfer Agency) Pte Ltd, a subsidiary of HSBC Holdings Plc. Prior to that, registrar fee was paid to the Manager. These fees paid or payable by the Fund are 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 fi nancial statements.


25


9. Related party transactions (continued) (b) As at the end of the fi nancial period/year, the Fund maintained the following accounts with the

related parties:

30 June 31 December 2007 2006 $ $

United Overseas Bank Limited Bank balances 34,253 7,599 HSBC Group Bank balances 12,680 2,101

(c) The following transactions took place during the fi nancial period between the Fund and United Overseas Bank Limited at terms agreed between the parties as follow:

30 June 30 June 2007 2006 $ $

United Overseas Bank Limited Interest expense 77 216 HSBC Group Interest income 36 12 Interest expense 337 804

(d) UOB Kay Hian Pte Ltd is an affi liate company of United Overseas Bank Limited. As at the end of the fi nancial period, the Fund has brokerage fee paid or payable to UOB Kay Hian Pte Ltd as follows:

30 June 30 June 2007 2006 $ $

UOB Kay Hian Pte Ltd Brokerage charges 28 59


26


10. Financial ratios 30 June 30 June 2007 2006

Expense ratio1 3.89% 2.72% Turnover ratio2 10.40% 27.46%

1 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 excluded in the expense ratio. The Fund does not pay performance fees.

2 The turnover ratio is calculated in accordance with the formula stated in the “Code on Collective Investment Schemes”.


27

This page has been intentionally left blank.


28

This page has been intentionally left blank.

UOB Optimix Contrarian Fund - UOB Asset Management Optimix Contrarian Fund (Constituted under a...

Documents

Transcript of UOB Optimix Contrarian Fund - UOB Asset Management Optimix Contrarian Fund (Constituted under a...