The CPF approved feeder fund is Henderson's fourth unit trust here. Counting on an affinity for the auspicious, Henderson hopes the Pacific Dragon Fund will rake in more than 40 million dollars during the initial launch period. It believes investors will see that Asia's economic resurgence is real and for the long term. The fund house is confident that better quality stocks are now avaliable after the Asian crisis, and this makes the fund an attractive investment. Managing Director of Henderson Investors Singapore, Alexander Henderson says: "We are very upbeat about Asia. We think that the timing is particularly appropriate to introduce this fund. There are some 25 Pacific Funds (Far East excluding Japan) in Singapore of which 15 are CPF approved. The performance (of our fund) is equal or exceeds the top performing funds in the market place - the likes of Schroders, Rothschild, Deutsche and CMG." Over the past 5 years, the Micropal 5-Star rated motherfund (Henderson Horizon Pacific Fund) has consistently outperformed its benchmark, the MSCI AC Pacific Free excluding Japan Index. (See table below).

Source : Standard and Poor's Micropal

Henderson's fund managers cite several reasons for their optimism in the long-term prospects of Asia. Lead fund manager Kirsteen Morrison notes that stabilising economic growth, increases in inter-regional trade, stable currencies, pickup in domestic demand, and minimal interest rate pressure should prolong the Asian growth momentum. "As a consequence, we feel that even if the U.S slows down, Asia would be less impacted than before. In addition, it's important to remember that Europe and Japan are improving and Henderson Investors is forecasting a soft landing in the U.S economy." More importantly, she points to a commitment towards restructuring and good corporate governance. This, she adds, gives a certain shine to some Asian companies now going cheap. "We have seen the relaxation of foreign investment restrictions in North Asia in particular, and we feel that this creates a better mix of investment opportunities. Asian mergers and acquisitions picked up quickly during the crisis, and it was the entrance of foreign companies that drove the restructuring and focus on profitability. We believe that this is qualitative improvement and has the momentum to move forward."

The bulk of the fund's holdings are in North Asia, hardly surprising given the current bullish sentiment. As at 31 July 2000, over half of the motherfund's assets was invested in North Asia. This allocation is likely to stay for the time being. Among her top picks from the region are China Mobile, China Southern Airlines, Hutchison Whampoa and Cheung Kong holdings. There are also a number of Taiwanese IT companies in the portfolio such as United Microelectronics (UMC). Even though the fund is heavily weighted in North Asia, Morrison reasons that it is still well-balanced. "Henderson's has identified several growth drivers. These include the expanding service sector, technolgy and outsourcing, and the economic growth in China. The fund also has the flexibility to invest in Australia, which is a developed market and gives us the opportunity to diversify risk."

Looking ahead, Morrison thinks the fund will outperform its benchmark index with returns in the neighbourhood of 15% to 20% in the first year. She sees plenty of opportunities for growth and her current favourite sectors are financials, healthcare, and IT consulting and outsourcing. "The services sector is expanding. First of all we have the financials, this is driven by wealth management. This is going to be a growth driver for the banks in terms of non-interest income. And the development of fund management industry; it's being encouraged by governments who wish to see diversification of the wealth of the elderly out of property assets to unit trusts, pension funds and insurance products. The ageing population provides a further stimulus for this growth. Healthcare has the same stimulus in terms of the ageing population. What we are seeing across the region is a desire (by governments) to cap the spending on healthcare by outsourcing services to the private sector. For companies operating in this area, they can achieve economies of scale, you see good growth opprtunities. Finally IT consulting and outsourcing. This where the challenges for the new economy proceeds. Those companies that can provide the IT solutions and can help with the systems integration have sizeable growth opportunities....(they include) software solutions, integrated hardware solutions, and data centres (where they take the entire IT needs of a company and operate it remote for a fixed fee). IT spending in the U.S is also expected to increase, and that's good news for Asia because it's a major producer of hardware."

FUND FACTS

Launch Period - 1 September to 30 September 2000
Launch Price - 1 Singapore Dollar per unit
Minimum Investment - 1000 Singapore Dollars
Sales Charge - 5%
Minimum Subsequent Investment - 100 Singapore Dollars
Discount - Up to 2% depending on amount invested
Annual Management Fee - 1.95%
CPF Approved - Yes
Realisation Charge - Nil
Annual Trustee Fee - 0.075%

Sector Allocation (indicative)
Conglomerates and other Finance - 6.8%
Finance - 15.9%
Healthcare - 5.5%
Industrials - 14.6%
Information Technology - 10.2%
Real Estate - 8.5%
Telecoms - 8%
Others - 30.5%

Country Breakdown (indicative)
Australia - 23.9%
Hong Kong - 23.0%
China - 14.0%
Singapore - 12.2%
Korea - 8.6%
Taiwan - 8.6%
Thailand - 1.3%
Malaysia - 0.3%
Cash - 8.2%

Top Ten Holdings (indicative)
Johnson Electric Holdings - 3.1%
Westpac Bank Corp - 3.0%
Cheung Kong - 2.7%
Energy Developments - 2.6%
Swire Pacific - 2.6%
Li and Fung - 2.6%
News Corp - 2.5%
Commonwealth Bank of Australia - 2.4%
Hutchison Whampoa - 2.3%
Lang Corporation - 2.3%