United Global Healthcare Fund · 2018. 3. 29. · Annual Report for the financial year ended 31st...

United Global Healthcare FundAnnual Report

for the financial year ended31st December 2017

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

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

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

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

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

SUB-MANAGERWellington Management Singapore Pte. Ltd.8 Marina Boulevard#03-01, Tower 1, Marina Bay Financial CentreSingapore 018981

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

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A) Fund Performance

Class SGD Acc

Fund Performance/Benchmark Returns

3 mth%

Growth

6 mth%

Growth

1 yr%

Growth

3 yrAnn

CompRet

5 yrAnn

CompRet

10 yrAnn

CompRet

SinceInception21 August

2000Ann

CompRet

United GlobalHealthcare Fund -3.79 -3.52 10.65 6.82 19.18 9.75 9.36

Benchmark -0.35 0.68 11.13 6.28 15.88 8.17 5.06

Source: Lipper, a Thomson Reuters Company.

Note: The performance returns of the Fund are in Singapore Dollar based on a NAV-to-NAV basis, with dividends and distributionsreinvested, if any.The benchmark of the Fund: MSCI ACWI Healthcare.

Class USD Dist

Fund Performance/Benchmark Returns

3 mth%

Growth

6 mth%

Growth

1 yr%

Growth

3 yrAnn

CompRet

5 yrAnn

CompRet

10 yrAnn

CompRet

SinceInception

01 September2015Ann

CompRet

United GlobalHealthcare Fund -2.31 -0.68 19.50 N/A N/A N/A 5.04

Benchmark 1.26 3.73 20.14 N/A N/A N/A 6.32

Source: Lipper, a Thomson Reuters Company.

Note: The performance returns of the Fund are in United States Dollar based on a NAV-to-NAV basis, with dividends and distributionsreinvested, if any.The benchmark of the Fund: MSCI ACWI Healthcare.

For the year ended 31December 2017, the net asset value of Class SGDAcc of the Fund increased 10.65%, underperformingthe benchmark MSCI World Health Care Index, which increased 11.13% (in Singapore Dollar terms) while the net asset valueof Class USD Dist increased 19.50%, underperforming the benchmark, which increased 20.14% (in United States Dollarterms).

The Fund is sub-managed by Wellington Management Singapore Pte Ltd and the commentary that follows reflects the viewsof the sub-manager.

The Fund had a solid first quarter, outperforming its benchmark despite continued market volatility related to drug pricing andpolicy uncertainty. The gains extended to the second quarter, and the portfolio continued to outperform the MSCI World HealthCare Index. The portfolio took a challenging turn in the second half of the year, underperforming its benchmark in the third andfourth quarters.

The Fund’s performance during the year was primarily driven by strong stock selection in the Biopharma Mid Cap space,mainly driven by our overweight position in Alnylam. The US-based biotech firm reported best-case phase three results for itslead siRNA drug patisiran for the treatment of hereditary ATTR amyloidosis, a rare genetic disorder affecting the nervoussystem, heart and other organs leading to early death. The compelling results provide strong proof-of-concept for Alnylam’ssiRNA platform and bode well for the company’s other late-stage therapies including givosiran and inclisiran.

The Fund’s outperformance was partially offset by our overweight exposure to Tesaro, an oncology-focused biotechnologycompany based in the US. The stock underperformed this year due to the competitive threat posed by AstraZeneca, whichreceived broadened approval for Lynparza from the US Food and Drug Administration, a PARP inhibitor for second line


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A) Fund Performance (continued)

treatment of ovarian cancer. Lynparza competes directly with Tesaro’s recently launched Zejula. Additionally, Clovis Oncologyis in the process of seeking approval for its own oncology drug, Rubraca, for the same indication. Despite competition in thePARP inhibitor space, Tesaro’s pipeline remains undervalued with Zejula being developed for other cancer types and threeimmuno-oncology programs in the clinic. We continue to hold the position.

The top relative contributors to returns were Alnylam, Portola, ARIAD, Bluebird Bio, and Loxo Oncology.

The key relative detractors were AbbVie, FivePrime Therapeutics, Tesaro, Allergan, and Coherus Biosciences.

In terms of country exposure, investments in theUnitedStates,China, and theUnitedKingdom generatedmost of the Fund’soutperformance, while holdings in Denmark lagged.

As at end December 2017, the Fund had the following country asset allocation: United States (67.08%), Ireland (8.55%),Japan (5.32%), United Kingdom (4.49%), Switzerland (2.26%), China (1.82%), Netherlands (1.49%), Belgium (1.47%),Denmark (0.90%), Hong Kong (0.89%), Israel (0.54%), Canada (0.21%), Brazil (0.20%), Sweden (0.17%), Luxembourg(0.13%), France (0.10%). The Fund had mostly maintained a low level of cash balances during the year.

Economic and Market Review

The Health Care sector was off to a strong start this year, as the MSCI World Health Care Index gained 5.1% during the firstquarter. The portfolio outperformed the benchmark by 451 basis points during the first quarter (in SGD terms). This was drivenby strong performance in the biopharma mid cap and small cap sectors.

The second quarter of 2017marked the continued recovery of global Health Care equities. TheMSCIWorld Health Care Indexgained 5.5% over the second quarter, and the portfolio continued to outperform the benchmark by 60 basis points (bps) in SGDterms. Strong performance in Health Care services and biopharma large cap contributed to results this quarter.

In the third quarter, the MSCI World Health Care Index gained 1.1%, and the Fund underperformed the benchmark by 19 bpsin SGD terms. Over the period, holdings within biopharma large cap and Health Care services detracted from relativeperformance.

Global Health Care equities ended the year with a challenging fourth quarter, as the MSCI World Health Care Index declined0.7%. The portfolio underperformed the benchmark by 258 basis points in SGD terms. Over the quarter, the portfolio’sout-of-benchmark collection of biopharma small cap stocks detracted most from performance. Holdings in the medicaltechnology sector further weighed on results.

Outlook and Strategy

The Health Care sector has generally performed well driven by a recovery in valuations, but more importantly due to significantinnovation gains in the biopharmaceutical sector, as well as better than expected growth trends across medical technology andmany of the Health Care service subsectors.We believemany of these trends will continue into 2018, yet remain cognizant thatuncertainties remain.

We are mindful of the risks posed for biopharma companies by intensifying competition, enhanced transparency, realignedincentives and ongoing challenges with affordability. Regarding efforts to repeal the Affordable Care Act, we believe that manyif not most of the millions of Americans who obtained insurance coverage in the past few years will retain coverage in someform. That said, with the 2017 Tax Cut and Jobs Bill’s repeal of the ACA’s Individual Mandate, the number of Americans withouthealth insurance is likely to trend upward over time.

We seek companies that look to provide solutions to the challenges facing the Health Care delivery system globally by shiftingfocus from volumes to value. Over the long term, the tailwinds of innovation, an aging population, and the globalisation ofdemand for cutting-edge Western-style Health Care should continue to drive the growth of the Health Care sector. We believethat we are well-resourced and favourably positioned to capitalise on that growth.


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B) Investments at fair value and as a percentage of net asset value (“NAV”) as at 31 December2017 under review classified by

i) Country

Fair Value(S$)

% of NAV

Belgium 6,899,646 1.47

Brazil 952,937 0.20

Canada 1,001,912 0.21

China 8,517,746 1.82

Denmark 4,220,214 0.90

France 442,589 0.10

Hong Kong 4,156,576 0.89

Ireland 40,044,732 8.55

Israel 2,541,899 0.54

Japan 24,899,482 5.32

Luxembourg 595,065 0.13

Netherlands 6,992,514 1.49

Sweden 801,482 0.17

Switzerland 10,586,434 2.26

United Kingdom 21,029,039 4.49

United States 314,124,485 67.08

Portfolio of investments 447,806,752 95.62

Other net assets/(liabilities) 20,513,905 4.38

Total 468,320,657 100.00

ii) Industry

Fair Value(S$)

% of NAV

Consumer Staples 6,595,427 1.41

Health Care 441,211,325 94.21



Total 468,320,657 100.00

iii) Asset Class

Fair Value(S$) % of NAV

Quoted equities 447,806,752 95.62


Total 468,320,657 100.00


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B) Investments at fair value and as a percentage of net asset value (“NAV”) as at 31 December2017 under review classified by (continued)

iv) Credit rating of quoted bonds

N/A

C) Top Ten Holdings

10 largest holdings as at 31 December 2017

Fair Value(S$)

Percentage oftotal net assetsattributable tounitholders

%

UNITEDHEALTH GROUP INC 20,205,228 4.31

BRISTOL-MYERS SQUIBB CO 17,615,772 3.76

ASTRAZENECA PLC 14,259,172 3.05

BOSTON SCIENTIFIC CORP 13,222,324 2.82

ALLERGAN PLC 12,748,144 2.72

ALKERMES PLC 11,758,687 2.51

PORTOLA PHARMACEUTICALS INC 11,199,122 2.39

ALNYLAM PHARMACEUTICALS INC 10,712,536 2.29

MCKESSON CORP 9,611,734 2.05

MEDTRONIC PLC 9,415,199 2.01

10 largest holdings as at 31 December 2016

Fair Value

Percentage oftotal net assetsattributable tounitholders

(S$) %

BRISTOL-MYERS SQUIBB CO 19,036,717 4.15

UNITEDHEALTH GROUP INC 18,211,008 3.97

ALLERGAN PLC 17,523,861 3.82

SSGA FDS MONEY MARKET FUND 17,474,391 3.81

ALKERMES PLC 13,008,583 2.84

ASTRAZENECA PLC 12,858,934 2.81

BOSTON SCIENTIFIC CORP 11,321,556 2.47

ELI LILLY AND COMPANY 10,005,330 2.18

MEDTRONIC PLC 9,797,781 2.14

HCA HOLDINGS INC 9,602,915 2.10


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D) Exposure to derivatives

i) Fair value of derivative contracts and as a percentage of NAV as at 31 December 2017

Contract orunderlyingprincipalamount

Positivefair value % of NAV

Negativefair value % of NAV

$ $ $

Foreign currency contracts 152,303 231 -* 113 -*

* denotes amount less than 0.01%

ii) There was a net realised gain of SGD 202,176 on derivative contracts during the financial year ended 31 December 2017.

iii) There was a net unrealised gain of SGD 118 on outstanding derivative contracts marked to market as at 31 December2017.

E) Amount and percentage of NAV invested in other schemes as at 31 December 2017

N/A

F) Amount and percentage of borrowings to NAV as at 31 December 2017

N/A

G) Amount of redemptions and subscriptions for the financial year ended 31 December 2017

Total amount of redemptions SGD 306,048,674

Total amount of subscriptions SGD 269,014,688

H) The amount and terms of related-party transactions for the financial year ended 31December2017

Please refer to Note 11 of the Notes to the Financial Statements.

I) Expense ratios


J) Turnover ratios


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

N/A


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

i) Top 10 holdings at fair value and as percentage of NAV as at 31 December 2017 and 31 December 2016

N/A

ii) Expense ratios for the financial year ended 31 December 2017 and 31 December 2016

N/A

iii) Turnover ratios for the financial year ended 31 December 2017 and 31 December 2016

N/A

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

M) Soft dollar commissions/arrangements

UOB Asset Management has entered into soft dollars arrangements with selected brokers from whom products andservices are received from third parties. The products and services relate essentially to computer hardware and softwareto 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 andquotation services, all of which are believed to be helpful in the overall discharge of UOB Asset Management’s duties toclients. As such services generally benefit all of UOB Asset Management’s clients in terms of input into the investmentdecision making process, the soft credits utilised are not allocated on a specific client basis. The Manager confirms thattrades were executed on a best execution basis and there was no churning of trades.

The Sub-Manager, Wellington Management Singapore Pte Ltd and their affiliates (collectively, the “WellingtonManagement group”) may utilize external research provided by broker/dealers and independent, or third-party researchfirms in their investment decision-making process (“Research Services”). These Research Services include writtenresearch material, conversations with analysts at the research firms, meetings with corporate management and access toexperts in a variety of fields, such as government officials, doctors, researchers, lawyers and scientists.

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

N/A


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REPORT OF THE TRUSTEE

The Trustee is under a duty to take into custody and hold the assets of United Global Healthcare Fund (the “Fund”) in trust forthe unitholders. In accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code onCollective Investment Schemes, the Trustee shall monitor the activities of the Manager for compliance with the limitationsimposed on the investment and borrowing powers as set out in the Trust Deed in each annual accounting year and reportthereon to unitholders in an annual report.

To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Fund during the financial yearcovered by these financial statements, set out on pages 12 to 40, in accordance with the limitations imposed on the investmentand borrowing powers set out in the Trust Deed.

For and on behalf of the TrusteeSTATE STREET TRUST (SG) LIMITED

Authorised signatory29 March 2018


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STATEMENT BY THE MANAGER

In the opinion of UOBAssetManagement Ltd, the accompanying financial statements set out on pages 12 to 40, comprising theStatement of Total Return, Statement of Financial Position, Statement of Movements of Unitholders’ Funds, Statement ofPortfolio andNotes to the Financial Statements are drawn up so as to present fairly, in all material respects, the financial positionand portfolio holdings of United Global Healthcare Fund (the “Fund”) as at 31 December 2017, and the financial performanceand movements of unitholders’ funds for the year then ended in accordance with the recommendations of Statement ofRecommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore CharteredAccountants. At the date of this statement, there are reasonable grounds to believe that the Fundwill be able tomeet its financialobligations as and when they materialise.

For and on behalf of the ManagerUOB ASSET MANAGEMENT LTD

THIO BOON KIATAuthorised signatory29 March 2018


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INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF UNITED GLOBALHEALTHCARE FUND

Our Opinion

In our opinion, the accompanying financial statements of United Global Healthcare Fund (the “Fund”), are properly drawn upin accordancewith the recommendations of Statement of RecommendedAccounting Practice 7 “Reporting Framework for UnitTrusts” issued by the Institute of Singapore Chartered Accountants, so as to present fairly, in all material respects, the financialposition and portfolio holdings of the Fund as at 31 December 2017, and of the financial performance and movements ofunitholders’ funds for the financial year ended on that date.

What we have audited

The financial statements of the Fund comprise:

• the Statement of Total Return for the financial year ended 31 December 2017;

• the Statement of Financial Position as at 31 December 2017;

• the Statement of Movements of Unitholders’ Funds for the financial year ended 31 December 2017;

• the Statement of Portfolio as at 31 December 2017; and

• the notes to the financial statements, including a summary of significant accounting policies.

Basis for Opinion

We conducted our audit in accordance with Singapore Standards on Auditing (“SSAs”). Our responsibilities under thosestandards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Independence

We are independent of the Fund in accordance with the Accounting and Corporate Regulatory Authority Code of ProfessionalConduct and Ethics for Public Accountants and Accounting Entities (“ACRA Code”) together with the ethical requirements thatare relevant to our audit of the financial statements in Singapore, and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ACRA Code.

Other Information

The Fund’s Manager (the “Manager”) is responsible for the other information. The other information comprises all sections ofthe annual report but does not include the financial statements and our auditor’s report thereon.

Our opinion on the financial statements does not cover the other information and we do not and will not express any form ofassurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in theaudit, or otherwise appears to be materially misstated. If, based on the work we have performed on the other information, weconclude that there is a material misstatement of this other information, we are required to report that fact. We have nothingto report in this regard.

Responsibilities of the Manager for the Financial Statements

The Manager is responsible for the preparation and fair presentation of these financial statements in accordance with therecommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Unit Trusts” issued by theInstitute of Singapore Chartered Accountants and for such internal control as the Manager determines is necessary to enablethe preparation of financial statements that are free from material misstatement, whether due to fraud or error.

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INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF UNITED GLOBALHEALTHCARE FUND

In preparing the financial statements, the Manager is responsible for assessing the Fund’s ability to continue as a goingconcern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unlessthe Manager either intends to terminate the Fund or to cease the Fund’s operations, or has no realistic alternative but to do so.

The Manager’s responsibilities include overseeing the Fund’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from materialmisstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assuranceis a high level of assurance, but is not a guarantee that an audit conducted in accordancewith SSAswill always detect amaterialmisstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in theaggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financialstatements.

As part of an audit in accordance with SSAs, we exercise professional judgement and maintain professional scepticismthroughout the audit. We also:

• Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, designand perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than forone resulting from error, as fraudmay involve collusion, forgery, intentional omissions,misrepresentations, or the overrideof internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriatein the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and relateddisclosures made by the Manager.

• Conclude on the appropriateness of theManager’s use of the going concern basis of accounting and, based on the auditevidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubton the Fund’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required todraw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures areinadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor’s report. However, future events or conditions may cause the Fund to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, andwhether the financial statements represent the underlying transactions and events in a manner that achieves fairpresentation.

We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significantaudit findings, including any significant deficiencies in internal control that we identify during our audit.

PricewaterhouseCoopers LLPPublic Accountants and Chartered Accountants

Singapore, 29 March 2018

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STATEMENT OF TOTAL RETURNFor the financial year ended 31 December 2017

2017 2016

Note $ $

Income

Dividends 3,530,840 3,499,538

Interest 47,661 70,971

Other income 319 2,812

Total 3,578,820 3,573,321

Less: Expenses

Management fee 11 7,253,024 7,596,529

Trustee fee 11 149,010 173,635

Audit fee 18,900 17,498

Registrar fee 11 25,119 25,000

Valuation fee 11 828,917 868,175

Custody fee 11 151,784 130,125

Transaction costs 274,652 344,493

Other expenses 459,823 253,445

Total 9,161,229 9,408,900

Net income/(losses) (5,582,409) (5,835,579)

Net gains/(losses) on value of investments

Net gains/(losses) on investments 56,840,864 (37,725,913)

Net gains/(losses) on financial derivatives 202,294 -

Net foreign exchange gains/(losses) (1,429,825) 3,434,251

55,613,333 (34,291,662)

Total return/(deficit) for the year before income tax 50,030,924 (40,127,241)

Less: Income tax 3 (749,920) (710,715)

Less: Capital gains tax 3 (16,703) (18,077)

Total return/(deficit) for the year 49,264,301 (40,856,033)


The accompanying notes form an integral part of these financial statements.-12-

STATEMENT OF FINANCIAL POSITIONAs at 31 December 2017

2017 2016

Note $ $

Assets

Portfolio of investments 447,806,752 454,295,716

Sales awaiting settlement 137,029 -

Receivables 5 3,084,596 3,008,732

Cash and bank balances 27,119,234 6,767,330

Financial derivatives at fair value 7 231 -

Total assets 478,147,842 464,071,778

Liabilities

Purchases awaiting settlement 6,016,057 3,117,671

Payables 6 3,374,039 2,692,232

Distribution payable 4 436,976 83,876

Financial derivatives at fair value 7 113 -

Total liabilities 9,827,185 5,893,779

Equity

Net assets attributable to unitholders 8 468,320,657 458,177,999



STATEMENT OF MOVEMENTS OF UNITHOLDERS’ FUNDSFor the financial year ended 31 December 2017

2017 2016

Note $ $Net assets attributable to unitholders at the beginning of the financialyear 458,177,999 512,513,478

Operations

Change in net assets attributable to unitholders resulting from operations 49,264,301 (40,856,033)

Unitholders’ contributions/(withdrawals)

Creation of units 269,014,688 142,429,315

Cancellation of units (306,048,674) (154,866,018)

Change in net assets attributable to unitholders resulting from net creationand cancellation of units (37,033,986) (12,436,703)

Distributions 4 (2,087,657) (1,042,743)

Total increase/(decrease) in net assets attributable to unitholders 10,142,658 (54,335,479)

Net assets attributable to unitholders at the end of the financial year 8 468,320,657 458,177,999



STATEMENT OF PORTFOLIOAs at 31 December 2017

Holdings at Fair value at

Percentage oftotal net assetsattributable tounitholders at

31 December2017

31 December2017$

31 December2017%

By Geography - Primary

Quoted Equities

BELGIUM

UCB SA 64,967 6,899,646 1.47

BRAZIL

QUALICORP SA 76,300 952,937 0.20

CANADA

CLEMENTIA PHARMACEUTICALS INC 39,500 1,001,912 0.21

CHINA

BEIGENE LTD 29,197 3,812,924 0.81

LIFETECH SCIENTIFIC CORP 7,491,990 2,395,071 0.51

MICROPORT SCIENTIFIC CORP 1,694,025 2,186,485 0.47

WUXI BIOLOGICS CAYMAN INC 16,500 123,266 0.03

TOTAL CHINA 8,517,746 1.82

DENMARK

GENMAB A/S 14,680 3,255,804 0.69

ZEALAND PHARMA A/S 24,541 449,602 0.10

ZEALAND PHARMA A/S ADR 28,325 514,808 0.11

TOTAL DENMARK 4,220,214 0.90

FRANCE

INNATE PHARMA SA 58,063 442,589 0.10

HONG KONGCHINA TRADITIONAL CHINESE MEDICINE HOLDINGS COLTD 1,466,815 1,043,154 0.22

HUTCHISON CHINA MEDITECH LTD 20,876 1,099,766 0.24

SINO BIOPHARMACEUTICAL LTD 849,850 2,013,656 0.43

TOTAL HONG KONG 4,156,576 0.89






31 December2017

31 December2017$

31 December2017%

By Geography - Primary (continued)

Quoted Equities

IRELAND

ALKERMES PLC 160,767 11,758,687 2.51

ALLERGAN PLC 58,315 12,748,144 2.72

ICON PLC 15,601 2,338,235 0.50

MEDTRONIC PLC 87,247 9,415,199 2.01

PROTHENA CORP PLC 46,576 2,333,534 0.50

UDG HEALTHCARE PLC 94,981 1,450,933 0.31

TOTAL IRELAND 40,044,732 8.55

ISRAEL

TEVA PHARMACEUTICAL INDUSTRIES LTD 100,372 2,541,899 0.54

JAPAN

CHUGAI PHARMACEUTICAL CO LTD 95,360 6,527,507 1.39

EISAI CO LTD 97,400 7,413,590 1.58

KYOWA HAKKO KIRIN CO LTD 41,250 1,066,317 0.23

ONO PHARMACEUTICAL CO LTD 138,990 4,329,957 0.93

SHIONOGI & CO LTD 39,660 2,868,628 0.61

TAKEDA PHARMACEUTICAL CO LTD 35,470 2,693,483 0.58

TOTAL JAPAN 24,899,482 5.32

LUXEMBOURG

BIOTOSCANA INVESTMENTS SA 71,700 595,065 0.13

NETHERLANDS

MYLAN NV 123,667 6,992,514 1.49

SWEDEN

BIOARCTIC AB 188,858 801,482 0.17

SWITZERLAND

GALENICA AG 8,428 578,473 0.12

NOVARTIS AG 60,431 6,828,756 1.46






31 December2017

31 December2017$

31 December2017%


Quoted Equities

SWITZERLAND (continued)

TECAN GROUP AG 7,463 2,074,540 0.44

ZUR ROSE GROUP AG 6,149 1,104,665 0.24

TOTAL SWITZERLAND 10,586,434 2.26

UNITED KINGDOM

ASTRAZENECA PLC 154,023 14,259,172 3.05

GEORGIA HEALTHCARE GROUP PLC 178,319 1,144,405 0.24

HIKMA PHARMACEUTICALS PLC 124,357 2,549,396 0.55

NIGHTSTAR THERAPEUTICS PLC 36,800 673,759 0.14

STERIS PLC 20,551 2,402,307 0.51

TOTAL UNITED KINGDOM 21,029,039 4.49

UNITED STATES

ABBOTT LABORATORIES 65,496 4,995,272 1.07

ABEONA THERAPEUTICS INC 51,727 1,095,678 0.23

ACADIA HEALTHCARE CO INC 56,104 2,446,512 0.52

ADURO BIOTECH INC 181,127 1,815,436 0.39

AETNA INC 9,477 2,284,651 0.49

AGIOS PHARMACEUTICALS INC 52,554 4,015,230 0.86

AKCEA THERAPEUTICS INC 95,017 2,204,385 0.47

ALDER BIOPHARMACEUTICALS INC 107,843 1,650,190 0.35

ALNYLAM PHARMACEUTICALS INC 63,093 10,712,536 2.29

ANTHEM INC 29,089 8,747,160 1.87

ARENA PHARMACEUTICALS INC 74,715 3,391,875 0.72

ATHENAHEALTH INC 26,467 4,705,691 1.01

ATRICURE INC 77,578 1,891,036 0.40

BAXTER INTERNATIONAL INC 29,377 2,537,729 0.54

BECTON DICKINSON AND CO 26,192 7,492,740 1.60

BIOGEN INC 14,711 6,263,016 1.34

BIO-TECHNE CORP 7,377 1,277,185 0.27

BLUEBIRD BIO INC 19,044 4,532,716 0.97

BLUEPRINT MEDICINES CORP 35,807 3,608,555 0.77






31 December2017

31 December2017$

31 December2017%


Quoted Equities

UNITED STATES (continued)

BOSTON SCIENTIFIC CORP 399,112 13,222,324 2.82

BRISTOL-MYERS SQUIBB CO 215,103 17,615,772 3.76

CALITHERA BIOSCIENCES INC 49,197 548,986 0.12

CARDINAL HEALTH INC 65,899 5,395,891 1.15

CARDIOVASCULAR SYSTEMS INC 53,118 1,681,680 0.36

CERNER CORP 41,030 3,695,162 0.79

CIGNA CORP 32,514 8,824,608 1.88

CLEARSIDE BIOMEDICAL INC 110,899 1,037,438 0.22

COHERUS BIOSCIENCES INC 232,952 2,739,590 0.59

DANAHER CORP 20,834 2,584,346 0.55

DERMIRA INC 35,659 1,325,277 0.28

EDWARDS LIFESCIENCES CORP 34,743 5,233,187 1.12

ELI LILLY & CO 79,299 8,950,664 1.91

ENVISION HEALTHCARE CORP 52,414 2,420,792 0.52

FIVE PRIME THERAPEUTICS INC 94,516 2,768,741 0.59

GLAUKOS CORP 15,822 542,357 0.12

GLOBAL BLOOD THERAPEUTICS INC 41,629 2,189,158 0.47

GLOBUS MEDICAL INC 26,067 1,431,757 0.31

HCA HEALTHCARE INC 45,697 5,364,342 1.15

HMS HOLDINGS CORP 103,643 2,347,719 0.50

HOLOGIC INC 45,551 2,602,379 0.56

HUMANA INC 7,306 2,422,091 0.52

IMPAX LABORATORIES INC 75,753 1,685,585 0.36

INCYTE CORP 54,421 6,888,090 1.47

INSULET CORP 16,257 1,499,084 0.32

INTERSECT ENT INC 93,222 4,036,453 0.86

INTUITIVE SURGICAL INC 4,797 2,339,525 0.50

INVITAE CORP 303,617 3,684,244 0.79

IONIS PHARMACEUTICALS INC 21,373 1,436,713 0.31

IRONWOOD PHARMACEUTICALS INC 211,822 4,243,353 0.91

JOUNCE THERAPEUTICS INC 29,546 503,437 0.11

K2M GROUP HOLDINGS INC 107,711 2,591,010 0.55

KALA PHARMACEUTICALS INC 5,706 140,995 0.03

KARYOPHARM THERAPEUTICS INC 136,128 1,746,446 0.37






31 December2017

31 December2017$

31 December2017%


Quoted Equities


LIFEPOINT HEALTH INC 26,684 1,775,893 0.38

LOXO ONCOLOGY INC 38,063 4,282,017 0.91

MCKESSON CORP 46,119 9,611,734 2.05

MERSANA THERAPEUTICS INC 38,100 836,564 0.18

MOMENTA PHARMACEUTICALS INC 95,462 1,779,677 0.38

NANOSTRING TECHNOLOGIES INC 51,892 518,033 0.11

NEKTAR THERAPEUTICS 25,873 2,064,919 0.44

ORASURE TECHNOLOGIES INC 8,806 221,951 0.05

OTONOMY INC 89,282 662,206 0.14

PORTOLA PHARMACEUTICALS INC 172,146 11,199,122 2.39

PTC THERAPEUTICS INC 63,479 1,415,020 0.30

R1 RCM INC 229,721 1,353,866 0.29

RA PHARMACEUTICALS INC 97,824 1,111,222 0.24

REGENERON PHARMACEUTICALS INC 12,252 6,155,808 1.31

REVANCE THERAPEUTICS INC 98,862 4,723,261 1.01

RIGEL PHARMACEUTICALS INC 764,140 3,962,243 0.85

SPARK THERAPEUTICS INC 35,294 2,425,322 0.52

STRYKER CORP 12,021 2,487,484 0.53

SYNDAX PHARMACEUTICALS INC 56,165 657,516 0.14

TELADOC INC 49,628 2,311,352 0.49

TESARO INC 40,362 4,469,989 0.95

THE MEDICINES CO 73,041 2,668,712 0.57

THERMO FISHER SCIENTIFIC INC 9,565 2,427,173 0.52

ULTRAGENYX PHARMACEUTICAL INC 34,256 2,123,263 0.45

UNITEDHEALTH GROUP INC 68,580 20,205,228 4.31

UNIVERSAL HEALTH SERVICES INC 23,947 3,627,514 0.78

VERTEX PHARMACEUTICALS INC 33,279 6,664,882 1.42

WALGREENS BOOTS ALLIANCE INC 56,577 5,490,762 1.17

WELLCARE HEALTH PLANS INC 15,917 4,277,907 0.91






31 December2017

31 December2017$

31 December2017%


Quoted Equities


ZIMMER BIOMET HOLDINGS INC 7,485 1,207,056 0.26

TOTAL UNITED STATES 314,124,485 67.08

Total Equities 447,806,752 95.62



Net assets attributable to unitholders 468,320,657 100.00




Percentage oftotal net assetsattributable tounitholders at31 December

2017%


2016%

By Geography - Primary (Summary)

Money Market Fund

United States - 3.81

Quoted Equities

Belgium 1.47 1.69

Brazil 0.20 0.16

Canada 0.21 -

China 1.82 1.91

Denmark 0.90 0.74

France 0.10 0.31

Hong Kong 0.89 0.24

Ireland 8.55 10.43

Israel 0.54 0.29

Japan 5.32 5.21

Luxembourg 0.13 -

Netherlands 1.49 2.27

Sweden 0.17 -

South Korea - 0.12

Switzerland 2.26 0.87

United Kingdom 4.49 4.87

United States 67.08 66.23

Portfolio of investments 95.62 99.15

Other net assets/(liabilities) 4.38 0.85

Net assets attributable to unitholders 100.00 100.00




Fair value at31 December

2017$


2017%


2016%

By Industry - Secondary

Money Market Fund - - 3.81

Quoted Equities

Consumer Staples 6,595,427 1.41 1.02

Health Care 441,211,325 94.21 94.32

Portfolio of investments 447,806,752 95.62 99.15

Other net assets/(liabilities) 20,513,905 4.38 0.85

Net assets attributable to unitholders 468,320,657 100.00 100.00



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

1 General

United Global Healthcare Fund (the “Fund”) is a Singapore-registered trust fund constituted under a Trust Deed dated 5 July2000 between UOB Asset Management Ltd (the “Manager”) and HSBC Institutional Trust Services (Singapore) Limited (the“Retired Trustee”). The Deed is governed by the laws of the Republic of Singapore.

With effect from 1 April 2017, the Trustee of the Fund has changed from HSBC Institutional Trust Services (Singapore) Limitedto State Street Trust (SG) Limited (the “Trustee”).

The investment objective of the Fund is to achieve long term capital growth by investing in securities issued by companiesprincipally involved in the development, production or distribution of products, equipment and/or services related to healthcare,in any part of the world. Such investments would include investing in sub-sectors of the healthcare industry such as medicalproducts, health services, major pharmaceuticals, specialty major pharmaceuticals, and specialty pharmaceuticals.

The Fund is included by the Central Provident Fund (“CPF”) Board under the CPF Investment Scheme (“CPFIS”) - Ordinaryaccount for subscription by unitholders using their CPF monies. The Fund is included under List B of the CPFIS and is notallowed to accept new CPF monies.

The Fund currently offers two classes of units, namely:

• Class SGD Acc Units (denominated in the Singapore Dollar)

This class does not declare or pay distributions but accumulates investment gains and income in its net asset value.

Subscriptions and redemptions of the units are denominated in theSingaporeDollar and theUnitedStatesDollar. Investorsmaysubscribe in the United States Dollar at the applicable rate of exchange from the Singapore Dollar.

• Class USD Dist Units (denominated in the United States Dollar)

This class declares and pays distributions in accordance with the applicable policies of the Fund.

2 Significant accounting policies

(a) Basis of preparation

The financial statements have been prepared under the historical cost convention, modified by the revaluation of financialassets held at fair value through profit or loss, and in accordance with the recommendations of Statement of RecommendedAccounting Practice 7 “Reporting Framework for Unit Trusts” issued by the Institute of Singapore Chartered Accountants.

The Fund has adopted the following Singapore Financial Reporting Standards (“FRS”) and related amendments in accordancewith the recommendations of the RAP 7 issued in March 2017 for annual periods beginning on or after 1 July 2016:

(i) Consolidation and disclosure of interests in other entities

FRS 110 “Consolidated financial statements”FRS 112 “Disclosure of interests in other entities”Amendments to FRS 110, FRS 112 and FRS 27 “Investment entities”

FRS 110 and the amendments define an investment entity and introduce an exception from the consolidation requirements forinvestments entities.

FRS 112 and the amendments require entities to disclose significant judgements and assumptions made in determiningwhether the entity controls, jointly controls, significantly influences or has some interests in other entities. Entities are alsorequired to provide disclosure around certain “structured entities”. The amendments to FRS 112 introduce new disclosurerequirements related to investment entities.


NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 31 December 2017

-23-

2 Significant accounting policies (continued)

(a) Basis of preparation (continued)

(ii) Offsetting financial assets and liabilities disclosures

Amendments to FRS 32 “Financial instruments: Presentation - Offsetting financial assets and financial liabilities”Amendments to FRS 107 “Disclosures - Offsetting financial assets and financial liabilities”

The amendments to FRS 32 provide clarification on the offsetting criteria in FRS 32 and address inconsistencies in theirapplication.

The amendments to FRS 107 require additional disclosures to enable users of the financial statements to evaluate the effector the potential effects of netting arrangements, including rights of set-off associated with an entity’s recognised financialassets and recognised financial liabilities, on the entity’s financial position.

The adoption of these new or amended FRS impacted the Fund’s level of disclosures in certain of the above noted areas, butdid not result in substantial changes to the accounting policies of the Fund and had no material effect on the amounts reportedfor the current or prior years.

(b) Recognition of income

Dividend income is recognised when the right to receive payment is established. Interest income is recognised on a timeproportion basis using the effective interest method.

(c) Investments

Investments are classified as financial assets at fair value through profit or loss.

(i) Initial recognition

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

(ii) Subsequent measurement

Investments are subsequently carried at fair value. Net changes in fair value on investments are included in the Statement ofTotal 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 sale of investmentsare computed on the basis of the difference between the weighted average cost and selling price gross of transaction costs,and are taken up in the Statement of Total Return.

(d) Basis of valuation of investments

The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of tradingon the financial year end date. The quoted market price used for investments held by the Fund is the last traded market pricefor both financial assets and financial liabilities where the last traded price falls within the bid-ask spread. In circumstanceswhere the last traded price is not within the bid-ask spread, the Manager will determine the point within the bid-ask spread thatis most representative of fair value.

The fair value of investments held in underlying funds is the quoted net asset value of the underlying funds as determined bythe underlying funds’ administrator. Net changes in fair value of investments are included in the Statement of Total Return inthe year in which they arise.




-24-


(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 theSingapore Dollar and the United States Dollar.

The performance of the Fund is measured and reported to the investors in the Singapore Dollar. The Manager considers theSingapore Dollar as the currency of the primary economic environment in which the Fund operate. The financial statements arepresented in the Singapore Dollar, which is the Fund’s functional and presentation currency.

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of thetransactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation atyear-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statementof Total Return. Translation differences on non-monetary financial assets and liabilities are also recognised in the Statementof Total Return within “Net gains/losses on investments”.

(f) Expenses charged to the Fund

All direct expenses relating to the Fund are charged directly to the Statement of Total Return. In addition, certain expensesshared by all unit trusts managed by the Manager are allocated to each fund based on the respective fund’s net asset value.

(g) Financial derivatives

Financial derivatives including forwards and swapsmay be entered into for the purposes efficient portfoliomanagement, tacticalasset allocation or specific hedging of financial assets held as determined by theManager and in accordance with the provisionof the Trust Deed and the Code on Collective Investment Schemes.

Financial derivatives outstanding on the financial year end date are valued at the forward rate or at the current market pricesusing the �mark-to-market� method, as applicable, and the resultant gains and losses are taken up in the Statement of TotalReturn.

(h) Distributions

The Manager has the absolute discretion to determine whether a distribution is to be made. In such an event, an appropriateamount will be transferred to a distribution account, to be paid out on the distribution date. The amount shall not be treated aspart of the property of the Fund. Distributions are accrued for at the financial year end date if the necessary approvals havebeen obtained and a legal or constructive obligation has been created.

(i) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is alegally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the assetand settle the liability simultaneously. The legally enforceable right must not be contingent on future events and must beenforceable in the normal course of business and in the event of default, insolvency or bankruptcy of the Fund or thecounterparty.




-25-


(j) Structured entities

A structured entity is an entity that has been designed so that voting or similar rights are not the dominant factor in deciding whocontrols the entity, such as when any voting rights relate to administrative tasks only and the relevant activities are directed bymeans of contractual arrangements. A structured entity often has someor all of the following features or attributes: (a) restrictedactivities, (b) a narrow and well-defined objective, such as to provide investment opportunities for investors by passing on risksand rewards associated with the assets of the structured entity to investors, (c) insufficient equity to permit the structured entityto finance its activities without subordinated financial support and (d) financing in the form of multiple contractually linkedinstruments to investors that create concentrations of credit or other risks (tranches).

The Fund considers all of their investments in other funds (“Investee Funds”) to be investments in unconsolidated structuredentities. The Fund invests in Investee Fundswhose objectives range fromachieving short to long term capital growth andwhoseinvestment strategy does not include the use of leverage. The Investee Funds are managed by unrelated/related assetmanagers and the Investee Funds apply various investment strategies to accomplish their respective investment objectives.The Investee Funds finance their operations by issuing redeemable shares which are puttable at the holder’s option and entitlesthe holder to a proportional stake in the respective fund’s net assets. The Fund holds redeemable shares in each of its InvesteeFunds.

The change in fair value of the Investee Funds are included in the Statement of Total Return within “Net gains/losses oninvestments”.

There was no Investee Fund held as at 31 December 2017.

3 Income tax

2017 2016

$ $

Overseas income tax 749,920 710,715

Capital gains tax 16,703 18,077

The Fundwas granted the status of Designated Unit Trust (“DUT”) in Singapore. The Trustee of the Fund ensures that the Fundfulfill their reporting obligations under the DUT Scheme.

Under the DUT Scheme, subject to certain conditions and reporting obligations being met, certain income of the DUT Fund isnot taxable in accordance with Sections 35(12) and 35(12A) of the Income Tax Act. Such income includes:

(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 Income Tax Act);

(iii) dividends derived from outside Singapore and received in Singapore;

(iv) gains or profits derived from foreign exchange transactions, transactions in futures contracts, transactions in interest rateor currency forwards, swaps or option contracts and transactions in forwards, swaps or option contracts relating to anysecurities or financial index;

(v) discount, prepayment fee, redemption premium and break cost from qualifying debt securities issued during theprescribed period; and

(vi) distributions from foreign unit trusts derived from outside Singapore and received in Singapore.




-26-

3 Income tax (continued)

The overseas income tax represents tax withheld on foreign sourced income. The capital gains tax represents tax on realisedcapital gains sourced from Brazil.

The Fund is required to recognise a tax liability when it is probable that the tax laws of foreign countries require a tax liabilityto be assessed on the Fund’s gains on investments sourced from such foreign countries, assuming the relevant taxingauthorities have full knowledge of all the facts and circumstances. The tax liability is then measured at the amount expected tobe paid to the relevant taxation authorities using the tax laws and rates that have been enacted or substantively enacted by theend of the financial year. There is sometimes uncertainty about the way enacted tax law is applied to offshore investment funds.This creates uncertainty about whether or not a tax liability will ultimately be paid by the Fund. Therefore when measuring anyuncertain tax liabilities management considers all of the relevant facts and circumstances available at the time which couldinfluence the likelihood of payment, including any formal or informal practices of the relevant tax authorities.

As at 31 December 2017 and 2016, the Fund has uncertain taxes exposure with respect to gains on investment of which thetax liability is estimated to be nil.While this represents theManager’s best estimate, the estimated value could differ significantlyfrom the amount ultimately payable.




-27-

4 Distributions

2017 2016Per 100units Amount Amount

Per 100units Amount Amount

Classcurrency

Classcurrency $

Classcurrency

Classcurrency $

Class USD DistJanuary interim distribution onunits outstanding as at 1February 2017 (2016: 1February 2016) 0.508 48,273 68,007 0.496 72,114 104,184February interim distribution onunits outstanding as at 1 March2017 (2016: 1 March 2016) 0.543 48,850 68,319 0.483 71,754 103,664March interim distribution onunits outstanding as at 3 April2017 (2016: 1 April 2016) 0.541 47,478 66,341 0.497 64,360 92,981April interim distribution onunits outstanding as at 2 May2017 (2016: 3 May 2016) 0.543 59,362 82,970 0.512 62,978 90,984May interim distribution onunits outstanding as at 1 June2017 (2016: 1 June 2016) 0.540 68,685 95,019 0.526 69,853 100,917June interim distribution onunits outstanding as at 3 July2017 (2016: 1 July 2016) 0.569 66,684 91,815 0.516 58,607 84,670July interim distribution on unitsoutstanding as at 1 August2017 (2016: 1 August 2016) 0.568 93,480 126,872 0.544 60,623 87,582August interim distribution onunits outstanding as at 4September 2017 (2016: 1September 2016) 0.564 127,987 173,807 0.516 52,041 75,184September interim distributionon units outstanding as at 2October 2017 (2016: 3 October2016) 0.568 151,202 205,325 0.533 53,165 76,808October interim distribution onunits outstanding as at 1November 2017 (2016: 1November 2016) 0.553 196,040 267,085 0.484 51,583 74,521November interim distributionon units outstanding as at 1December 2017 (2016: 1December 2016) 0.555 300,758 405,121 0.494 46,634 67,372December final distribution onunits outstanding as at 2January 2018 (2017: 3 January2017) 0.545 326,980 436,976 0.490 54,577 83,876

2,087,657 1,042,743




-28-

5 Receivables

2017 2016

$ $

Amounts receivable for creation of units 2,493,009 2,306,902

Dividends receivable 193,994 182,259

Other receivables 397,593 519,571

3,084,596 3,008,732

6 Payables

2017 2016

$ $

Amount payable for cancellation of units 1,053,687 538,123

Amount due to the Manager 2,147,462 2,087,607

Amount due to Trustee 38,544 42,754

Tax payables 42,325 -

Other creditors and accrued expenses 92,021 23,748

3,374,039 2,692,232

7 Fair value of financial derivatives

Financial derivatives contracts comprise foreign currency contracts for the sale and purchase of foreign currencies. Thecontract or underlying principal amounts of these financial derivatives and their corresponding gross positive or negative fairvalues at the financial year end date are analysed below.

2017 2016Contract orunderlyingprincipalamount

Positivefair value

Negativefair value

Contract orunderlyingprincipalamount

Positivefair value

Negativefair value

$ $ $ $ $ $

Foreign currency contracts 152,303 231 113 - - -




-29-

8 Units in issue

During the financial year ended 31 December 2017 and 2016, the numbers of units issued, redeemed and outstanding wereas follows:

Class SGD Acc Class USD Dist

2017 2016 2017 2016

Units at the beginning of the financial year 109,595,281 111,308,962 11,150,258 13,796,924

Units created 39,740,985 30,136,589 70,270,657 17,398,395

Units cancelled (61,614,493) (31,850,270) (21,477,347) (20,045,061)

Units at the end of the financial year 87,721,773 109,595,281 59,943,568 11,150,258

*Included above are units denominated in USD 64,919,701 83,444,843 - -

$ $ $ $

Net assets attributable to unitholders(SGD equivalent) 393,846,766 444,747,061 74,473,891 13,430,938

Net assets value per unit (SGD equivalent) 4.489 4.058 1.242 1.205

Net assets attributable to unitholders(Class Currency) 393,846,766 444,747,061 55,727,246 9,296,697

Net asset value per unit (Class Currency) 4.489 4.058 0.929 0.834

A reconciliation of the net assets attributable to unitholders per unit per the financial statements and the net assets attributableto unitholders per unit for issuing/redeeming units at the financial year end date is prepared below:

Class SGD Acc Class USD Dist

2017 2016 2017 2016

$ $ $ $

Net assets attributable to unitholders per financialstatements per unit 4.489 4.058 1.242 1.205

Effect of distribution payable - - 0.007 0.007Effect of movement in the NAV between the lastdealing date and the end of the reporting period* 0.001 - - -Net assets attributable to unitholders forissuing/redeeming per unit 4.490 4.058 1.249 1.212

Net assets attributable to unitholders forissuing/redeeming per unit (Class Currency) 4.490 4.058 0.935 0.839

* The net asset value for the purpose of processing unit subscription and redemption was established in accordance with the

methodology indicated in the Fund’s Prospectus. This item reflects the movement in net asset value between such date and the end

of the financial year.




-30-

9 Financial risk management

The Fund’s activities expose it to a variety of market risks (including currency risk, interest rate risk and price risk), credit riskand liquidity risk. The Fund’s overall risk management programme seeks to minimise potential adverse effects on the Fund’sfinancial performance. The Fund may use futures contracts, financial options contracts and/or foreign currency contractssubject to the terms of the Trust Deed to moderate certain risk exposures. Specific guidelines on exposures to individualsecurities and certain industries are in place for the Fund at any time as part of the overall financial risk management to reducethe Fund’s risk exposures.

The Fund’s assets principally consist of financial instruments such as equity investments, moneymarket investments and cash.They are held in accordance with the published investment policies of the Fund. The allocation of assets between the varioustypes of investments is determined by the Manager to achieve its investment objectives.

(a) Market risk

Market risk is the risk of loss arising from uncertainty concerning movements in market prices and rates, including observablevariables such as interest rates, credit spreads, exchange rates, and others that may be only indirectly observable such asvolatilities and correlations. Market risk includes such factors as changes in economic environment, consumption pattern andinvestor’s expectation etc. which may have significant impact on the value of the investments. The Fund’s investments aresubstantially dependent on changes in market prices and are monitored by the Manager on a regular basis so as to assesschanges in fundamentals and valuation. Although the Manager makes reasonable efforts in the choice of investments, eventsbeyond reasonable control of the Manager could affect the prices of the underlying investments and hence the asset value ofthe Fund.Guidelines are set to reduce theFund’s risk exposures tomarket volatility such as diversifying the portfolio by investingacross various geographies, alternatively, the Fund may be hedged using derivative strategies.

(i) Foreign exchange risk

The Fund has monetary financial assets and liabilities denominated in currencies other than the Singapore Dollar and it maybe affected favourably or unfavourably by exchange rate regulations or changes in the exchange rates between the SingaporeDollar and such other currencies. The Manager may at his discretion, implement a currency management strategy either toreduce currency volatility or to hedge the currency exposures of the Fund.




-31-

9 Financial risk management (continued)

(a) Market risk (continued)

(i) Foreign exchange risk (continued)

The table below summarises the Fund’s exposure to foreign currencies at the end of the financial year.

As at 31 December 2017GBP USD JPY Others Total$ $ $ $ $

Assets

Portfolio of investments 19,403,906 371,758,174 24,899,482 31,745,190 447,806,752

Sales awaiting settlement - - 137,029 - 137,029

Receivables - 2,313,997 39,608 730,991 3,084,596

Cash and bank balances 220 25,783,564 - 1,335,450 27,119,234

Total Assets 19,404,126 399,855,735 25,076,119 33,811,631 478,147,611

LiabilitiesPurchases awaitingsettlement - 5,918,464 59,971 37,622 6,016,057

Payables - 519,332 6,063 2,848,644 3,374,039

Distribution payable - 436,976 - - 436,976

Total Liabilities - 6,874,772 66,034 2,886,266 9,827,072

Net AssetsForeign currency contracts(notional value) - 39,705 (77,141) 37,436

Net currency exposure 19,404,126 393,020,668 24,932,944 30,962,801




-32-



(i) Foreign exchange risk (continued)

As at 31 December 2016GBP USD JPY Others Total$ $ $ $ $

Assets

Portfolio of investments 21,337,540 383,987,149 23,873,399 25,097,628 454,295,716

Receivables 1,239 2,312,420 36,481 658,592 3,008,732

Cash and bank balances 217 4,909,547 - 1,857,566 6,767,330

Total Assets 21,338,996 391,209,116 23,909,880 27,613,786 464,071,778

LiabilitiesPurchases awaitingsettlement 119,159 2,617,251 186,468 194,793 3,117,671

Payables - 160,490 - 2,531,742 2,692,232

Distribution payable - 83,876 - - 83,876

Total Liabilities 119,159 2,861,617 186,468 2,726,535 5,893,779

Net currency exposure 21,219,837 388,347,499 23,723,412 24,887,251

Investments, which is the significant item in the Statement of Financial Position is exposed to currency risk and other price risk.The other price risk sensitivity analysis includes the impact of currency risk on non-monetary investments. The Fund’s netfinancial assets comprise significantly non-monetary investments, hence currency risk sensitivity analysis has not beenperformed 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 inmarket conditionsand volatility in security prices.

The table below summarises the impact of increases/decreases from the Fund’s investments in equities on the Fund’s netassets attributable to unitholders at 31 December 2017 and 2016. The analysis is based on the assumption that the indexcomponents within the benchmark increased/decreased by a reasonable possible shift, with all other variables held constantand that the fair value of the Fund’s investments moved according to the historical correlation with the index.

Benchmark component

2017Net impact tonet assets

attributable tounitholders

2016Net impact tonet assets

attributable tounitholders

$ % $ %

MSCI ACWI Healthcare 100,308,712 20 97,847,977 20




-33-



(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.

Investment funds that invest in equity securities may be subject to interest rate risk as any interest rate change may affect theequity risk premium though at varying degrees. Tomanage this risk, theManager analyses how interest rate changesmay affectdifferent industries and securities and then seeks to adjust the Fund’s portfolio investments accordingly. However, the effectsof changes in interest rates on the Fund’s portfolio may not be quantified as the relationship between the interest rates and thevalue of equity securities is indirect.

Other than the cash and bank balances which are at short term market interest rates, and therefore subject to insignificantinterest rate risk, the Fund’s financial assets and liabilities are largely non-interest bearing.

Hence, no sensitivity analysis has been presented separately.

(b) Liquidity risk

The Fund is exposed to daily cash redemptions and disbursements for the settlements of purchases. The Manager thereforeensures that the Fund maintains sufficient cash and cash equivalents and that it is able to obtain cash from the sale ofinvestments held to meet its liquidity requirements. Reasonable efforts will be taken to invest in securities which are traded ina 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 regionalstock exchanges. The Fund’s investments in other funds are considered to be readily realisable as the net asset value is struckdaily, and units are redeemable on demand at the published price.

The table below analyses the Fund’s financial liabilities into relevant maturity groupings based on the remaining period at thefinancial year end 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.

Less than 3months

3 months to1 year

Over1 year

$ $ $

As at 31 December 2017

Purchases awaiting settlement 6,016,057 - -

Payables 3,374,039 - -

Distribution payable 436,976 - -

Financial derivatives at fair value

Less than 3months

3 months to1 year

Over1 year

$ $ $

As at 31 December 2016

Purchases awaiting settlement 3,117,671 - -

Payables 2,692,232 - -

Distribution payable 83,876 - -




-34-


(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 cash and bank balances, and amounts or securities receivable on the sale andpurchase of investments respectively. In order to mitigate exposure to credit risk, all transactions in listed securities aresettled/paid for upon delivery and transacted with approved counterparties using an approved list of brokers that are regularlyassessed 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 31 December2017 and 2016.

The credit ratings are based on the Viability ratings published by Fitch.

Credit ratingas at 31December2017

Credit ratingas at 31December2016

Bank and custodian

State Street Bank and Trust Company aa- aa-

Bank

United Overseas Bank Limited n/a aa-

Counterparties of foreign currency contracts

Goldman Sachs a n/a

HSBC Bank USA aa- n/a

JP Morgan Chase Bank NA a+ n/a

Societe Generale a n/a

The maximum exposure to credit risk at the financial year end date is the carrying amount of the portfolio of investments andcash and bank balances as presented in Statement of Financial Position.

(d) Capital management

The Fund’s capital is represented by the net assets attributable to unitholders. The Fund strives to invest the subscriptions ofredeemable participating units in investments that meet the Fund’s investment objectives while maintaining sufficient liquidityto meet unitholder redemptions.

(e) Fair value estimation

The Fund classifies fair value measurements using a fair value hierarchy that reflects the significance of the inputs used inmaking the measurements. The fair value hierarchy has the following levels:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1).

• Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is,as prices) or indirectly (that is, derived from prices) (Level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).




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(e) Fair value estimation (continued)

The following table analyses within the fair value hierarchy, the Fund’s financial assets and liabilities (by class) measured at fairvalue at 31 December 2017 and 2016:

Level 1 Level 2 Level 3 Total$ $ $ $

As at 31 December 2017Assets

Portfolio of investments

- Quoted equities 447,806,752 - - 447,806,752

Financial derivatives at fair value - 231 - 231

Total 447,806,752 231 - 447,806,983

Liabilities

Financial derivatives at fair value - 113 - 113

Total - 113 - 113

Level 1 Level 2 Level 3 Total

$ $ $ $As at 31 December 2016Assets

Portfolio of investments

- Money market fund 17,474,391 - - 17,474,391

- Quoted equities 436,821,325 - - 436,821,325

Total 454,295,716 - - 454,295,716

Investments whose values are based on quoted market prices in active markets, and therefore classified within Level 1,comprise listed equities. The Fund does not adjust the quoted price for these instruments.

Investment in open-ended investment funds whose net asset value is struck daily, price information is published and readilyavailable and units are subscribed and redeemable on demand at the published price, are classified within Level 1. The quotesprice for these financial instruments is not adjusted.

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices,dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2.

Except for cash and bank balances which are classified as Level 1, the Fund’s assets and liabilities not measured at fair valueat 31 December 2017 and 2016 have been classified as Level 2. The carrying amounts of these assets and liabilitiesapproximate their fair values as at the financial year end date.




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(f) Offsetting financial assets and financial liabilities

Financial assets and liabilities are offset and the net amount reported in the Statement of Financial Position when there is alegally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the assetand settle the liability simultaneously. The gross and net positions of financial assets and liabilities that have been offset in theStatement of Financial Position are disclosed in the first three columns of the tables below.

Financial assets Effects of offsetting on the Statements ofFinancial Position

Related amount not offset

Grossamounts offinancialassets

Grossamounts

set off in theStatements

ofFinancialPosition

Net amountof

financialassets

presented inthe

Statementsof

FinancialPosition

Financialinstruments

Collateralpledged/received Net amount

$ $ $ $ $ $

31 December 2017Derivative financialinstruments 152,534 (152,303) 231 - - 231

Total 152,534 (152,303) 231 - - 231

31 December 2016Derivative financialinstruments - - - - - -

Total - - - - - -




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(f) Offsetting financial assets and financial liabilities (continued)

Financial liabilities Effects of offsetting on the Statements ofFinancial Position

Related amounts not offset

Grossamounts offinancialliabilities

Grossamounts

set off in theStatements

ofFinancialPosition

Net amountof

financialliabilities

presented inthe

Statementsof

FinancialPosition

Financialinstruments

Collateralpledged/received Net amount

$ $ $ $ $ $

31 December 2017Derivative financialinstruments 152,416 (152,303) 113 - - 113

Total 152,416 (152,303) 113 - - 113

31 December 2016Derivative financialinstruments - - - - - -

Total - - - - - -

10 Structured entities

TheFund’s investment in the Investee Fund is subject to the terms and conditions of the Investee Fund’s offering documentationand is susceptible to market price risk arising from uncertainties about future value of the Investee Fund. The Manager makesinvestment decisions after extensive due diligence of the Investee Fund, its strategy and the overall quality of the InvesteeFund’s manager. The Investee Fund’s portfolio manager is compensated by the Investee Fund for their services. Suchcompensation generally consists of an asset based fee and is reflected in the valuation of the Fund’s investment in the InvesteeFund.

The Fund has the right to request redemption of its investments in the Investee Fund on a daily basis.

The exposure to investment in the Investee Fund at fair value is disclosed under the Statement of Portfolio. The investment isincluded within “Portfolio of investments” in the Statement of Financial Position.

The Fund’s holdings in an Investee Fund, as a percentage of the Investee Fund’s total net asset value, will vary from time totime, dependent on the volume of subscriptions and redemptions at the Investee Fund level. It is possible that the Fund may,at any point in time, hold a majority of an Investee Fund’s total units in issue.

The Fund’s maximum exposure to loss from its interests in the Investee Fund is equal to the total fair value of its investment inthe Investee Fund.

Once the Fund has disposed of its shares in an Investee Fund, the Fund ceases to be exposed to any risk from it.

There was no Investee Fund held as at 31 December 2017.




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11 Related party transactions

(a) TheManager and the Trustee of the Fund areUOBAssetManagement Ltd andState Street Trust (SG) Limited respectively.State Street Trust (SG) Limited replaced HSBC Institutional Trust Services (Singapore) Limited as the Trustee with effect from1 April 2017. The Manager is a subsidiary of United Overseas Bank Limited while the Trustee is a subsidiary of State StreetBank and Trust Company.

Management fee and valuation fee are paid to the Manager for the financial year. Trustee fee and registrar fee were paid to theRetired Trustee for the period from 1 January 2017 to 31 March 2017.

With effect from 1 April 2017, trustee fee is paid to the Trustee while registrar fee and custody fee are paid to State Street Bankand Trust Company, Singapore Branch.

These fees paid or payable by the Fund shown in the Statement of Total Return and in the respective Notes to the FinancialStatements are on terms set out in the Trust Deed. All other related party transactions are shown elsewhere in the financialstatements.

(b) As at the end of the financial year, the Fund maintained the following accounts with the related parties:

2017 2016

$ $

State Street Bank and Trust Company, Singapore Branch

Cash and bank balances 27,119,234 -

United Overseas Bank Limited

Cash and bank balances - 145,991

(c) The following transactions took place during the financial year between the Fund and related parties at terms agreedbetween the parties:

2017 2016

$ $

State Street Bank and Trust Company, Singapore Branch

Bank charges 44,958 -

United Overseas Bank Limited

Bank charges 100 50

The Hongkong and Shanghai Banking Corporation Limited

Bank charges 5,063 -




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12 Financial ratios

2017 2016$ $

Class SGD AccTotal operating expenses 8,306,155 8,703,179Average daily net asset value 387,669,031 418,574,966Expense ratio1 2.14% 2.08%

Class USD DistTotal operating expenses 558,922 292,167Average daily net asset value 26,546,097 14,051,623Expense ratio1 2.11% 2.08%

Lower of total value of purchases or sales 211,967,961 200,480,565Average daily net assets value 414,215,128 432,626,589

Turnover ratio2 51.17% 46.34%

1 The expense ratio has been computed based on the guidelines laid down by the Investment Management Association of Singapore

(“IMAS”). The calculation of the Fund’s expense ratio at financial year end was based on total operating expenses divided by the

average net asset value respectively for the financial 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.2 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 ratiowas based on the lower of the total value of purchases or sales of the underlying investments

divided by the average daily net asset value.




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United Global Healthcare Fund · 2018. 3. 29. · Annual Report for the financial year ended 31st...

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Transcript of United Global Healthcare Fund · 2018. 3. 29. · Annual Report for the financial year ended 31st...