United G Strategic Fund - UOB Group.Com Wai Fai Eric Tham Kah Jin Goh Yu Min Thio Boon Kiat TRUSTEE...

UnitedG StrategicFund

Annual Report

for the financial year ended30th June 2017

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

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

DIRECTORS OF UOB ASSET MANAGEMENTLee Wai FaiEric Tham Kah JinGoh Yu MinThio 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 LLP8 Cross Street#17-00, PWC BuildingSingapore 048424

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

SOLICITOR TO THE TRUSTEEShook Lin & Bok LLP1 Robinson Road#18-00, AIA TowerSingapore 048542

United G Strategic Fund(Constituted under a Trust Deed in the Republic of Singapore)

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A) Fund Performance

Fund Performance/Benchmark Returns

3 mth%

Growth

6 mth%

Growth

1 yr%

Growth

3 yrAnn

CompRet

5 yrAnn

CompRet

10 yrAnn

CompRet

SinceInception

29 July 2010Ann

CompRet

United GStrategic Fund 2.14 5.17 17.19 4.83 5.77 N/A 3.18

Benchmark 2.21 4.86 16.46 7.21 10.21 N/A 7.95

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 distributions

reinvested, if any.

The benchmark of the Fund: Since Inception – 12 Jan 17: 80% MSCI AC World Index and 20% Citigroup Government Bond Index;

13 Jan 17 - Current: 80% MSCI AC World Index and 20% Banks Fixed Deposits 3 Months rate.

For the twelve months ended 30 June 2017, the United G Strategic Fund achieved a return of 17.19%.

The blended benchmark1, from 30 June 2016 till 12 January 2017 comprised 80%MSCI World Index which gained 15.1% and20% of the Citigroup World Government Bond Index that returned -2.15%. From 13 January 2017 till 30 June 2017, thebenchmark2 comprised 80% of the MSCI World Index that returned 4.6% and 20% of the 3 month Bank Fixed Deposits ratewhich gained 0.07%.

During the period under review, the Fund was overweight on equities which helped the performance of the Fund during theperiod as equities performed well throughout the period while the fixed income return was negative.

The Fund’s primary objective continues to be invested in global markets and to participate in returns during periods of low ormoderate risk. However, when risks levels rise, the Fund will tactically reduce risk asset exposures and accept lower potentialreturns in order to protect against downside risks. During the first half of 2017, the key risk indicators of volatility, correlations,and financial stress primarily signaled an outlook of low fundamental risk and financial stress. As such, the Fund remainedprimarily invested in equities throughout the period. At the end of the period at 30 June 2017, the Fund had 99.90% of itsinvestments in equities and 0.10% in cash.

Geographically, the Fund was predominantly focused in global equities in line with the MSCI World Index. The Fund uses anumber of ETFs and other efficient funds to give liquid access to the global markets.

1 The Fund’s benchmark comprises 80% MSCI World Index and 20% Citigroup World Government Bond Index.

2 The Fund’s benchmark comprises 80% MSCI World Index and 20% Banks Fixed Deposits 3 Months rate.

Economic and Market Review

Financial markets showed major divergences going into 2017. The US Dollar, which had appreciated sharply after the USPresidential election in November 2016 in anticipation of stronger growth and higher interest rates, started to weaken in early2017. TheUSTreasury (UST) yield, which had spiked post-election, also began to ease, as the new Trump administration failedto push through numerous policy initiatives, including repealing the Affordable Care Act, tightening trade policies andintroducing tax reforms.

On the other hand, the US equity markets continued to set record highs, as investors took comfort in improving economic dataand corporate earnings. Global equity markets also took the cue from the US and “climbed the wall of worries”, includinggeopolitical risks in the form of missile testing inNorth Korea, a FrenchPresidential election that could have elected an anti-euroright-wing candidate, a political spat between Saudi Arabia and Qatar in the Middle East, and a series of political missteps andallegations of possible misconducts by the new US President.


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A) Fund Performance (continued)

In spite of the above risks, the US Federal Reserve hiked interest rates in March and June 2017, and began communicatingplans to shrink its balance sheet by gradually reducing the amount it would reinvest as its bond holdings mature. While thesewould have previously been seen as monetary tightening measures, causing the UST yield to rise, the bond markets remainedunconvinced while UST yields eventually fell to a post-US election low in June. Global bond yields started climbing in late Juneas the European Central Bank (ECB) signalled that it was preparing to phase out its monetary easing measures, including itsasset purchase programme (often referred to as quantitative easing, or QE).

Outlook and Fund Strategy

As of the start of the second half of 2017 the volatility and correlation metrics, we monitor continue to remain at low levels.Increasingly, we find evidence that positivemacro trends have largely been priced into equitymarkets and economic trendsmaybe shifting. So we will closely monitor key risk indicators for signs of increases in volatility. We continue to highlight betterbroad-based gross domestic product (GDP) growth in 2017 which supports strong global corporate earnings. However,valuations are no longer attractive and leading indicators are less impressive with the reflation theme fading.

Previously, we had highlighted that “reflation”, or the normalisation of inflation, growth and interest rates was a trend that wasvery favourable for equities and a headwind for fixed income. Over recent months, economic growth has remained favourableand supportive of equities. However, as inflation trends have disappointed, long termgovernment bond yields have declined andglobal fixed income markets have been performing as well. As the reflation theme fades, the risk of normalisation of interestrates decreases.

On the whole, valuations of global equities have risen to above average levels, but earnings improvements and healthy levelsof global growth have been maintaining the equity market rally. For the United G Strategic Fund, market fundamentals and riskenvironment remain favorable enough to maintain equity weights at high levels, but we are closely monitoring for signs ofdeterioration in these fundaments at any time over the coming year and will adjust equity accordingly.


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B) Investments at fair value and as a percentage of net asset value (“NAV”) as at 30 June 2017under review classified by

i) Country

Fair Value(S$)

% of NAV

Ireland 14,243,539 56.98

United States 10,730,936 42.92

Portfolio of investments 24,974,475 99.90

Other net assets/(liabilities) 24,912 0.10

Total 24,999,387 100.00

ii) Industry

N/A

iii) Asset Class

Fair Value(S$) % of NAV

Unit trusts 24,974,475 99.90


Total 24,999,387 100.00

iv) Credit rating of quoted bonds

N/A


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C) Top Ten Holdings

10 largest holdings as at 30 June 2017

Fair Value(S$)

Percentage oftotal net assetsattributable tounitholders

%

DIMENSIONAL FUNDS PLC - WORLD EQUITY FUND USD DIS 6,028,370 24.11

DIMENSIONAL FUNDS II PLC - GLOBAL CORE EQUITY FUND USD ACC 6,018,694 24.08

VANGUARD TOTAL WORLD STOCK ETF 2,436,041 9.74

SPDR S&P500 ETF TRUST 2,276,523 9.11

VANGUARD FTSE EUROPE ETF 2,247,218 8.99

EMERGING MARKETS LARGE CAP CORE EQUITY FUND USD ACC 2,196,475 8.79

POWERSHARES QQQ TRUST SERIES 1 1,683,225 6.73

ISHARES RUSSELL 2000 ETF 1,296,286 5.18

ISHARES MSCI JAPAN ETF 791,643 3.17

There were only 9 holdings as at 30 June 2017.

10 largest holdings as at 30 June 2016

Fair Value

Percentage oftotal net assetsattributable tounitholders

(S$) %

SPDR S&P 500 ETF TRUST 2,323,169 8.56

POWERSHARES QQQ 2,226,361 8.20

ISHARES MSCI ACWI ETF 2,063,868 7.60

ISHARES RUSSELL 2000 ETF 2,062,814 7.60

ISHARES MSCI JAPAN ETF 2,028,682 7.47

ISHARES CORE S&P 500 ETF 1,649,875 6.08

ISHARES MSCI ALL COUNTRY ASIA EX-JP ETF 1,363,914 5.03

VANGUARD FTSE EUROPE ETF 979,801 3.61

SPDR DJIA TRUST ETF 825,265 3.04

ISHARES S&P EUROPE 350 INDEX ETF 562,275 2.07

D) Exposure to derivatives

i) fair value of derivative contracts and as a percentage of NAV as at 30 June 2017

N/A

ii) There was a net realised loss of SGD 79 on derivative contracts during the financial year ended 30 June 2017.

iii) net gains/(losses) on outstanding derivative contracts marked to market as at 30 June 2017

N/A


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E) Amount and percentage of NAV invested in other schemes as at 30 June 2017

Please refer to the Statement of Portfolio.

F) Amount and percentage of borrowings to NAV as at 30 June 2017

N/A

G) Amount of redemptions and subscriptions for the financial year ended 30 June 2017

Total amount of redemptions SGD 8,509,263

Total amount of subscriptions SGD 2,262,239

H) The amount and terms of related-party transactions for the financial year ended 30 June 2017

Please refer to Note 9 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

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”)1

should be disclosed as well

i) top 10 holdings at fair value and as percentage of NAV as at 30 June 2017 and 30 June 2016

N/A

ii) expense ratios for the financial year ended 30 June 2017 and 30 June 2016

N/A

iii) turnover ratios for the financial year ended 30 June 2017 and 30 June 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 a

formal arrangement or investment agreement with, the Singapore manager, the above information should be disclosed on the

underlying scheme. In other cases, such information on the underlying scheme should be disclosed only if it is readily available

to the Singapore manager.


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M) Soft dollar commissions/arrangements

UOB Asset Management has entered into soft dollars arrangements with selected brokers from whom products 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.

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 G Strategic Fund (the “Fund”) in trust for theunitholders. In accordance with the Securities and Futures Act (Cap. 289), its subsidiary legislation and the Code on CollectiveInvestment Schemes, the Trustee shall monitor the activities of the Manager for compliance with the limitations imposed on theinvestment and borrowing powers as set out in the Trust Deed in each annual accounting year and report thereon to unitholdersin an annual report.

To the best knowledge of the Trustee, the Manager has, in all material respects, managed the Fund during the year covered bythese financial statements, setoutonpages12 to29, inaccordancewith the limitations imposedon the investmentandborrowingpowers set out in the Trust Deed.

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

Authorised signatory27 September 2017


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STATEMENT BY THE MANAGER

In the opinion of UOBAssetManagement Ltd, the accompanying financial statements set out on pages 12 to 29, 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 G Strategic Fund (the “Fund”) as at 30 June 2017, and the financial performance andmovements 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 signatory27 September 2017


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INDEPENDENT AUDITOR’S REPORT TO THE UNITHOLDERS OF UNITED G STRATEGIC FUND

Our Opinion

In our opinion, the accompanying financial statements of the United G Strategic Fund (the “Fund”), are properly drawn up inaccordance with the recommendations of Statement of Recommended Accounting 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 30 June 2017, and of the financial performance andmovements of unitholders’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 30 June 2017;

• the Statement of Financial Position as at 30 June 2017;

• the Statement of Movements of Unitholders’ Funds for the financial year ended 30 June 2017;

• the Statement of Portfolio as at 30 June 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 G STRATEGIC 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, 2 September 2017

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7

STATEMENT OF TOTAL RETURNFor the financial year ended 30 June 2017

2017 2016

Note $ $

Income

Dividends 329,292 513,242

Interest 5,763 196

Total 335,055 513,438

Less: Expenses

Management fee 9 367,404 389,176

Trustee fee 9 9,987 10,378

Audit fee 13,401 13,400

Registrar fee 9 24,983 25,000

Valuation fee 9 32,202 32,431

Administration fee 9 53,312 64,863

Custody fee 9 2,284 3,179

Transaction costs 40,711 22,862

Other expenses 41,416 45,748

Total 585,700 607,037

Net income/(losses) (250,645) (93,599)

Net gains/(losses) on value of investments

Net gains/(losses) on investments 4,365,006 (2,078,953)

Net gains/(losses) on financial derivatives (79) -

Net foreign exchange gains/(losses) 84,174 (41,109)

4,449,101 (2,120,062)

Total return/(deficit) for the year before income tax 4,198,456 (2,213,661)

Less: Income tax 3 (95,725) (140,164)

Total return/(deficit) for the year 4,102,731 (2,353,825)


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

STATEMENT OF FINANCIAL POSITIONAs at 30 June 2017

2017 2016

Note $ $

Assets

Portfolio of investments 24,974,475 19,115,121

Receivables 4 81,647 16,662

Cash and bank balances 105,747 2,197,525

Fixed deposits - 6,000,000

Total assets 25,161,869 27,329,308

Liabilities

Payables 5 162,482 185,628

Total liabilities 162,482 185,628

Equity

Net assets attributable to unitholders 6 24,999,387 27,143,680



STATEMENT OF MOVEMENTS OF UNITHOLDERS’ FUNDSFor the financial year ended 30 June 2017

2017 2016

Note $ $Net assets attributable to unitholders at the beginning of the financialyear 27,143,680 25,817,166

Operations

Change in net assets attributable to unitholders resulting from operations 4,102,731 (2,353,825)

Unitholders’ contribution/(withdrawal)

Creation of units 2,262,239 7,865,500

Cancellation of units (8,509,263) (4,185,161)

Change in net assets attributable to unitholders resulting from net creationand cancellation of units (6,247,024) 3,680,339

Total increase/(decrease) in net assets attributable to unitholders (2,144,293) 1,326,514

Net assets attributable to unitholders at the end of the financial year 6 24,999,387 27,143,680



STATEMENT OF PORTFOLIOAs at 30 June 2017

Holdings at Fair value at

Percentage oftotal net assetsattributable tounitholders at

30 June2017

30 June2017$

30 June2017%

By Geography - Primary

Unit Trusts

IRELANDDIMENSIONAL FUNDS II PLC - GLOBAL CORE EQUITY FUNDUSD ACC 245,306 6,018,694 24.08DIMENSIONAL FUNDS PLC - WORLD EQUITY FUND USDDIS 390,927 6,028,370 24.11EMERGING MARKETS LARGE CAP CORE EQUITY FUNDUSD ACC 126,811 2,196,475 8.79

TOTAL IRELAND 14,243,539 56.98

UNITED STATES

ISHARES MSCI JAPAN ETF 10,717 791,643 3.17

ISHARES RUSSELL 2000 ETF 6,681 1,296,286 5.18

POWERSHARES QQQ TRUST SERIES 1 8,882 1,683,225 6.73

SPDR S&P500 ETF TRUST 6,838 2,276,523 9.11

VANGUARD FTSE EUROPE ETF 29,600 2,247,218 8.99

VANGUARD TOTAL WORLD STOCK ETF 26,200 2,436,041 9.74

TOTAL UNITED STATES 10,730,936 42.92

Total Unit Trusts 24,974,475 99.90

Portfolio of investments 24,974,475 99.90


Net assets attributable to unitholders 24,999,387 100.00



STATEMENT OF PORTFOLIOAs at 30 June 2017

Percentage oftotal net assetsattributable tounitholders at30 June2017%

Percentage oftotal net assetsattributable tounitholders at30 June2016%

By Geography - Primary (Summary)

Unit trusts

France - 2.57

Ireland 56.98 3.00

United States 42.92 64.85

Portfolio of investments 99.90 70.42

Other net assets/(liabilities) 0.10 29.58

Net assets attributable to unitholders 100.00 100.00

As the Fund is invested wholly into Unit Trusts, it is not meaningful to classify the investments into industry segment.



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

1 General

United G Strategic Fund (the “Fund”) is a Singapore-registered trust fund constituted under a Trust Deed dated 3 June 2010between UOB Asset Management Ltd (the “Manager”) and HSBC Institutional Trust Services (Singapore) Limited (the “RetiredTrustee”). 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) Limited(the “Retired Trustee”) to State Street Trust (SG) Limited (the “Trustee”), and the global custodian of the Fund has changed fromThe Hongkong and Shanghai Banking Corporation Limited to State Street Bank and Trust Company, Singapore Branch.

The primary activity of the Fund is to invest in exchange traded funds (“ETFs”) domiciled in the USA, Hong Kong, Singapore,Luxembourg, France and Ireland, and which are managed by managers domiciled primarily in the USA, France, Ireland, HongKong, Luxembourg and Singapore. The investment objective of the Fund is to achievemedium to long-term capital appreciationby the strategic allocation of the Fund’s assets in various investments corresponding to market conditions. There is no targetsector, industry or geographical area.

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.

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 inJune 2016 (“RAP 7”) for the financial year beginning on or after 1 July 2016.

The Fund has adopted the following Singapore Financial Reporting Standards (“FRS”) and related amendments in accordancewith the recommendations of the RAP 7:

(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.

(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.


NOTES TO THE FINANCIAL STATEMENTS

For the financial year ended 30 June 2017

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2 Significant accounting policies (continued)

(a) Basis of preparation (continued)

(ii) Offsetting financial assets and liabilities disclosures (continued)

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 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.

(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.




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(e) Foreign currency translation (continued)

(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.

(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).




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(j) Structured entities (continued)

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”.

3 Income tax

2017 2016

$ $

Overseas income tax 95,725 140,164

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.

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




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4 Receivables

2017 2016

$ $

Amounts receivable for creation of units 22,500 -

Dividends receivable 33,281 16,466

Other receivables 25,866 196

81,647 16,662

5 Payables

2017 2016

$ $

Amount payable for cancellation of units 36,197 31,322

Amount due to the Manager 83,981 114,042

Amount due to Trustee 2,218 2,807

Tax payables 10,021 -

Other creditors and accrued expenses 30,065 37,457

162,482 185,628

6 Units in issue

During the financial year ended 30 June 2017 and 2016, the numbers of units issued, redeemed and outstanding were asfollows:

2017 2016

Units at the beginning of the financial year 25,620,309 22,077,069

Units created 1,927,964 7,346,274

Units cancelled (7,401,824) (3,803,034)

Units at the end of the financial year* 20,146,449 25,620,309

*Included above are units denominated in USD 311,928 1,495,045

$ $

Net assets attributable to unitholders 24,999,387 27,143,680

Net assets value per unit 1.240 1.059




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6 Units in issue (continued)

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:

2017 2016

$ $

Net assets attributable to unitholders per financial statements per unit 1.240 1.059

Under accrual for legal and professional fee 0.001 -

Net assets attributable to unitholders for issuing/redeeming per unit 1.241 1.059

7 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 investments in ETFs. They are held in accordance with the published investmentpolicies of the Fund. The allocation of assets between the various types of investments is determined by the Manager toachieve 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.




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7 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 30 June 2017

SGD USD HKD Total

$ $ $ $Assets

Portfolio of investments - 24,974,475 - 24,974,475

Receivables 48,366 33,281 - 81,647

Cash and bank balances 97,640 3,490 4,617 105,747

Total Assets 146,006 25,011,246 4,617 25,161,869

Liabilities

Payables 152,529 9,953 - 162,482

Total Liabilities 152,529 9,953 - 162,482

Net currency exposure (6,523) 25,001,293 4,617

As at 30 June 2016

SGD USD GBP EUR HKD Total

$ $ $ $ $ $

Assets

Portfolio of investments - 17,602,962 815,719 696,440 - 19,115,121

Receivables 196 16,466 - - - 16,662

Fixed deposits 6,000,000 - - - - 6,000,000

Cash and bank balances 2,036,648 156,336 - - 4,541 2,197,525

Total Assets 8,036,844 17,775,764 815,719 696,440 4,541 27,329,308

Liabilities

Payables 185,366 262 - - - 185,628

Total Liabilities 185,366 262 - - - 185,628

Net currency exposure 7,851,478 17,775,502 815,719 696,440 4,541

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.




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(a) Market risk (continued)

(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 30 June 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

$ % $ %80% MSCI AC World Index and 20% BanksFixed Deposits 3 Months rate (2016: 80%MSCI AC World Index and 20% CitigroupGovernment Bond Index) 6,693,159 20 5,122,852 20

(iii) Interest rate risk

Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates.

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.




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(b) Liquidity risk (continued)

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.

2017 2016Less than 3months

3 months to1 year

Over1 year

Less than 3months

3 months to1 year

Over1 year

$ $ $ $ $ $

Payables 162,482 - - 185,628 - -

(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 30 June 2017and 2016.

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

Credit ratingas at 30 June

2017

Credit ratingas at 30 June

2016

Bank and custodian

State Street Bank and Trust Company aa- n/a

The Hongkong and Shanghai Banking Corporation Limited n/a aa-

Bank

United Overseas Bank Limited n/a aa-

Oversea-Chinese Banking Corporation n/a aa-

The custodian of the Investee Funds is State Street Custodial Services (Ireland) Limited which is an indirect wholly-ownedsubsidiary of State Street Corporation. As at 30 June 2017, State Street Corporation is rated aa- (2016: aa-) based on theViability ratings by Fitch.

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.




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(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).

The following table analyses within the fair value hierarchy, the Fund’s financial assets and liabilities (by class) measured at fairvalue at 30 June 2017 and 2016:

2017 2016Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total$ $ $ $ $ $ $ $

AssetsPortfolio ofinvestments- Unit trusts 24,974,475 - - 24,974,475 19,115,121 - - 19,115,121

Total 24,974,475 - - 24,974,475 19,115,121 - - 19,115,121

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

Except for cash and bank balances which are classified as Level 1, the Fund’s assets and liabilities not measured at fair valueat 30 June 2017 and 2016 have been classified as Level 2. The carrying amounts of these assets and liabilities approximatetheir fair values as at the financial year end date.

8 Structured entities

The Fund’s investments in Investee Funds are subject to the terms and conditions of the respective Investee Fund’s offeringdocumentation and are susceptible to market price risk arising from uncertainties about future values of those Investee Funds.The Manager makes investment decisions after extensive due diligence of the Investee Funds, their strategy and the overallquality of the respective Investee Fund’s manager. The Investee Funds in the investment portfolio are managed by portfoliomanagers who are compensated by the respective Investee Funds for their services. Such compensation generally consists ofan asset based fee and is reflected in the valuation of the Fund’s investments in each of the Investee Funds.

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

The exposure to investments in the Investee Funds at fair value is disclosed under the Statement of Portfolio. Theseinvestments are included within “Portfolio of Investments” in the Statement of Financial Position.




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8 Structured entities (continued)

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 Funds is equal to the total fair value of its investmentsin Investee Funds.

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




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9 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.

Custody fee was paid to The Hongkong and Shanghai Banking Corporation Limited, a related party of the Retired Trustee, forthe period from 1 July 2016 to 31March 2017 and is paid to State Street Bank and Trust Company, Singapore Branch with effectfrom 1 April 2017.

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 105,747 -

United Overseas Bank Limited

Cash and bank balances - 50,944

Fixed deposit - 3,000,000

The Hongkong and Shanghai Banking Corporation Limited

Cash and bank balances - 2,146,581

(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 61 -

United Overseas Bank Limited

Bank charges 206 50




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Management fee, valuation fee and administration fee are paid to the Manager for the financial year. Trustee fee and registrar fee were paid to the Retired Trustee for the period from 1 July 2016 to 31 March 2017. With effect from 1 April 2017, trustee fee and registrar fee are paid to the Trustee and State Street Bank and Trust Company, Singapore Branch respectively.

10 Financial ratios

2017 2016$ $

Total operating expenses 544,970 584,175Average daily net asset value 25,766,548 25,943,918Weighted average of the Investee Funds’ expense ratio 0.33% 0.22%Expense ratio1 2.45% 2.47%

Lower of total value of purchases or sales 21,581,223 3,728,587Average daily net assets value 25,766,548 25,943,918Turnover ratio2 83.76% 14.37%

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

(“IMAS”). This is the sum of the Fund’s expense ratio and the weighted average of the Investee Funds’ unaudited expense ratios. The

unaudited expense rations of the Investee Funds are obtained from Investee Funds’ manager. The calculation of the Fund’s expense

ratio at 30 June 2017 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 G Strategic Fund - UOB Group.Com Wai Fai Eric Tham Kah Jin Goh Yu Min Thio Boon Kiat TRUSTEE...

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