MEGATRENDS - Absolute · Institute for Future Studies, we have identified 14 megatrends that we...

MEGATRENDS

INVESTING INQ1 2018

MEGATRENDS

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This is the best reason to learn history: not in order to predict the future, but to free yourself of the past and imagine alternative destinies. Of course this is not total freedom, we cannot avoid being shaped by the past. But some freedom is better than none.

YUVAL NOAH HARARIHOMO DEUS: A BRIEF HISTORY OF TOMORROW

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TABLE OF CONTENTS

EXPLAINING MEGATRENDSpage 5

PORFOLIO CHARACTERISTCS AND PERFORMANCEpage 12

INVESTMENT PERSPECTIVEpage 8

STRATEGIESpage 14

APPENDIXpage 40

MEGATRENDS

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Megatrends are a discrete group of powerful social, demographic, environmental and technological forces of change that are reshaping our world. These trends evolve independently of the economic cycle, and while they may develop in different ways and at a different pace, they each possess the capacity to redraw the financial landscape.

There is no doubt the world is currently experiencing a period of upheaval. Monumental shifts in geopolitics, the environment, economies, society and populations are forcing people to adapt and evolve.

Major transitions, such as population growth, will present considerable challenges for governments, private companies and individuals over the years to come. How we react to these changes will determine not only our futures, but those of the coming generations.

To safeguard our future, national governments are increasingly adopting multilateral frameworks, such as global regulations to mitigate climate change.

Meanwhile, evolving consumer behavior is revolutionizing how businesses operate, resulting in, for example, the rapid transmission of information via digital networks. Consequently, companies that are able to adapt by creating innovative products and services that meet the new demands of this changing world economy should benefit from unrivalled growth potential.

What are Megatrends

EXPLAINING MEGATRENDS

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In turn, investors in these companies are likely to be the winners of tomorrow’s world.

Where megatrends connect, powerful investment themes emerge

EXPLAINING MEGATRENDS

With the help of advisers including the Copenhagen Institute for Future Studies, we have identified 14 megatrends that we believe are currently shaping the world.

Based on our findings, we have selected 11 single-themed equity strategies and a multi-themed equity strategy that aim to pick out the companies best positioned to benefit from these megatrends. Our belief is that investing is a strategy for the future.

While traditional investment approaches are based on indices that list companies by their market value – in other words, firms that have succeeded in the past – selected thematic strategies, on the other hand, aim to harness the potential of the companies that will succeed in the future.

By identifying the megatrends changing the world, we believe that the long-term winners in the global stock markets can be selected.

MEGATRENDS

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Network economy

SustainabilityDemographics

Knowledge societyHealth

DematerialisationPolarisation

DemocratisationGlobalisation

Acceleration& Complexity

Commercialisation

TechnologyIndividualisation

Economic growth

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Investment Perspective

– Collaboration with established experts.

– Statistical and qualitative research to identify markets and industries that sit at the intersection points of two or more of these structural forces.

– Pictet Sustainable Investment Board (SIB).

– Environmental, Social and Governance (ESG) integration.

– Active Ownership (Proxy Voting and Engagement).

– Viable investment strategies. – Liquidity. – Sufficient number of companies tied to the megatrends.

– Dedicated investment team. – Advisory board with business leaders, leading academics and independent experts.

– Concentrated thematic universe.

– Pure play businesses. – Companies whose earnings and revenue prospects are materially influenced by the megatrends at play in their industry.

– No benchmark – unconstrained.

– Thematic investing provides superior growth prospects.

– Alpha potential from bottom-up and active management.

TRANSITION FROM TREND TO DURABLE THEMATIC STRATEGY

SUSTAINABILITY

INVESTABLE UNIVERSE

SPECIALISED INVESTMENT THEMES

PURITY

ATTRACTIVE LONG-TERM RETURNS

MEGATRENDS

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12.78 GLOBAL MEGATREND

SELECTION

23.86 BIOTECHNOLOGY

18.27 DIGITAL

12.68 GLOBAL ENVIRONMENTAL

OPPORTUNITIES

14.90CLEAN ENERGY

13.73 SECURITY

13.65 GLOBAL THEMATIC OPPORTUNITIES

13.38 PREMIUM BRANDS

13.36 ROBOTICS

10.41 WATER

11.26 HEALTH

9.67 NUTRITION

7.72 TIMBER

Investing in Megatrends offer superior earnings growth prospects

ESTIMATED 3–5 YEARS EARNING PER SHARE (EPS) GROWTH

Forecasts are not reliable indicator of future performance

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Source: Pictet as at 30.11.2017

BIOTECHNOLOGYpage 14

CLEAN ENERGYpage 16

DIGITALpage 18

Offers investors the opportunity to profit from the structural changes underway in the global energy industry, such as the gradual transition to a lower carbon economy.

Identifies the companies that are best-placed to thrive in an innovative sector, in which breakthroughs that lead to effective treatments for diseases can save lives and prove profitable for investors

Captures the growth opportunities resulting from the increasing ubiquity of digital technology, an area in which constant innovation is disrupting established business models to create a digital revolution.

GLOBAL ENVIRONMENTAL OPPORTUNITIES (GEO)page 20

GLOBAL MEGATREND SELECTION (GMS)page 22

GLOBAL THEMATIC OPPORTUNITIES (GTO)page 24

Invests equally across 9 key strategic themes: Nutrition, Clean Energy, Digital, Health, Premium Brands, Robotics, Security, Timber and Water.

Capitalizes on the increasing importance consumers and governments are placing on protecting the environment. It invests in companies helping to safeguard the world’s natural resources.

Invests in companies that benefit from long-term global themes, resulting from secular changes in economic and social factors. It leverages the knowledge of 11 specialized investment teams by focusing on “best ideas” across thematic funds, within their investment universes.

Strategies Overview (1/2)

MEGATRENDS

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HEALTHpage 26

NUTRITIONpage 28

PREMIUM BRANDSpage 30

Invests in companies that both contribute to and benefit from improving quality, access and sustainability of food production.

Invests in an industry modernizing its products and services to meet the demands of a growing and ageing population.

Capitalises on the investment potential of companies producing high-end goods and services with strong pricing power, loyal consumers and resilience to economic cycles. Growth areas include firms providing experiential luxury products and services to wealthy emerging consumers.

Strategies Overview (2/2)

ROBOTICSpage 32

SECURITYpage 34

TIMBERpage 36

WATERpage 38

Invests in companies providing responses to the increasingly diverse security threats faced by governments, businesses and individuals, from protecting against cyber-attacks and guarding vital infrastructure to food safety and personal security.

Invests in companies at the forefront of technological innovation. Robotic products are revolutionising many industries by, for example, increasing their productivity and energy efficiency.

Invests in companies operating in the plantation, financing & management of forests/wooded regions and/or production, processing & distribution of timber and other services & products derived from wood.

Invests in companies involved in the global water industry, from those improving water infrastructures to those developing new products and services that are helping to overcome global water scarcity.


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Portfolio characteristics

PORFOLIO CHARACTERISTCS AND PERFORMANCE

Source: Pictet Asset Management & Portfolio Characteristics, data as of 29.12.2017, portfolio weighted EPS growth numbers based on Factset consensus estimates.

Net Debt to Equity: An indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long-term debt by common stockholders’ equity.

Price/Book: The price-to-book ratio (P/B Ratio) is a ratio used to compare a stock’s market value to its book value. It is calculated by dividing the current closing price of the stock by the latest quarter’s book value per share.

PCF (Price to Cash Flow): The price-to-cash-flow ratio is the ratio of a stock’s price to its cash flow per share. The price-to-cash-flow ratio is an indicator of a stock’s valuation.

Price/Earnings: The price-earnings ratio (P/E ratio) is the ratio for valuing a company that measures its current share price relative to its per-share earnings. The price-earnings ratio is also sometimes known as the price multiple or the earnings multiple.

PEG (Price/Earnings To Growth): The price/earnings to growth ratio (PEG ratio) is a stock’s price-to-earnings (P/E) ratio divided by the growth rate of its earnings for a specified time period. The PEG ratio is used to determine a stock’s value while taking the company’s earnings growth into account, and is considered to provide a more complete picture than the P/E ratio.

ROE (Return on Equity): Return on equity (ROE) is the amount of net income returned as a percentage of shareholders equity. Return on equity measures a corporation’s profitability by revealing how much profit a company generates with the money shareholders have invested

Fund

nam

e

Base

Cur

renc

y

Num

ber o

f Sec

uriti

es

Wei

ghte

d Av

erag

e M

arke

t Cap

Pric

e/Bo

ok

PCF

(FY1

)

Pric

e/Ea

rnin

g

P/E

Usin

g FY

1 Es

t

Est 3

-5 Y

R EP

S Gr

owth

PEG

Ratio

Div

Yiel

d

RoE

Net D

ebt t

o Eq

uity

Pictet – Biotech USD 63 33'101.04 5.78 16.99 20.95 17.23 22.36 5.61 0.65 28.1 -26.72

Pictet – Clean Energy USD 60 22'300.14 3.1 13.74 23.67 20.47 14.36 1.49 1.36 12.79 33.78

Pictet – Digital USD 51 191'412.43 3.88 13.19 23.98 23.35 18.76 1.08 1.25 21.25 -20.43

Pictet – GEO EUR 51 20'968.06 3.71 14.68 25.04 22.14 12.5 1.84 1.43 15.26 44.75

Pictet – GMS USD 478 55'844.41 3.52 14.61 21.05 21.31 12.98 1.33 1.53 17.05 31.38

Pictet – GTO USD 64 72'796.53 3.53 13.14 21.19 17.91 13.25 1.4 1.35 17.58 22.86

Pictet – Health USD 60 75'327.16 4.22 17.01 27.35 18.91 14.31 3.15 1.33 17.88 2.69

Pictet – Nutrition (ex Agriculture) EUR 60 26'491.54 3.46 15.53 24.54 22.36 10.04 2.04 1.59 20.59 42.78

Pictet – Premium Brands EUR 49 89'212.99 3.88 16.61 25.87 22.26 13.85 1.63 1.3 17.5 29.82

Pictet – Robotics USD 54 47'361.28 4.26 18.63 27.71 22.93 13.1 1.8 1.32 13.9 -13.69

Pictet – Security USD 74 27'351.88 4.61 17.4 27.24 24.59 13.71 1.75 1.16 17.95 56.43

Pictet – Timber USD 57 11'269.49 2.17 10.05 7.64 16.36 7.65 0.46 2.33 13.03 56.66

Pictet – Water EUR 60 14'989.07 3.06 11.93 24.45 21.5 10.24 1.95 1.98 13.11 66.63

MSCI World Index - 1653 127'999.04 2.29 12.07 19.77 17.72 11.57 1.64 2.22 16.44 30.65

MEGATRENDS

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Portfolio perfomance


PORFOLIO CHARACTERISTCS AND PERFORMANCE

Fund

nam

e

Isin

cod

e

Curre

ncy

2017

(%)

Dece

mbe

r 201

7 (%

)

Nove

mbe

r 201

7 (%

)

Octo

ber 2

017

(%)

Sept

embe

r 201

7 (%

)

Augu

st 2

017

(%)

July

2017

(%)

June

201

7 (%

)

May

201

7 (%

)

April

201

7 (%

)

Mar

ch 2

017

(%)

Febr

uary

201

7 (%

)

Janu

ary 2

017

(%)

3 Ye

ar*

(%)

5 Ye

ar*

(%)

Pictet – Biotech LU0090689299 USD 24.37 2.60 -0.20 -6.73 -0.76 5.86 2.72 9.38 -4.27 1.90 -2.13 6.12 6.76 1.86 14.37

Pictet – Clean Energy LU0280430660 USD 24.41 0.02 -0.64 4.76 1.66 0.59 2.78 -1.89 3.74 0.86 1.96 3.80 3.68 4.92 7.73

Pictet – Digital LU0101692670 USD 37.05 1.69 0.94 4.00 0.70 0.08 5.57 -1.05 6.96 3.23 1.29 2.63 6.02 18.24 18.27

Pictet - GEO LU0503632282 USD 31.96 1.36 1.50 3.09 2.43 0.74 2.43 0.50 3.87 2.69 0.98 4.28 3.78 11.48 10.63

Pictet – GMS LU0386859887 USD 28.03 1.33 1.40 2.74 1.86 0.55 2.57 -0.08 3.04 2.74 1.25 3.14 3.78 9.38 10.85

Pictet – GTO LU1437676122 USD 27.07 1.11 0.28 2.32 1.95 1.21 3.94 -1.50 2.17 3.61 0.32 1.75 4.44 - -

Pictet – Health LU0188501257 USD 15.09 -0.31 1.59 -2.97 -0.01 1.93 0.48 3.89 -0.60 2.36 -1.06 4.87 3.37 1.68 10.94

Pictet – Nutrition (ex Agriculture) LU0428745748 USD 25.10 2.73 2.95 0.94 2.23 -0.55 2.72 -0.40 3.51 3.92 1.14 2.15 1.34 6.34 4.25

Pictet – Premium Brands LU0280433847 USD 34.05 2.89 1.74 2.74 0.75 0.85 2.32 0.38 3.57 3.81 3.67 2.05 4.24 4.75 5.06

Pictet – Robotics LU1279333675 USD 40.24 0.56 1.98 5.93 4.20 0.94 4.00 -2.65 4.59 2.53 2.32 3.71 5.57 - -

Pictet – Security LU0256846139 USD 24.40 0.26 0.83 2.97 1.74 1.10 1.67 -0.42 3.67 2.23 1.03 2.24 4.52 10.10 11.35

Pictet – Timber LU0340559557 USD 27.62 2.58 0.63 3.90 3.33 -0.04 1.99 2.10 -0.09 3.08 -0.36 3.90 1.62 8.47 6.90

Pictet – Water LU0255980327 USD 24.99 1.54 2.55 2.37 2.14 0.08 1.65 -0.65 1.97 2.67 1.29 2.96 3.67 10.45 9.74

MSCI World Index USD 22.40 1.74 1.95 1.89 1.92 -0.33 2.39 0.38 1.89 1.48 0.09 2.71 2.41 10.77 11.52

NOTES

Past performance must not be considered an indicator or guarantee of future performance, and the addressees of this document are fully responsible for any investments they make. No express or implied warranty is given as to future performance. Performances are presented net of fees.

As the performance is disclosed in USD for GEO, Nutrition, Premium and Water Funds, while their reference currency is in EUR, there might be a potential USD/EUR exchange rate positive or negative effect on the respective funds’ disclosed performances.

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With a growing global population and increasing life expectancy, new ways are needed to reduce healthcare costs and keep patients out of hospital. Biotechnology companies, using biological processes to manufacture products intended to improve quality-of-life, will play a pivotal role in making new discoveries that can help solve these issues.

Biotechnology

MEGATRENDS

TechnologyEconomic Growth

HealthDemographics

THE AGEING CHALLENGE

Population ageing is an increasingly global phenomenon. Although it is currently most pronounced in developed countries such as Italy and Japan, the proportion of people aged 65+ is rising in almost all countries. As the prevalence of age-related and lifestyle diseases (such as cardiovascular disease and diabetes) grows, national healthcare budgets will come under increased pressure.

INNOVATION IS KEY

The need to reduce costs and ease pressure on the healthcare system is encouraging innovation. These objectives, supported by technological breakthroughs such as better analysis of data from medical experiments and DNA mapping, can help lead to solutions to a wide range of medical problems.

THE FUTURE OF MEDICINE

Developing new drugs requires a lot of money, time and research. Fortunately, companies developing treatments for conditions that are currently expensive to treat are receiving assistance from a more supportive regulatory environment. Governments are offering incentives to companies researching and creating innovative therapies and tailored medicines.

MEGATRENDS

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PROBLEM HEPATITIS C

Hepatitis C currently has no vaccine. The World Health Organization estimates that as much as 3 percent of the world’s population is infected.

SOLUTION INNOVATION

One successful treatment, released in 2013, was the first available as a daily-dose pill. It recorded sales of over USD 10 billion in its first year.

90%

Success rate in its Phase III trial.Source: Sovaldi, 2013

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Increasing energy usage per capita as emerging markets such as India expand means demand for energy and competition for energy resources will continue to rise. Energy-efficient technologies and development of cleaner energy sources can help to meet growing energy needs while curbing pollution and climate change.

Clean Energy

GROWING DEMAND

The world is consuming more and more energy. But traditional energy supplies – dirtier fossil fuels such as oil and coal – drive climate change and are in any case finite. The trend is towards lower- or zero-carbon energy alternatives, such as natural gas and renewables. More energy-efficient technologies, in both production and consumption, are also needed to cope with growing demand.

HEALTH AWARENESS

Cleaner energy solutions reduce pollution and the health complications it creates. By burning huge quantities of coal, countries such as China face serious particulate pollution. According to the World Health Organization, only 12 percent of the world’s urban population breathe air whose quality meets safety guidelines.

TRANSITION IS UNDER WAY

Many governments, private companies and consumers are supporting the move towards low/zero-carbon fuels. The cost of producing clean energy is also converging towards that of ‘dirtier’ sources due to technological improvements. The transition to a sustainable and clean energy future is becoming a reality.

MEGATRENDS

SustainabilityTechnology

Economic GrowthGlobalisation

Health

MEGATRENDS

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INCREASING ENERGY EFFICIENCY

By optimising energy consumption, smart cities and buildings can play a pivotal role in a more energy-efficient future. Innovations such as smart grids, which incorporate IT into the electricity network, will also greatly increase energy efficiency.

LOW-CARBON ENERGY

Producing electricity from natural gas will help reduce air pollution, and also save billions of tons of water each year (as it uses half as much water as producing electricity from coal.)

RENEWABLES

Renewables such as wind and hydroelectric power are a key part of the solution for both developed and developing nations. For instance, Japan aims to almost triple the power it generates from renewables from 2010 to 2030.

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Digital technology has revolutionised the global economy. For instance, mobile internet access is providing faster, cheaper and more personalised solutions for businesses and consumers.

Digital

MEGATRENDS

Network EconomyDemocratisation

Acceleration & Complexity

Technology DevelopmentIndividualisation

Demographics

DIGITAL MOBILITY & CLOUD COMPUTING

The globalisation of the internet is driving growth in this sector. The web, smartphones and tablets and the growth of cloud computing have opened up new markets worldwide. Urbanisation and the growing spending power of digitally-aware Millennials are adding to the trend.

SMART SOFTWARE & BIG DATA

In our increasingly connected world, billions more people and devices are going online, creating far more data. Big Data will have a major impact on businesses such as insurance, banking, advertising and healthcare. And, in response to rising demand, digital companies are developing smart software offering individualised services, as well as effective storage solutions.

DISRUPTIVE INNOVATION

The next decade looks set to be a landmark period for innovation. We now have the infrastructure, technology and user-base to support a digital world. The advent of the matrix of connections between communications devices and everyday appliances known as the Internet of Things (IoT) is opening up a variety of opportunities for companies developing innovative products and services.

MEGATRENDS

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THE INTERNET OF THINGS

The IoT is a prime example of the growing sophistication of the digital world – connecting people, data, systems and services. The vast amounts of data derived from this network will offer ground-breaking benefits to an increasingly information-driven economy.

THE RISE OF THE SHARING ECONOMY

New companies based on collaboration and information and powered by social media are changing the relationship between consumers and suppliers, affecting areas from hotels to travel, music and retail. A new breed of digital pioneers have the innovation and potential to create new industries as well as upset established business models.

BUSINESS MUST INVEST TO SURVIVE

The impact of the digital revolution will reverberate far beyond the technology, media and telecommunication industries. Companies in all sectors will have to invest heavily in digital services. Retail, for example, is being transformed by e-commerce.

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By 2030, the world will have three billion more middle-class consumers. Their demands and aspirations will put considerable pressure on natural resources, adding to existing concerns about environmental degradation.

Global Environmental Opportunities

MEGATRENDS

SustainabilityImmaterialisation

TechnologyEconomic GrowthCommercialisation

GlobalisationHealth

Demographics

ATTITUDES ARE CHANGING

Unprecedented growth in global wealth has led to unsustainable increases in resource consumption. At the same time, today’s consumers are better informed about environmental issues. The environment has risen up the political agenda, with most governments globally adopting eco-friendly policies.

AWARENESS IS GROWING

Influential research bodies such as the World Economic Forum have described adverse ecological change as one of the major risks to future economic expansion. Awareness of the health complications resulting from pollution is also growing.

HOW COMPANIES CAN HELP

The private sector is rising to the challenge, with many companies aiming to become better stewards of the environment. Firms that minimise their environmental impact and develop products to improve resource efficiency can provide sustainable long-term returns for investors.

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WASTE MANAGEMENT

Capturing methane froman additional 440 landfill sites could power half amillion homes in the US.Source: US EnvironmentalProtection Agency, 2014

IRRIGATION

In Australia, drip irrigation technology counters the impact of droughts by using 50% less water than traditional irrigation. Source: Irrigation Australia, 2006

ENERGY EFFICIENCY

EU member states have committed to rolling out 200 million smart electricity meters by 2020.Source: European Commission, 2014

WATER QUALITY

Demand for domestic water treatment technology in China is increasing by almost 15% a year.Source: The Freedonia Group 2014

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Whatever the shape of global economic cycles, key megatrends will play a central role. Our multi-theme investment strategy offers exposure to nine megatrends, covering a huge range of ideas, companies and sectors, from today’s well-established companies to the success stories of tomorrow, in a single fund.

Global Megatrend Selection

MEGATRENDS

ExityTechnology

Network EconomySustainability

Knowledge SocietyDematerialisationDemocratisation


Economic GrowthIndividualisation

CommercialisationGlobalisationPolarisation

HealthDemographics

GLOBAL GROWTH OPPORTUNITIES

Whatever happens to individuals, companies or countries in the future, key drivers including urbanisation, technology, resources, and healthcare are likely to have a continual and significant impact on the global economy.

MULTI-THEME INVESTMENT STRATEGY

Our multi-theme strategy offers exposure to nine investment themes, covering a huge range of ideas, companies and sectors, from today’s well-established companies to the success stories of tomorrow- in a single investment.

INVESTMENT UNIVERSE

From an initial investment universe of over 2,000 companies, meticulous research is carried out in order to select the most promising 400 companies.

MEGATRENDS

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GLOBAL MEGATREND SELECTION

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Pictet-Global Thematic Opportunities is a global equity portfolio that invests in our thematic investment teams’ top convictions and/or the most attractive opportunities across their investment universes. It is an actively managed equity portfolio of 60-80 bottom-up-selected stocks. The strategy leverages Pictet Asset Management’s established expertise in thematic equity investing.

Global Thematic Opportunities

MEGATRENDS

ExityTechnology

Network EconomySustainability

Knowledge SocietyDematerialisationDemocratisation


Economic GrowthIndividualisation

CommercialisationGlobalisationPolarisation

HealthDemographics

GLOBAL THEMATIC OPPORTUNITIES

A global unconstrained equity portfolio with exposure to emerging-markets, mid-cap, growth.

SUPERIOR RISK-RETURN PROFILE

Generates superior risk-return characteristics and adds diversification versus standard global equity indices.

UNIQUE INVESTMENT PROCESS

A best-ideas equity strategy that leverages Pictet Asset Management’s established expertise in thematic equity investing.

MEGATRENDS

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GLOBAL THEMATIC OPPORTUNITIES

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People globally are demanding a higher standard of living, including better healthcare, for themselves and their families. Pharmaceutical, medical, insurance and healthcare companies are finding new ways to meet this global challenge.

Health

THE RISING COST OF HEALTH

The global population is set to increase from 6 billion in 2005 to over 9 billion in 2050, and the number of people aged 60+ will rise especially rapidly. Healthcare costs for the elderly are treble those for younger generations, and healthcare budgets continue to grow more quickly than the economies of most OECD countries. Better prevention and more effective treatments are going to be necessary to contain cost rises.

ADVANCES IN MEDICINE

Over half of all new drugs currently being developed target diseases that typically affect older people. The introduction of robotics in the healthcare system will greatly improve care for the elderly, and also increase operating efficiency through faster and more precise surgical techniques. They will also help to shorten recovery times by preventing complications that could arise from human error, such as incomplete sterilisation of instruments.

AN EMERGING MIDDLE CLASS

What were once diseases of the wealthy are increasingly becoming global problems. Obesity is one of the top three social burdens globally, and 8 of the top 10 countries for diabetes are actually in the developing. Finding treatments for the chronic illnesses of the emerging middle classes will be a long-term challenge for emerging-market governments.

MEGATRENDS

TechnologyEconomic GrowthIndividualisation

HealthDemographics

MEGATRENDS

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Integrated networks

PAYER/REGULATORS SUPPLIERS

Medical equipment

PharmaceuticalRegulatory agency

Employer Biotech

OutpatientHospitals

Third-party payer

PROVIDERS

PATIENTS

EQUIPMENT & SERVICES

With a growing population and rising average life expectancy, visits to healthcare facilities are rising, contributing to spiralling healthcare budgets. Increased efficiency of healthcare facilities, equipment and services will be crucial to contain costs.

PRODUCERS OF MEDICINES

The biotech industry conducts intensive R&D in defined areas, ensuring a steady flow of innovation. A sub-set of companies is also developing more accessible generic drugs (lower-cost versions of brand-name medicines).

TOOLS & TECHNOLOGY

IT is growing fast in the healthcare industry. Electronic records are needed to streamline communications between patients, doctors and pharmaceutical and insurance companies. Increasing digital interconnectedness can facilitate growth in ‘virtual consultations’.

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Population growth is dramatically increasing food needs. But soil degradation and demand for biofuels are shrinking the land available to grow food. Meanwhile, consumers are demanding nutritionally higher-quality food and querying its source and treatment. This all creates major challenges for food cultivation, storage and distribution.

Nutrition

RISING DEMAND

With the global population set to reach 9 billion by 2050, it is estimated that global food production will have to increase by 60–100 percent to keep up with rising demand. This is already a major priority in many countries, with governments introducing policies that seek to overcome decades of under-investment.

SUSTAINABLE CULTIVATION

Much of rising demand can be met by improving efficiency along the production chain. Agriculture is the largest source of demand for critical resources – water, energy and land – and will be at the forefront of innovations to use them more efficiently. Firms that develop innovative technologies will be able to capitalise on growing demand for sustainable cultivation.

CHANGING DIETARY HABITS

Rising incomes in emerging markets are increasing demand for higher-quality food products such as animal protein, which tend to be more resource-intensive. Increasing health awareness is also changing global consumption patterns. In the US, for instance, organic foods are increasingly moving into the mainstream, with sales growing over 8 percent in 2016 to USD 43 billion.

MEGATRENDS


GlobalisationHealth

Demographics

MEGATRENDS

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FOOD

In both developed and emerging markets, a greater focus on health is changing consumer and regulatory attitudes on the nutritional content of food. Companies involved in the development of better-quality food products, through better ingredients, testing, quality control or certification, are set to benefit.

TRANSFORMATION & DISTRIBUTION

There are many opportunities to reduce food losses during harvesting, processing, transport and storage. Innovations include anti-microbial packaging that helps with food safety, while innovative sensors on food packaging can improve on ‘use-by dates’ and reduce the vast amount of food thrown away.

Plant health Farm production

Commodity processing

Packaging & recycling

Transport & wholesale

Food ingredients Food staples

Testing & certification

Farm technology Animal health

FARMING

Continued improvements in agricultural practices, such as using land more efficiently, will be essential to boost production to meet demand. Yet this must not come at the cost of sustainability. Investing in companies that adopt best-practice farming techniques will lead to increased efficiency, less waste and lower costs due to economies of scale.

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Premium brands occupy a unique place in the consumer market and enjoy a range of advantages. Their reputation for outstanding quality has helped them achieve strong market positions, customer loyalty and pricing power globally. High barriers to entry mean they are less vulnerable to new competition.

Premium Brands

WHY THEY ARE SPECIAL

Premium brands offer exceptional quality products and services that are aspirational in nature. They have gained traction among a broader range of affluent consumers, and tend to be less affected by economic downturns than other consumer products, as the spending habits of High Net Worth Individuals (HNWI) are less volatile than for the middle classes.

A WIDE RANGE OF SECTORS

Premium brands encompass a highly diverse range of products and services, from ultra-premium car brands to high-end fragrances. Our strategy, which aims to capitalise on growth prospects linked to consumer aspirations, focuses on the brands of superior-quality companies across a range of consumer sectors – autos, hotels, fashion, leisure, food & drink, and fitness & health.

GROWTH IN ASIA

Emerging markets, especially in the Asia-Pacific region, are set to be the major drivers of growth in this sector. They are predicted to account for 60 percent of global luxury goods expenditure by 2020. This is a result of these countries’ rapid economic development, increasing urbanisation and expanding numbers of HNWI.

MEGATRENDS

ImmaterialisationEconomic GrowthIndividualisation

GlobalisationPolarisation

Demographics

MEGATRENDS

PAGE 31

EXPERIENTIAL LUXURY

The definition of what constitutes luxury has shifted in recent years. Many affluent consumers are as keen to enjoy luxury as to own it. The market for luxury experiences, from safaris to spas and cruises, is growing, and premium hotel groups have been recording strong growth across the experiential category.

DIGITAL TECHNOLOGY

Many premium brand companies have resisted e-commerce. However, this is changing as the digital revolution impacts how consumers relate to brands and the way they shop. Nearly 40 percent of luxury market growth will come from online sales by 2020, and some firms are now spending as much as 60 percent of their marketing budget on digital.

GROWING DEMAND FROM EMERGING MARKETS

The industry is increasingly fuelled by consumers in emerging markets. Asian consumers have become voracious consumers of premium brands. By 2023, China is forecast to have the second-largest number of people in the world with annual gross income of more than USD 150,000, behind only the US.

INVESTING IN

PAGE 32

Artificial intelligence (AI) is revolutionising robotics and automation technologies. Robots are no longer confined to the factory floor – they are becoming part of our day-to-day lives.

Robotics

NEW ERA, NEW CHALLENGES

We are on the cusp of a new technological revolution, led by robotics and AI. Robots will play an important role in boosting productivity, and in resolving one of the biggest challenges for the coming decades: how the world’s shrinking workforce will support its growing ageing and dependent population.

INNOVATION IS KEY

Many industries are increasingly using robots to boost their output, improve the quality of their goods and services, and reduce their impact on the environment. For instance, the flexibility and responsiveness of new automated technologies, such as 3D-printing allows for meeting increased demand for product customisation.

WIDER APPLICATION

Modern robotic devices have a remarkable capacity to gather, process and act on information, their role in the economy is widening beyond factories. In healthcare, robots are working alongside surgeons on delicate and complex procedures. In the services and security industries, improvements in facial and voice recognition are creating opportunities.

MEGATRENDS

SustainabilityKnowledge Society


Demographics

MEGATRENDS

PAGE 33

CONSUMER & SERVICES APPLICATIONS

Robots are fast becoming part of our day-to-day lives, in places as diverse as homes, factories and hospitals. For example, commercial drones (unmanned aerial vehicles) are benefiting from an improving regulatory environment, and virtually all robotics developers are working on new healthcare applications – from assistance in the operating theatre to monitoring vulnerable patients in their homes.

INDUSTRIAL AUTOMATION

A new generation of automated ‘Cobots’ can collaborate with human workers thanks to technological improvements, broadening their uses. Along with increased affordability, this will mean a rapid expansion in the use of robots by smaller companies as well as larger firms.

ENABLING TECHNOLOGIES

Innovation is giving robots the eyes (cameras) and brains (software and sensors) they need to perceive their environment and be more autonomous, allowing them to carry out increasingly complex processes. With rising demand for applications such as medical imaging and intelligent traffic surveillance, the machine vision market is expected achieve growth of over 10 percent annually and be worth an estimated USD 10 billion by 2020.

INVESTING IN

PAGE 34

Governments, businesses and individuals globally face an increasingly diverse range of security threats. From protecting against cyber-attacks and guarding vital infrastructure to food safety and personal security, companies able to provide solutions will offer attractive long-term opportunities for investors.

Security

NEW THREATS, NEW OPPORTUNITIES

An increasingly connected world is creating new security challenges, both physical and virtual. Technological innovation is providing a raft of new opportunities for criminal activity, and for security solutions in response. Cloud computing, data storage, biometric identification systems and online payments all require security measures that will need constant updating.

PROTECTING TOMORROW’S CITIES

Continued urbanisation, particularly in less-developed nations, where the number of people living in cities will almost double by 2050, will require huge investments to safeguard infrastructure such as mass transit networks and utilities. Citizens’ personal security needs will also grow. Overall, urban security will provide attractive opportunities for investors.

BETTER HEALTH & SAFETY

A growing focus on safety across many areas (e.g. transportation, appliances, construction, food sourcing and occupational health) will create increased demand for testing and inspecting equipment and services. For instance, rising living standards have led to much greater expenditure on food safety testing in the developing world.

MEGATRENDS

Acceleration & ComplexityTechnology

Economic GrowthGlobalisation

Demographics

MEGATRENDS

PAGE 35

IT SECURITY PRODUCTS

The number of devices connected to the internet will double from 25 billion in 2015 to 50 billion in 2020. But more connected devices implies more data breaches. There are now over 100,000 detected cyber attacks per day. New security IT such as biometrics will help fight crime and terrorism. Big Data can detect anomalies and provide advance warning of threats.

SECURITY AND SAFETY SERVICES

Security service companies are booming, thanks to increasing urbanisation and a perception that public provision of security is insufficient. Companies that provide safety solutions for everyday products and services, such as those involved in food testing, also have strong growth potential. For instance, private companies are developing tools to detect contamination more effectively across the food production chain.

PHYSICAL SECURITY PRODUCTS

Three million people globally are moving to urban areas every week. As cities grow, so will spending on infrastructure and personal security. Specialised companies offering innovative solutions such as electromagnetic locks or comprehensive home security systems are set for strong growth.

INVESTING IN

PAGE 36

Wood is a highly versatile commodity: an excellent building material and the basis for a wide variety of packaging, board and paper products. Traditionally, this valuable resource was accessed through private equity schemes or direct investment in forests. By investing in publicly listed companies, our strategy offers the opportunity to invest across the wider timber sector for a more diversified approach.

Timber

GROWING DEMAND

Given its versatility, timber resources are coming under increasing pressure. A growing global population and greater spending power will boost demand for wood and paper products. There is also significant pent-up demand for new homes. In the US, for example, housing construction has been at half its long-term average since the financial crisis, and it will need to return to its historic level to meet population growth.

SUPPLY SQUEEZE

Production of many traditional timber-producing regions, such as Canada, which has long supplied most of the US’s wood, is likely to peak in the next few years. Many of the world’s remaining major sources of trees are either difficult to access or are in ecologically sensitive areas. Therefore, sustainable long-term solutions are needed to meet rising demand.

MITIGATING CLIMATE CHANGE

Unsustainable management of forests threatens both future timber supply and the vital role that forests play as carbon sinks. Forests provide significant storage for excess atmospheric carbon (CO2), so the use of timber and how it is cultivated are central to environmental discussions and to attempts to mitigate climate change.

MEGATRENDS

SustainabilityEconomic Growth

GlobalisationDemographics

MEGATRENDS

PAGE 37

SUPPLY UNDER PRESSURE

The world’s forested areas continues to shrink. Supply from mature growing areas, such as Canada, is peaking, and forests in other regions are often unsustainably managed. Efforts to protect biodiversity will also reduce the area available for timber supply – some 15 per cent of the world’s forest is already protected. Investment will be needed in sustainable forest management and increased efficiency of timber use.

THE VALUE OF TIMBERLAND

Timberland (forest with high commercial-wood-growing potential) is an attractive long-term investment because its productivity is typically unaffected by economic downturns: trees continue to grow and increase in value regardless. Over the past 30 years, investing in timberland has generated above-average returns versus global equities. It also contributes to the sustainable management of forests.

GROWING DEMAND FOR WOOD PRODUCTS

Global demand for timber is set to rise in the coming decades – potentially trebling by 2050 – fuelled by economic and population growth. With higher disposable incomes, wood and paper products will benefit from increased consumer spending.

INVESTING IN

PAGE 38

Next to oxygen, water is the most important life support system of all. It has no substitutes. But supply is finite. Although around three-quarters of the earth’s surface is covered with water, only 1 percent of that water is readily available for human use. And as the world’s population expands, demand is growing.

Water

INCREASING DEMAND

Water is a renewable but ultimately finite resource. Global economic and population growth are leading to higher demand for water –not just the visible water we use for drinking and washing, but also the ‘virtual’ water footprint incurred through production of food and other goods.

INACCESIBILITY

Despite water covering around three-quarters of the planet’s surface, very little of it is fit for consumption. The majority is salt water, and much of the world’s fresh water is either locked up in polar icecaps, glaciers and permafrost, or heavily polluted. Climate change is also putting pressure on freshwater sources.

INFRASTRUCTURE INEFFICIENCY

To keep pace with demand, over USD 1 trillion will need to be invested in water infrastructure globally each year. The private sector will have a major role to play. Technological innovations will help drive new solutions in areas such as desalination, ultraviolet filtration and water reuse.

MEGATRENDS

SustainabilityEconomic GrowthCommercialisation

HealthDemographics

MEGATRENDS

PAGE 39

ENVIRONMENTAL SERVICES

Improper solid waste disposal is creating major water supply problems, notably in emerging markets, In China, for example, it has led to nearly 60 percent of underground water and one-third of surface water being classed as ‘unfit for human contact’. Environmental services companies providing solutions to waste water collection and treatment are set to benefit from growing attempts to address the situation.

WATER TECHNOLOGY

Companies in the water technology sector are developing tools and systems to improve the efficiency with which we use water, such as innovative filtration systems and next-generation monitoring equipment. One major focus is agricultural production, which accounts for 70 percent of the world’s freshwater use. There are opportunities for firms active in agricultural water technology, such as drip irrigation.

WATER SUPPLY

By 2050, 4 billion people globally could be living with ‘severe’ water shortage, up from 1.2 billion today. Economic growth is raising consumption of products that require more water to produce, such as animal protein, while governments are struggling to maintain ageing supply infrastructure due to tight budgets. This will create opportunities for firms providing innovative supply solutions, such as recycling and desalination.

INVESTING IN

PAGE 40

Appendix

MEGATRENDS

PAGE 41

The Fund’s investment objective is to achieve long-term capital gains by investing in shares of small and medium-sized scientific companies in the sector of biotechnology which are listed on stock exchanges and, in so far as permitted by the investment restrictions, in similar unlisted companies.

OBJECTIVES AND INVESTMENT PROCESS

– The fund invests in biotechnology firms focused on innovation and developing new medicines. This is a sector where medical breakthroughs are often very profitable and where firms typically enjoy strong pricing power for their products, even in a difficult economic environment. Focus on innovative companies entering new product cycles, primarily mid and large caps able to address unmet medical needs with their product portfolio and pipeline.

– Fundamentally-driven analysis and stock selection: proprietary framework that determines how its products and services add value to the health system along four dimensions: innovation, efficiency, and cost containment.

INVESTMENT TEAM

Resourced and experienced investment team of 4 investment professionals focused on the Healthcare and Biotech sectors. Nathalie Flury and Tazio Storni joined in 2014 and are Senior Investment Managers for the Pictet-Health and Pictet-Biotech funds.

PORTFOLIO CHARACTERISTICS

– Pictet Asset Management has taken the management of its Biotech fund in-house in April 2016. Convictions portfolio of 45 to 50 stocks.

– No benchmark or tracking error constraint. – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - BiotechKEY FEATURESISIN LU0112497283

Share class I Acc.USD

Assets Under management $ 1,423m

Inception date 6/27/2000

Total Expense Ratio 1.20%

Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Biotech - I USD (%)

MSCI Daily TR Net World (%)

Ccy USD USD

Last month 2.69 1.35

YTD 25.37 22.40

2016 -23.38 7.51

2015 11.56 -0.87

2014 24.06 4.94

2013 55.53 26.67

3Y* 2.33 9.26

5Y* 15.63 11.63

Vol. 1Y* 18.46 5.02

INTRINSIC RISK RATING

OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style

*AnnualizedSource: Bloomberg, as at 12/31/2017

NOTEPast performance must not be considered an indicator or guarantee of future performance, and the addressees of this document are fully responsible for any investments they make. No express or implied warranty is given as to future performance. Performances are presented net of fees. Changes in foreign-exchange rates may cause the value of your investment to go up or down.

Medium

INVESTING IN

PAGE 42

The objective of the Fund is to achieve capital growth. The Fund invests at least two-thirds of its assets in shares issued by companies worldwide that contribute to and profit from the world’s transition to less carbon intensive energy production and consumption.


– Global Equity fund focused on investing in companies operating in the field of cleaner infrastructures and resources, carbon reducing technologies and equipment, the generation, transmission and distribution of cleaner energy and energy efficiency.

– From an universe of approximately 500 companies , the fund managers applies both a financial/valuation filtering and qualitative filter to establish a “Purity score” on each companies based on both environmental exposure and resource efficiency. ESG and sustainability considerations are fully integrated within the scoring process as the fund excludes companies with significant exposure to coal, oil and/or nuclear exposure.

INVESTMENT TEAM

The fund is managed by a resourced and experienced team led by Luciano Diana, Xavier Chollet and Christian Roessing The team combine both sector expertise and financial analysis. Pictet Asset Management is a pioneer in theme-based investment (Global Mega Trends, Premium-Brands, Security, Robotics).


– Diversified and balanced portfolio of large and mid-cap growth stocks biased towards Industrials and Utilities.

– High conviction portfolio of approximately 60 stocks of high-quality companies with unique positions within the energy efficiency-value chain.

– Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - Clean EnergyKEY FEATURESISIN LU0280430405

Share class I Acc. USD

Assets Under management $ 761m



Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Clean En-ergy - I USD (%)


Ccy USD USD

Last month -0.88 1.35

YTD 25.41 22.40

2016 2.91 7.51

2015 -11.82 -0.87

2014 -1.64 4.94

2013 35.64 26.67

3Y* 4.40 9.26

5Y* 8.71 11.63

Vol. 1Y* 8.00 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

MEGATRENDS

PAGE 43

The Fund invests its assets in companies offering digital communication products and services enabling permanent interactivity (streaming, downloading, data processing, news feeds) at reduced production and maintenance costs.


– Global Equity fund-Thematic Internet and Mobile Technologies: invests exclusively in growth companies across seven sectors: e-commerce, online advertising, interactive entertainment, enterprise and vertical SaaS (Software and Services), devices and network operators.

– Aims to invest in the universe of companies which will profit from the transition to digital with the creation of a new wave of interactive / innovative business models. Excludes telecom equipment manufacturers, traditional hardware businesses and electronic components companies.

– Focus on bottom-up stock selection, with the emphasis on fundamental analysis and company visits.

INVESTMENT TEAM

Strategy launched in July 2008, focused and dedicated team which combines both sector expertise and financial analysis. Experienced team of 2 investment managers headed by Sylvie Sejournet.


– Convictions, unconstrained and benchmark agnostic portfolio of 40 to 60 stocks.

– Mainly invested in Large to Mid-Caps. – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - DigitalKEY FEATURESISIN LU0101689882





Liquidity Daily

Available in USD, EUR, GBP

PERFORMANCE

Pictet - Digital - I USD (%)


Ccy USD USD


YTD 38.15 22.40

2016 9.19 7.51

2015 7.43 -0.87

2014 5.15 4.94

2013 40.76 26.67

3Y* 17.44 9.26

5Y* 19.11 11.63

Vol. 1Y* 8.77 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

INVESTING IN

PAGE 44

The Fund’s objective is capital growth. The Fund mainly invests in shares and other equity-related securities issued by companies active along the environmental value chain. The Fund favors companies in services,infrastructure, technologies and resources related to environmental sustainability.


– Invest in companies whose products and services are making a positive active contribution to solving environmental issues, as well as having a low environmental impact: Water supply& technology, energy efficiency, renewable energy, pollution control, environmental services, sustainable agriculture & forestry.

– Exposed to companies which contribute to solve environmental challenges through innovation, technology and intelligent use of natural resources Diverse and large investment universe within the environmental thematic: Water, Timber, Clean Energy, Robotics, Security and Agriculture.

– The fund was repositioned as per October 1st 2014.

INVESTMENT TEAM

A focused, dedicated and experienced team which combines both sector expertise and financial analysis. Six investment professionals specializing in environmental strategies with Lead manager Luciano Diana as Head of Environmental Thematic Investing.


– Convictions, unconstrained and benchmark agnostic portfolio of 50 to 60 best-ideas stocks.

– Sectors bias: Industrials, Technology, Utilities and Materials. – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - Global Environ-mental Opportunities

KEY FEATURESISIN LU0503632100





Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Global Environmental Op-portunities - I (%)


Ccy USD USD


YTD 33.02 22.40

2016 3.50 7.51

2015 -0.30 -0.87

2014 3.26 4.94

2013 22.93 26.67

3Y* 11.13 9.26

5Y* 11.74 11.63

Vol. 1Y* 7.08 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

MEGATRENDS

PAGE 45

The Fund’s objective is to achieve capital growth. The Fund invests at least two-thirds of its assets in equities or equity-linked securities issued by companies worldwide. The Fund will primarily invest in securities that may benefit from global megatrends.


– Invest in companies whose products and services are making a positive active contribution to solving environmental issues, as well as having a low environmental impact: Water supply& technology, energy efficiency, renewable energy, pollution control, environmental services, sustainable agriculture & forestry.

– Exposed to companies which contribute to solve environmental challenges through innovation, technology and intelligent use of natural resources Diverse and large investment universe within the environmental thematic: Water, Timber, Clean Energy, Robotics, Security and Agriculture.

– The fund was repositioned as per October 1st 2014.

INVESTMENT TEAM

A focused, dedicated and experienced team which combines both sector expertise and financial analysis. Six investment professionals specializing in environmental strategies with Lead manager Luciano Diana as Head of Environmental Thematic Investing.


– Convictions, unconstrained and benchmark agnostic portfolio of 50 to 60 best-ideas stocks.

– Sectors bias: Industrials, Technology, Utilities and Materials. – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - Global Megatrend Selection






Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Global Megatrend Selec-tion - I USD (%)


Ccy USD USD


YTD 29.06 22.40

2016 2.47 7.51

2015 -2.13 -0.87

2014 6.01 4.94

2013 28.02 26.67

3Y* 8.97 9.26

5Y* 11.92 11.63

Vol. 1Y* 6.37 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

INVESTING IN

PAGE 46

The Fund’s objective is to achieve capital growth. The Fund invests in equities and equity related securities (ADR, GDR, EDR) issued by companies worldwide (including emerging countries). The Fund mainly invests in securities benefting from secular changes in economic and social factors.


– Global Equity fund – Thematic: bottom-up, “best ideas” stock-picking across thematic funds, whether they are their strongest convictions and/or identified opportunities within their investment universes using the proprietary process.

– Megatrends are large, social, economic, political, environmental or technological changes. They impact business, economy, society, cultures and personal lives. They represent seismic shifts, providing long term investment opportunities.

– Actively managed portfolio of thematic investment teams’ top convictions.

INVESTMENT TEAM

A resourced and experienced team which combines both sector expertise and financial analysis. Pictet Asset Management is a pioneer in theme-based investment (Global Mega Trends, Premium-Brands, Security, Robotics).


– Convictions based portfolio of 60/70 stocks. – Mainly invested in Large to Mid-Caps. – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - Global Thematic Opportunities






Liquidity Daily

Available in USD

PERFORMANCE

Pictet-Global Thematic Opportu-nities - I USD (%)


Ccy USD USD


YTD 28.10 22.40

2016 - 7.51

2015 - -0.87

2014 - 4.94

2013 - 26.67

3Y* - 9.26

5Y* - 11.63

Vol. 1Y* 7.07 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

MEGATRENDS

PAGE 47

The Fund’s objective is to achieve capital growth. The Fund will primarily invest in equities issued by companies active in sectors related to health. The Fund can invest in any country.


– The Fund invests globally and in all market capitalizations across healthcare sub-sectors, pharmaceuticals, medical technology and supplies and the development of biotechnology. Focus on company with above average innovation, quality of life, efficiency and/or cost containment.

– Large cap healthcare – pick the leaders that are adapting or driving change: look for differentiated pipelines or drugs that are underappreciated by the market and prefer companies that are building scale to benefit customers, take share and expand operating margins.

– Small/Mid-cap healthcare – identify the innovators in any sub-sector of healthcare.

INVESTMENT TEAM

Resourced and experienced investment team of 4 investment professionals focused on the Healthcare and Biotech sectors. Nathalie Flury and Tazio Storni joined in 2014 and are Senior Investment Managers for the Pictet-Health and Pictet-Biotech funds.


– Pictet Asset management made the decision to manage Pictet-Health (formerly known as Pictet-Generics) internally in April 2015. Convictions portfolio of 45 to 50 stocks.

– No benchmark or tracking error constraint. – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - HealthKEY FEATURESISIN LU0188500879





Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Health - I USD (%)


Ccy USD USD


YTD 16.01 22.40

2016 -11.41 7.51

2015 0.39 -0.87

2014 32.10 4.94

2013 26.34 26.67

3Y* 1.05 9.26

5Y* 11.48 11.63

Vol. 1Y* 10.22 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

INVESTING IN

PAGE 48

The Fund applies a strategy for capital growth by investing primarily in shares issued by companies contributing to and/or profiting from the value chain of the agricultural sector.


– Global Equity fund focused on investing in companies that contribute to the quality, delivery and sustainability of food production worldwide whilst retaining farming exposure in areas that are crucial to the future of food, such as precision agriculture.

– From an universe of approximately 370 companies, the fund managers applies both quantitative and qualitative screening to establish a “Purity score” on each companies based on both agriculture exposure and resource efficiency. ESG consideration are fully integrated within the scoring process as the fund excludes companies with significant exposure to Genetically Modified Organisms.

INVESTMENT TEAM

The fund is managed by a resourced and experienced team led by Gertjan Van Der Geer and Cedric Lecamp which combine both sector expertise and financial analysis. Pictet Asset Management is a pioneer in theme-based investment (Global Mega Trends, Premium-Brands, Security, Robotics).


– Diversified and balanced portfolio of large and mid-cap value stocks biased towards Industrials and basic materials.

– High conviction portfolio of approximately 60 stocks of high-quality companies with unique positions within the Agriculture-value chain.


Pictet - NutritionKEY FEATURESISIN LU0428745664





Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Nutrition - I USD (%)


Ccy USD USD


YTD 26.11 22.40

2016 4.20 7.51

2015 -8.74 -0.87

2014 0.51 4.94

2013 8.57 26.67

3Y* 6.23 9.26

5Y* 5.52 11.63

Vol. 1Y* 6.56 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

MEGATRENDS

PAGE 49

The objective of the Fund is capital appreciation. The Fund invests at least two-thirds of its assets in shares issued by companies with well-known brands in their sector and which provide high-quality services and products.


– Invests exclusively in high-quality, sought after aspirational goods across seven sectors: autos, luxury products, food and drinks, hotels, sports, healthcare, and fitness.

– Focus on High Quality franchise companies, built on dominant and durable brands, which possess powerful market positions, high customer loyalty, healthy balance sheets, superior profitability and strong pricing power relative to their competitors. Universe of circa 150 companies worldwide. Companies with sustainable competitive advantages due to durable intangible assets such as powerful brands.

– Focus on bottom-up stock selection, with the emphasis on fundamental analysis and company visits.

INVESTMENT TEAM

One of the most established fund to invest in Consumer Goods/Luxury Brands : strategy launched in May 2005, focused, dedicated and experienced team which combines both sector expertise and financial analysis. Experienced team of 3 investment managers headed by Caroline Reyl.


– Convictions, benchmark agnostic portfolio of 30 to 50 stocks. – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - Premium BrandsKEY FEATURESISIN LU0280433417





Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Premium Brands - I USD (%)


Ccy USD USD


YTD 35.14 22.40

2016 -8.42 7.51

2015 -8.70 -0.87

2014 -5.87 4.94

2013 26.66 26.67

3Y* 4.15 9.26

5Y* 6.14 11.63

Vol. 1Y* 7.04 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

INVESTING IN

PAGE 50

The Fund’s objective aims to achieve capital growth. The Fund invests in equities and equity related securities issued by companies that contribute to and/or profit from the value chain in robotics and enabling technologies.


– Global Equity fund-Thematic Robotics: pure and focused fund which invests in robotics and artificial intelligence technologies. The fund aims to capitalize on advances in IT, such as cloud computing and the emergence of powerful new microprocessors, which are revolutionizing robotics and automation technologies.

– Exposure to 3 global segments: Industrial automation, Consumer & services applications and Enabling Technologies.

– Focus on pure bottom-up stock selection, with the emphasis on fundamental analysis and company visits. In particular, the strategy targets stocks with high growth and low accessibility in the security segment.

INVESTMENT TEAM

The strategy was launched in October 2015 under the lead of Peter Lingen. A focused, dedicated and experienced team which combines both sector expertise and financial analysis.


– Convictions, unconstrained and benchmark agnostic portfolio of 40 to 50 stocks.

– Mainly invested in Large to Mid-Caps. Sectors bias: Information Technology, Industrials and Healthcare.


Pictet - RoboticsKEY FEATURESISIN LU1279333329





Liquidity Daily

Available in USD, EUR, GBP

PERFORMANCE

Pictet - Robotics - I USD (%)


Ccy USD USD


YTD 41.36 22.40

2016 12.66 7.51

2015 - -0.87

2014 - 4.94

2013 - 26.67

3Y* - 9.26

5Y* - 11.63

Vol. 1Y* 9.04 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

MEGATRENDS

PAGE 51

The Fund will invest at least two-thirds of its assets in equities issued by companies that contribute to providing integrity, health, and freedom, whether it be individual, corporate, or political. The Fund mainly invests its assets in companies that provide physical or information technology security.


– Global Equity fund-Thematic Security: pure and focused Security fund which invests in companies that protect the physical safety and property of individuals, companies and governments.

– Exposure to 3 security segments: Physical Security products (Airbags, Video surveillance camera..), IT Security products (Internet Security, Biometry, Secured electronic payment) and Security Services (Testing and Controlling).

– Focus on bottom-up stock selection, with the emphasis on fundamental analysis and company visits. In particular, the strategy targets stocks with high growth and low accessibility in the security segment.

INVESTMENT TEAM

One of the most established fund to invest in Security, the strategy was launched in October 2006 under the lead of Yves Kramer. A focused, dedicated and experienced team which combines both sector expertise and financial analysis. Team of 2 investment managers – Yves Kramer and Frédéric Dupraz.


– Well balanced and diversified portfolio within the 3 Security segments – Small and Mid Caps Bias. Benchmark agnostic portfolio of 60 to 75 stocks – Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - SecurityKEY FEATURESISIN LU0256845834





Liquidity Daily

Available in USD, EUR, CHF

PERFORMANCE

Pictet - Security - I USD (%)


Ccy USD USD


YTD 25.40 22.40

2016 0.40 7.51

2015 5.37 -0.87

2014 8.13 4.94

2013 25.35 26.67

3Y* 9.87 9.26

5Y* 12.44 11.63

Vol. 1Y* 7.45 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

INVESTING IN

PAGE 52

The Fund’s investment objective is to achieve capital growth by investing at least two-thirds of its total assets in shares issued by companies active in the financing, planting, and management of forests and wooded areas and/or in the processing, production and products derived from wood contained.


– A Global Equity fund focused on the whole forest and timber value chain by investing in companies owning forests and timberlands. The funds aims at capturing the growing global demand of wood fibre as well as the increasing standards of living and construction needs in Emerging Markets through pulp, tissue and hygiene.

– From an universe of approximately 220 companies (with a market cap of USD 800 Bn), the fund managers applies a quantitative screening to establish if at least a 20% of the enterprise value is related to the theme. The list of investable stocks is then ranked according to the level of relevance or “purity” that each business has with the Timber theme.

INVESTMENT TEAM

The fund is managed by a resourced and experienced team led by Christoph Butz and Gabriel Micheli which combine both sector expertise and financial analysis. Pictet Asset Management is a pioneer in theme-based investment (Global Mega Trends, Premium-Brands, Security, Robotics).


– Diversified and balanced portfolio of large and mid-cap value stocks biased towards materials and consumer cyclicals.

– High conviction portfolio of 40 to 60 stocks of high-quality companies with unique positions within the timber-value chain.


Pictet - TimberKEY FEATURESISIN LU0340557262





Liquidity Daily

Available in USD

PERFORMANCE

Pictet - Timber - I USD (%)


Ccy USD USD


YTD 28.64 22.40

2016 6.05 7.51

2015 -7.42 -0.87

2014 1.09 4.94

2013 15.44 26.67

3Y* 8.09 9.26

5Y* 8.06 11.63

Vol. 1Y* 8.26 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

MEGATRENDS

PAGE 53

The Fund’s objective is to give investors access to the world water market. The Fund primarily invests its assets in equities issued by companies within the water and air sector worldwide, including those active in all aspects of the water production and water treatment industries.


– Global Equity fund – Water Thematic: pure and focused Water fund which invests at least two-thirds of its assets in companies that generate most of their revenues in the water industry.

– Invests in companies engaged in businesses related to the quality, availability or demand for water - a sector marked by rising demand and dwindling supply. The fund expands its investment universe seeking opportunities across all stages of water-related technologies.

– Active in the entire water value-chain: invests in companies whose activities form an integral part of the water cycle, such as water supply, processing services, water technology and environmental services.

INVESTMENT TEAM

One of the most established fund to invest in Water, the strategy was launched in January 2000 under the lead of Hans Peter Portner. A resourced and experienced team which combines both sector expertise and financial analysis.


– Diversified and balanced portfolio between large cap value stocks (Water Supply, Utilities and services) and growth-orientated mid-caps (Water technology).

– Benchmark agnostic portfolio of 50 to 80 stocks of high-quality companies with unique positions within the water-supply chain. Risks to consider: Equity Risk; Sector concentration risk; Emerging Markets Risk; Currency risk.

Pictet - WaterKEY FEATURESISIN LU0255980244





Liquidity Daily

Available in USD, EUR, CHF, GBP, JPY

PERFORMANCE

Pictet - Water - I USD (%)


Ccy USD USD


YTD 26.00 22.40

2016 6.84 7.51

2015 -0.05 -0.87

2014 2.78 4.94

2013 22.36 26.67

3Y* 10.39 9.26

5Y* 11.09 11.63

Vol. 1Y* 6.24 5.02


OBJECTIVES

Very low Very high

Small Large

Market cap

Middle

Value Blend Growth

Style



Medium

INVESTING IN

PAGE 54

The big forces that are shaping all our futures. By the people who understand them most.

www mega.online

MEGATRENDS

PAGE 55

DERIVATIVES AND COUNTERPARTY RISK

The use of certain derivatives could result in the fund having a greater or more volatile exposure to the underlying assets and an increased exposure to counterparty risk. This may expose the fund to larger gains or losses associated with market movements or in relation to a trade counterparty being unable to meet its obligations.

CREDIT AND DEFAULT RISK

A decline in the financial health of an issuer of a fixed income security can lead to an inability or unwillingness to repay a loan or meet a contractual obligation. This cause the value of its bonds to fall or become worthless. Funds with high exposures to non-investment grade securities have a higher exposure to this risk.

COMMODITY RISK

The value of commodity related instruments may fluctuate substantially due to changes in supply and demand and/or due to political, economic and financial events.

CURRENCY RISK

Currency may have either a direct or indirect effect on individuals’ investments. Where the reference currency is different from the reporting currency, foreign exchange movements will directly impact the value of the holdings. Currency will indirectly impact the value of the underlying investments as foreign exchange movements strongly influence the market economy and the competitiveness of both domestic and international companies. Funds which try to hedge to a reference currency can mitigate the direct impact of currency movements but cannot completely isolate the indirect effects of foreign exchange movements.

INTEREST RATE RISK

Changes in interest rates will usually result in the values of bond and other debt instruments moving the opposite direction (e.g a rise in interest rates likely leads to fall in bond prices).

INVESTMENT RISK

The investment is subject to normal market fluctuations and there can be no assurance that an investment will return its value or that appreciation will occur.

EMERGING MARKETS RISK

There is a greater risk associated with Emerging Markets; liquidity may be less reliable and price volatility may be higher than that experienced in more developed economies which may result in the fund suffering sudden and large falls in value.

EQUITY RISK

Equity investments are subject to high price volatility (variations in net asset value of the unit class) but may offer rewards in line with the risks taken, which is why they are in this risk category.

COUNTRY CONCENTRATION RISK

Funds with a single sector focus will typically be more volatile than funds which invest broadly across markets and geographies.

Glossary of Risks (1/2)

INVESTING IN

PAGE 56

MORTGAGE RELATED AND OTHER ASSET BACKED SECURITIES RISKS

Mortgage or asset backed securities are subject to similar risks as other fixed income securities and may also be subject to prepayment risk and higher levels or credit and liquidity risk.

POLITICAL RISK

Countries where political leadership is either unstable or where it exerts a very strong influence on markets and business practices may be subject to greater volatility. Political risk may include potential for currency controls which would disrupt efficient financial markets.

SECTOR CONCENTRATION RISK

Funds with a single sector focus will typically be more volatile than funds which invest broadly across markets.

SMALLER COMPANY RISK

Smaller Company Risk – Small companies may be less liquid than larger companies and therefore price movements in securities of smaller companies may be more volatile and involve greater risk.

REGIONAL CONCENTRATION RISK

Region-specific funds have a limited investment scope and are susceptible to a decline in the region in which they invest. Therefore, these funds may be more risky than those which invest more broadly across markets and geographies.

KEY MAIN RISK

Where investment decisions are made by an individual or a very small team, the potential loss of any one individual represents a significant risk to the ongoing viability of the fund.

LIQUIDITY RISK

Liquidity constraints where subscriptions and redemptions are not available daily, or where lockups apply, mean that investors are subject to market risk during interim pricing periods and may not be able to access funds on short notice.

Glossary of Risks (2/2)

MEGATRENDS

PAGE 57

DISCLAIMER

This document is not intended for and shall neither be provided to nor used by persons who are citizens of, domiciled or resident in, or entities registered in a country or a jurisdiction in which its distribution, publication, provision or use would violate current laws and regulations.

The financial products mentioned in this document might not be registered with or approved by the relevant regulatory authority. Public distribution may therefore not be permitted and private placements may be restricted to specific type of clients. Offerings are only allowed in accordance with the applicable local laws and regula-tions. Detailed selling restrictions of the relevant financial products may apply and need to be considered.

The content of this document has been prepared without taking into account your particular objectives, needs, financial situation, knowledge or experience. This document and/or the financial products mentioned herein might not be suitable for you. Therefore, you should consider the suitability of the transaction to individual circumstances and objectives and independently assess, with a professional advisor, the specific financial risks as well as any legal, regulatory, credit, tax and accounting consequences. You are fully responsible for your investments.

The information and data furnished in this document are for information purposes only. Banque Pictet & Cie SA (hereinafter, “the Bank”) is not liable for them nor do they constitute advice, an offer, an invitation or recommendation to make, hold or terminate an investment. The information contained herein is not the result of independent financial analysis and does therefore not qualify as financial research.

All information and opinions expressed in this document were obtained in good faith from sources believed to be reliable. Prices, values or returns of any investment mentioned in this document are based on the Bank’s customary sources of financial data. Unless specifically stated otherwise, such information is indicative only and may change without notice. The Bank is under no obligation to update the information contained in this document and no representation or warranty, express or implied, is made as to its accuracy or completeness.

The market value of financial products may vary on the basis of economic, financial or political changes, the remaining term, market conditions, the volatility and sol-vency of the issuer or the benchmark issuer. Some investments may not be readily realizable as the relevant market may be illiquid. Moreover, exchange rates may have a positive or negative effect on the value, the price or the return of the respective product. The political and economic situation in emerging countries is significantly less stable than in industrialized countries and related investments are exposed to higher risks and volatility. Forecasts and past performance are not reliable indica-tors or guarantees of future results. No express or implied warranty is given as to future performance. Any performance shown does not take into account commissions and costs (which negatively impact the performance).

You shall only take investment decisions when you fully understand the relevant financial product and the involved risks. In particular, the relevant product documen-tation (such as the issuance program, final terms, prospectus, simplified prospectus and key (investor) information document) as well as the brochure “Special Risks in Securities Trading” of the Swiss Bankers Association shall be read. Structured products are complex financial products and involve a high degree of risk. They do not qualify as collective investment schemes within the meaning of the Swiss Federal Act on Collective Investment Schemes (CISA), and are therefore not subject to the regulations of the CISA or the supervision of the Swiss Financial Market Supervisory Authority (FINMA). The value of structured products depends not only on the performance of the underlying asset(s), but also on the credit rating of the issuer. Furthermore, the investor is exposed to the risk of default of the issuer/guarantor.

If this document contains a link to a key Information Document of a Package Retail and Insurance-based Investment Product (“KID”) or an Undertaking for Collective Investment in Transferable Securities (“KIID”), please note that the respective KID/KIID may change without notice. In order to access the most recent version of the respective KID/KIID, click on the link immediately before confirming to the Bank your decision to invest.

If the Bank is not the manufacturer of the product(s), the KID/KIID is provided by a third party (the “Third Party Document”). The Third Party Document is obtained from sources believed to be reliable. The Bank does not make any guaranty or warranty as to the correctness and accuracy of the data contained in the Third Party Document. The Bank may not be held liable for an investment decision or other transaction made based on reliance on, or use of, the data contained in the Third Party Document.

By subscribing to the product(s) proposed herein, you acknowledge that you have (i) received, in good time, read and understood any relevant documentation linked to the product(s), including, as the case may be, the respective KID/KIID; (ii) taken note of the product(s) restrictions; and (iii) met the applicable subjective and objective eligibility conditions to invest in the product(s).

The Bank may rely on these acknowledgements and sign, on your behalf, any documents or certificates needed to subscribe to the product(s). Further, by subscribing to the product(s), you agree to indemnify and hold harmless the Bank for any and all claims, losses and damages it may incur in connection with the investment in the product(s).

The content of this document shall only be read and/or used by its addressee. Any form of reproduction, copying, disclosure, modification and/or publication in any form or by any means whatsoever is not permitted without the prior written consent of the Bank and no liability whatsoever will be incurred by the Bank. The addressee of this document agrees to comply with the applicable laws and regulations in the jurisdictions where they use the information provided in this document.

Banque Pictet & Cie SA, route des Acacias 60, 1211 Genève 73, Switzerland, is established in Switzerland and licensed under Swiss Law and therefore subject to the supervision of the Swiss Financial Market Supervisory Authority (FINMA), Laupenstrasse 27, 3003 Berne, Switzerland.

All rights reserved. Copyright 2017.

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