31 Mar 2018 (Q1) Global Funds. Portfolio Manager Comments. Page 1 of 5. Where is the market heading?

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1 Portfolio Manager Comments Where is the market heading? This bull-run has been with us for about nine years and the recent market correction is somewhat expected. We have witnessed a few major corrections within this quarter, Dow Jones Industrial Average was down more than 1000 points on both 5 February 2018 and 8 February 2018, which respectively lost more than -4% within a single trading day. The sell-off continued in March. If downward movement of more than 10% is defined as a market correction, a market correction had technically occurred during this quarter between 26 January 2018 and 8 February 2018 (Period 1) which recorded %. The market has recovered well before the subsequent drop between 26 February 2018 and 23 March 2018 (Period 2) which only recorded -8.46% that would not considered as another correction. During the same period, market volatility measured by Chicago Board Options Exchange (CBOE) Volatility Index (VIX), also known as Fear Index has spiked up from to (236%) between 26 January 2018 and 5 February VIX index recorded 202% and 57% during the two periods mentioned above. It signifies that market fear has been escalated. On fundamental aspects, the recent market movements partly contributed to the recent increased expectations of excessive rate hikes. Investors also perceived the ongoing US-China trade war as a negative development. We expect market volatility to continue to be heightened for the rest of this year and this suggests that there would be larger swings in the market. However, the recent market correction has allowed us to deploy our excess cash as we are still expecting more room for market to continue to grow. As long as the net asset purchases conducted by the central banks (including European Central Bank and Bank Of Japan) are net positive, we expect that the markets are still supported by these monetary policies. On the other hand, with the heightened volatility, we have to put in place measures to ensure that the portfolio has downside protection. As the equities sell-off is much greater than the bonds market during the last quarter, bonds still remain as a traditional portfolio diversifier. Another good diversifier will be gold which continue to hold up well during this period as a safe-haven asset during bad times. For this quarter, the USD/SGD is -1.83% (last year was -7.66%) while HKD/SGD is -2.34% (last year was %). Both the USD and HKD have recorded an astonishing depreciation of -9.35% and % respectively since beginning of During the same period, the global indices as measured in SGD terms are as follows: Equities indices: MSCI All-Country-World Index (ACWI): -3.4% MSCI All-Country Asia ex-japan Index (MXAPJ): -3.1% Fixed Income indices: J.P. Morgan GBI Global Index (JPMGGLBL): almost flat at 0.2% J.P. Morgan Asia Credit Index Core (JPEIJACC): -3.8% Page 1 of 5

2 Phillip The portfolio ended the first quarter of 2018 with a return of -2.5% (in SGD terms) and -0.7% (in USD terms). The US Dollar and Hong Kong Dollar continued to weaken further and this eroded the portfolio valuation as we report to our account holders in SGD terms. The current portfolio has 87.23% USD exposure, 8.99% HKD exposure and 3.79% SGD exposure. During the quarter, the portfolio sold or trimmed the following counters: We trimmed 8.2% of top portfolio holding in. VanEck Oil Services ETF (OIH) from 16.6% to 8.4% with a slight gain of 1.2%, which has contributed 0.1% of the overall portfolio performance. Sold UOB United Gold & General Fund which had a 6.6% weightage of the overall portfolio with 15.1% gain. It has 1% contribution to the overall portfolio performance. Sold VanEck Vectors Russia ETF which had a 5.6% weightage of the overall portfolio with 17.7% gain. It has 1% contribution to the overall portfolio performance. During the period, the portfolio also bought into following counters: We have added about 1.6% weightage back in VanEck Oil Services ETF (OIH) during its price bottoming which make it one of the Top 5 holdings at 10% weight of the overall portfolio. It has become one of the main performance contributors for the recent Oil price rally. Kraneshares CSI China Internet ETF (KWEB) to ride alongside with technological megatrend. The ETF top holdings are big companies such as Tencent, Alibaba and Baidu (also known as BAT) which form approximately 27% weight with this ETF. SPDR Select Sector Financial (XLF) to participate in the rising interest rate and tax repatriation trend and US financials are anticipated to be one of the key beneficiaries. Franklin Templeton Global Total Return Fund (SGD Hedged) to participate in its relatively attractive yield while negating the USD impact with the hedged class. During the month of March, several ETFs received their dividend payouts which generated additional income stream into the portfolio. (Kindly refer to our Phillip Global Fund s Portfolio Scorecard below) Page 2 of 5

3 Phillip Portfolio Scorecard Let us take the opportunity to review our portfolio performance over the one year period by focusing on the positions we have initially purchased and eventually closed or trimmed, termed that as the Portfolio Scorecard since start of Some of these information may not be relevant to the individual account holder because of the individual accounts different inception dates and differences in funding such as top-ups or partial withdrawals. For the purpose of simplicity, the following Profit & Loss computation (shown below as P/L (%) ) does not take into consideration, foreign exchange movements and dividends received. The Profit & Loss is computed based on the Average Cost Price (or Entry Price) including transaction costs against the eventual Selling Price (or Exit Price ) for the full closure or trimming of the position since last December. Sorted by the most recent positions closed/trimmed: Sn Period Sold/ Trimmed Holding Period 1 Feb 18 7 Mths 2 Jan Mths 3 Jan 18 >2 Yrs 4 Oct 17 >1 Yrs 5 Sep Mths 6 Jul' Yrs 7 Jun' Mths 8 May' Yrs Counter % Weight (Before) % Weight (After) % Weight Sold/ Trimmed P/L (%) Remarks RUSSIA ETF Sold all. UOB UNITED GOLD & GEN FUND Sold all. OIL SERVICES ETF SPDR S&P METALS & MINING ETF GOLD MINERS WISDOMTREE JAPAN HEDGED EQUITY ETF HENDERSON EUROPEAN PROPERTY EQTY (USD-H) GLOBAL X MSCI GREECE ETF Sold all. DEUTSCHE INVEST I TOP DIVIDEND SGD LCH(P) Top 5 Holdings in Dec 17. Sold/Trimmed 5.2% from 10.7% to 5.5%. Top 5 Holdings in Sep 17. Sold/Trimmed 5.2% from 10.7% to 5.5%. Top 5 Holdings in Aug 17. Sold/Trimmed 8.0% from 15.5% to 7.5%. Top 5 Holdings in Dec 16. Sold/Trimmed 6.7% from 12.6% to 5.9% in Dec'16 and sold the remaining 6.2%. Switched/Trimmed from SGD share class and sold the remaining 5.6% (see below) Sold/Trimmed 1.9% from 9 Apr'17 >2 Yrs 6.4% to 4.5%. Top 5 Holdings in Jan 17. Sold full 7.5% weight. In addition to the 7.8% dividend yield, the total 10 Feb' Yrs ISHARES ASIA HYG ETF return is more than 17% JPM ASEAN EQUITY A 11 Feb' Mths (ACC) SGD Sold all. Switched/Trimmed 1.1% to 12 Feb'17 >1 Yrs HENDERSON EUROPEAN PROPERTY SEC FUND USD-H share class from 6.1% to 5.0% weight (see above) 13 Feb' Yrs SPDR S&P BANK ETF Sold all. 14 Dec' Yrs RUSSIA ETF Sold all. 15 Dec' Yrs WISDOMTREE JAPAN HEDGED EQUITY ETF Top 5 Holdings in Dec 16. Sold/Trimmed 6.7% from 12.6% to 5.9% weight. Page 3 of 5

4 We were taking profits in the positions which were closed or trimmed within the course of this year Two important points to highlight here are: 1) The portfolio should be measured and reviewed over time. This is a moderately aggressive risk portfolio which is meant for an investment horizon of at least three to five years. As illustrated above, positions are held over different periods of time before we are able to eventually closed/trimmed the positions. 2) The Profit & Loss on existing holdings in the portfolio should not be measured based on the current point in time as the existing positions may not reflect earlier profit-making on these holdings. We hope you are satisfied with how we are managing your portfolio. With heightened volatility, we are expecting more challenging times ahead in the remaining months for However, be rest assured that your portfolio will be in our good hands to ensure the smooth journey and hopefully a better Scorecard that we can present to you the months ahead. Once again, we would like to thank you for entrusting us and the opportunity for us to venture into this investment journey with you in this ever-changing environment. About the Manager James Pang Portfolio Manager jamespangyy@phillip.com.sg Mr Pang joined Phillip Securities in 2006 and has more than 11 years of working experience in the financial industry. Before becoming a Portfolio Manager, he was an Exchange-Traded Fund (ETF) product specialist and headed the Company s ETF channel sales. He was also previously engaged in business development and channel management roles within PhillipCapital. Mr Pang s work experiences before joining Phillip Securities included retail sales and marketing with GoodAire Pte Ltd, human resources development and planning matters with the Ministry of Defence and Alstoms Transport (S) Pte Ltd. He was also with Network for Electronic Transfer (Singapore) Pte Ltd, also known as NETS, to develop its business information systems. He holds an MBA with specialization in Information Technology from University of La Rochelle, France. MA Service Coverage:, Returns Enhancer MAenquiries@phillip.com.sg Page 4 of 5

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