Figure 1: Resource subsector ETF performance

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1 In February the Bromma Resource Fund returned -4.8% for Class B C$ and -8.5% for Class V US$. While general equity markets were able to recover more than half of their volatility-induced peak-to-trough losses by the end of February (e.g. S&P lost 12% from January 26 th to February 9 th, but had recovered more than half to be down 5% by month-end), Resource subsectors were hit hard and the Bromma Resource Fund was unable to avoid losses. The table below shows the monthly performance for February for the resource subsector ETF s in the US and Canada: Resource subsector February XEG (TSX Energy ETF) -7.1% XGD (TSX Gold Miners ETF) -7.6% XBM (TSX Base Metals ETF) -0.3% XMA (TSX Materials ETF) -4.0% PICK (US Metals & Mining Producers ETF) -4.1% GDX (VanEck Gold Miners ETF) -10.1% XOP (Oil & Gas E&P ETF) -10.4% Figure 1: Resource subsector ETF performance Class B (C$) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec FY % -0.8% -3.1% -0.5% -2.1% 2.8% 0.3% -1.7% 5.0% -4.2% % -4.8% -3.5% Class U (US$) Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec FY % 0.2% 0.9% 3.5% -2.2% 2.9% -3.0% -1.7% 7.8% 5.9% % -8.5% -5.5% Figure 2: Bromma Resource Fund Performance. Macro Outlook Looking forward, we see a period of consolidation impacting commodities and resource equities as many of the macro trends we monitor have reached reach important inflection points. First, on currencies, although the US Dollar Index is in a well-defined downtrend since 2016, it has reached important support at 88/89 where we expect a period of consolidation (see Figure 3). Obviously, a continuation of the weak UDS narrative would be commodity bullish and vice versa.

2 Figure 3: USD Index consolidating at key 88/89 support. Yields are also stalling, with the 10 year breakevens (a measure of the reflation trade) stalling near breakout levels at 2.0/2.1 (see Figure 4), causing commodities as measured by the Thomson CRB Index (see Figure 5) to stall at resistance as well.

3 Figure 4: US 10 Year Breakevens stalling at breakout level. Figure 5: CRB Index stalling at resistance. Sector Outlook Our fundamental outlook for the resource sectors remain consistent as global growth continues to be solid. However, the latest wrinkle is the trade-war rhetoric out of the US which could severely disrupt global growth prospects if it escalates beyond tariffs on steel and aluminum imports.

4 Base metals remain the strongest sector, although breadth amongst the equities have reduced significantly in the last few weeks. Gold equities continue to await the resolution of the 18-month consolidation in bullion prices. Without getting too technical, we believe that as long as the December 2017 lows hold (~$1235), gold bullion should break out and produce an impulsive gold equity rally comparable to the early 2016 run (see Figure 6). Figure 61: Gold's 18-month consolidation is coming to an end. Energy continues to trade in a broad range as investor sentiment remains poor for the equities and overly bullish for the commodity. Fund Positioning We remain cautiously positioned as we wait for clear signs that the consolidation period is over. Our current positioning has us net long approximately 65%, invested mostly in base & bulk metals followed by energy and lastly precious metals. We believe there is currently a large disconnect between fundamentals and valuations in the resource space. For example, in the Small to medium sized-energy producer space, we can easily identify several producers that are trading at less than their PDP NAVs (proved developed reserves; no value given to undeveloped land despite proven success at increasing economic reserves). In mining, there are many producers with projected FCF yields > 10%. In a world where the S&P trades at 22x Current and 17x Fwd P/E, we believe the value is definitely in resource equities, particularly as we come towards the late innings of the current economic cycle when energy and materials usually tend to outperform. As our information and deal-flow improves, we have also begun focusing more of our attention on earlier stage opportunities as we view the exploration names to be the best space to generate alpha in the intermediate to long-term. Of late the companies coming to market have been of better quality than in recent years. Many with exceptional projects are struggling to find financing

5 and are trading at pennies on the dollar. We view this as a constructive sign that better times lie ahead and are taking advantage of the short-term fire-sale of good assets. Working hard to protect your capital and earn your trust, Jason, Harry, and Paul