Manulife Global Bond Fund 2 2 Fund Information (31 Dec 2018) (Dec 2018) Unit NAV RM

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1 Page 1 of 5 MANULIFE INVESTMENT FUNDS MANULIFE INVESTMENT FUNDS Manulife Global Bond Fund 2 2 Fund Information (31 Dec 2018) (Dec 2018) Unit NAV RM Fund Size RM 5.70 million Investment Objective Units in circulation 6.37 million The Manulife Global Bond Fund is a tranche of the Manulife Global Bond Fund Series; Launch Date 22 August 2013 which invests fully in Singapore Dollar denominated underlying Fund namely the Management Fee 1.00%p.a. Franklin Templeton Investment Funds Templeton Global Bond Fund A (Mdis) SGD-H1 Dealing Daily (the Underlying Fund ). The Underlying Fund aims to maximise total investment returns consisting of a combination of interest income, capital appreciation and currency gains by investing principally in a portfolio of fixed or floating rate debt securities and debt obligations issued by government or government-related issuer worldwide. Investment Strategy The Underlying Fund seeks to achieve its objective by investing principally in a portfolio of fixed or floating-rate debt securities (including noninvestment grade securities) and debt obligations issued by government or government-related issuers worldwide. The Underlying Fund may also, in accordance with the investment restrictions, invest in debt securities (including noninvestment grade securities) of corporate issuers. The Underlying Fund may also purchase debt obligations issued by supranational entities organized or supported by several national governments, such as the International Bank for Reconstruction and Development or the European Investment Bank. The Underlying Fund may also utilise financial derivative instruments for investment purposes. These financial derivative instruments may be dealt on either regulated markets or over-the-counter, and may include, inter alia, swaps (such as credit default swaps or total return swaps), forwards and cross forwards, futures contracts (including those on government securities), as well as options. Use of financial derivative instruments may result in negative exposures in a specific yield curve/duration, currency or credit. The Underlying Fund may also invest in securities or structured products where the security is linked to or derives its value from another security or is linked to assets or currencies of any country. The Underlying Fund may hold up to 10% of its net assets in securities in default. The Underlying Fund may purchase fixed income securities and debt obligations denominated in any currency, and may hold equity securities to the extent that such securities result from the conversion or exchange of a preferred stock or debt obligation. Fund Performance Since Launch (22 August 2013 to 31 December 2018) Top Five Holdings # Korea Treasury Bond, senior note, 2.00%, 4.98% 3/10/21 Government of Mexico, senior note, M, 5.00%, 4.31% 12/11/19 Nota Do Tesouro Nacional, 10.00%, 1/01/ % Korea Treasury Bond, senior note, 1.375%, 2.51% 9/10/21 Government of Indonesia, senior bond, FR56, 2.46% 8.375%, 9/15/26 Performance Table Performance 1 Month 6 Months YTD 1 Year 3 Years 5 Years Since Inception Manulife Global Bond Fund 2 JP Morgan Global Government Bond Index* -1.43% 1.20% 4.72% 2.58% 0.55% 1.44% 0.55% 1.44% 6.44% 3.74% 17.86% 33.32% 22.65% 32.97% Note: Fund's performance is calculated on NAV to NAV. This is strictly the performance of the investment-linked (IL) fund, and not to be treated as the returns on the actual premiums/contributions on the IL insurance product. The above returns are net of fund management charges and taxes. The value of units may go up as well as down. Past performance is not indicative of future results. The benchmark is in MYR terms. *Source : Morningstar 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Aug-17 Feb-18 Aug-18 Fund Graph depicts returns calculated on NAV to NAV basis Source: Morningstar Benchmark # Underlying Fund Highest and Lowest Unit Price Since Launch Unit Price (RM) Date Highest Nov-15 Lowest Sep-18 Page 1 of 5

2 Market Review # Market volatility escalated in December, as global growth uncertainties and trade concerns led to rallies in perceived safe haven assets. In the US, concerns over continued monetary tightening appeared to weigh on investor sentiment, leading to sharp declines in equities and rallies in US Treasuries (USTs). The yield on the 10-year UST note dropped 30 basis points (bps) to end the month at 2.69%. As widely anticipated, the US Federal Reserve (Fed) raised the federal funds target rate 25 bps to a range of 2.25% to 2.50% at its 19 December meeting, but modestly lowered its forecast for US economic growth for It also reduced its projected rate hikes for 2019 from three to two. The Fed s dot plot for the median expected target rate at the end of 2019 dropped from 3.125% to 2.875%. Fed Chairman Jay Powell indicated that the Fed would monitor financial and economic conditions, and form policy decisions on a data-dependent basis, rather than a pre-set path. Nonetheless, markets appeared to interpret the policy statements as potentially constraining to the US economy, which fuelled additional downturns in equity markets and rallies in USTs. We believe the market reactions were overdone our base case is for ongoing strength in the US labour markets, ongoing expansion of the US economy, rising inflation pressures and a low probability for a recession in On the global front, we continue to expect global growth to remain largely on trend, with some moderation from current levels in the upcoming year. However, trade disputes between the US and China remain a risk. We expect both the US and Chinese economies to expand in 2019, but our greater concern is for the impact on the global economy. At this stage, first-order impacts from US tariffs have been relatively small, with second- and third-order impacts extending to other areas of the global economy. Overall, we expect global trade levels to moderate in 2019 the extent of moderation would be impacted by the outcome of trade policy negotiations, in our view. Trade negotiations between the US and China remain in a 90-day reprieve through the end of February. Without an agreement on specific terms, the US has indicated it intends to raise tariffs to 25% from the current 10% level. Uncertainty over the outcome of trade policy has had material impacts on markets and industry. Export orders were accelerated in earlier quarters to get ahead of the expected 25% tariffs (previously scheduled for 1 January) those figures are likely to decline in the first half of 2019 as the demand levels revert to normal. If higher tariffs are in fact imposed, export demand would likely diminish further. Oil prices continued to decline in December on moderating expectations for global growth and supply dynamics out of the Middle East. The effects on emerging markets have been mixed, as net importers of oil like India and Indonesia benefit from lower oil prices. We do not expect the recent magnitudes of price declines in oil or other commodities to have severe impacts on the more resilient emerging economies. Select markets with stronger fundamentals remain prepared to absorb external shocks, in our view, including commodity shocks, trade disruptions and rising rates in the US. The yield on the 10-year German Bund decreased seven bps to 0.24% in December, while the euro modestly appreciated against the US dollar. European Central Bank (ECB) President Mario Draghi has continued to indicate that rates will likely remain unchanged until at least the summer of The central bank s net asset purchase programme concluded at the end of December, but balance sheet reinvestments will continue. Overall, we expect yields in the eurozone to remain exceptionally low in upcoming quarters. We expect the euro to weaken on widening rate differentials between the rising yields in the US and the low to negative yields in the eurozone. The peak rate divergence between the US and the eurozone remains ahead, in our view. The euro also continues to be vulnerable to unresolved structural and political risks across Europe, in our view, notably including recent debt sustainability concerns in Italy. The Bank of Japan (BOJ) has continued to reaffirm its intentions to target a 0.0% yield on the 10-year Japanese government bond (with a tolerable deviation of 0.2%). BOJ Governor Haruhiko Kuroda continues to indicate that borrowing costs should be kept very low for an extended period of time. The BOJ is not in a position to reduce monetary accommodation, in our view, given Japan s need for higher inflation. The Japanese yen appreciated 3.55% against the US dollar in December, as perceived safe haven assets rallied amidst heightened risk aversion. However, we expect the Japanese yen to fundamentally weaken against the US dollar in upcoming quarters on widening rate differentials with the US. Market Overview # Overall, our investment convictions remain largely unchanged. Many of the countries that we believed were undervalued earlier this year became even more undervalued during the risk-off cycles in August and September. Longer term we continue to have a positive outlook on a number of local-currency markets that we believe are fundamentally stronger than markets have been indicating. We continue to expect global growth to remain largely on trend, with some moderation from current levels in the upcoming year. However, trade disputes between the US and China remain a risk. On the whole, we don t see trade coming to a standstill or the global economy toppling into a recession we continue to have a positive outlook for US growth and the global economy for In the major developed economies, we anticipate continued monetary accommodation and low rates in Japan and the eurozone while rates rise in the US those increasing rate differentials should depreciate the yen and euro against the US dollar, in our view. Outside of the developed markets, we are focused on specific emerging markets that are less externally vulnerable and more domestically driven, and that have responsible, credible central banks that consistently respond with appropriate monetary policies. We continue to hold select local-currency duration exposures in countries that we believe have healthy fundamentals and significantly higher yields than those available in developed markets. We also expect currency appreciation across a select subset of emerging markets. # Underlying Fund Disclaimer: This report is prepared for information purposes only and Manulife Insurance Berhad ( Manulife ) does not guarantee its accuracy, completeness, correctness or timeliness for any particular purpose. Manulife reserves the right to change any information without giving any notice. The performance of the fund is not guaranteed and the value of investment and their derived income may increase or decrease. Past performance is not a guide to future performance. In the event of exceptional circumstances, such as high volume of sale of investment within a short period of time, the Company reserves the right to defer or suspend issuance or redemption of units. The fund manager is Manulife Asset Management Services Berhad. Page 2 of 5

3 Investment in the fund is subject to certain risks, including but not limited to: Investment Counterparty Credit Credit-linked Securities Defaulted Debt Securities Derivative Emerging Markets When over-the counter ( OTC ) or other bilateral contracts are entered into, the Underlying Fund may find itself exposed to risks arising from the solvency of its counterparties and from their ability to respect the conditions of these contracts. Credit risk, a fundamental risk relating to all fixed income securities as well as money market instruments, is the chance that an issuer will fail to make principal and interest payments when due. Issuers with higher credit risk typically offer higher yields for this added risk. Conversely, issuers with lower credit risk typically offer lower yields. The Underlying Fund bears the risk of loss of its principal investment, and the periodic interest payments expected to be received for the duration of its investment in the credit-linked security, in the event that one or more of the debt obligations underlying the credit default swaps go into default or otherwise become non-performing. In addition, the Underlying Fund bears the risk that the issuer of the credit-linked security will default or become bankrupt. In such an event, the Underlying Fund may have difficulty being repaid, or fail to be repaid, the principal amount of its investment and the remaining periodic interest payments thereon. Besides, the market for credit-linked securities may suddenly become illiquid which may result in significant, rapid and unpredictable changes in the prices for those securities. In certain cases, a market price for a creditlinked security may not be available or may not be reliable, and the Underlying Fund could experience difficulty in selling such security at a price the Investment Manager believes is fair. The Underlying Fund may invest in debt securities on which the issuer is not currently making interest payments (defaulted debt securities). These securities may become illiquid and the risk of loss due to default may also be considerably greater with lower-quality securities because they are generally unsecured and are often subordinated to other creditors of the issuer. Defaulted securities tend to lose much of their value before they default. Thus, the Underlying Fund's net asset value per Share may be adversely affected before an issuer defaults. In addition, the Underlying Fund may incur additional expenses if it must try to recover principal or interest payments on a defaulted security. For the purpose of efficient portfolio management, the Underlying Fund may, within the context of each Fund's overall investment policy, and within the limits set forth in the investment restrictions applicable to the Underlying Fund, engage in certain transactions involving the use of derivative instruments. The use of derivative instruments and hedging transactions may or may not achieve its intended objective and involves special risks. Performance and value of derivative instruments depend, at least in part, on the performance or value of the underlying asset. Derivative instruments involve cost, may be volatile, and may involve a small investment relative to the risk assumed (leverage effect). Their successful use may depend on the Investment Manager s ability to predict market movements. s include delivery failure, default by other party or the inability to close out a position because the trading market becomes illiquid. Some derivative instruments are particularly sensitive to changes in interest rates. The risk of loss to a Fund for a swap transaction on a net basis depends on which party is obliged to pay the net amount to the other party. If the counterparty is obliged to pay the net amount to the Fund, the risk of loss to the Fund is the loss of the entire amount that the Fund is entitled to receive; if the Fund is obliged to pay the net amount, the Fund s risk of loss is limited to the net amount due. OTC derivative instruments involve a higher degree of risk as OTC markets are less liquid and regulated. The global exposure of the Underlying Fund to financial derivative instruments shall not exceed its total net assets value and as a result the total risk exposure of the Underlying Fund shall not exceed 200% of its net assets value on a permanent basis. All Underlying Fund investments in the securities issued by corporations, governments, and public-law entities in different nations and denominated in different currencies involve certain risks. These risks are typically increased in developing countries and Emerging Markets. Such risks, which can have adverse effects on portfolio holdings, may include: (i) investment and repatriation restrictions; (ii) currency fluctuations; (iii) the potential for unusual market volatility as compared to more industrialised nations; (iv) government involvement in the private sector; (v) limited investor information and less stringent investor disclosure requirements; (vi) shallow and substantially smaller liquid securities markets than in more industrialised countries, which means the Underlying Fund may at times be unable to sell certain securities at desirable prices; (vii) certain local tax law considerations; (viii) limited regulation of the securities markets; (ix) international and regional political and economic developments; (x) possible imposition of exchange controls or other local governmental laws or restrictions; (xi) the increased risk of adverse effects from deflation and inflation; (xii) the possibility of limited legal recourse for the Underlying Fund; and (xiii) the custodial and/or the settlement systems may not be fully developed. Investors in Underlying Funds investing in Emerging Markets should in particular be informed that the liquidity of securities issued by corporations and publiclaw entities in Emerging Markets may be substantially smaller than with comparable securities in industrialised countries. Foreign Currency Since the securities held by the Underlying Fund may be denominated in currencies different from its reference or base currency (USD), the Underlying Fund may be affected favourably or unfavourably by exchange control regulations or changes in the exchange rates between such reference currency and other currencies. If the currency in which a security is denominated appreciates against the base currency, the price of the security could increase. Conversely, a decline in the exchange rate of the currency would adversely affect the price of the security. To the extent that the Underlying Fund seeks to use any strategies or instruments to hedge or to protect against currency exchange risk, there is no guarantee that hedging or protection will be achieved. If currency management strategies are used, it may substantially change the Underlying Fund's exposure to currency exchange rates and could result in losses to the Underlying Fund if the currencies do not perform as the Investment Manager expects. Page 3 of 5

4 Investment in the fund is subject to certain risks, including but not limited to: Investment Interest Rate Securities Liquidity Market Class Hedging Eurozone Low-Rated or Non- Investment Grade Securities risk Sovereign Debt Structured Notes Swap Agreements Distribution As the Underlying Fund invests in debt securities or money market instruments it is subject to interest rate risk. A fixed income security s value will generally increase in value when interest rates fall and decrease in value when interest rates rise. Interest rate risk is the chance that such movements in interest rates will negatively affect a security s value or, in the Underlying Fund s case, its net asset value. Reduced liquidity may have an adverse impact on market price and the Underlying Fund s ability to sell particular securities when necessary to meet the Underlying Fund s liquidity needs or in response to a specific economic event such as the deterioration in the creditworthiness of an issuer. This is a general risk which affects all types of investment. Price trends are determined mainly by financial market trends and by the economic development of the issuers, who are themselves affected by the overall situation of the global economy and by the economic and political conditions prevailing in each country. Because the securities that the Underlying Fund holds fluctuate in price, the value of the Fund s investment in the Underlying Fund will go up and down. The Fund may not get back the amount that the Fund invested in the Underlying Fund. The Underlying Fund Manager may engage in currency hedging transactions with regard to a certain Share Class (the Hedged Share Class ). Hedged Share Classes are designed i) to reduce exchange rate fluctuations between the currency of the Hedged Share Class and the base currency of the Underlying Fund or ii) to reduce the exchange rate fluctuations between the currency of the Hedged Share Class and other material currencies within the Underlying Fund s portfolio. The Underlying Fund may invest in the Eurozone. Mounting sovereign debt burdens and slowing economic growth among European countries, combined with uncertainties in European financial markets, including feared or actual failures in the banking system and the possible break-up of the Eurozone and Euro currency, may adversely affect interest rates and the prices of both fixed income and equity securities across Europe and potentially other markets as well. The performance and value of the Underlying Fund may be adversely affected should there be any adverse credit events (e.g. downgrade of the sovereign credit rating or default or bankruptcy of any European countries) The Underlying Fund may invest in higher-yielding securities rated lower than investment grade. Accordingly, an investment in the Underlying Fund is accompanied by higher degree or credit risk. Below investment-grade securities such as, for example, high-yield debt securities, may be considered a high-risk strategy and can include securities that are unrated and/or in default. Lower-quality, higher yielding securities may also experience greater price volatility when compared to higher quality, lower yielding securities. Investment in Sovereign Debts issued or guaranteed by governments or their agencies and instrumentalities ( governmental entities ) involves a high degree of risk. The governmental entity that controls the repayment of Sovereign Debt may not be able or willing to repay the principal and/or interest when due in accordance with the terms of such debt due to specific factors, including, but not limited to (i) their foreign reserves, (ii) the available amount of their foreign exchange as at the date of repayment, (iii) their failure to implement political reforms, and (iv) their policy relating to the International Monetary Fund. Sovereign Debt holders may also be affected by additional constraints relating to sovereign issuers which may include: (i) the unilateral rescheduling of such debt by the issuer and (ii) the limited legal recourses available against the issuer (in case of failure of delay in repayment). The Underlying Fund may invest in Sovereign Debt issued by governments or government-related entities from countries referred to as Emerging Markets or Frontier Markets, which bear additional risks compared to more developed markets due to such factors as greater political and economic uncertainties, currency fluctuations, repatriation restrictions or capital controls, etc.). Structured notes such as credit linked notes, equity linked notes and similar notes involve a counterparty structuring a note whose value is intended to move in line with the underlying security specified in the note. Unlike financial derivative instruments, cash is transferred from the buyer to the seller of the note. Investment in these instruments may cause a loss if the value of the underlying security decreases. There is also a risk that the note issuer will default. Additional risks result from the fact that the documentation of such notes programmes tends to be highly customised. The liquidity of a structured note can be less than that for the underlying security, a regular bond or debt instrument and this may adversely affect either the ability to sell the position or the price at which such a sale is transacted. The Underlying Fund may enter into interest rate, index and currency exchange rate swap agreements for the purposes of attempting to obtain a particular desired return at a lower cost to the Underlying Fund than if the Underlying Fund had invested directly in an instrument that yielded that desired return. Whether the Underlying Fund s use of swap agreements will be successful in furthering its investment objective will depend on the ability of the Investment Managers to correctly predict whether certain types of investments are likely to produce greater returns than other investments. Because they are two party contracts and because they may have terms of greater than seven (7) calendar days, swap agreements may be considered to be illiquid. Moreover, the Underlying Fund bears the risk of loss of the amount expected to be received under a swap agreement in the event of the default or bankruptcy of a swap agreement counterparty. The Fund intends to make distributions on a quarterly basis during the first 5 years from the policy date and annually thereafter until the maturity of the Policy. The Fund has the absolute discretion to determine whether a distribution is to be made. The Fund also reserves the right to review and make changes to the distribution policy from time to time. The ability of the Fund to make periodic income distribution is depending on income payouts by the Underlying Fund. The income distributions made by the Fund may not be in congruent with income payout received from the Underlying Fund due to factors such as expenses, taxes etc. Please note that the Manager of the Underlying Fund has the discretion to make distributions out of capital in the event the income generated by the Underlying Fund is insufficient. Please note that the above is a summary of the investment risks, please refer to policy contract for full details. Page 4 of 5

5 Management on the usage of derivative instruments Franklin Templeton s philosophy on risk management is to ensure risks are: Recognized: The firm seeks to identify and understand risk at the security, portfolio, and operational level. Rational: The firm strives to ensure that risks are intended and a rational part of each portfolio s strategy. Rewarded: The firm applies its best effort to verify that risks assumed provide the potential to commensurate long-term reward. Franklin Templeton s approach is to use a dedicated team of risk management specialists who are independent of the portfolio managers and provide robust analytics and unbiased insight. These specialists are locally positioned in the primary investment management offices, to work consultatively with portfolio teams around the globe. Franklin Templeton has developed a rigorous structure to provide this independent oversight. Senior risk management specialists participate on various committees, dealing with such issues as counterparty risk, pricing and liquidity risk, the use of complex securities or investment techniques, and the vetting of new products. Supporting these efforts are centrally supported platforms for data analytics and modeling, portfolio compliance, and trade monitoring and execution. Page 5 of 5