Philam Life Unit-linked Funds Performance Report Full Year 2018 · 2020-02-03 · Trade disagreements between the world’s key economies dampened manufacturing activity and slowed

Philam Life Unit-linked FundsPerformance Report Full Year 2018

philamlife.com (02) 528-2000 PhilamLifeAIA

About Philam Life

The Philippine American Life and General Insurance Company (Philam Life) is the country’s premier life insurance company. Established on 21 June 1947, Philam Life has earned the trust of customers for its financial strength, strong brand name, and ability to deliver on its promises.

Philam Life has PHP249.6 billion in total assets as of 31 December 2018, while serving over 700,000 individual policyholders and over 3,000,000 insured group members.

Philam Life understands the needs of its customers and provides holistic solutions that include life protection, health insurance, savings, education, retirement, investment, group, and credit life insurance. It also offers bancassurance and fund management products and services through its subsidiaries—BPI-Philam Life Assurance Company (BPLAC) and Philam Asset Management Inc. (PAMI).

Philam Life is a member of AIA Group Limited, the largest independent publicly listed pan-Asian life insurance group.

About the Philam Group

The Philam Group comprises the biggest life insurance company in the Philippines. By putting its customers at the center of its operations, the Philam Group has earned the trust of its stakeholders and has achieved continued growth over the years.

The Philam Group was formed with the mission of empowering Filipinos to achieve financial security and prosperity. Through its strong network, it is able to offer financial solutions such as life protection, health insurance, savings, education, retirement, investment, group and credit life insurance, and fund management products and services.

After the establishment of Philam Life in 1947, the Philam Group has since expanded to include other affiliate companies, namely: BPI-Philam Life Assurance Company (BPLAC), Philam Asset Management Inc. (PAMI), Philam Call Center, and Philam Foundation.

Based on the Insurance Commission results as of 31 December 2018, the combined total premium income of Philam Life and BPLAC is at PHP40.7 billion. Its strength and stability is solidified by its assets at PHP247.0 billion and net worth at PHP77.1 billion. It is a member of AIA Group Limited, the largest independent publicly listed pan-Asian life insurance group.

About AIA

AIA Group Limited and its subsidiaries (collectively “AIA” or the “Group”) comprise the largest independent publicly listed pan-Asian life insurance group. It has a presence in 18 markets in Asia-Pacific – wholly-owned branches and subsidiaries in Hong Kong, Thailand, Singapore, Malaysia, China, Korea, the Philippines, Australia, Indonesia, Taiwan, Vietnam, New Zealand, Macau, Brunei, Cambodia, a 97 per cent subsidiary in Sri Lanka, a 49 per cent joint venture in India and a representative office in Myanmar.

The business that is now AIA was first established in Shanghai a century ago in 1919. It is a market leader in the Asia-Pacific region (ex-Japan) based on life insurance premiums and holds leading positions across the majority of its markets. It had total assets of US$230 billion as of 31 December 2018.

AIA meets the long-term savings and protection needs of individuals by offering a range of products and services including life insurance, accident and health insurance and savings plans. The Group also provides employee benefits, credit life and pension services to corporate clients. Through an extensive network of agents, partners and employees across Asia-Pacific, AIA serves the holders of more than 33 million individual policies and over 16 million participating members of group insurance schemes.

December 2018

Dear Policyholder,

The world economy firmly grew 3.0% in 2018, albeit at a slower pace than in 2017. Asia remains to be the biggest contributor to world GDP, growing 6.3% in 2018. Meanwhile, the Philippine economy continues to display strength despite headwinds in 2018. Local economic growth registered 6.2% in 2018, slower than 2017’s 6.7% growth rate.

The year 2018 was a challenging one for both global and local financial markets. It was a story of reflation and rising interest rates in the Philippine setting. The Build, Build, Build Infrastructure program by the government continued to buoy economic growth, resulting in stronger demand for imported raw materials and capital equipment, which contributed to a wider current account deficit and ultimately depreciating the value of the Philippine peso against the US dollar. Meanwhile, the increase in global oil prices and weaker local currency pressured Philippine inflation, which averaged 5.2% in 2018, breaching the Bangko Sentral ng Pilipinas’ (BSP) 2.0 to 4.0% target. To abate rising price pressures, the BSP aggressively hiked policy rates by 175bps cumulatively to 4.75%. Given high local interest rates and peso depreciation amid escalating concerns in geo-politics and global trade, the Philippine Stock Index (PSEi) underperformed in 2018 at -12.8%.

Despite the volatility in the market and other factors, Philam Life reaffirms its strength and leadership with strong financial performance in 2018 based on audited financial statements:

- Total Assets of PHP249.6 billion - Net Worth of PHP80.6 billion - Paid up Capital of PHP2.0 billion - Gross Premiums of PHP22.7 billion - Net Income of PHP9.8 billion

Thank you for your loyalty and continued patronage. Should you have any inquiries, please do not hesitate to call us at (+632) 528-2000 or e-mail us at [email protected]. You may also visit our website at www.philamlife.com or go to the nearest Philam Life Customer Service Center for assistance.

KELVIN ANGChief Executive OfficerKELKEKELKELKELKELKELELEEKELKELLEKEKEE VVVINVVVVVV ANGChief Executive Office

2018 was an eventful year. The United States (US) central bank raised its short-term interest rates four times or a total of 100 basis points.The Philippine currency depreciated 5.3%. For the first time since 2004, the country’s imports outpaced exports throughout the year. The local Consumer Price Index was at the ‘front and center’ of uncertainties. Disruptions in food supply and the impact of new taxes pushed Philippine inflation to 11-year-highs. Dubai crude oil prices soared to US$79 per barrel in October, from US$55 per barrel 12 months before. The local central bank adjusted its overnight lending rate, two months after the US Federal Reserve Bank, by an average of 25 basis points every month until November. Trade disagreements between the world’s key economies dampened manufacturing activity and slowed global Gross Domestic Product (GDP) growth to 3.6%, from 3.8% in 2017. Notwithstanding, the Philippine economy grew faster than 6% for the seventh consecutive year, owing to robust domestic consumption and investment spend. The bond and stock markets fell, with their benchmarks returning -5.2% and -12.8%, respectively.

At 6.2%, Philippine GDP growth proved resilient, even as it moderated from 6.7% the year before. Domestic “drivers”, namely, public and private construction, led growth, expanding 21.2% and 12.9%. Financial intermediation (banking, insurance and other institutions that mobilize savings) grew 7.1%. Employed persons increased 2.1% to 41.2 million – employment rose to 94.7% (+0.4-ppts). Real per capita income (USD3,580) improved 4.5%, despite the 5.2%-increase in consumer prices. Inflation accelerated steadily, from one month to the next until October, reaching 6.7%, from just 3.4% at the start of the year. From the perspective of the supply of goods and services, output in the service sector grew 6.6% and accounted for nearly two-thirds of GDP growth. Retail trade, tourism, business process outsourcing (BPO), real estate, and finance were mainly responsible. Industry expanded 6.8%, where manufacturing and construction provided nearly 20 percent and 16%, respectively. Agriculture nudged 1%. On the demand-side, investment spending rose 13.9%. Private consumption slowed to 5.6% from 5.9%, supported by the 3%-increase in workers’ remittances (US$28.9 billion). Government consumption grew 12.8%, following higher spending on social services and the hike in salaries of government employees. Exports of goods and services recorded 11.5% growth, while imports (mainly investment and consumer goods) rose 14.5%.

General Market Overview

The Local Economy

2018 ANNUAL REPORT PHILAM LIFE VARIABLE FUNDS

Interest rates, in lock step with inflation, rose steadily, from one month to the next until October. The 10-year Philippine government bond yield reached a high of 7.96%, from just 4.97% at the start of 2018. Concurrently, bond prices recorded year-on-year declines, month after month, throughout 2018, ending at 94.92,from 100.16 in December 2017. To address accelerating inflation, the BSP hiked policy rates by a total of 1.75%, from 3% to 4.75%, throughout the year. The higher-than-programmed cash deficit of the National Government (NG) likewise exerted upward pressure on interest rates. Expenditures exceeded revenues by PHP558 billion, from PHP350 billion in 2017. Spending on infrastructure and capital outlays of PHP235 billion (+41%) and the hiring and higher pay of government workforce of PHP179 billion contributed the most. To cushion the bond portfolios’ sensitivity to the rise in interest rates, the portfolios added to shorter tenors, mainly. Duration, or the time it takes for a bond to receive all payments or proceeds, shortened, tactically. Yield to maturity (or the discount rate at which all future payments equal the price of a bond) increased. Overall, uncertainty in the markets encouraged investors to favor bonds with shorter maturities to guard against higher rates. On balance, interest rates are expected to trend lower in 2019 relative to 2018 levels. Inflation is expected to return to the 2-4% target range of the BSP as supply-driven factors have been addressed and ample market liquidity should sustain demand for fixed income assets.

Stock prices rose at the start of the year, as usual, but gave back all gains (and more) in February. By June, the benchmark fell to levels not seen even in 2017, bounced 6.6% in July, added 2.4% in August, lost 7.4% in September, and added 1.9% in October, before closing 2018 at 7,466, or -12.8% – its worst-performance in the last 10 years. The slowdown in economic activity, coupled with the 200-basis-points increase in discount rates, was the main cause of this negative performance. (Historically, economic growth has had the most significant impact on stock prices.) GDP growth decelerated, sequentially from 7.2% in September 2017 to 6.0% four quarters after. Return on capital (or how much traded companies were earning from investments) declined to 7.51% in 2018, from 7.55% in 2017 and 8.33% in 2016. The country’s ability to pay its loan obligations was not a contributory factor to the negative performance. In April, Standard & Poor’s raised its assessment of the National Government from “Stable” to “Positive”, which paved the way for an “upgrade” in credit rating. Recurring sources of money (in)flows – BPO and tourism industry – recorded US$16.4 billion and US$5.5 billion as of September, contributing to Gross International Reserves (US$79 billion) – equivalent to 7 months’ worth of imports and 6 times the country’s short-term external debt. To cushion the equity portfolios’ sensitivity to the volatility in stock prices, the portfolios added to Cash, mainly. Tracking Error (or the difference in the behavior between the portfolio and Philippine Stock Exchange Index) declined tactically. The portfolio remains composed of high-quality securities and characterized by a high margin of safety. Uncertainty encouraged foreign-domiciled funds to reduce exposure in Philippine shares.

Local Equity Market

Local Fixed Income Market

Global Fixed Income Market

Philam Life’s variable life funds are managed by Philam Life’s team of investment professionals who have 20 to 30 years of experience and expertise in the field of fund management. As of 31 December 2018 total assets under management reached over PHP56.2 billion, excluding those of other Philam affiliates. Philam Life combines its expertise with the strength of its senior management to manage portfolios effectively in order to achieve favorable returns.

FUND MANAGERS

The effects of the U.S. Federal Reserve Bank’s determination to raise policy rates throughout 2018 was felt in financial markets around the world, including the Philippines. As U.S. policy rates increased by 0.50% in the first half of 2018, prices of Philippine government-issued U.S. dollar-denominated bonds declined. Further upward adjustments in U.S. policy rates in the latter part of the year continued to put pressure on the bond market, with yields on 10-year ROP bonds reaching a high of 4.22% in October before closing the year at 3.74%. The US 10-year bond yield rose by 0.28% during the year to close at 2.68%, the highest level seen since 2013. The Federal Funds rate ended the year at 2.50%, after adjustments of 0.25% every three months beginning in March. To cushion the portfolio’s sensitivity to the rise in interest rates, the portfolios adjusted the duration position closer to the benchmark. The portfolio remains composed of high-quality securities and characterized by a high margin of safety. Going into 2019, global interest rates will continue to be driven largely by US monetary policy. Consensus forecasts predict additional hikes by the Federal Reserve, although not as aggressive as those made this year. Expect the Fed to remain data-dependent with respect to determining the direction of interest rates.

Cash and cash equivalents

Financial assets at FVPL*

Loans and receivables

Accrued income

Total Assets

Net Asset Value (NAV)

*Fair Value Through Profit or Loss

90,152,627 1,626,536,236

- 24,110,546

1,740,799,409

99,576 99,576

1,740,699,833 9,377,457,510 3,277,663,052 7,072,458,311

18,732,406 18,732,406

3,198,097 3,198,097

176,321 176,321

836,920,987 8,549,639,790

7,589,012 2,040,126

9,396,189,916

304,126,167 2,964,698,738

1,836,676 10,199,569

3,280,861,149

- 7,072,634,632

- -

7,072,634,632

2,660,799,410

7,929,946 7,929,946

- 2,668,729,356

- -

2,668,729,356

Philam Life Peso Variable Funds

Philam LifeFixed Income

Fund

Philam LifeEquity Fund

Philam LifeBalanced

Fund

PAMI PhilamBond Fund

PAMI PhilamFund

ASSETS

Accounts payable andaccrued expenses

LIABILITIES

Total Liabilities

PAMI PhilamStrategic

Growth Fund

- 19,769,123,698

- 4,300

19,769,127,998

--

19,769,127,998

- 7,170,323,993

- 6,264

7,170,330,257

PAMI PhilamEquity Index

Fund

7,170,330,257

--

FINANCIAL STATEMENTAs of 31 December 2018

STATEMENT OF ASSETS AND LIABILITIES

Cash and cash equivalents

Financial assets at FVPL*

Loans and receivables

Accrued income

Total Assets

Net Asset Value (NAV)

*Fair Value Through Profit or Loss

$624,219 7,559,607

- 150,888

$8,334,714

--

$8,334,714 $69,532,096 $20,772,349

$4,441 $4,441

--

$526,586 68,037,093

- 972,858

$69,536,537

- 20,772,349

--

$20,772,349

Philam Life Dollar Variable Funds

STATEMENT OF ASSETS AND LIABILITIES

FINANCIAL STATEMENTAs of 31 December 2018

ASSETS

Accounts payable andaccrued expenses

LIABILITIES

Total Liabilities

Philam LifeDollar Bond

Fund

Philam LifeGlobal Bond

Fund

High-WaterMark Fund

2019

Fund Description

Fund Performance*

FIXED INCOME SECURITIES (as of 31 Dec 2018)

PORTFOLIO MIX* (as of 31 Dec 2018)

PORTFOLIO STATISTICS (as of 31 Dec 2018)

NAVPU Since Inception

The Philam Life Fixed Income Fund (PFIF) is a PHP-denominated investment fund created for variable life insurance contracts issued by The Philippine American Life and General Insurance Company (Philam Life). It is an investment option for the variable life policyholder with a preference for investing in high-quality interest-bearing debt instruments that present low to moderate levels of risk. The investment objective of the Philam Life Fixed Income Fund is to provide stable income over the medium- to long-term, and preserve capital by investing primarily in PHP-denominated fixed-income securities issued by the government and reputable corporate issuers.

Net Asset Value (NAV in PHP) 1,740,699,833Net Asset Value per Unit (NAVPU) 1.9447

Cash & Cash Equivalents 5.25% Corporate Securities 17.17% Philippine Issued Peso Government Bonds 77.58%

* Fund returns are calculated based on Net Asset Value (NAV) per Unit (NAVPU). NAVPU is the market value of the fund divided by its total number of outstanding units. Past performance is not indicative of future performance.

* Based on Audited Financial Statement. NAV is net of 2.0% fund management charge, transaction cost, and audit fees.

* Excluding accrued income

Top 10 Issues Maturity % of PortfolioPH Issued PHP Govt Bonds 7/19/31 19.74%PH Issued PHP Govt Bonds 6/13/21 8.96%PH Issued PHP Govt Bonds 1/14/36 8.89%PH Issued PHP Govt Bonds 10/24/37 7.78%PH Issued PHP Govt Bonds 1/15/21 6.04%PH Issued PHP Govt Bonds 4/11/20 5.99%PH Issued PHP Govt Bonds 12/4/22 5.75%PH Issued PHP Govt Bonds 9/9/25 5.22%PH Issued PHP Govt Bonds 11/22/19 3.01%PH Issued PHP Govt Bonds 11/26/22 2.87%

2018 Return -6.44%2017 Return -0.56%2016 Return 0.67%2015 Return -2.00%2014 Return 4.51%2013 Return 5.22%2012 Return 7.37%2011 Return 11.05%2010 Return 10.46%2009 Return 7.45%3 Years Return (annualized as of 31 Dec 2018) -2.16%5 Years Return (annualized as of 31 Dec 2018) -0.83%Return since Inception (annualized as of 31 Dec 2018) 4.82%

PHILAM LIFEFIXED INCOME FUND

Fund Inception Date: 10 November 2004

NAVPU Since Inceptionp p

0.8

1.1

1.3

1.6

1.8

2.1

2.3

Nov-0

4

Feb-

06

May-0

7

Sep-

08

Dec-0

9

Apr-1

1

Jul-1

2

Nov-1

3

Feb-

15

Jun-

16

Sep-

17

Dec-1

8

Fund Description

Fund Performance*


COMMON STOCKS by SECTOR (as of 31 Dec 2018)




The Philam Life Equity Fund (PEF) is a PHP-denominated investment fund created for variable life insurance contracts issued by The Philippine American Life and General Insurance Company (Philam Life). This investment option is for the variable life policyholder with an investment objective of capital appreciation over a long-term investment horizon, and the risk appetite for the stock market. The investment objective of the Philam Life Equity Fund is to achieve capital growth by investing in an efficient and diversified portfolio of predominantly growth companies while including appropriate value stocks.

NAV in PHP 9,377,457,509.60NAVPU 3.4859

Cash & Cash Equivalents 8.92% Common Stocks 91.08%

* Fund returns are calculated based on NAVPU. Past performance is not indicative of future performance.



Top 10 Issues % of Portfolio SM Investments Corporation 10.66% Ayala Land Inc 9.78% SM Prime Holdings Inc 9.05% Ayala Corporation 8.03% Bank of the Philippine Islands 7.60% BDO Unibank Inc 7.29% Metropolitan Bank & Trust Co 4.81%JG Summit Holdings Inc 4.17% Aboitiz Equity Ventures Inc 3.81% International Container Terminal Services Inc 2.96%

Sector % of PortfolioFinancials 57.01%Industrials 27.01%Consumer Staples 6.87%Utilities 2.71%Consumer Discretionary 2.63%Telecommunication Services 2.07%Energy 1.70%

2018 Return -12.55%2017 Return 21.38%2016 Return -2.71%2015 Return -5.72%2014 Return 19.09%2013 Return -5.55%2012 Return 24.44%2011 Return 0.31%2010 Return 49.15%2009 Return 41.47%3 Years Return (annualized as of 31 Dec 2018) 1.08%5 Years Return (annualized as of 31 Dec 2018) 3.00%Return since Inception (annualized as of 31 Dec 2018) 9.23%

PHILAM LIFEEQUITY FUND

Fund Inception Date: 10 November 2004


0.8 1.2 1.6 2.0 2.4 2.8 3.2 3.6 4.0 4.4

Nov-

04

Feb-

06

May

-07

Sep-

08

Dec-

09

Apr-1

1

Jul-1

2

Nov-

13

Feb-

15

Jun-

16

Sep-

17

Dec-

18

Fund Description

Fund Performance*






The Philam Life Balanced Fund (PBAL) is a peso-denominated investment fund created for variable life insurance contracts issued by Philam Life. This investment option is for the variable life policyholder with an investment objective of long-term capital appreciation by investing primarily in peso-denominated equities, equity-related securities, and debt securities.

NAV in PHP 3,277,663,052.27*NAVPU 1.7808

Cash & Cash Equivalents 9.30%Philippine Issued Peso Government Bonds 39.58%Common Stocks 51.12%

* Fund returns are calculated based on NAVPU Past performance is not indicative of future performance.



PHILAM LIFEBALANCED FUND

Fund Inception Date: 22 May 2007

Top 10 Issues % of PortfolioSM Investments Corporation 14.15%SM Prime Holdings Inc 8.99%Ayala Land Inc 8.81%BDO Unibank Inc 7.69%Bank of the Philippine Islands 7.58%Ayala Corporation 7.43%Metropolitan Bank & Trust Co 4.79%JG Summit Holdings Inc 3.95%Aboitiz Equity Ventures Inc 3.94%International Container Terminal Services Inc 2.95%

Top 10 Issues Maturity % of PortfolioPH Issued PHP Govt Bonds 4/11/20 22.59%PH Issued PHP Govt Bonds 6/13/21 14.90%PH Issued PHP Govt Bonds 12/4/22 14.46%PH Issued PHP Govt Bonds 4/21/23 13.81%PH Issued PHP Govt Bonds 2/19/19 9.31%PH Issued PHP Govt Bonds 1/15/21 8.27%PH Issued PHP Govt Bonds 1/12/20 7.52%PH Issued PHP Govt Bonds 11/26/22 3.60%Union Bank of the Philippines 12/7/20 2.32%Metropolitan Bank & Trust Co 11/9/20 1.93%

2018 Return -8.31%2017 Return 12.41%2016 Return -1.57%2015 Return -3.50%2014 Return 13.09%2013 Return -4.31%2012 Return 23.90%2011 Return 1.34%2010 Return 41.93%2009 Return 34.07%3 Years Return (annualized as of 31 Dec 2018) 0.48%5 Years Return (annualized as of 31 Dec 2018) 2.06%Return since Inception (annualized as of 31 Dec 2018) 5.10%

NAVPU Since Inception management charge, transaction cost, and audit fees.

0.5

0.8

1.0

1.3

1.5

1.8

2.0

2.3

May

-07

Oct

-08

Mar

-10

Sep-

11

Feb-

13

Aug-

14

Jan-

16

Jun-

17

Dec-

18

Fund Description

Fund Performance*





The Philam Life Dollar Bond Fund (PALDBF) is a USD-denominated investment fund created for dollar variable life insurance contracts issued by The Philippine American Life and General Insurance Company (Philam Life). The Philam Life Dollar Bond Fund is an investment option for the variable life policyholder with a preference for investing in USD-denominated Philippine government and corporate fixed-income securities. The Fund aims to provide income growth while maintaining moderate liquidity over the medium- to long-term investment horizon.

NAV in USD 69,532,096NAVPU 2.0429

Cash & Cash Equivalents 13.27%Foreign Bond Securities 31.86%Philippine Issued Dollar Government Bonds 54.88%




PHILAM LIFEDOLLAR BOND FUND

Fund Inception Date: 12 July 2005

2018 Return -2.58%2017 Return 3.07%2016 Return 0.37%2015 Return 1.29%2014 Return 7.54%2013 Return -8.57%2012 Return 10.14%2011 Return 6.60%2010 Return 9.55%2009 Return 15.29%3 Years Return (annualized as of 31 Dec 2018) 0.26%5 Years Return (annualized as of 31 Dec 2018) 1.89%Return since Inception (annualized as of 31 Dec 2018) 5.45%

Top 10 Issues Maturity % of PortfolioPH Issued US$ Govt Bonds 10/23/34 9.55%PH Issued US$ Govt Bonds 3/1/41 9.49%PH Issued US$ Govt Bonds 1/14/31 7.93%ICTSI Treasury B.V. 1/16/23 7.45%PH Issued US$ Govt Bonds 1/15/21 6.79%PH Issued US$ Govt Bonds 2/2/30 6.69%PH Issued US$ Govt Bonds 1/21/24 5.21%SM Investments Corporation 10/17/19 5.07%PH Issued US$ Govt Bonds 2/1/28 4.76%JG Summit Holdings 1/23/23 4.48%

NAVPU Since Inception Past performance is not indicative of future performance.

0.8

1.0

1.2

1.4

1.6

1.8

2.0

2.2

Jul-0

5

Aug-

06

Oct-0

7

Nov-

08

Jan-

10

Feb-

11

Apr-1

2

May

-13

Jul-1

4

Aug-

15

Oct-1

6

Nov-

17

Dec-

18

Fund Description

Fund Performance*





The Philam Life Global Bond Fund (PALGBF) is a USD-denominated investment fund created for dollar variable life insurance contracts issued by The Philippine American Life and General Insurance Company (Philam Life). The Philam Life Global Bond Fund is an investment option for the variable life policyholder with a preference for investing in USD-denominated high-quality, investment-grade fixed-income securities with low to moderate levels of risk over a medium- to long-term investment horizon. The Fund aims to preserve capital and provide stable income growth over the medium- to long-term.

NAV in USD 8,334,714.15NAVPU 1.5619

Cash & Cash Equivalents 12.96%Foreign Corporate Securities 87.04%




PHILAM LIFEGLOBAL BOND FUND

Fund Inception Date: 12 July 2005

2018 Return -1.88%2017 Return 2.05%2016 Return 1.48%2015 Return 0.16%2014 Return 3.40%2013 Return -4.28%2012 Return 11.70%2011 Return 2.81%2010 Return 6.33%2009 Return 9.08%3 Years Return (annualized as of 31 Dec 2018) 0.54%5 Years Return (annualized as of 31 Dec 2018) 1.03%Return since Inception (annualized as of 31 Dec 2018) 3.37%

Top 10 Issues Maturity % of PortfolioChina Cinda Finance 5/14/2024 9.31%Reliance Hdg USA 2/14/2022 7.33%China Overseas Finance 11/10/2020 7.30%Charming Light Invest 9/3/2024 7.27%Bangkok Bank 10/18/2020 6.51%China Overseas Finance 10/29/2023 5.93%Siam Commercial Bank 4/7/2019 5.67%CITIC Ltd 1/17/2023 4.68%Talent Yield Invest 4/25/2022 4.30%PCCW Capital 4/17/2022 2.98%



0.9

1.1

1.2

1.4

1.5

1.7

Jul-0

5

Aug-

06

Oct

-07

Nov-

08

Jan-

10

Feb-

11

Apr-1

2

May

-13

Jul-1

4

Aug-

15

Oct

-16

Nov-

17

Dec-

18

Fund Description

Fund Performance*




The Philam Life High-Water Mark (HWM) Fund 2019 is a USD-denominated single-asset fund that locks in the highest NAVPU of the fund at maturity. The fund is invested in a 10-year structured note issued by Barclays Bank PLC, which is exposed to various asset classes and markets, such as global and emerging market equities and bonds. On a daily basis, the note allocates its exposure between risky and risk-free assets to maximize returns while ensuring that the highest NAVPU is protected at maturity.

NAV in USD 20,772,349NAVPU 1.1950Remaining Life (in years) 0.36


* Based on Audited Financial Statement. NAV is net of 2.2% administrative charge.

PHILAM LIFEHIGH-WATER MARK FUND 2019 (or Prime Yield)

Fund Inception Date: 13 May 2009

2018 Return -0.65%2017 Return -1.35%2016 Return -1.20%2015 Return -0.05%2014 Return 0.73%2013 Return -3.73%2012 Return 5.06%2011 Return 2.59%2010 Return 1.96%3 Years Return (annualized as of 31 Dec 2018) -1.07%5 Years Return (annualized as of 31 Dec 2018) -0.51%Return since Inception (annualized as of 31 Dec 2018) 1.87%

Matual Fund % of PortfolioAberdeen Global World Equity Fund 35.00%Aberdeen Global EM Equity Fund 7.50%BlackRock Global Funds - Global SmallCap Fund 7.50%Parvest US Dollar Bond Fund 16.00%Pimco Total Return Bond Fund 16.00%MFS Meridian EM Debt Fund 8.00%PIMCO Funds Glb Investors - Glb Real Return Fund 10.00%


Fund returns are calculated based on NAVPU Past performance is not indicative of future performance.

1.0

1.1

1.2

1.3

May

-09

Apr

-10

Apr

-11

Mar

-12

Mar

-13

Feb-

14

Feb-

15

Jan-

16

Jan-

17

Dec

-17

Dec

-18

Fund Description

Fund Performance*





The PAMI Philam Bond Fund is a PHP-denominated single asset fund invested in Philam Asset Management Inc.'s PAMI Bond Fund (PBF). The investment focus of the fund is capital preservation with returns and inflows derived out of investments in fixed income instruments. The fund considers medium to long-term investment horizons for its shareholders.

NAV in PHP 2,660,799,410NAVPU 3.9195

Cash & Cash Equivalents 11.09% Philippine Issued Peso Government Bonds 61.96% Corporate Securities 26.95%




PAMI PHILAM BOND FUNDFund Inception Date: 1 August 2012

2018 Return -3.22%2017 Return 0.10%2016 Return 1.52%2015 Return -0.91%2014 Return 1.99%2013 Return 6.01%2012 Return 4.60%3 Years Return (annualized as of 31 Dec 2018) -0.56%5 Years Return (annualized as of 31 Dec 2018) -0.12%Return since Inception (annualized as of 31 Dec 2018) 1.53%

Issue Maturity % of PortfolioPH Issued PHP Govt Bonds 7/19/31 6.85%PH Issued PHP Govt Bonds 4/21/23 6.27%PH Issued PHP Govt Bonds 1/14/36 6.20%PH Issued PHP Govt Bonds 1/14/36 5.95%PH Issued PHP Govt Bonds 9/9/25 4.31%


3.5

3.8

4.0

4.3

4.5

Aug

-12

May

-13

Mar

-14

Dec

-14

Oct

-15

Jul-1

6

May

-17

Feb-

18

Dec

-18

Fund Description

Fund Performance*


COMMON STOCKS (as of 31 Dec 2018 )




The PAMI Philam Fund is a PHP-denominated single asset fund invested in Philam Asset Management Inc.'s PAMI Fund (PFI). The fund is a moderate type of investment dealing with equity securities and fixed income instruments. An adequate portion of the portfolio will be invested in cash or near cash assets to ensure that redemptions will be adequately and immediately serviced. An investment in a balanced fund should be regarded as long term in nature and only suitable for sophisticated investors who understand and appreciate the risk involved.

NAV in PHP 7,072,458,311 NAVPU 15.9113

Common Stocks 50.91%Philippine Issued Peso Government Bonds 49.09%




2018 Return -9.38%2017 Return 11.47%2016 Return -1.47%2015 Return -4.74%2014 Return 13.45%2013 Return -8.76%2012 Return 1.44%3 Years Return (annualized as of 31 Dec 2018) -0.15%5 Years Return (annualized as of 31 Dec 2018) 1.47%Return since Inception (annualized as of 31 Dec 2018) -0.07%

Issue Maturity % of PortfolioPH Issued PHP Govt Bonds 7/19/31 5.09%PH Issued PHP Govt Bonds 3/1/25 2.38%PH Issued PHP Govt Bonds 12/16/35 2.03%PH Issued PHP Govt Bonds 10/24/37 1.60%PH Issued PHP Govt Bonds 1/14/36 1.40%

Top 5 Issues of PFI % of PortfolioSM Investments Corporation 6.95%SM Prime Holdings Inc 4.55%Ayala Land Inc 4.50%Bank of the Philippine Islands 3.84%BDO Unibank Inc 3.82%

PAMI PHILAM FUNDFund Inception Date: 1 August 2012


14.0

15.5

17.0

18.5

20.0

Aug-

12

May

-13

Mar

-14

Dec

-14

Oct

-15

Jul-1

6

May

-17

Feb-

18

Dec

-18

Fund Description

Fund Performance*

COMMON STOCKS (as of 31 Dec 2018)




The PAMI Philam Strategic Growth Fund is a PHP-denominated single asset fund invested in Philam Asset Management Inc.'s PAMI Strategic Growth Fund (PSGF). The investment objective of the fund is capital growth with returns and inflows derived out of investments in equity securities. PSGF considers a medium to long-term investment horizon for its shareholders.

NAV in PHP 19,769,127,998NAVPU 514.9400

Common Stocks 90.48% Philippine Issued Peso Government Bonds 9.52%




2018 Return -12.51%2017 Return 20.03%2016 Return -3.06%2015 Return -6.44%2014 Return 17.71%2013 Return -8.45%2012 Return 3.68%3 Years Return (annualized as of 31 Dec 2018) 0.60%5 Years Return (annualized as of 31 Dec 2018) 2.32%Return since Inception (annualized as of 31 Dec 2018) 0.98%

PAMI PHILAM STRATEGIC GROWTH FUNDFund Inception Date: 1 August 2012

Top 10 Issues of PSGF % of Portfolio SM Investments Corporation 11.92% Ayala Land Inc 8.33% SM Prime Holdings Inc 7.97% Ayala Corporation 6.93% Bank of the Philippine Islands 6.73% BDO Unibank Inc 6.63% Metropolitan Bank & Trust Co 4.29% JG Summit Holdings Inc 3.77% Aboitiz Equity Ventures 3.36% International Container Terminal Services Inc 2.66%


420.0

470.0

520.0

570.0

620.0

Aug

-12

May

-13

Mar

-14

Dec

-14

Oct

-15

Jul-1

6

May

-17

Feb-

18

Dec

-18

Fund Description

Fund Performance*

COMMON STOCKS (as of 31 Dec 2018)




The PAMI Philam Equity Index Fund is a PHP-denominated single asset fund invested in Philam Asset Management Inc.'s PAMI Equity Index Fund (PEIF). It aims to invest in the top 30 corporations that compose the Philippine Stock Exchange Index (PSEi) in such proportion that the performance of the fund attempts to replicate that of the PSEi. The Fund is directed to capitalizing on the long-term positive prospects of the Philippine economy.

NAV in PHP 7,170,330,257NAVPU 0.9669

Cash & Cash Equivalents 3.24% Common Stocks 96.76%




2018 Return -12.70%2017 Return 24.32%2016 Return -2.85%2015 Return -8.31%3 Years Return (annualized as of 31 Dec 2018) 1.79%Return since Inception (annualized as of 31 Dec 2018) -0.95%

PAMI PHILAM EQUITY INDEX FUND

Fund Inception Date: 22 June 2015

Top 10 Issues of PEIF % of PortfolioSM Investments Corporation 13.22%SM Prime Holdings Inc 8.71%Ayala Land Inc 8.47%BDO Unibank Inc 7.00%Ayala Corporation 6.64%Bank of the Philippine Islands 5.52%JG Summit Holdings Inc 4.45%Metropolitan Bank & Trust Co 4.19%Jollibee Foods Corporation 3.75%Aboitiz Equity Ventures Inc 3.66%

0.8

0.9

1.0

1.1

Jun-

15

Nov

-15

Apr

-16

Sep

-16

Mar

-17

Aug

-17

Jan-

18

Jun-

18

Dec

-18

DISCLOSURE STATEMENT

Readership: This document is intended solely for the addressee(s). Its content may be legally privileged and/or confidential. This material is only valid if distributed in the Philippines

Opinions: Any opinion expressed in this document may be subject to change without notice. We are not soliciting or recommending any action based on this material

Risk Warning: Past performance is not indicative of future results. Our investment management services relate to a variety of investments, each of which can fluctuate in value. The value of portfolios we manage may fall as well as rise, and the investor may not get back the full amount originally invested. The investment risks vary between different types of instruments. For example, for investments involving exposure to a currency other than that in which the portfolio is denominated, changes in the rate of exchange may cause the value of investments, and consequently the value of the portfolio, to go up or down. In the case of a higher volatility portfolio, the loss on realization or cancellation may be very high (including total loss of investment), as the value of such an investment may fall suddenly and substantially.

In making an investment decision, prospective investors must rely on their own examination of the merits and risks involved.

Unless otherwise noted, all information contained herein is sourced from Philam Life internal data.

The content included herein has been shared with various in-house departments within the member companies of Philam Life, in the ordinary course of completion. All Philam Life member companies comply with the confidentiality requirements of their respective jurisdictions. Parts of this presentation may be based on information received from sources we consider reliable.

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