Feature

What kind of investment?

Who is the issuer? Structure What instruments are issued? Do investors have shareholder rights? (Voting rights, right to inspect the books of the fund, right to receive dividends, etc.) Who oversees the fund?

Mutual Funds Unit Investment Trust (MF) Funds (UITF) These are pooled investment vehicles combining the monies of various investors, investing them into a diversified portfolio of securities. An investor gains access to and enjoys the services of professional investment managers whose services are normally available only to high net worth individuals or big corporations. Investment company Banks Corporate structure Contractual Structure Common shares Units of participation

Yes. Investors in the fund have the same rights No, since investors in (except pre-emptive rights) UITFs are not as shareholders of ordinary shareholders. companies.

Board of directors Banks Trust Committee Independent Investment Who manages the funds Company Adviser / Fund Banks Trust Department assets? Manager SEC-Licensed Distribution and SEC- Bank-Accredited Sales Who distributes the fund Companies Licensed Certified Frontliners to the public? Investment Solicitors What is the primary Securities and Exchange Bangko Sentral ng Pilipinas government regulatory Commission (SEC) (BSP) agency? Are the funds subject to YES. full disclosure requirements? Are the funds required to give investors a prospectus or a similar Yes. Mutual funds are document that discloses required to submit regular Yes. material information reports to the SEC and disclose material regarding the fund, must particularly its investment information objectives and risk factors? Are the funds required to give investors a YES. prospectus or a similar document that discloses

material information regarding the fund, particularly its investment objectives and risk factors? Are the funds required to give investors an annual Required to be made Yes. available to the participants report including financial of the fund. statements and a schedule of investments? Are the funds subject to NO. BSP reserve requirements? Are gains realized by Yes, as provided for under investors upon the sale of R.A. #8424 or the Tax their holdings in the fund Reform Act of 1997. tax-exempt? Sales load are primarily distribution fees. Positioning: 1. Incentive for longer term investing. 2. Minimal for all the value added services, like the investor receiving financial advice from an advisor and Trust fee is charged as for the advisor to keep compensation for the What are the charges an servicing his client over the Trustees services and to investor will incur? years. cover for the costs involved in managing the UITF. Management fee is charged as compensation for the Independent Investment Company Adviser / Fund managers services and to cover for the costs involved in managing the mutual funds. Are the returns NO. guaranteed? Yes. The following are the guidelines and restrictions: Are the funds subject to 1. The maximum NO. minimum standards for investment of a investing? mutual fund in any single enterprise

must not exceed an amount of 10% of its net asset value. This is to ensure that a mutual fund company is reasonably diversified at all times. 2. The total investment of a mutual fund must not exceed 10% of the outstanding securities of any one investee company. This is to ensure that the mutual fund adheres to its primary purpose, which is to engage in the business of investing, reinvesting and trading in securities. 3. At least 10% of a mutual funds net assets must be invested in liquid/semi-liquid assets to make sure that they have sufficient funds to honor redemptions of investors. 4. Mutual funds are allowed to incur debt provided at all times, there is 300% asset coverage for all its borrowings.

Source: Study Guide for the Investment Company Representative Certification Program, a joint project of Philippine Investment Funds Association (PIFA) and Securities and Exchange Commission (SEC)