http://www.pse.com.ph/html/InvestingInPSE/investing_pse.

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WHAT ARE STOCKS? SECURITIES?

Stocks are shares of ownership in a corporation. When you become a stockholder or shareholder of a
company, you become part-owner of that company. Securities, on the other hand, are proof of one's
ownership or indebtedness in a company. Examples of securities are treasury bills and commercial
papers, which are considered as short-term and are traded in the money market; and stocks and bonds,
which are long-term and traded in the capital market. Securities are easily bought and sold in the stock
market.

WHAT ARE THE TYPES OF SECURITIES THAT I CAN BUY IN THE STOCK MARKET?
Most of the issues listed in the PSE are common stocks. Other types of securities such as preferred
stocks, warrants, PDRs and bonds are also traded.
1. Common Stocks - These are usually purchased for participation in the profits and control of
ownership and management of the company. Holders of common stocks have voting rights.
They are also entitled to an equal pro rata division of profits without preference or advantage
over another stockholder. However, they have the last claim on dividends and are the last to
collect in case of corporate liquidation.
2. Preferred Stocks - Its name is derived from preference given to the holders of these stocks
over holders of common stocks. Holders of preferred stocks are entitled to receive dividends, to
the extent agreed upon, before any dividends are paid to the holders of common stocks.
However, preferred stocks usually have a specified limited rate of return or dividend and a
specified limited redemption and liquidation price.
3. Warrants - A corporation can also raise additional capital by issuing warrants. A warrant,
normally issued on a detachable basis, allows its holders the right, but not the obligation, to
subscribe to new shares at a set price during a specified period of time. It is usually provided
free of charge and traded separately in the securities market.
4. Philippine Deposit Receipts (PDRs) - A PDR is a security which grants the holder the right
to the delivery or sale of the underlying share, and to certain other rights including additional
PDR or adjustments to the terms or upon the occurrence of certain events in respect of rights
issues, capital reorganizations, offers and analogous events or the distribution of cash in the
event of a cash dividend on the shares. PDRs are evidences or statements nor certificates of
ownership of a foreign/foreign-based corporation. For as long as the PDRs arenot exercised, the
shares underlying the PDRs are and will continue to be registered in the name of and owned by
and all rights pertaining to the shares shall be exercised by the issuer.
5. Small-Demominated Treasury Bonds (SDT-Bonds) - The SDT Bonds are long-term and
relatively risk-free debt securities issued by the Bureau of Treasury (BTr) of the Republic of the
Philippines. The bond is a certificate of indebtedness of the Republic of the Philippines to the
owner of the SDT-Bonds.

WHERE CAN I BUY OR SELL SHARES OF STOCKS AND/OR BONDS?

In the Philippines, the only operating stock exchange is the Philippine Stock Exchange (PSE). Its main
function is to facilitate the buying and selling of stocks and other securities through its accredited
trading participants.
The PSE has two trading floors - PSE Centre in Ortigas, Pasig City and PSE Plaza in Ayala, Makati
City - where trading participants trade daily - from 9:30 a.m. to 12:10 p.m. except Saturdays, Sundays,
legal holidays and days when the Central Bank Clearing Office is closed.

HOW ARE SHARES AND SDT-BONDS BOUGHT OR SOLD?

If you wish to buy shares of stocks or SDT-Bonds, you must have a stockbroker who will do this for
you. A stockbroker is a person or a corporation authorized and licensed by the Securities and Exchange
Commission (SEC) and PSE to trade securities.
Investing Procedures:
1. Choose a stockbroker. The PSE has a complete list and information about all its trading
participants who are authorized and qualified to trade either equity or debt securities for you.
This list is also available on the Exchange's website and the PLDT directory's Government and
Business listings yellow pages under the category of stock and bond brokers.
2. You shall be required to open an account and fill-out a Reference Card and to submit
identification papers for verification. The stockbroker will then assign a trader or agent to assist
you in either buying or selling any listed security. Discuss with the trader what stocks to buy or
sell.
3. Give the order to your broker/trader, and then get the acknowledgement receipt.
4. For equity transactions: Deliver the Stock Certificate if you are selling or pay within the
settlement date (3 days from date of transaction) if you are buying. Some brokers may require
you to pay with post-dated checks upon ordering.

For SDT-Bonds transactions: Selling investors must open a RoSS account under his broker's
sub-account and instruct his bank-underwriter to transfer the share to this account. Buying
investors must also open an account with a BTr accredited bank and pay the appropriate amount
of transaction to the settlement bank on the trade date.
5. You shall receive from your broker either the proceeds of sale your stocks (after 3 days for
equities and on the date of trade for SDT-Bonds) or proof of ownership of stocks you bought
(confirmation receipt and invoice). If you wish to have a physical certificate of the equities you
bought, just give instructions to your broker and pay the required upliftment fee. Buyers of
SDT-Bonds will only be given a confirmation slip in lieu of the bond certificates.

You can purchase shares of stock either through IPO (Initial Public Offering) or through the open
market. Shares sold through IPOs are offered for the first time to the public by the company (primary
market) whereby proceeds of the sale go directly to the company. Shares of listed or publicly traded
companies are bought during trading (open market). These shares have since been transferred from one
owner to another (secondary market) and proceeds of the sales do not go directly to the company but to
the owners of the shares.
The Trading Cycle
All equity transactions, whether buying or selling has a settlement period of T+3 (trading day + 3
working days). This means that a seller should be able to deliver the stock certificate, if any, to his
broker and the buyer must have paid the cost of transaction to his broker within 3 working days after
the trade was done. Historically, settlement was done manually (27-day cycle). With the advent of
scripless trading wherein settlement is done via the book-entry-system (thru Philippine Central
Depository or PCD), transactions are settled on the third day after trade date. Under this system, the
investor has the option to hold on to his certificate (uplift) or deposit (lodge) this certificate in PCD
through his broker-participant account.

SDT-Bonds transactions, however, are settled on the same day when the trade is transacted (T+0).
There shall be no physical transfer of bond certificates. The transfer of securities shall be conducted
electronically by the BTr's Registry of Scripless Securities (RoSS). On the other hand, cash settlement
will be coursed through the PSE's two settlement banks namely, Equitable-PCI Bank and Rizal
Commercial Banking Corporation.

WHAT IS THE MINIMUM AMOUNT NEEDED TO INVEST IN THE STOCK MARKET?

Equity trading is done by board lot or round lot system. The Board Lot Table determines the minimum
number of shares one can purchase or sell at a specific price range. Therefore, the minimum amount
needed to invest in the stock market varies and will depend on the market price of the security as well
as its corresponding board lot. Prices of stocks move through a scale of minimum price fluctuations.
On the other hand, the minimum amount of SDT-Bonds that an investor can buy if PhP 5,000.00.

Board Lot Table:

TICK
PRICE LOT SIZE
SIZE
0.0001 to 0.0099 0.0001 1,000,000
0.0100 to 0.0490 0.0010 100,000
0.0500 to 0.2490 0.0010 10,000
0.2500 to 0.4950 0.0050 10,000
0.5000 to 4.9900 0.0100 1,000
5.0000 to 9.9900 0.0100 100
10.0000 to 19.9800 0.0200 100
20.0000 to 49.9500 0.0500 100
50.0000 to 99.9500 0.0500 10
100.0000 to 199.9000 0.1000 10
200.0000 to 499.8000 0.2000 10
500.0000 to 999.5000 0.5000 10
1000.000 to 1999.000 1.0000 5
2000.000 to 4998.000 2.0000 5
5000.000 to UP 5.0000 5

The following securities fees and taxes (subject to change) are levied on the investors:

FEES/TAXES SELLER BUYER

a. Brokerage
Commission
(maximum of
X X
1.5% of
transaction cost
+ 12% VAT)
b. SCCP Fee
of 0.0001 x
X X
value of
transaction
b. Transfer Fee
of Php 100.00 X
+ 12% VAT
d. Cancellation X
 Fee of Php
20.00 + 12%
VAT
e. Stock
Transaction
Tax (½ of 1%
value of X
transaction in
lieu of capital
gains tax)

Illustration:
Buying Transaction:
Mr. X wishes to buy a stock whose market price is P10.00 and with a par value of P1.00. Based on the
Board Lot Table, the minimum number of shares he can buy at a regular transaction is 1,000 shares (a).
In this case, the amount that he needs is about P10,000.00 plus charges. His required cash outflow will
be as follows:
Market
P 10.00
price/share
Minimum
number of x 1,000
shares *
P 10,000.00
Broker's
Commission
+ 168.00
(1.5% +
12% VAT)
Transfer Fee
+ 112.00
+ 12% VAT
SCCP Fee + 1.00
Total Cash
P 10,281.00
Outlay

Selling Transaction:
Mr. Y wishes to sell a stock whose market price is P5.00 and with a par value of P1.00. Based on the
Board Lot Table, the minimum number of shares he can sell at a regular transaction is 1,000 (b). In this
case, the proceeds of the sale is about P5,000.00 less charges. His cash inflow will be as follows:
 Market
P 5.00
price/share
Minimum
number of x 1,000
shares
P 5,000.00
Broker’s
Commission
- 84.00
(1.5% +
12% VAT)
Stock
Transaction - 25.00
Tax
PCD and
- 0.50
SCCP Fees
Cancellation
Fee + 12% - 22.40
VAT
Net Cash
P 4,868.10
Receivable

HOW CAN I PROFIT IN THE STOCK MARKET?

Investors can profit in the stock market thru any or a combination of the following;
• Capital Gains - These are profits made due to an increase in the market price of a stock from
the buying price.
• Cash Dividend - A dividend given to shareholders in the form of cash. It is computed by
multiplying the number of shares held by the cash dividend rate declared.
• Stock Dividend - A dividend given to shareholders in the form of additional stocks. It is
computed by multiplying the number of shares held by the percentage of the stock dividend
declared.
• Stock Rights - Stock rights offering is the option given to the present shareholders to buy
additional shares of stock at a price lower than its market price.

IS THERE ANY RISK INVOLVED IN INVESTING?

Yes, since risk is always a part of any investment. And because stock investment is the most volatile, a
better attitude would be to limit and manage your risk. A maximum level of gain or loss should be set
and calculated decisions should be made when this level is reached.

DO I NEED TO KEEP TRACK OF MY INVESTMENT?

Yes! Having placed some amount in stocks, you should spend some time and effort in studying your
investment. You should keep track of the stock price and follow closely the developments of the
company. This way, you are able to foresee possible gains or losses that will guide you in making
sound and wise investment decisions.

Daily quotations of stock prices can be obtained from your stockbroker or from all leading newspapers.
You may also get information from our official website: www.pse.com.ph or from the PSE-Public
Information and Assistance Center (PIAC) at telephone numbers 688-7602 to 03.

=========================================================================

Kabuhayan Mutual Fund

gidj2006-eche@yahoo.com.ph

For most of the Filipino working class, the usual scenario is that you spend most of your time working
your ass off.

Every day, you wake up six in the morning; eat a quick breakfast of instant noodles, and after that, you
spent 30 to 45 minutes commuting to work. And then you spend most of your day in the office.
Sometimes you may do routine office tasks, while sometimes you may be out doing fieldwork or sales
work.

And then finally, you get home early in the evening. Already feeling dog-tired to do anything else, you
doze off while watching your favorite soap opera on TV. And then you wake up again the next morning
doing the same things.

You probably do this every day of your life since you graduated from college. Sometimes, you may feel
the routine is becoming too boring and wish there is something more to it.

However, even if your job does not give you fulfillment, the best thing about it is that you earn money.
It may not be big, but you earn and may have little savings set aside.

You may have saved up 50,000 to 500,000 pesos in your Bank of the Philippine Islands savings
account from the years of working for different companies so that someday you would have money for
a new home, a new car, your child’s education, or for your retirement.

But the problem is that there is an ongoing economic recession. You know that with the Philippine’s
economy and the rising inflation, the value of your savings five to ten years from now won’t able you
to buy your dream, even if it is placed in a time deposit.

Or even if you placed your savings in an insurance plan or college educational plan. You might have
heard of College Assurance Plan (CAP) which went bankrupt because they can’t commit to the yield
they promised their investors.

Luckily, there is such a thing as mutual funds in the Philippines. A mutual fund is a professionally
managed type of collective investment scheme that pools money from many investors and invests it in
stocks, bonds, short-term money market instruments, and/or other financial securities. The mutual fund
will have a fund manager that trades the pooled money on a regular basis. Currently, the worldwide
value of all mutual funds totals more than US$26 trillion.

In the old days, you can only settle for money market, time deposit or savings account. These financial
instruments do not give you as much return or profit for your hard earned money or savings to
overcome inflation or the drop in purchasing power of the Philippine peso. You may try investing
directly in the Philippine Stock Exchange. However, to be successful, you need good and reliable
information to pick the right stocks to buy.

But now - since 1995, a couple by the name of Lilia and Leo Clemente, who were successful fund
managers in Wall Street, New York, set up an investment company. They called it, “The Mutual Fund
Management Company of the Philippines (MFMCP)” and together with top honchos from San Miguel
Corporation Retirement Fund, Pag-Ibig Mutual Fund, Retirement Separation Benefits System of the
Armed Forces of the Philippines, Manila Electric Company Pension Fund, Philippine Long Distance
Telephone Company Beneficial Trust Fund, and the Philippine National Bank Provident Fund gave life
to what is popularly known now as the “Kabuhayan Mutual Fund.”

Fully supported by the likes of the then Secretary of Finance Roberto Ocampo and President Fidel
Ramos, the Fund was launched at the Heroes Hall of Malacañang Palace.

Since then, a cross section of Filipinos: Overseas Filipino Workers (OFWs) from Hong Kong,
Singapore, Saudi Arabia, United Kingdom, United States, Canada, Thailand, Taiwan, and of course
locally from as far as Davao City and Isabela have entrusted their money and invested in this fund.

The ATR Capital Partners have infused additional capital into MFMCP and with it brought more
expertise into the management of the Fund. MFMCP has also two more funds under it: ATR Kim Eng
Equity Opportunity Fund Inc and ATR Kim Eng Fixed Income Fund.

Nine reasons on why should I invest in Kabuhayan Mutual Fund when there is a global economic
recession?

1. Since a lot of people lost their jobs, they are afraid to spend their money. This in turn caused
everything to be cheap (lower demand equals lower prices). Now is the best time to invest since it’s
cheaper than when the economy gets better in the years to come.

2. Very affordable - Minimum investment is only P5,000. Then You can add a minimum additional
investment of P1,000.

3. Safe - The mutual fund company you are investing in has been around for more than ten years. It is
registered with the Securities and Exchange Commission (SEC) in the Philippines and follows strictly
rules and regulations governing mutual funds. MFMCP has a custodian bank, Hong Kong and
Shanghai Banking Corporation (HSBC) who is the safe keeper of the fund’s assets namely the money
and the securities. The mutual fund company is a separate company from the management company.
The mutual fund company contracts the management company to become its fund manager. The
management company’s main responsibility is to make the fund grow through investing in equities and
fixed income securities. It also reports the funds’ performance every quarter of the year to the board of
directors of the fund company.
4. The fund manager invests the fund in a very secure and safe (blue chip) companies after a careful
study and analysis of the financial market, the track records of the companies he will invest in. He
monitors the market looking for opportunities to make a profit.

5. Investment in mutual fund is diversified. In Kabuhayan Mutual Fund, the fund is 50% invested in
equities which is further spread to 22 different stocks and 50% in fixed income securities which is
mostly government treasury bills.

6. The fund is transparent. Its performance is reported quarterly to SEC and to the board of directors of
the fund. In addition, investors can view his/her account anytime through the internet. MFMCP assigns
each investor a password which he/she will log in at MFMCP’s website to access his/her account.

7. Of course, the main consideration in investing is the return on investment or the money you’ll make.
Kabuhayan Mutual Fund has averaged for three years a yield of 20%. For 2007, its year-to-date
earnings are 21.08%.

8. Investment in mutual fund is very liquid. You can redeem your investment anytime you want.

9. MFMCP’s main concern is that “the interest of the funds’ investors always comes first.” The
company has an Investor Relations Department which is dedicated to servicing the investment needs of
the clients.

For more information about the funds and the management, e-mail Gigi at
gidj2006-eche@yahoo.com.ph.

Contact Us
Feel free to drop by our branches or inquire in the following numbers:
Institutional Sales Desk and MFMCP Head Office View Map
17th Flr. Tower One & Exchange Plaza, Ayala Triangle, Ayala Avenue,Makati City 1200
Trunkline: +632-848-1381
Fax: +632-841-0315
Buendia - Investor Relations Branch View Map
Ground Floor Morning Star Building, Sen. Gil Puyat Ave. (formerly Buendia),Makati City 1200
Telefax: +632-890-3827
Landline: +632-896-3734, +632-896-3750, +632-890-1758 local 403

ow May We Help You??

> Contact Us
Can't find the answer to your question? Call us at:
+632-896-3750 (Buendia, Makati)
+632-848-1381 (Ayala Ave, Makati)
or send us an email
> Email Alerts and Newsletter > Site Feedback > Attend a Free Seminar
FAQ
 1. What is a mutual fund?
2. What are the benefits of investing in a mutual fund?
3. What are the different types of mutual funds?
4. Are mutual funds guaranteed?
5. What is the right fund for me?
6. Are there any fee's or charges when investing in any of MFMCP's funds?
7. How can I track the performance of the fund? What is a NAV?
8. Can I withdraw my money anytime?
9. Who can I call about my account?

1. What is a mutual fund

A mutual fund is simply a financial intermediary that allows a group of investors to pool their money
together with a predetermined investment objective. The mutual fund will have a fund manager who is
responsible for investing the pooled money into specific securities (usually stocks or bonds). When you
invest in a mutual fund, you are buying shares (or portions) of the mutual fund and become a
shareholder of the fund. Mutual funds are one of the best investments ever created because they are
very cost efficient and very easy to invest in (you don't have to figure out which stocks or bonds to
buy). By pooling money together in a mutual fund, investors can purchase stocks with much lower
trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is
diversification.BACK TO TOP
2. What are the benefits of investing in a mutual fund?
For the average investor, mutual funds are a convenient and affordable way of gaining access to
investments that would otherwise be available only to large institutions or the wealthy. These
investments are selected by experienced professionals who devote themselves exclusively to tracking
the markets, analyzing investments, and implementing a consistent investment strategy.
• Diversification - Diversification is the idea of spreading out your money across many different
types of investments. When one investment is down another might be up. Choosing to diversify
your investment holdings reduces your risk tremendously.
• Professionally managed - For the individual investor, mutual funds provide the benefit of
having someone else manage your investments, take care of recordkeeping for your account,
and diversify your pesos over many different stocks that may not be available or affordable to
you otherwise.
• Low investment amount - Today, minimum investment requirements on many funds are low
enough that even the smallest investor can get started in mutual funds.
• Easy access to your funds - You can liquidate your investment anytime you want to. However
you will need to be aware of the value of your investment at the time you liquidate in order to
know whether the value increased or decreased. BACK TO TOP
3. What are the different types of mutual funds
• Equity Funds invest shares in common stock
• Fixed Income Funds invest in government or corporate securities which offered fixed rates of
return
• Balanced Funds invest in a combination of both stocks and bonds BACK TO TOP
4. Are mutual fund guaranteed?
 • Since mutual funds qualify as securities and not deposits, they are not guaranteed, their values
change frequently and past performance may not be repeated.
• However, fund managers and the funds themselves operate under strict securities regulations.
For example, mutual funds are owned by the shareholders and are separate legal entities from
the companies that operate them. BACK TO TOP
5. What is the right fund for me?
Once you've identified your goals and the types of funds available to help you reach them, it's time to
identify specific funds that might be suitable for you and learn more about them before you make your
investment.
• # Visit the Fund Selector to review funds by investment category and compare their objectives,
performance, and expenses. Also review the fund's minimum investment requirement to
determine if you can meet the initial requirement needed to open an account. # Read the
prospectus carefully before you invest. It's important that you understand how the fund operates
and how its policies, fees or philosophies might affect your investment over
• Read the prospectus carefully before you invest. It's important that you understand how the fund
operates and how its policies, fees or philosophies might affect your investment over time.
BACK TO TOP
6. Are there any fees or charges when investing in any of MFMCP's funds?
Kabuhayan Mutual Fund and ATR Kim Eng Equity Opportunity Fund
Entry or Sales Fee Exit or Redemption Fee
2.24% of Investment Amount to be withdrawn for shares held
2.24% of amounts ranging from P5,000-P50,000
less than a year
1.12% of Investment Amount to be withdrawn for shares held
1.68% of amounts over P50,000-P100,000
more than a year but less than two years
1.12% of amounts over P100,000

ATR Kim Eng Fixed Income Fund

Entry or Sales Fee Exit or Redemption Fee
0.5% of Investment Amount to be withdrawn for shares held less
1.12% of any investment amount
than a year

BACK TO TOP
7. How can I track the performance of the fund? What is a NAV?
Treat a mutual fund's net asset value as its price per share. If you see a fund NAV as P100, then you can
expect to buy the fund for P100 or sell it for P100. Since mutual funds hold a number of stocks, the net
asset value must be calculated at the end of the day on a daily basis.
NAV or Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its
liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding.
Buying and selling into funds is done on the basis of NAV-related prices. NAV is calculated as follows:
NAV=Market value of the fund's investments+Receivables+Accrued Income- Liabilities-Accrued
Expenses/Number of Outstanding Shares
BACK TO TOP
8. Can I withdraw my money anytime?
Yes, investors have immediate access to their money by selling shares at the fund's net asset value,
which is determined at the end of each trading day.
BACK TO TOP
9. Who can I call about my account
• Investors Relations Officers can be reached on Mondays to Fridays, 9 am tp 5 pm at telephone
numbers +632-896-3734, 896-3750, 890-3827 and 848-1381. IRD can also be reached outside
of working hours and on weekends via SMS at mobile number +63-917-525-2558 and via e-
mail at ird@mutualfund.com.ph
• The IRD can also assist in providing practical analysis of the current political and economic
situation in addition to the fundamentals of various investments of the fund; quality basic advice
and timing on investment; efficient and precise and speedy confirmation and documentation of
investment or redemption; efficient settlement and reporting of accounts and lastly, to ensure the
confidentiality of all investor accounts and dealings with MFMCP.
• Click below to view to location maps of our offices:
• Head Office and Institutional Sales Desk
• Buendia Investor Relations Office
• Araneta Center Investor Relations Office
• Lipa City Investor Relations Office

Established in 1972 and listed on the Stock Exchange of Singapore, Kim Eng Holdings Ltd. is the
leading independent stockbroking house in Singapore, with operations spanning Hong Kong,
Indonesia, South Korea, London, Malaysia, New York, the Philippines, Taiwan and Thailand.
Kim Eng subsidiaries or affiliates are the top stock brokers in Thailand and Indonesia, and ranked
second in Singapore and fourth in the Philippines.
Aside from its core business of equity trading and research, Kim Eng is also involved in corporate
finance, asset management, fiduciary services, and hedge fund operations.
Kim Eng’s important strategic partners across the region include Mitsubishi UFJ Securities Co. Ltd. of
Japan, Yuanta Core Pacific Securities Group of Taiwan, and ATR Holdings, Inc. of the Philippines.
Visit KimEng Holdings Ltd.'s corporate website

The Kabuhayan Fund is the trade name or brand of The Mutual Fund Company of the Philippines, Inc.
This is also sometimes known as the MFCP Kabuhayan Fund. This fund was established and began
marketing in 1995, and incepted on April 29, 1996.

Investment Objective:
The Kabuhayan Fund is designed to seek total return through current income and long-term capital
growth through investment in listed and non-listed equity and fixed income securities of Philippine
companies and debt obligations of the Government of the Republic of the Philippines and its
instrumentalities. Shares in the Fund are offered primarily to Filipinos.
Largest Institutional Investor-Customers
(in alphabetical order, as of end-July 2009):
 Asian Development Bank (ADB)
 AsianLife and General Assurance Corp. (ALGA)
 AsianLife Financial Assurance Corp. (ALFA)
 ATR KimEng Capital Partners Inc. (as trustee)
 ATR KimEng Securities Inc. (as trustee)
 Eastbridge Holdings Inc.
 Home Development Mutual Fund (The Pag-IBIG Fund)
 Kapatiran sa Kasaganaan Cooperative (KsK)
 Manila Electric Co. (Meralco) Pension Fund
 Philippine Long Distance Telephone Co. (PLDT) Beneficial Trust
 Philippine National Bank (PNB) Regular Retirement Fund

Board Of Directors
Name Position Affiliation

Mr. Carlos
C.Torres Chairman/President DEG

Ms. Ma. Elena Sarmiento Vice-Chairman/TreasurerPNB Reg Retirement Fund

Mr. Rufo B. Colayco Director ATR KimEng Group

Atty. Rosito B. Manhit Director PLDT Beneficial Trust

Mr. Manolo C. Fernando Director Meralco Pension Fund

Mr. Vicente K. Fabella Independent Director Jose Rizal University

Atty. Rose Marie M. King Corporate Secretary SyCip Salazar Law

Atty. Melyjane G. Bertillo Asst Corp Secretary SyCip Salazar Law

External Auditor
Manabat Sanagustin (affiliate of KPMG International)
A mutual fund is a company that pools investors' money to make multiple types of investments, known
as the portfolio. Stocks, bonds, and money market funds are all examples of the types of investments
that may make up a mutual fund.
The mutual fund is managed by a professional investment manager who buys and sells securities for
the most effective growth of the fund. As a mutual fund investor, you become a "shareholder" of the
mutual fund company. When there are profits you will earn dividends. When there are losses, your
shares will decrease in value.
Mutual funds are, by definition, diversified, meaning they are made up a lot of different investments.
That tends to lower your risk (avoiding the old "all of your eggs in one basket" problem).
Because someone else manages them, you don't have to worry about diversifying individual
investments yourself or doing your own record keeping. That makes it easier to just buy them and
forget about them. That's not always the best strategy, however -- your money is in someone else's
hands, after all.
Since the fund manager's compensation is based on how well the fund performs, you can be assured
they will work diligently to make sure the fund performs well. Managing their fund is their full-time
job!
Mutual funds can be open-ended or closed-ended. But many people consider all mutual funds to be
open-ended, while putting closed-ended funds in another category.
"Open-ended" means that shares are issued in the fund (or sold back to the fund) whenever anyone
wants them. With closed-ended funds, only a certain number of shares can be issued for a particular
fund, and they can only be sold back to the fund when the fund itself terminates. (You can sell closed-
ended funds to other investors on the secondary market, though.)
Next Up

• Money Market Accounts

• The Stock Market
• PlanetGreen.com: Green Investing

Load refers to the sales charges added to a mutual fund when you purchase it. The load charge goes to
the fund salesperson as a commission and payment for their research services. Load charges can be up
to 8.5 percent of the selling price and can be figured in as a front-end load (meaning you pay it when
you buy the mutual fund) or a back-end load (meaning you pay when you sell the mutual fund).
Many mutual funds are no-load funds. Yes, that means there is no sales fee charged and the fund is
direct-marketed so you can buy it without the help of a salesperson. With the wealth of information on
the Internet today, it is certainly easier to make smart choices yourself to save money.
In addition to no-load funds, there are also funds that charge up to 3.5 percent as a sales fee. These are
called low-load funds and can still be a good deal.
Mutual funds fall into three categories:
• Equity funds are made up of investments of only common stock. These can be riskier (and earn
more money) than other types.
• Fixed-income funds are made up of government and corporate securities that provide a fixed
return and are usually low risk.
• Balanced funds combine both stocks and bonds in the investment pool and offer a moderate to
 low risk. While low risk may sound good, it is also accompanied by lower rates of return-
meaning you risk less, but your investment won't earn as much. You have to decide how much
risk you're willing to take on before you invest your money.
If you have invested in a college savings fund or a 401k account, chances are good that already own a
few mutual funds. Mutual funds are great for long-term investments like these. You can also buy
mutual funds directly from a mutual fund company.
Most of these offer no-load funds (or sometimes low-load funds). You can find lists of mutual fund
companies on the Internet and purchase shares by simply filling out an application and mailing a check.
Once you are a shareholder, you will receive statements telling you how the fund is doing as well as
how much your own investment is growing. You can also set up monthly bank transfers to
automatically buy more shares every month.
Remember to do your research and select a mutual fund that fits the level of risk you are willing to take
with your hard-earned cash. Then just sit back and hope for the best!