Frequently Asked Questions

ON UITFs

What are UITFs?
“UITF” stands for Unit Investment Trust Fund. It is a BSP-approved instrument wherein investments of various investors are pooled together and treated as a single fund. UITFs were created by Circular no. 447 issued by the Bangko Sentral ng Pilipinas in July 2004.

Why are our investments pooled together?
By combining the investments of small and big investors alike, the Fund’s bigger value will result in greater flexibility and pricing advantage. This effectively maximizes the earnings of Fund participants.

Who can invest in UITFs?
Individuals, corporations, entities with legal capacity to contract, and the like can invest in UITFs.

Can anyone issue UITFs?
No, only those institutions approved by the Bangko Sentral ng Pilipinas (BSP) can create and administer UITFs. The Trust Banking Division of GE Money Bank (GEMB-TBD) is authorized to issue UITFs.

Can anyone market UITFs?
No, only banking personnel who underwent a training program especially designed and duly-approved by the BSP can market UITFs.

What are the different types of GEMB’s UITFs?
Currently, the Classic UITF and the Greenback UITF.

If I invest in a UITF, do I own the Fund or am I lending to it?
You own a portion of the Fund. Your share depends on the number of Units of the Fund that you purchased in proportion to the total number of Units outstanding in the Fund.

Can I give instructions on where the funds should be invested in?
No, GEMB-TBD is the Trustee of the Fund, and as such, GEMB-TBD shall manage the UITFs in behalf of the Participants.

Where can I get a list of the Fund’s investments?
A copy of the “Quarterly Investment Disclosure Statement” of each UITF can be examined by all Participants. The said Statement shall include a list of prospective and outstanding investment outlets of each Fund.

ON INVESTING IN UITFs

How can I invest in the Fund?
You may invest through your GEMB Branch, or you can call the Trust Department for your investments.

How do I know which UITF is for me?
You may choose the UITF that corresponds to your investment objective and risk profile. In addition, you shall undergo a risk profiling evaluation to better assess the suitability of the UITF as an investment for you.

How much do I need to invest in the Fund?
You may invest in the GE Money Bank’s UITFs for as low as P10,000 (for the Classic UITF) or $1,000 (for the Greenback UITF).

What is the price of one unit of the Fund?
The “Net Asset Value per Unit” or NAVPU is the price of one unit of a UITF.

Does the NAVPU change daily?
Yes, this is because the prices of the assets in the Fund are “marked-to-market” on a daily basis.

ON ASSET VALUATION

What is “Mark-to-Market?”
“Mark-to-Market” is an international best practice by which the Fund records the price or value of a security or asset to reflect its current market value.

Consistent with international best practices, UITFs shall mark-to-market the assets of a Fund on a daily basis. This method requires the Trustee to record the price or value of a security or asset to reflect its current market value.

NET ASSET VALUE PER UNIT (NAVPU)

Your investment in a UITF corresponds to a certain number of units based on the prevailing NAVPu on investment date.

The prevailing NAVPu at the time of withdrawal shall be the basis for the amount you will receive as proceeds from your investment.

Net Asset Value of the UITF
Divided by: No. of Units Outstanding

NET ASSET VALUE PER UNIT

Can you give us an example of “Mark-to-Market?”
For example, if the Fund’s portfolio includes 100 shares of a particular stock purchased originally for PHP40 per share, and that stock is currently trading at PHP50 per share, then the "mark-to-market" value of the Fund’s shares is equal to (100 shares * PH P50), or PHP5,000.

How do I determine the current value of my investment?
The NAVPU of each UITF shall be published in a newspaper of national circulation on a weekly basis. You only need to multiply the NAVPU by the number of units you hold to arrive at the current value of your investment. For example, you bought 10,000 units a month ago and the current NAVPU is PHP1.50, then your investment is worth (10,000 * PHP1.50) PHP15,000 today.

ON RETURN ON INVESTMENT

Do I get a guaranteed rate of return?
No, by nature trust products do not guarantee yields. Moreover, no one can accurately predict the market rates of the Fund’s investments at a future date.

Are UITFs deposit products?
No, UITFs are not deposit accounts.

Who is liable for the losses of the Funds?
Being a trust product, any loss or income is for the account of the investor.

Is GEMB-TBD liable for any losses at all?
As with other institutions, the liability of GE Money Bank-Trust Banking Division is limited to losses due to negligence.

Is my investment insured with PDIC?
No, it is not insured by PDIC. However, the BSP is the approving body that closely monitors the management of the UITFs. In addition, KBP-TBD strictly adheres to the highest standards of prudence, apart from its triple annual BSP, external and internal audits.

ON DOCUMENTATION

What documents serve as proof of my investment?
GEMB-TBD shall issue a Participating Trust Agreement and Confirmation of Participation (COP) as evidence of your investment in a UITF.

When do I receive these documents?
We release your documents the following banking day since the assets need to be marked-to-market late in the afternoon of your investment date.

ON REDEMPTION

When can I withdraw my investment?
You can redeem your investment after the holding period as stated in the UITF flyers. However, due to the “marking-to-market” of investments, your funds will be available only on the following banking day.

How do I withdraw my investment?
Simply surrender your COP, with signed instructions at the back, to your GEMB Branch and GEMB-TBD will process your withdrawal based on the prevailing NAVPU for that day.

RISK DISCLOSURE

What are the risks applicable to UITFs?

a. Interest Rate Risk
The UITF portfolio, being marked-to-market, is affected by changes in interest rates thereby affecting the value of fixed income investments such as bonds. Interest rate changes affect fixed income securities inversely, i.e. as interest rates rise, bond prices fall and when interest rates decline, bond prices rise. As the prices of bonds in a fund adjust to a rise in interest rates, the fund's unit price may decline. Investment in government securities in Philippine Peso, although considered credit risk-free, is subject to interest rate risk.

b. Market/Price Risk
It is the risk of the UITF to lose value due to decline in securities prices, which may sometimes happen rapidly or unpredictably. The value of investments fluctuate over a given time period because of general market conditions, economic changes or other events that impact large portions of the market such as political events, natural calamities, etc. As a result the Net Asset Value per Unit (NAVPU) may increase to make profit or decrease to loss money.

c. Liquidity Risk
This risk occurs when certain securities in the UITF portfolio may be difficult or impossible to sell at a particular time, which may prevent the redemption of investment in UITF until its assets can be converted to cash. Even Government Securities, which is the most liquid of fixed income securities, may be subjected to liquidity risk particularly if sizeable volume is involved.

d. Credit Risk
This is the risk of losing value in the UITF portfolio in the event the borrower defaults on his obligation or in the case of counterparty, when it fails to deliver on the agreed trade. This decline in the value of the UITF happens because the default/failure would make price of the security go down and may make the security difficult to sell. As these happen, the UITF’s NAVPU will be affected by a decline in value.

Note: Aside from risks inherent in all investments, those associated with Trust products include, but are not limited to, non-quantifiable/quantifiable risk, country risk, regulatory risks, currency risk, and liquidity risks. There is a possibility that government intervention in the markets, perhaps in the form of fiscal policies, exchange control laws or restrictions on the repatriation of profits, may affect the value of an investment.