BDO PESO FIXED INCOME FUND

Transcription

1 KEY INFORMATION AND INVESTMENT DISCLOSURE STATEMENT FUND FACTS Classification: Medium Term Bond Fund Launch Date: April 29, 2005 Minimum Investment: PHP10, Minimum Additional Investment: PHP10, Minimum Holding Period: 30 calendar days Net Asset Value per Unit (NAVPU): PHP Total Fund NAV: PHP Billion Dealing Period: Up to 2:30pm of any banking day Redemption Settlement: One (1) banking day after the notice of redemption is received Early Redemption Fee: 0.50% of Original Participation Amount FEES* Trustee Fees: % Custodianship Fees: % External Auditor Fees: % Other Fees: % BDO Trust and Investments Standard Chartered Bank, Group Citibank Punongbayan & Araullo None *As a percentage of average daily NAV for the month valued at PHP Billion. INVESTMENT OBJECTIVE AND STRATEGY The Fund aims to provide a high level of income with preservation of principal and maintenance of liquidity by investing in a combination of short to long-term fixed-income securities. The Fund s benchmark is the Markit iboxx ALBI Philippines 1-5 (Domestic) Index (IBXXPH15). CLIENT SUITABILITY A client profiling process should be performed prior to participating in the Fund to guide the prospective investor if the Fund is suited to his/her investment objectives and risk tolerance. Clients are advised to read the Declaration of Trust/Plan Rules of the Fund, which may be obtained from the Trustee, before deciding to invest. The BDO Peso Fixed Income Fund is primarily suitable for individual and corporate investors with moderate risk appetite and who are looking for higher yields and are willing to take the attendant risks that come with portfolios that may have investments with longer tenors. Participants/trustors are recommended to stay invested in the Fund for at least three (3) years. KEY RISKS AND RISK MANAGEMENT You should not invest in this Fund if you do not understand or are not comfortable with the accompanying risks. Interest Rate Risk. This is the possibility for an investor to experience losses due to changes in interest rates. The purchase and sale of a debt instrument may result in profit or loss because the value of a debt instrument changes inversely with prevailing interest rates. Market/Price Risk. This is the possibility for an investor to experience losses due to changes in market prices of securities. It is the exposure to the uncertain market value of a portfolio due to price fluctuations. Liquidity Risk. This is the possibility for an investor to experience losses due to the inability to sell or convert assets into cash immediately or in instances where conversion to cash is possible but at a loss. Credit Risk/Default Risk. This is the possibility for an investor to experience losses due to a borrower s failure to pay the principal and/or interest in a timely manner on instruments such as bonds, loans, or other forms of security, which the borrower issued. Reinvestment Risk. This is the risk associated with the possibility of having lower returns or earnings when maturing funds or the interest earnings of funds are reinvested. The Fund employs a risk management policy based on modified duration. Modified duration measures the sensitivity of bond prices to interest rate movements. As interest rates rise, bond prices fall. The higher the duration, the more the NAVPU will fluctuate in relation to changes in interest rates. All the Fund's investment outlets undergo evaluation in accordance with the Trustee's Investment Policy Manual. Regulatory exposure limits are monitored on a regular basis. The Fund may also use financial derivative instruments solely for the purpose of hedging risk exposures. THE UIT FUND IS NOT A DEPOSIT AND IS NOT INSURED BY THE PHILIPPINE DEPOSIT INSURANCE CORPORATION (PDIC). RETURNS CANNOT BE GUARANTEED AND HISTORICAL NAVPU IS FOR ILLUSTRATION OF NAVPU MOVEMENTS/FLUCTUATIONS ONLY. WHEN REDEEMING, THE PROCEEDS MAY BE WORTH LESS THAN THE ORIGINAL INVESTMENT AND ANY LOSSES WILL BE SOLELY FOR THE ACCOUNT OF THE CLIENT. THE TRUSTEE IS NOT LIABLE FOR ANY LOSS UNLESS UPON WILLFUL DEFAULT, BAD FAITH OR GROSS NEGLIGENCE. For more information, visit our website at or call (02) locals 4265 / 4244 / 4035 / 7032 or us at investments@bdo.com.ph

2 KEY INFORMATION AND INVESTMENT DISCLOSURE STATEMENT (Page 2) FUND PERFORMANCE AND STATISTICS AS OF June 30, 2016 (Purely for reference purposes and is not a guarantee of future results) NAVPU over the past 12 months Highest PHP Lowest PHP Fund s NAVPu vs Benchmark & Risk Free Rate 2,200 2,000 1,800 1,600 1,400 1,200 1, Apr-05 BDO Peso Fixed Income Fund HSBC 1-5Yr Bond Index (net)/markit iboxx ALBI 1-5Yr 91-d T-Bill Auction Rate (net) insert graph here Statistics Weighted Ave. Duration 2.86 Volatility, Past 1 Year % Sharpe Ratio Information Ratio 6 (0.30) Weighted Ave.Yield (net) % 4 Volatility measures the degree to which the Fund fluctuates vis-à-vis its average return over a period of time. 5 Sharpe Ratio is used to characterize how well the return of a Fund compensates the investor for the level of risk taken. The higher the number, the better. 6 Information Ratio measures reward-to-risk efficiency of the portfolio relative to the benchmark. The higher the number, the higher the reward per unit of risk. 7 Net of taxes and trust fees Cumulative Performance (%) Period 1 mo 3 mos 6 mos 1 yr 3 yrs Fund % 1.36% 2.91% 3.15% 6.22% Benchmark 2/3 0.45% 1.80% 3.69% 4.01% 10.93% 1 Past performance is not indicative of future performance. 2 The Fund's benchmark is the HSBC Local Curency Bond Index (HSLI) 1-5Yrs (net), commencing August 31, 2005 The Fund's benchmark is the Markit iboxx ALBI Philippines 1-5 (Domestic) Top Ten Holdings 8 (%) Issue % of Portfolio Index (IBXXPH15) commencing April 29, FXTN /22/ % 15.9% FXTN /23/ % 7.9% Portfolio Composition FXTN /20/ % 6.7% FXTN /18/2018 5% 6.5% BSP Corp Bonds 5.73% TD Other Bank 8/17/ % 6.4% 26.27% ODF 9 7/1/ % TD Other Bank 7/27/ % 3.5% Short-term deposits 10.59% FXTN /19/ % 3.4% FXTN /19/ % 2.8% FXTN /19/ % 2.7% Total 61.7% GS 57.41% 30-Jun-16 8 The complete list of portfolio holdings is available upon request 9 BSP Overnight Deposit Facility RELATED PARTY TRANSACTIONS The Fund has investments and trade transactions with BDO Unibank, Inc., its subsidiaries and related parties, as follows: Transaction Market Value (Mln) BDO Unibank, Inc. Time Deposit Placement - SM Group SM Investments Corp. Investment in Bonds Investments in the said outlets were approved by the Trust Committee. Likewise, all related party transactions are conducted on an arm s length and best execution basis and within established limits.

3 KEY INFORMATION AND INVESTMENT DISCLOSURE STATEMENT (Page 3) OUTLOOK AND STRATEGY June was a tumultuous month for global markets after the Brexit wherein a majority of British voters chose to have the United Kingdom leave the European Union. Consequently, the 10-year US Treasury yield fell to 1.4%, its lowest levels since July 2012 as investors migrated to the safe haven instrument amidst the uncertainty. Surprisingly, Philippine bond market trends mirrored that of the US as the yield on the 5-year peso-denominated sovereign bonds fell to 2.8% at the end of June to its lowest level year-to-date and since the historic lows of Despite the risk aversion, investors were greatly assured of the reduced risk of a Fed rate hike earlier than December 2016 if at all as a result of the fear engendered by Brexit. However, the Philippine peso trended in the opposite direction: it touched the Php46.007=US$1 at the onset of June, but closed the month significantly higher at Php47.162=US$1 as the USD gained strength. PFIF's exposure to government securities increased while corporate bond holdings decreased over June. The Fund's duration increased by two basis points to INVESTMENT POLICY / PROSPECTIVE INVESTMENTS The Fund may invest in deposits in the trustee s bank or in other banks, securities issued or guaranteed by the Philippine Government or the BSP, tradable securities issued by any supranational entity and exchange-listed fixed income securities. Subject to BSP guidelines and the Trustee's Trust Committee approval, the Fund may also avail of financial derivative instruments solely for the purpose of hedging risk exposures, as well as invest in other tradable investment outlets/categories as may be deemed suitable for the Fund. OTHER BASIC FUND FACTS Trust Fee: 1.0% p.a. Bloomberg Ticker: BDOPFIF <Index> Initial NAVPU: PHP1, NAVPU Availability: Every trading day at 7:30 p.m. Available via the Easy Investment Plan (EIP), an investment build-up plan that enables investors to attain their financial goals and financial wellness through the twin habits of regularly saving and investing via selected BDO UITFs; subject to a non-completion fee as detailed in the BDO EIP Joining Terms and Conditions approved by BDO's Trust Committee on January 10, The availability via the Easy Redemption Plan (ERP), a redemption facility that allows participants to partially, automatically and regularly receive regular cash pay-outs from their investments in units of participation in the Fund, has not been implemented yet. Participants will be notified once this feature is available. The availability of Fund's Switching Feature, a feature which allows an existing Participant to request that his UITF units of participation be redeemed and the proceeds thereof reinvested in the units of participation of one or several BDO UITF/s (up to a maximum of five UITFs) with the same or longer settlement period and the same currency without the need to wait for the usual settlement period for redemptions, has not been implemented yet. Participants will be notified once this feature is available. The results of the latest annual audit are available to all participants upon request via (investments@bdo.com.ph) OTHER PERFORMANCE INDICATORS Period Fund Benchmark Risk-Free Rate 10 Year to Date 2.91% 3.69% 0.73% Five Years Ago 28.10% 21.65% 5.27% Since Inception % 98.00% 29.47% CAGR 11 Since Inception 6.34% 6.20% 2.30% 10 Refers to 91-day T-Bill rates 11 Compounded Annual Growth Rate (CAGR) measures how fast an investment would have grown over time if it grew at a steady rate instead of actual varying rates.

4 KEY INFORMATION AND INVESTMENT DISCLOSURE STATEMENT (Page 4) Best Performance (Past Five Years) Inclusive Dates Biggest Gain No. of Days to Achieve 6/30/2011-6/28/ % 1825 days Maximum Drawdown and Recovery in NAVPUs 12 (Past Five Years) Maximum Drawdown Period Biggest Loss Recovery Period (days) 5/20/2013-2/4/ % 507 days 12 Maximum Drawdown is the maximum percentage loss that a fund incurs over a time period. Maximum Drawdown Period is the length of time the maximum drawdown occurs. Recovery Period is the length of time taken by a fund to surmount its maximum drawdown. IMPORTANT NOTICE BDO Unibank, Inc.-Trust and Investments Group is regulated by the Bangko Sentral ng Pilipinas (BSP). For any inquiries and complaints relating to our services and products you may 1) call our phonebanking hotline: ; 2) send an to investments@bdo.com.ph ; or 3) visit/call/ your assigned Trust Marketing Officer or the Branch Manager/Marketing Officer of your servicing branch. You may also file your complaints at BSP Financial Consumer Department at (632) or consumeraffairs@bsp.gov.ph. To know your rights under BSP Circular No. 857 (Regulations on Financial Consumer Protection), please access a copy at the BSP website ( ).

5 NOTICE TO THE PARTICIPANTS OF Subject: Change in Benchmark Index of the BDO Peso Fixed Income Fund Dear Valued Investors, We wish to inform you of the change in the benchmark index of the BDO Peso Fixed Income Fund. Early this year, HSBC advised the fund management industry that it will no longer continue providing the HSBC Local Currency Bond Indices after 29 April In view of this, we have evaluated the proposals received from prospective index providers to replace the retiring benchmark indices. BDO Trust s Investment Committee approved our subscription to the iboxx ALBI Philippines (Domestic) Indices for use as benchmark indices for our fixed income funds/portfolios. The iboxx ALBI Indices are maintained and published by Markit Ltd., a global financial information services provider based in London, United Kingdom. Please see below the comparative features of the HSBC Philippines Local Currency Bond Indices with the Markit iboxx ALBI Philippines (Domestic) Indices: Parameter HSBC Philippines Local iboxx ALBI Philippines Currency Bond Indices (Domestic) Indices Provider HSBC Markit, Ltd. Volume of Bond Inclusion PhP 3.0 Billion PhP 3.0 Billion Constituent Securities FXTNs, RTBs, GPNs FXTNs, RTBs Valuation (Basis of Pricing) PDSSR2 PDSSR2 Taxation Net Net Rebalancing Monthly Monthly Launch Date Ending 29 April 2016 Available 2016 Access Bloomberg FTP server or Web browser Indices HSBC Overall Index HSBC 1-3 Index HSBC 1-5 Index HSBC 5+ Index HSBC Money Market Index HSBC Liquid Index iboxx ALBI Philippines iboxx ALBI Philippines 1-3 iboxx ALBI Philippines 1-5 iboxx ALBI Philippines 5+ iboxx Philippines Money Market iboxx Philippines Liquid Effective 29 April 2016, we have replaced the benchmark index of the BDO Peso Fixed Income Fund from the HSBC Local Currency Bond Index 1-5 Years (HP15TR) to the Markit iboxx ALBI Philippines 1-5 (Domestic) Index (IBXXPH15). This will be reflected in the Amended Declaration of Trust submitted to the Bangko Sentral ng Pilipinas as well as in the succeeding editions of the Fund s Key Information and Investment Disclosure Statement (KIIDS). We believe that the replacement benchmark is the most suitable for the Fund, having similar risk-return characteristics with the old benchmark. Your decision to remain invested in the Fund will be deemed as your conformity with the replacement of the benchmark index. For clarifications, please feel free to call us at the following numbers: , or You may also us at investments@bdo.com.ph and we will be glad to assist you. Thank you for your continued patronage. BDO Unibank, Inc. Trust and Investments Group 15 May 2016