UITF OVERVIEW – FREQUENTLY ASKED QUESTIONS (FAQS)

In September 2004, the Bangko Sentral ng Pilipinas issued Circular No. 447 (amended by Circular No. 593 in January 2008) which introduced a new pooled fund concept called the “Unit Investment Trust Fund” (UITF). The launching of the UITF was meant to revitalize the Trust Business and eventually led to the phase out of the “Common Trust Fund” in September 2006.

This section aims to answer basic UITF questions as well as to educate the investors on the advantages and disadvantages in investing in UITF. While this is designed to provide reasonable working knowledge on UITF, investors are still encouraged to look up other references to thoroughly understand the UITF concept. Please be reminded that this section is purely for information purposes only and is not intended to constitute an investment advice. No recommendations regarding investments are made nor implied herein.

1. What is a Unit Investment Trust Fund (UITF)?

   The UITF was created by virtue of BSP Circular No. 447 dated September 3, 2004 and amended Circular No. 593. It is an open-ended trust fund denominated in peso, or any acceptable currency, which pools together the funds of various investors, for investment in different instruments such as government securities, bonds, commercial papers, deposit products and other similar instruments.

2. What is the meaning of an “open-ended trust fund”?

   It is a fund wherein investors can freely buy and sell units of participation any time subject to the fund’s minimum holding period. Units are bought and sold at their current net asset value, which is expected to fluctuate daily, depending on the prices of the securities held by the fund.

3. What are the advantages of UITF?

   1. It assures investors of information and guidance using a more realistic valuation method known as marked-to-market (MTM). This system allows clients to fully understand the status of their investments.

   2. It requires an accredited third party custodian to take charge of all securities or proofs of ownership of investments to ensure market integrity and iron-clad protection for the investor.

   3. Investments are limited to tradable investments, or those that can be sold or bought in an organized exchange to ensure fund liquidity at all times.

   4. Peso-denominated UITF is exempt from reserve requirement so the entire assets are fully invested to maximize returns.

   5. The bank is required to fully disclose investment risks to investors.

   6. Transparency is ensured as the list of prospective and outstanding investment outlets of the fund are made available to clients at least quarterly. Likewise, the NAVpu, year-on-year and year-to-date returns are published weekly in a national newspaper aside from being accessible daily via the bank’s website and www.uitf.com.ph.