Trust Services  UITF  Frequently Asked Questions

 

Unit Investment Trust Fund - Frequently Asked Questions

 

1. Q: What does UITF stand for?
A: A Unit Investment Trust Fund or UITF is an open-ended trust fund denominated in pesos or any acceptable
currency, which is operated or administered by a trust entity and made available by participation.
Each type of UITF product is governed by  a Declaration of Trust (Plan Rules) which contains
the mechanics for investing, operating and administering the fund.

2. Q: What does "open-ended trust fund" mean?
A:
An open-ended trust fund is a fund wherein you can freely purchase and redeem your investments at any
time subject to the fund’s minimum holding period.
Funds from different clients with similar investment objectives are pooled together into one fund.
These pooled-funds are then invested in various types of investment securities with the aim of maximizing
returns within reasonable risk levels.

3. Q: What does "made available by participation" mean?
A:
You invest in UITF by purchasing units of participation in the fund.
The units of participation represent your proportionate share in the total value of the fund.  As an investor
in the trust fund you do not own any specific asset of the fund, only a proportionate share of fund’s assets.

4. Q: At what price may I purchase these units of participation?
A:
The Net Asset Value Per Unit or NAVPU is the price you must pay for one unit of participation.
The Net Asset Value of NAV is the sum of the market value of the investments of the fund less
expenses such as trust fees, taxes and other qualified expenses. The value of one unit is calculated by
dividing the current net market value of the underlying investments in the fund by the total number of
outstanding units.

NAVPU = Net Asset Value____

Total Outstanding Units

 

Sample Computation

In Pesos

Market Value of Total Assets 

5,000

 

 

Less: Total Allowable Expenses''

50

(NAV)

4,950

Divided by: Outstanding Units''''

1000

Net Asset Value Per Unit (NAVPU)

4.95

''Consisting of fees, taxes and qualified expenses

 

 

''''Assume 1,000

 

 

 

5. Q: What are the corresponding fees and charges when I invest in UITF?
A:
The trust entity shall charge the fund for trust fees, taxes and qualified expenses. The trust fee shall differ
for each type of trust fund and will cover the costs of investment research, management, marketing and
routine administrative expenses of the trust entity. The corresponding fees and charges are subtracted
from the total market value of investment; the resulting amount is the Net Asset Value (NAV).

6. Q: Are all UITF products offered in the market the same?
A:
No. UITF products differ in terms of portfolio mix, minimum investment amount, minimum holding
period, settlement period and fees/charges.

7. Q: What are the types of UITF available in the market?
A:
There are many kinds of UITF and its name usually indicates where the money will be invested.
1. Money Market Fund    
•Income-Oriented UITF/capital preservation
•Invested principally in short-term, fixed-income deposits and securities with portfolio duration
of one year or less
•Expected return is low
•Risk Profile is Conservative
2. Bond Fund/Fixed Income Fund
•Income-Oriented UITF
•Invested in portfolio of bonds and other similar fixed-income securities with portfolio duration
which may exceed one year
•Expected return is relatively higher than money market fund
•Risk Profile is Moderate
3. Balanced Fund
•Income  and Growth-Oriented UITF
•Invested in a good mix of stocks and fixed-income securities
•Expected Return is relatively higher compared to purely fixed-income funds
•Risk Profile is Aggressive
4. Equity Fund
•Growth-Oriented/Aggressive UITF
•Invested significantly in stocks/equities
•Expected return is very high
•Risk Profile is Aggressive
•A longer investment horizon is recommended in an equity fund

8. Q: Who can invest in a UITF?
A:
UITFs are available to any person, association, corporation, firm who/which has the legal capacity
to establish a trust.

9. Q: Can I invest in more than one type of UITF?
A:
Yes. You may invest across various UITFs as long as the mechanics of the fund are suitable to your
needs and requirements.

10. Q: Which type of UITF is suitable to me?
A:
To determine which type of UITF is suitable to you, the following factors have to be considered:
1. Investment Capacity (amount available for investment)
2. Time Horizon (how long can you stay in the fund)
3. Risk Profile (how much risk you are willing to take)
4. Investment Objective (whether you want income source or capital growth)

11. Q: How do I earn? Is the return guaranteed?
A:
Return is variable therefore it cannot be guaranteed. The NAVPU or unit price of the UITF changes
daily and is based on price movements of underlying investments of the fund. As the NAVPU of the
fund increases so does the value of your units of participation. Your rate of return will be based on the
underlying securities of the fund and the expertise of our prudent and experienced fund managers.

12. Q: How do I determine how much I earned from the UITF?
A:
The difference between the value of the units of participation at the time of purchase and the value at
the time the units are redeemed determines how much you earned from UITF.
As the fund value increases, you earn more. Also, the longer you stay invested in the fund, the better
your chances of earning more since underlying investments become less prone to market
volatility over time.
13. Q: How do I monitor the value of the UITF investment?
A:
The NAVPU, where the value of UITF investment is based, is generally made available on a daily basis
at the trust entity’s office, its branches or through our website www.cbs.com.ph.To determine the value
of the UITF investment, simply multiply the    NAVPU by the number of units of participation acquired.

Value of UITF = NAVPU x Outstanding Units of Participation

14. Q: How much will I get when I redeem my UITF investment?
A:
Upon redemption of UITF investment, the number of units redeemed is multiplied by the applicable
NAVPU for the day.

15. Q: When do I get the proceeds of the UITF investment when redeemed?
A:
Payment of proceeds will depend on settlement period prescribed by the trust entity. This may vary
depending on the nature and settlement convention of the investments of the UITF product.

16. Q: What are allowable investment outlets for UITF?
A:
BSP regulations prescribe that UITF fund investments shall be limited to:
1. Bank deposits
2. Securities issued by or guaranteed by the Philippine government or the BSP
3. Tradable securities issued by the government of a foreign country, any political subdivision of
a foreign country or any supranational entity (i.e. IMF, ADB).
4. Exchange-listed securities
5. Marketable instruments traded in an organized exchange
6. Loans traded in an organized market
7. Such other tradable investments as the BSP may allow

17. Q: How will I know where the fund is invested?
A:
List of prospective and outstanding investment outlets of the fund shall be made available to you.
The list of investment outlets shall be updated quarterly.

18. Q: What are the risks of investing in a UITF?
A:
Because the assets of the UITF are valued based on the prevailing market price, there is a possibility
of incurring losses in the UITF if you withdraw in a scenario of generally declining market prices. 
It is recommended that you  defer withdrawal until markets recover.

19. Q: What are my benefits for investing in UITF?
A: The Following are the benefits in investing in UITF:
1.Diversification to Spread Out Risks
•By participating in a UITF, risks are spread out across the various investments held by
the trust fund.
2. High Liquidity
•Funds are redeemable anytime after the minimum holding period.
3. Affordability
•UITFs generally have low minimum investment requirements.
4. Higher Earnings Potential
•Since value of UITF is based on current market prices there are potentially higher returns from
capital gains due to revaluation of investments.
5. Professional Fund Management
•To optimize investment opportunities with respect to risk preference of client .
6. Transparency
•The trust entity is required to fully disclose investment risks to investors.
7. Regulated Product
•The management and administration of UITFs are governed by the BSP.
8. Exempt from Reserve Requirement
•Peso denominated UITFs are exempt from reserve requirement so the entire assets are fully
invested to maximize returns .

20. Q: Is the UITF covered by PDIC?
A:
No. The PDIC only covers deposit accounts. However, CBS Trust Banking Group has placed
safeguards and mitigants in compliance with BSP rules and industry best practices to ensure that
investments are handled in the best interest of the investor.

21. Q: What is the minimum initial investment for CBS UITF?
A: The minimum initial investment in the UITF are the following:
TYPE OF FUNDS AMOUNT
CBS Money Manager Fund (Money Market Fund) Php 5000.00
CBS Asset Builder Fund (Fixed Income Fund) Php 5,000.00
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