Mutual Fund Quick Facts

It pools the money of people, with the same investment objectives, through the issuance of shares.

The resulting size of the fund allows it to invest in a basket of securities.

It managed by a full-time professionals.

Investors in a mutual fund are considered part owners or shareholders of the fund.

Shareholders are entitled to a proportionate share in investment income and risk explosure.

Each represents a proportionate ownership in all the funds underlying securities.

Earnings in a mutual fund are based on Net Asset Value Per Share (NAVPS).

A mutual fund is an investment vehicle that pools together the funds of various investros both individuals and corporation. The ppol of funds is managed by a professional fund manager who uses the funds to create a diversified investment portfolio consisting of various investment instruments such as stock and bonds.

Choose Your Own Investments

Once you know what your investment objectives are and your appetite risk is, the next logical step is to determine where to invest your money. You have three options at this point:

1. You Could Select your Investment Instruments
This, of course, would required time and knowledge on your part on where to invest. This entails access to information about investing and investments as well as ability on your part to implement your investment strategies. Some people love th thrill of managing their own funds. But most would not have th time and expertise to do this.

2. You Could Hire a Personal Portfolio Manager
Most banks offer personal investment managers who will tailor-fit an investment protfolio to suit your particular objectives. However, for this type of customized service, a high initial investment amount is normally required.

3. You Could Participate in a Pooled Fund
For retail investors, participating in a pooled investment fund such as a mutual or unit investment trust fund could be the best option. Pooled investment funds normally require a low initial investment and provide you with instant access to a diversified portfolio of investment instruments. Since you buy shares or units in the pooled fund at a particular price which changes daily depending on the performance of the investments, it is also very easy to determine just how much money you are earning and how well the investment is performing.

Understand Your Appetite for Risk

When it comes to money matter, common people have natural dislike on risk. After all, most people defin risk as the probability of incurring loss. The greater the risk, the greater the potential loss.

But that is just in one common side. While risk can sometimes work against you, it can also work in your favor. In investing, the greater the risk, the greater the potential for gain.

Risk is present in any financial product, whether it be a simple time deposit or a complex financial derivative. It is only the degree of riskiness that differs. Whenever you invest, absorbing a certain amount of risk is unavoidable and , in some cases, even necessary especially if you want to achieve your financial goals. What's important is that you understand the risk that you are takinga dn are both comfortable and capable of taking it.

To get the percentage of your risk appetite you can take Suitability Test from an investment company.

Know Your Investment Objectives

The process of investing begins with articulating your financial goals. As with most things in life, knowing your objectives is essential since this will help you determine what you need to do. So ask yourself these questions: what are you investing for? Why are you investing? Be as concrete as possible. Quantify your goals: how much do i need to by that dream house? Do I need regular cash inflows to sustain my living expenses? If so, how much? And, finally, situate your objectives in time: when will i need the money?

Getting Started on Investing

Have you ever dreamt of owning your own house? Have you ever, wished you were driving a new car? Have you ever worried about financing your kids education? If you have, then congratulations! You have just taken your first step towards understanding what investing is all about.

Although the work "investing" may sound intimidating to some, it actually referes to a process that is very personal and relevant to our lives. In order to achieve goals such as those mentioned above, we need to figure out how we are going to finance them. That usually entails setting aside some of your funds. But we can't just leave all our money in a savings account if we want to have enough in the future to pay our financial expenses and goals. We want our savings to grow and that entails investing.

Tax Free

Income Generated by mutual fund shareholders are exempted from capital gains tax as stipulated in the comprehensive tax reform program.

Government and Government-owned and controlled corporation also offer shareholding to the public in the form of bonds or securities. Government securities are unconditional obligations of the State, and backed by its full taxing power, making them practically free from default.

Treasury bills are directed and unconditional obligations of the national government. they are issued by the BTr. They carry maturity of one year or less and can be traded in teh secondary market before maturity. Various tenors of T-bills exist. Banks that compromise majority of the Government Security Eligible Dealers bid for T-bills in the weekly auctions held by the BTr. Tha banks then resell the T-bills to investors.

Mutual Fund Voting Rights and Potential Higher Returns

Mutual fund shareholders are part owners of the fund and are therefore entitled to vote during the funds annual shareholder's meeting.

Because mutual fund is manged as a single protfolio, it is able to take advantage of certain economies of scale. For instances, with its millions or billions under managemetn, it can negotiate for lower stockbrokerage fees or command higher interest rates on fixed-income investments.

Mutual Fund Daily Pricing

Mutual Fund must calculate the price of their shares every business day. investors can sell (redeem) som or all their shares anytime and receive the current share price, which may be more or less then the original price.

A mutual fund investment involves risk. The value of the fund may go up and down. Returns from the investment are not guaranteed in daily fix rate. Any gains or losses from the investment are solely for the account of the investor. Past performance is not necessarily a guide to the future performance. A mutual find is not a deposit product and is not insured with any government insurance.

Safety of Mutual Fund

Mutual funds are highly regulated by the Securities and Exchange Commission (SEC) under the investment company act and its implementing rules and guidelines. They are prohibited from investing in certain investment products and from engaging in certain transactions. They also have to submit regular reports to teh SEC and the shareholder as well.

Liquidity - Mutual Fund Advantages

Liquidity is the ability to readily convert investments into cash. Other investment products require investor to find a  buyer so that he can liquidate his investment. That is not the case with mutual fund shares because the fund itself stands ready to buy back these shares at the prevailing Net Asset Value Per Share. While the law provides that the redemption proceeds must be given with seven (7) banking days from teh date of the redemption request, most funds are able to pay the redeption proceeds with 2 to 3 days. Mutual funds are, therefore, considered very liquid investments.

Diversification - Mutual Fund Advantages

Diversification

Fund Managers typically invest in a variety of securities, seeking portfolio diversification.

A diversified portfolio helps reduce risk by offsetting losses from some securities with gains in others. The average investor would find it expensive and difficult to construct a portfolio as diversed as that of a mutual fund. Mutual funds provide an economical way for average investors to obtain the same kind of professional money management and diversification of investments that is available to large institutions and wealthy investors.

Professional Management

The money accumulated in a mutual fund is managed by professionals who decided on behalf of the investment strategy. These professionals choose investments that best match the funds objectives as described in the prospectus. Their investment decisions are based on extensive knowledge and research of market conditions and the financial performance of individual companies and specific securities.

Benefits of Mutual Fund Investor

Professional Management - One of the main attractions of mutual funds is that it affords its investors, particularly the small ones, the servicfes of full time investment managers whose jobs is to analyze and select investment products which would give the best possible returns to teh fund and shareholders.

Low Capital Requirement - A key advantage of mutual funds is they offer investors access to professional money management for a relatively low minimum investment.

Diversification - Mutual funds are invested in a wide array of securities that can lower overall risk without necessarily reducing returns.

Liquidity - Mutual fund shares can be redeemed at anytime based on the prevailing Net Asset value Per Share.

Safety - Mutual funds are registered with and highly regulated by the SEC. It functions within strict regulations design to protect the interest of the investors.

Potentially Higher Returns - Because a mutual fund is managed as a single portfolio, it is able to take advantage of cetain economics of scale and has access to investments with higher returns.

FAQ: How Safe is my Investment with Asset Mutual Funds?

The concept of safety in mutual funds may come in different forms. One is the structure. PAMI is titally segregated from the mutual funds that they manage. The invested instruments of these funds are kept with custodian bank. Records of shareholders are kept with the transfer agent and an external auditor monitors the company's operations. Moreover, all mutual funds are closely monitored by the SEC under the provisions of the RA 2629. More importantly, all mutual funds do not deviate from the company's stipulated investment restrictions and guidelines.

Expenses and Fees

If your are considering the purchase of mutual fund, be sure you thoroughly understand its sales charges, fee and expense structure. Ask your representative or the mutual fund company for an explanation of:

• Sales Charge
• Other fund fees / expenses
• Transfer Fees
• Redemption Fees
• Visit your local library for magazines of books on mutual funds, securities and personal finance.
• Many mutual fund companies offer toll-free consumer inquiry lines. If you are considering purchasing a fund from particular company, ask for product literature or visit its website.

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Buying Tips

Match Fund Objectives to your Needs

• Understand your risk profile and investment goals
• Understand the funds investment choices/objectives (i.e. industry specific, socially responsible, etc.) and limitations (i.e., mutual funds may not be best choice for investors close to retirement age, etc.)
• Market volatility may be greater with Non-US investing funds.

Investment professionals are compensated for the services and support they provide investors, generally through a sales commission, or through 12b-1 and/ or services fees deducted from the fund's assets.

Diret-marketed funds typically offer fund shares with a low sales charge or non at all. Funds that do not charge a front end or deferred sales charge are called "no-Load" funds. Other fees aor expenses may apply.

Frequently Asked Questions - Mutual Fund

Where Can I Find Information About How These Products work, As Well as Benefits and Risks?
The best source of information is the funds prospectus. This document contains detailed information about the fund, its features, its performance and more. You should receive and read the prospectus thoroughly before making any financial commitment to the fund.

Can I make changes if My Situation Changes? How?
Yes, the propectus spells out what requirements apply to fund activities and any fees related to the administration and record keeping of thos events. If you purchased the fund through a registered representative, he or she can also explain these details. inforamtion is also available from the mutual fund company, usually via a Web site or shareholder information line.

Should I Redeem my Fund Balance if the Market Goes Down?
Mutual funds are typically part of a longer-term financial strategy, and are not normally intended to be utilized as short term (12 Months or less) trading vehicles. Because of the potential of fluctuations in value of the underlying securities in fund, the fund itself may experience a change in overall value as well. As such, the sale of fund shares that have delined in value should only be considered if such a transaction is conistent with your total financial plans and goals. An important consideration is "time in the market, NOT timing of tht market."

How is a Mutual Fund's Price Determined?
The process of pricing a fund usually begins at the end of each business day when the New York Stock Exchange closes.

• Remember, past preformance is no guarantee of future results.
• To determine a mutual funds share price, follow this formula:

Fund share price or Net Asset Value (NAV) = Market value in dollars of a funds securities muns its liabilities, divided by the number of investor shares outstanding.

Orders received during a business day will be executed at the NAV determined at the close of business that day. This process is referred to as forward pricing.

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Benefits of Mutual Funds

Professional Money Management

• Develop investment strategy and chooses investments that best match the fund objective.
• Decision based on extensive knowledge and research of market conditions and financial performances.
• Adjust investment mix as economic conditions change.
• Diversifies portfolio to reduce risk.

Accessibility

• Easy to buy either through an investment professional or directly from an investment firm.
• Generally offered as investment selection in 401(k) plans and other employee benefit plans.
• Offer wide variety of services to meet shareholder's needs.
• Variety of investment minimums allowing participation at virtually any dollar amount.

Tax Advantages and Economic Opportunity

• Allow investors to contribute to and benefit from investment economy.
• Potentially tax deductable or tax deferred if used within certain qualified retirement plans.
• Potentially reduces taxes by reducing tacable income.

Investment Concepts

Inflation
Inflation is an increase in the volume of money and credite relative to available good and services, resulting in continuing rise in the gerenal price level. Over time, inflation reduces the value and purchasing power of money.

Risk Versus Reward
Generally, the greater the amount of risk assumed by an investor is, the greater the potential reqards are. Before you make any investment decisions, you should know your risk tolerance. Factors such as age, income and years unit retirement, should be considered before making any investment decision.

Market Fluctuations
Upswings or downturns in market activity impact the value of investment instruments or accounts. As a result, investments may be worth more or less than their original cost when ultimately redeemed.

Asset Allocation
Asset allocation is the process of developing a diversified portfolio by mixing different asset classes - such as stocks, bonds and cash equivalents - in varying proportions to help reduce risk and maximize potential returns.

Diversification
An investment portfolio that contains a number of different types of investments tends to have a lower level of risk than a portfolio with more similar types of investments. There is no assurance that a diversified portfolio will achieve a greater return than a non-diversified portfolio.

Dollar-Cost Averaging
Dollar cost averaging advocates the investment of a constant dollar amount, regardless of the price of the investment. Over a period of time, thsi generally results in a lower purchase price per investment than if the total purchase was made a t on time.

Compounding
Compounding takes plase when the returns (such as interest, dividends and capital gains) on investments start earning returns of their own.

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Mutual Fund Planning

Mutual Funds, as with other investments, are affected by changes in exonomic trends and cycles. The value of investments may rise or fall as the stock and bond markets fluctuate. Understanding certain investments concepts and tactivs can hely you lessen risk and maximize opportunity.

Objective of Money Market Funds

Taxable Money Market Funds - Seekt o provide income on cash reserves, while preserving capital and maintaining liquidity, through high-quality money market instruments. Pays dividends monthly.

Tax-Exempts Money Market Funds - Seek to provide income exempt from federal taxes while preserving capital and maintaining liquidity. Pays dividends monthly.

Objective of Bond - Income Funds

Corporate Bond Funds - Seek current income, while preserving capital, by investing in diversified portfolio if high-grad corporate fixed-income securitied.

High Yield Bond Funds - Seek current income, while preserving capital, by investing in diversified portfolio of lower grade, higher yielding corporate and/or government fixed-income securities.

World Bond Funds - Seek to provide high, long-term total return consistent with prudent management by investing in quality fixed-income securities issued by major world government and corporations around the world and in the United States.

Government Bond Funds - Seek current income while preserving capital, by investing in obligations issued or guarantee be the U.S. government or its agencies.

Strategic Income Funds - Seekt o provide a high level of current income and preservation of capital.

State Municipal Bond Funds - Seek to provide current income free from federal and state income taxes. Also seeks to preserve capital.

Municipal Bond Funds - Seek to provide a high level of current income exempt from federal taxes, consistent with the preservation of capital.