notice of annual meeting of the...

NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS

Please be informed that the Annual Meeting of Stockholders of FIRST METRO SAVE AND LEARN BALANCED FUND, INC. (SALBF) will be held on Saturday, June 28, 2014 at 2:00 P.M. at the Le Pavilion, Roxas Boulevard corner EDSA, Metropolitan Park, Pasay City, Metro Manila. The Agenda is as follows:

1. Call to Order 2. Certification of Notice and Quorum 3. Approval of the Minutes of the previous Annual Stockholders’ Meeting 4. Annual Report 5. Ratification of Corporate Acts

6. Election of the Members of the Board of Directors 7. Ratification of the amendment to the Articles of Incorporation of SALBF to

specifically state the exact location of its principal office. 8. Appointment of External Auditor 9. Other Matters 10. Adjournment

In case you cannot attend the meeting in person and you wish to be represented, you

may designate your authorized representative by submitting a signed proxy on or before June 16, 2014 at the First Metro Asset Management Inc. office, 18th Floor, PS Bank Center, 777 Paseo de Roxas, corner Sedeño St., Makati City.

Only stockholders of record at the close of business on April 28, 2014 are entitled to

notice of, and to vote at the said meeting. Makati City, June 5, 2014. NIMFA BALMES-PASTRANA Corporate Secretary

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SECURITIES AND EXCHANGE COMMISSION

SEC FORM 20-IS

INFORMATION STATEMENT PURSUANT TO SECTION 20 OF THE SECURITIES REGULATION CODE

1. Check the appropriate box ( ) Preliminary Information Statement (x) Definitive Information Statement

2. Name of registrant as specified in its charter: FIRST METRO SAVE AND LEARN BALANCED FUND, INC. 3. Province, Country or other jurisdiction of incorporation or organization; Metro Manila, Philippines 4. SEC Identification number: CS200509328

5. BIR Tax Identification Code: 006-609-183 6. Address of Principal Office: 18

th Floor, PS Bank Center, 777 Paseo de Roxas, corner Sedeño St., Makati City

7. Telephone Number: (632) 8912860, (632) 8405710, Fax No. (632) 8160467 8. Date, time, place, of the meeting of security holders:

Saturday, June 28, 2014 at 2:00 P.M., Le Pavilion, Roxas Boulevard corner EDSA, Metropolitan Park, Pasay City, Metro Manila

9. Approximate date on which the Information Statement is first to be sent or given to security holders:

June 6, 2014

10. Securities registered pursuant to Sections 4 and 8 of the RSA: Title of each class Number of Shares of Common Stock Outstanding (Par value) Common Shares 907,029,217

11. Are any or all of registrant’s securities listed on the Philippine Stock Exchange? No.

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PART I - INFORMATION STATEMENT

A. GENERAL INFORMATION Item 1. Date, Time, and Place of Meeting of Security Holders: Date : Saturday, June 28, 2014

Time : 2:00 P.M. Place : Le Pavilion, Roxas Boulevard corner EDSA, Metropolitan Park, Pasay City, Metro Manila.

Mailing Address of the Registrant 18

th Floor, PS Bank Center, 777 Paseo de Roxas, corner Sedeño St., Makati City

Approximate date on which the Information Statement is first to be sent or given to security holders: June 6, 2014

Item 2. Right of Appraisal: There are no matters or proposed corporate actions which may give rise to a possible exercise by security holders of their appraisal rights under Title X of the Corporation Code of the Philippines. Item 3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon: a) No current director or officer of the Fund, or nominee for election as directors of the Fund nor any associate thereof, has any substantial interest, direct or indirect, by security holdings or otherwise, in any matter to be acted upon other than election to office. b) No director has informed the registrant, in writing or otherwise, that he intends to oppose any action to be taken by the registrant at the Meeting. B. CONTROL & COMPENSATION INFORMATION Item 4. Voting Securities and Principal Holders Thereof:

a) Class of Voting Shares :

Class of Voting Securities Total Outstanding Shares Votes Entitlement Common Shares 907,029,217 One (1) vote per Share The number of shares outstanding as of April 28, 2014 is 907,029,217 common shares which is entitled to 907,029,217 votes. The by-laws do not provide for cumulative voting rights.

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b) Record Date

Stockholders of record as of April 28, 2014 are entitled to notice and to vote in the Annual Stockholders’ Meeting. c) Security Ownership of Certain Record and Beneficial Owners and Management: The following stockholder owns more than 5% of the common voting securities as of April 28, 2014.

Title of Class

Name and Address of Owner/Relationship to the Issuer

Name of Beneficial

Owner Citizenship

No. of Shares Held

Percent to Outstanding

Shares

Common shares

First Metro Investment Corporation Same Filipino 132,904,887 14.65%

45th Flr. GT Tower Int'l., Ayala Ave.,

corner HV Dela Costa St., Makati City/Stockholder

Common shares

FIRST GEORGETOWN VENTURES, INC./Stockholder/ 5/F, F&M Lopez Bldg, 109 , C. Palanca St., Legaspi Village 1229, Makati City.

Same

Filipino

46,951,686

5.18%

1/ FMIC, is the registered owner of the shares in the books of the Company. The Board of Directors of FMIC has the right

to appoint actual person or persons acting individually or jointly to direct the voting or disposition of the shares held by the corporation. The person who will exercise the voting powers over the shares of FMIC is Mr. Francisco C. Sebastian or Mr. Roberto Juanchito T.Dispo or any officers appointed by the Board. 2 First Georgetown Ventures, Inc. is a registered owner of shares in the books of the Fund. The person who will exercise

the voting powers over the shares of the company is George T. Yang or any officers appointed by the Board.

Security Ownership of Directors/Management: The directors and officers as a group held a total of 989,608 common voting shares as of April 28, 2014. This is broken down as follows:

Title of Class Name of Beneficial

Owners Amount and

Nature of

Ownership

Citizenship

Percent to Outstanding Shares

Common shares Manuel V. De Leon 1 Filipino 0.00%

Common shares Victor A. Abola* 1 Filipino 0.00%

Common shares Sis. Lioba Tiamson* 1 Filipino 0.00%

Common shares Bernadette M. Nepomuceno

1 Filipino 0.00%

Common shares Hector C. de Leon 76,891 Filipino 0.01%

Common shares Nimfa B. Pastrana 912,713 Filipino 0.10%

*Independent Director

The Corporation knows of no other person holding more than 5% of common shares under a voting trust or similar agreement.

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Item 5. Directors and Executive Officers All directors are elected for a term of one year. Each Director shall hold office until the next annual meeting of shareholders and or until his/her successor shall have been elected and qualified. The by-laws do not provide for any cumulative voting rights in the election of directors. All other officers shall be elected/appointed by the Board of Directors. Vacancies occurring among such officers however arising, shall be filled by the Board.

The Board of Directors The Board of Directors of the Fund as of April 28, 2014 (record date) are as follows:

All directors are elected for a term of one year.

Bro. Manuel V. de Leon, FMS - 56 years old, Filipino. Term of office is one year. Bro. De Leon has been serving as a member of the Board of Director since 2005 and elected as Chairman of the Board on March 22, 2011. Bro. de leon is also the Chairman of First Metro Save & Learn Fixed Income Fund, Inc. First Metro Save and Learn Equity Fund, Inc., First Metro Save and Learn Dollar Bond Fund, Inc. and First Metro Save and Learn Global Opportunity Fund, Inc. He also director for First Metro Asset Management, Inc. (since 2005); President, Notre Dame of Kidapawan College. He is the Founding President of SAGIP KA 2000 Foundation, Inc. Bro. De Leon is a member of the BEDFORD FUND CANDA. He held the following positions: Provincial Superior of Marist Brothers of the Schools - East Asia Province; Chairman of the Board of Notre Dame of Dadiangas University and Notre Dame of Marbel University; Treasurer of Catholic Educational Association of the Philippines. He was an awardee of the Ten Outstanding Young Men (TOYM) in 1992. He has masteral and doctorate degrees in Education from University of the Philippines.

Mr. Hector C. De Leon – 51 years old, Filipino. President since June 2011. Mr. De Leon is also the President of First Metro Global Opportunity Fund, Inc. (since 2010), First Metro Save and Learn Fixed Income Fund, Inc. (since June 2011), First Metro Save and Learn Balanced Fund, Inc. (since June 2011) and First Metro Save and Learn Dollar Fund, Inc. (since June 2011) He is currently the Executive Vice President of First Metro Asset Management, Inc., a position he has held since August of 2007. He was formerly the EVP and Head of Sales and Marketing for Philequity Management, Inc (2006 to 2007). Before joining Philequity, he served as FVP for Capital Markets of Philam Asset Management Inc. (1996 to 2006) where he was instrumental in setting up and operating most of the company’s mutual funds. He was former Chairman of the Board of Trustees of the Investment Company Association of the Philippines from 2005 to 2006. Mr. de Leon has a Bachelors Degree in Electronics and Communications Engineering from De La Salle University and took up Masters in Business Administration (MBA) at the Ateneo Graduate School of Business.

Victor A. Abola- 70 years old, Filipino, Term of office is one year. Dr. Abola has been

serving as Independent Director since 2010. He is also an Independent Director of First Metro Save & Learn Fixed Income Fund, Inc. (since 2010), First Metro Save & Learn Balanced Fund, Inc. (since 2010), First Metro Save & Learn Dollar Bond Fund, Inc. (since 2010), First Metro Global Opportunity Fund, Inc. (since 2010) and First Metro Securities Brokerage Corp. (since 2010). He is the Program Director of the Strategic Business Economics Program (SBEP) of the University of Asia and the Pacific. (2007-present) and the Executive Director of the UA&P-FMIC Capital Market Research Center. He was the Chief of Party of the Fiscal Policy Analysis Activity of the Department of Finance (1998-2001). He has a doctorate degree in Development Management from the University of Asia and the Pacific, where he also received his M.S. in Industrial Economics. After obtaining his Bachelor of Arts and Bachelor of Science in Commerce (major in Accounting) from the De La Salle University, he obtained his C.P.A. certificate. He has authored numerous articles that have appeared in local and foreign newspapers and periodicals, and UA&P’s research

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publications. He co-authored with Dr. Bernardo M. Villegas the textbooks, Economics An Introduction (now in its 6th edition) and Basic Economics (2

nd ed. 2010). He is the author of

the text/reference book Money, Banking and Finance (2006). Sr. Lioba M. Tiamson, OSB - 88 years old, Filipino. Term of office is one year and has

served as Independent director since 2008. She is also an Independent Director of First Metro Save & Learn Equity Fund, Inc. (from March 2008 to present) and First Metro Save and Learn Dollar Bond Fund, Inc. (since November 2008 to present). Currently, Treasurer of Educational Capital Corporation and Director of Concorde Condominium Inc. (2007-present), Board member, St. Scholastica’s Priory Fund Management; member, CEAP Commission (2003-present), member, CEAP Retirement Plan Board Commission. (2003 to present).

Sr. Lioba, OSB obtained her Bachelor of Science degree in Commerce from University of Santo Tomas and St. Scholastica’s College and a Master’s degree in Business Management from De La Salle University. She attended trainings at the Western Association of College and University Business Officers at Stanford University, USA.

Bernadette M. Nepomuceno, 62 years old. Filipino. Independent Director. Term of Office is one year. Ms. Nepomuceno is also an Independent Director for First Metro Save & Learn Fixed Income Fund, Inc. (since August 2012), First Metro Save & Learn Balanced Fund, Inc. (since August 2012), First Metro Save & Learn Dollar Bond Fund, Inc. (since August 2012) and First Metro Global Opportunity Fund, Inc. (since August 2012). Ms. Nepomuceno is the President of Private Education Retirement Annuity Association (PERAA)(from 2007-present). Among her past positions during the last five years, She was President of Holy Angel University (1994-August 2006); Board of Directors, Philippine Association of Colleges and Universities (1995-2006); Board of Directors, Coordinating Council of Private Education Association (2003-2006), among her other affiliations, includes: President, Sophia (Association of Women Presidents/Chancellors of Private Colleges & Universities, Inc.); Member, Technical Working Group on Management Development Program; CHED, Member, Ethics Committee, Lung Center of the Philippines; Board of Trustees, Private Education Retirement Annuity Association, Accreditor, Philippine Accrediting Association of Schools, Colleges and Universities (PAASCU), Founding member, Friends of Jung. She is also a Psychotherapist, in a Private Practice (2001-present). Ms. Nepomuceno has a Bachelor of Arts degree in Psychology from University of the Philippines (1972), She also has a Masters of Psychology, major in Social Psychology, Ateneo de Manila University (1998) (cand.). She took up Hypnotherapy, Psychology of Carl Jung.

Execut ive Officers

Significant Employees

No person who is not an executive officer is expected by the Corporation to make significant contribution to its business.

Name Position Age Citizenship Business Experience

Bro. Manuel V. De Leon Chairman 56 Filipino Education

Hector C. de Leon Director/President 51 Filipino Financial Services

Atty. Nimfa B. Pastrana Corporate Secretary 52 Filipino Banking/Finance/Law

Jonathan T. Tabac Compliance Officer 59 Filipino Banking/Finance

Marie Arabella D. Veron Treasurer 53 Filipino Banking/Finance

Edwin B. Valeroso Asst. Treasurer 50 Filipino Banking/Finance

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Nominee Directors The following are expected to be nominated as members of the Board of Directors during annual Stockholders Meeting on June 28, 2014:

Bro. Manuel V. De Leon, FMS Mr. Hector C. De Leon Dr. Victor A. Abola* Ms. Bernadette M. Nepomuceno* Sister Lioba Tiamson*

*Independent Directors

Independent Directors

In accordance with SRC Rule 38(8)(F)(v), First Metro Save and Learn Balanced Fund, Inc. has formulated its rules relative to the election of independent directors, as follows:

The Nomination Committee shall have at least three (3) members, one of whom is an

independent director, and it shall promulgate the guidelines and criteria to govern the conduct of the nomination. The nomination of independent director/s shall be conducted by the Committee prior to a stockholder’s meeting. All recommendations shall be signed by the nominating stockholders together with the acceptance and conformity by the would-be nominees.

After the nomination, the Committee shall prepare a Final List of Candidates which shall contain all the information about all the nominees for independent directors, as required under SRC Rule 38. Only nominees whose names appear on the Final List of Candidates shall be eligible for election as Independent Director/s. No other nomination shall be entertained after the Final List of Candidates shall have been prepared and no further nomination shall be entertained or allowed on the floor during the stockholders’/membership meeting.

Sister Lioba Tiamson, Dr. Victor A. Abola and Ms. Bernadette M. Nepomucemo are nominees for independent directors of First Metro Save and Learn Balanced Fund, Inc. and they were recommended to the Nominations Committee for election of independent directors by Atty. Melissa B. Reyes, stockholder, in accordance with the foregoing rules. Atty. Reyes has no relations with any nominees.

Sr. L ioba M. Tiamson, OSB s i ts as Independent Director of First Metro Save and

Learn Balanced Fund, Inc. (from March 2008 to present) and First Metro Save and Learn Dollar Bond Fund, Inc. (since 2008 to present). Currently, Treasurer of Educational Capital Corporation and Director of Concorde Condominium Inc. (2007-present), Board member, St. Scholastica Priory Fund Management; member, CEAP Retirement Commission (1975 to present) and Treasurer, Educational Capital Corporation (1995-present).

Mr. Victor A. Abola is an independent di rector o f Fi rs t Metro Save and Learn Fixed Income Fund, Inc. , (s ince December 2010) Fi rs t Metro Save and Learn Equi ty Fund, Inc. (s ince December 2010), Fi rs t Metro Save and Learn Dol lar Bond Fund, Inc. (s ince December 2010), Fi rs t Metro Save and Learn Global Currency Fund, Inc . (s ince December 2010) and Fi rs t Metro Securi t ies Brokerage Corp. (s ince December 2010). He is the program di rec tor of S trategic Business Economics Program of UA&P (2007 -present) , Execut ive Di rector of Rober to F. de Ocampo Center for Publ ic Finance Regiona l Economic Cooperat ion Center for Research (2006-present) , Di rec tor of Inkwel l Publ ishing Co. , Inc (1998 -present) , and Senior Economist at UA&P School of Economics lectur ing on Economic s Pol icy in graduate school programs (1997 -present) . Dr . Abola was USAID -Consul tant as the Chief of Party, Fiscal Pol icy Analys is Act iv i ty pro ject of the Depar tment of Finance (1998-2001) .

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Bernadette M. Nepomuceno, 62 years old. Filipino. Independent Director. Ms. Nepomuceno is also an Independent Director of First Metro Save and Learn Equity Fund, Inc. (since August 2012), First Metro Save and Learn Fixed Income Fund, Inc. (since August 2012), First Metro Save and Learn Balanced Fund, Inc. (since August 2012), First Metro Save and Learn Dollar Bond Fund, Inc. (since August 2012), First Metro Global Opportunity Fund, Inc. (since August 2012). Ms. Nepomuceno is the President of Private Education Retirement Annuity Association (PERAA)(from 2007-present). Among her past positions during the last five years, She was President of Holy Angel University (1994-August 2006); Board of Directors, Philippine Association of Colleges and Universities (1995-2006); Board of Directors, Coordinating Council of Private Education Association (2003-2006), among her other affiliations, includes: President, Sophia (Association of Women Presidents/Chancellors of Private Colleges and Universities, Inc.); Member, Technical Working Group on Management Development Program; CHED, Member, Ethics Committee, Lung Center of the Philippines; Board of Trustees, Private Education Retirement Annuity Association, Accreditor, Philippine Accrediting Association of Schools, Colleges and Universities (PAASCU), Founding member, Friends of Jung.

The members of the Nominations Committee are, Bro. Manuel V. De Leon, FMS,

Mr. Hector C. de leon and Sister Lioba Tiamson. Bro. De Leon is the Chairman of the Committee.

Legal Proceedings

The Regist rant has no pending mater ia l legal proceedings to which i t is a party . None of the Board of Di rectors and i ts Execut ive Of f icers is :

1. involved in any legal proceeding the past five (5) years that are material to an evaluation of the ability or integrity of any director, any nominee for election as director, executive officer, underwriter, or control person of the Registrant;

2. involved in any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two (2) years prior to that time;

3. involved in or convicted by final judgment in any criminal proceeding, domestic or foreign, or subject to a pending criminal proceeding, foreign or domestic, excluding traffic violations and other minor offenses;

4. subject to any order, judgment, or decree not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending, or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and

5. found by a domestic or foreign court of competent jurisdiction( in a civil action), the SEC or comparable foreign body, or a domestic or foreign exchange or organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation and the said judgment has not been reversed, suspended or vacated.

Family Relationships There are no other family relationships among the directors and officers listed above up to the fourth Civil Degrees either by consanguinity or affinity among the Directors, Officers or persons nominated. Relationships and Related Transactions There had been no material transaction nor is there any material transaction currently proposed to which the Company was, or is a party, or in which any director or executive officer of the Company, had or is to have a direct or indirect material interest.

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Item 6. Compensation of Executive Officers and Directors

Aggregate annual compensation of the following:

Year Bonuses/ Other

Remuneration

Total

Manuel V. De Leon Victor A. Abola Sis. Lioba Tiamson Bernadette M. Nepomuceno Hector C. de Leon Nimfa B. Pastrana

2013 (Actual) 2014 (Estimate)

201,765

240,000

201,765

240,000

All other executives and directors as a group unnamed

2013 (Actual) 42,000 42,000

2014 (Estimate) 42,000 42,000

TOTAL

2013 (Actual) 2014 (Estimate

243,765

282,000

243,765

282,000

Per diem of Directors, Corporate Secretary and Officers of the Fund amounting to P10,000.00, P3,000.00, P2,500.00, respectively, are given during their Annual Stockholders’ and regular meeting. The Fund has no employees because all aspects of its operations and administration are subcontracted with third parties. Item 7. Independent Public Accountants:

SGV & Co. has been the external auditor of First Metro Save and Learn Balanced Fund Inc. since 2007. Representatives of SGV & Co. are expected to be present at the stockholders meeting on June 28, 2014. They will have the opportunity to make a statement if they desire to do so and they are expected to be available to respond to appropriate questions. In compliance with SRC Rule 68 (3)(b)(iv) on rotation of external auditor, First Metro Save and Learn Balanced Fund, Inc. will be engaging the services of SGV & Co. for the year 2014. Ms. Vicky B. Lee- Salas is the current Audit Partner. Ms. Salas had signed the Fund’s audited financial statements for the years ended December 31, 2011, 2012 and 2013. There are no disagreements with the auditors on any matter of accounting principles or practices, financial statement disclosures, auditing scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused the auditors to make reference thereto in their respective reports on the financial statements for such years. The aggregate fees paid for the professional services rendered by SGV & Company for the audit of our Financial Statements for the years 2013 and 2012 is P=243,765.00 and P=207,000.00 respectively. SGV & Co. conducted the audit in accordance with auditing standards generally accepted in the Philippines to obtain reasonable assurance about whether the financial statements are free of material misstatements. Their audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation.

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There are no tax fees paid for the last 2 years for professional services rendered by SGV & Co. for tax accounting compliance, advice, planning and any other form of tax service.

There are no other fees paid for the last 2 years for products and services provided by SGV & Co. other than the services mentioned above.

The Audit Committee is being chaired by Dr. Victor A. Abola with Sister Lioba Tiamson and Ms. Bernadette M. Nepomuceno as members. C. ISSUANCE AND EXCHANGE OF SECURITIES Item 11. Authorization or Issuance of Securities Otherwise than for Exchange D. OTHER MATTERS

Item 17. Amendment of Charters, By-Laws or Other Documents

The Board of Director during its meeting held on April 8, 2014, approved the amendment to the Articles of Incorporation of First Metro Save and Learn Balanced Fund, Inc. to specifically state in the Articles of Incorporation the exact location of its principal office in order to comply with Memorandum Circular No. 6 Series of 2014 issued by the Securities and Exchange Commission (SEC) dated 20 February 2014. Said SEC circular directs all registered corporations to specifically state in their AoIs the exact location of their principal office. The above mentioned amendment will be submitted to the stockholders for approval. Item 18. Other Proposed Item 1) Approval of the minutes of the meetings of the stockholders held on July 13, 2013, with the following points:

i) Annual report ii) Ratification of Corporate Acts iv) Election of Directors (including independent directors)

v) Amendment to the Articles of Incorporation to Increase the Authorized Capital Stock

vi) Appointment of External Auditor 2) Ratification of Corporate Acts

The matters that will be ratified are: (a) The minutes of the Board of Directors and all acts, transactions and resolutions of the

Board of Directors and the Management in 2013 adopted in the ordinary course of business like:

i) Approval of Investments ii) Other agreements

-Management and Distribution Agreement -Stock and Transfer Agency Agreement -Custodianship Agreement -Agreement with the External Auditor

3) Election of Directors (including independent directors)

4) Approval of the amendment to the Articles of Incorporation

Amendment to the Articles of Incorporation to specifically state in the Articles of Incorporation the exact location of the principal office.

The above mentioned amendment will be submitted to the stockholders for approval.

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Voting Procedure

The matters included in the agenda require the approval of the stockholders, as follows;

1) For the ratification of corporate acts – stockholders representing the majority.

2) For the election of Directors

The votes of all the shares present or represented at the meeting will be on a per share basis. Article III of Section 7 of the Articles of By-Laws states that unless otherwise provided by law, each stockholder shall at every meeting of the stockholders be entitled to one vote, in person or by proxy, for each share with voting right held by such stockholder. At all meetings of the stockholders, all elections and all questions, except in cases where other provision is made by statue or by these By-Laws, shall be decided by the plurality vote of stockholders present in person or by proxy and entitlement to vote thereat, a quorum being present. Unless required by law, or demanded by a stockholder present in person or by proxy at any meeting and entitlement to vote thereat, the vote on any question need not be by ballot. On a vote ballot, each ballot shall be signed by the stockholder voting, or in his name by his proxy if there be such proxy, and shall state the number of shares voted by him.

3) The matters included in the agenda require the approval of the stockholders as follows: For the amendment to the Articles of Incorporation – the approval of the stockholders representing at least 2/3 of the outstanding capital stock is required. 4) Methods by which votes will be counted Voting shall be made viva voce, through the raising of the hands, and counted manually by the Corporate Secretary, unless there is a motion duly made and seconded for voting to be made via balloting.

FIRST METRO SAVE AND LEARN BALANCED FUND, INC. YEAR 2013 ANNUAL REPORT ON SEC FORM 17-A WILL BE PROVIDED WITHOUT CHARGE TO EACH STOCKHOLDER UPON WRITTEN REQUEST ADDRESSED TO:

Atty. Nimfa G. Balmes-Pastrana Corporate Secretary

First Metro Save and Learn Fixed Income Fund, Inc. 45

th Floor GT Tower International

Ayala Avenue corner H.V. de la Costa St. Makati City

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this report is true, complete and correct. This report is signed in Makati City on June 5, 2014. FIRST METRO SAVE AND LEARN BALANCED FUND, INC. By: NIMFA B. PASTRANA Corporate Secretary

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PART II -COMPANY PROFILE Brief Description of the General Nature and Scope of Business of the Company The Fund

Plan of Distribution/Distribution method The Fund has First Metro Asset Management, Inc. (FAMI) as principal distributor of its shares of stock and will not sell or agree to sell any shares of its capital stock except through FAMI. FAMI may set up a marketing network and accredit sub-distributors or agents to sell the shares. Accredited sub-distributors or agents are directly liable to FAMI. Heavy use of print advertisements will be part of the sales and marketing strategy. The product being sold by the registrant, through FAMI, is its shares of stock, being a mutual fund company. This product was offered to the public starting only in May 2007. The registrant is a stock corporation which was incorporated on January 29, 2007. FAMI’S marketing strategy will be based on the strategic partnership of CEAP, Marist and First Metro Investment Corporation FAMI will capitalize on the endorsement of the CEAP in order to educate the teachers on the concept of savings and mutual fund investing. The CEAP membership composed of over 20,000 teachers will be a primary source of retail investors. This competitive advantage will be further strengthened by First Metro good track record, market experience and credibility, and position as the largest investment bank and backed-up by the largest universal bank in the country. FAMI will likewise capitalize on its relationships with the companies under the Metrobank Group. The Group, with its total employee force of over 14,000 will be an excellent source of retail investors and referrals to high net-worth individuals. The corporations under the group are potential sources of institutional funds that will enable the FAMI mutual funds to attain critical mass at a faster pace. Competition The competitive environment for the company’s products includes not only the products and services offered by the other Mutual Fund players, but all other investment instruments that the Company’s target market has access to. The registrant’s main competitors are the other mutual funds in the Balanced Fund category of Philippine mutual funds. It considers the balanced funds of Philam, Sunlife, Philequity, and BPI as its main competitors. The company will be competing initially in terms of return on investment (ROI) and later on in terms of Fund size. The institutional funds of this market (especially the bigger ones) evidently have access to almost all types of instruments locally available such as unit investment trust funds, pre-need plans, universal life products, and other bank products. The retail funds and smaller institutional funds, however, are more likely limited to simple bank products. There is a big opportunity to tap into both the institutional and retail investors. Effect of existing governmental regulation The marking-to-market method of valuation assesses both equity and debt instruments based on the current market price of those investment instruments. Therefore, the interplay of demand and supply of those instruments and other macroeconomic factors affect their prices. The changes in

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the prices of equities will be reflected in the value of the net assets of the Fund. The Fund’s net asset value per share (NAVPS) is thus affected by this marking-to-market valuation. EXECUTIVE OFFICERS

Bro. Manuel V. de Leon, FMS - 56 years old, Filipino. Term of office is one year. Bro. De Leon has been serving as a member of the Board of Director of the following companies since 2005 and elected as Chairman of the Board on March 22, 2011, namely: First Metro Save and Learn Fixed Income Fund, Inc. (2005 to present) First Metro Save and Learn Equity Fund, Inc., (2005 to present) First Metro Save and Learn Dollar Bond Fund, Inc. (2008 to present) and First Metro Global Opportunity Fund, Inc. (2010 to present). He is also a director of First Metro Asset Management, Inc. (2005 to present). He is the Provincial Superior of Marist Brothers of the Schools - East Asia Province (from 2003 to present). He is the Founding President of SAGIP KA 2000 Foundation, Inc. (2000-present). He is Chairman of the Board of Notre Dame of Dadiangas University (2007-present), Notre Dame of Kidapawan College (2003-present), Notre Dame of Marbel University (1990-present). He was an awardee of the Ten Outstanding Young Men (TOYM) in 1992. He has masteral and doctorate degrees in Education from University of the Philippines.

Hector C. De Leon– 51 years old, Filipino. President since June 2011. Mr. De Leon is also

the President of First Metro Global Opportunity Fund, Inc. (since 2010), First Metro Save and Learn Fixed Income Fund, Inc. (since June 2011) First Metro Save and Learn Equity Fund, Inc. (since June 2011) and First Metro Save and Learn Dollar Bond Fund, Inc. (since June 2011). He is currently the Executive Vice President of First Metro Asset Management, Inc., a position he has held since August of 2007. He was formerly the EVP and Head of Sales and Marketing for Philequity Management, Inc (2006 to 2007). Before joining Philequity, he served as FVP for Capital Markets of Philam Asset Management Inc. (1996 to 2006) where he was instrumental in setting up and operating most of the company’s mutual funds. He was former Chairman of the Board of Trustees of the Investment Company Association of the Philippines from 2005 to 2006. Mr. de Leon has a Bachelor’s Degree in Electronics and Communications Engineering from De La Salle University and took up Master’s in Business Administration (MBA) at the Ateneo Graduate School of Business.

Atty. Nimfa B. Pastrana, 52 years old, Corporate Secretary of FMSALBF, She is also the

Corporate Secretary of the following mutual fund companies: First Metro Save and Learn Equity Fund, Inc.,(since 2005) First Metro Save and Learn Fixed Income Fund, Inc. (since 2005) and First Metro Save and Learn Dollar Bond Fund, Inc. (since 2008) and First Metro Global Currency Fund, Inc. (since 2010) . She is also the Corporate Secretary of PBC Capital Investment Corporation, Prima Ventures Development Corporation, SBC Properties, Inc., First Metro Insurance Brokers Corp., First Metro Asset Management, Inc., First Metro Securities Brokerage Corp., Resiliency (SPC) Inc. Atty. Pastrana is the Vice President/Assistant Corporate Secretary/Corporate Information Officer of First Metro Investment Corporation. She finished her AB Philosophy course at the University of the Philippines and her Bachelor of Law at San Beda College.

Ms. Marie Arabella D. Veron – 53 years old, Filipino, Treasurer. Term of office is

one year and has served as such from February 2007 up to the present. She is the First Vice President/ Controller of First Metro Investment Corporation, Treasurer/Director of SBC Properties, Inc. (2003-present), Director of First Metro Asset Management, Inc. (since 2010), Treasurer of First Metro Save and Learn Fixed Income Fund, Inc. (since 2005), First Metro Save and Learn Equity Fund, Inc., (since 2005) First Metro Save and Learn Dollar Bond Fund, Inc. (since 2008); First Metro Global Currency Fund, Inc. (since January 2010) First Metro Insurance Agency (2001-present), Inc., and Saleage Insurance Agency (2001-present), Treasurer of PBC Capital Investment Corporation (2006-present), First Metro Securities Brokerage Corporation, First Metro Philippine Equity Exchange Traded Fund, Inc. (since April 2013), and the Asst. Treasurer of Resiliency (SPC) Inc. Ms. Veron finished her Bachelor of Science Degree in Business Administration, major in Accounting from University of the East. She is a Certified Public Accountant.

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Mr. Jonathan T. Tabac - 59 years old, Filipino, Compliance Officer. Term of office is one

year and has served as such from January 2007 up to the present. He is also the Compliance Officer of First Metro Investment Corporation, First Metro Securities Brokerage Corporation, First Metro Save and Learn Fixed Income Fund, Inc., First Metro Asset Management, Inc. (from May 2005 to the present), First Metro Save and Learn Equity Fund, Inc. and First Metro Save and Learn Dollar Bond Fund, Inc. and First Metro Philippine Equity Exchange Traded Fund, Inc. (since April 2013). He was AVP & Compliance Officer of Citystate Savings Bank (2002-2003), Vice President of Maybank Philippines (formerly PNB Republic Planters Bank)-1997-2001 and Chairman of the Board of RPB Provident Fund, Inc.(1997-2001). Mr. Tabac obtained his BSC-Accounting from University of Baguio and MBA units from the University of Santo Tomas. He is a Certified Public Accountant.

Dr. Edwin B. Valeroso - 50 years old, Filipino, Asst. Treasurer. Term of office is one year

and has served as President and Director (2005-2011). He was also the President of First Metro Save and Learn Fixed Income Fund, Inc. (2005-2011), First Metro Save and Learn Balanced Fund, Inc. (January 2007 to 2011), and First Metro Save and Learn Dollar Bond Fund, Inc. (November 2008 to 2011). He is currently First Vice President of First Metro Asset Management, Inc. Corporate Secretary of Philippine Investment Funds Association of the Philippines (formerly ICAP, 2006-present). Among his past positions during the last five years, he was a Mutual Fund Strategist/Consultant at First Metro Investment Corp. (2004-2005) and an Associate Professor Guest Lecturer at De La Salle University-Graduate School of Business (2000-2009). Mr. Valeroso has a Bachelor’s degree in Actuarial Mathematics from University of Santo Tomas, a Master of Science in Applied Mathematics from University of the Philippines, and Doctor of Business Administration from De La Salle University (Candidate). He is also a graduate of the Trust Institute Foundation of the Philippines.

Pr incipal Of f icers are appointed or e lec ted annual ly by the Board of

Directors at i ts f i rst meet ing fo l lowing the Annual Meet ing of Stockholders. Number of Employees: The Fund has no employees because all aspects of its operations and administration are subcontracted with third parties; hence it has no risks as far as labor problems are concerned.

Compliance with the Manual on Corporate Governance In line with the Securities and Exchange Commission’s Memorandum Circular No. 2 series of 2002, as amended, the Company has adopted its Manual on Corporate Governance providing for the best practices on governance. The duties responsibilities and authorities of the Board of Directors as well as qualifications of a director/officer are adopted and complied with. Board Committees were created, such as: the Audit Committee; the Nominations Committee which pre-qualifies and shortlists the nominees for independent directors to be elected in the annual stockholders meeting and the Compensation Committee including Risk Oversight Committee which assist the Board of Directors in ensuring due observance of corporate governance principles and guidelines. A Certification of Attendance of Directors in Board meetings was submitted to SEC on January 28, 2014. A compliance officer has been appointed to manage the Compliance System of the Company and to monitor and evaluate compliance with the Manual of Corporate Governance. In general, the Company is in compliance with the leading practices in good corporate governance. This was reported in a Certification by the Compliance Officer filed with the Commission on January 23, 2014. No director or officer of the Company was found in violation of the Manual. The Company has adopted a good governance scorecard to measure and determine the level of compliance by the Board of Directors and top-level management with its Manual of Corporate Governance. Every end of the current year, the scorecard patterned after the SEC-prescribed Corporate Governance Self-Rating Form (CG-SRF) shall be accomplished by the Compliance

15

Officer. Any negative result of this evaluation is submitted to the Board together with the CO’s recommendation for any sanctions of non-compliance. On the basis of this scorecard, the Compliance Officer has issued to SEC a certification on the Company’s compliance with its Manual of Corporate Governance, as stated above. As of this date, the Fund has not encountered any deviations therefrom. The Compliance Officer likewise periodically reviews and improves the Manual to incorporate latest rules and regulations and best practices issued by regulators, if any. There are continuing plans to improve corporate governance of the company. Existing policies and procedures are being reviewed to enhance organizational structure, operation and risk management.

The Fund has identified the following major risks involved in its businesses and other operations:

Various risk factors can affect the market value of the assets of the Fund and cause the Fund's net asset value to vary. Consequently, there are instances when redemption prices of redeemed shares may be less than the prices at which the shares were originally purchased. Investors who redeem their shares during this time may not recover the full cost of their investment. Market Risk. Market risk is the risk of change in fair value of financial instruments from fluctuation in foreign exchange rates (currency risk), market interest rates (interest rate risk) and market prices (price risk), whether such change in price is caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market. Following the regulatory guidelines, the Fund’s market risk policy restricts the amount of investment in any single enterprise to ten percent of the Fund’s NAV, except for government securities. Conversely, the total investment of the Fund in any one investee company must not exceed 10% of the outstanding securities. The Fund is also not allowed to invest in securities of other investment companies and mutual funds. Manager Risk. The performance of the Fund is dependent upon the investment manager’s skill in making appropriate investments. As a result, the Fund may under-perform the market or its peers. Also, the Fund may fail to meet its investment objectives. No single fund is intended to be a complete investment program, but individual funds, such as this Fund, can be an important part of a balanced and diversified investment program. Mutual funds have the following general risks: returns may vary, the investor may lose money, and the investor cannot be certain that the Fund will achieve its investment objective.

Credit Risk. Credit risk is the risk that one party to a financial instrument will fail to discharge an

obligation and cause the other party to incur a financial loss.

The Fund invests in government securities, the risk of default of which is considered minimal.

Also management policies state that the Fund shall not engage in lending operations without prior

review and approval of its BOD. Another policy of the Fund directed at managing credit risk is

that all sales of the Fund’s capital stock shall only be on cash basis. Installment sales are

prohibited.

The maximum exposure to credit risk is represented by the carrying amounts of the financial

assets that are carried in the statement of financial position. There were no agreements

concluded that reduced the maximum exposure to credit risk as of the reporting date. Following the regulatory guidelines, the Fund’s credit risk policy restricts the amount of investment in any single enterprise to 10% of the Fund’s NAV, except for government securities. Conversely, the total investment of the Fund in any one investee company must not exceed 10% of the outstanding securities.

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The Fund is also not allowed to invest in securities of other investment companies and mutual funds.

The Fund manages credit risks (risks due to uncertainty in counterparty or an obligor’s ability to

meet its obligation and cause the other party to incur a financial loss) by transacting with

accredited counterparties only. Credit exposures are closely monitored to ensure that payments

are made on time.

Concentration of Equity Price Risk. The Fund focuses on industries with strong growth potentials or profitable historical financial performance. There may be concentration on certain industries at various point in time, depending on the overall condition of the financial and capital markets.

Liquidity Risk. Liquidity or funding risk is the risk that an entity will encounter difficulty in raising funds to meet commitments associated with the financial instruments. Liquidity risk may result from either the inability to sell financial assets quickly at their fair values; or counterparty failing on repayment of a contractual obligation; or inability to generate cash inflows as anticipated.

The Fund is exposed to daily cash redemptions of redeemable shares. It therefore invests the majority of its assets in investments that are traded in an active market and can be readily disposed of. The Fund has the ability to borrow in the short term to ensure settlement. No borrowings have arisen during the year. Market risk. Market risk is the risk of change in fair value of financial instruments from fluctuation in foreign exchange rates (currency risk), market interest rates (interest rate risk) and market prices (equity price risk), whether such change in price is caused by factors specific to the individual instrument or its issuer or factors affecting all instruments traded in the market.

The Fund’s exposure to market risk relates only to equity price risk.

Equity Price Risk. The Fund’s price risk exposure at year-end relates to financial assets whose values will fluctuate as a result of changes in market prices.

Such investment securities are subject to price risk due to changes in market values of instruments arising either from factors specific to individual instruments or their issuers or factors affecting all instruments traded in the market.

The Fund’s equity price risk policy requires it to manage such risks by (a) closely monitoring investment objectives and constraints on investment by its Fund Manager; (b) detailed market observation and analysis; (c) setting of limits as to investment diversification (i.e. issuer, industry or sector, index); and (d) establishment of profit or loss tolerance.

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PART III - SECURITIES OF THE REGISTRANT Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

a. Below is the list of the highest and lowest Net Asset Value per Share (NAVPS) of the Fund for the

first quarter of 2014, and the whole quarters of 2013 and 2012:

Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter

2014 Highest 2.7817

Lowest 2.6604

2013 Highest 3.0015 3.1528 2.9604 2.8729

Lowest 2.6554 2.6933 2.6817 2.6499

2012 Highest 2.4589 2.5437 2.5250 2.6599

Lowest 2.1200 2.3611 2.3679 2.5138

b. There is no principal market where the Fund’s shares are traded, not even in the Philippine Stock Exchange due to its nature as an open-end investment company. The Fund’s shares are sold through its appointed Principal Distributor and sub-distributors.

B) Dividends The Fund has not issued any cash dividends since its inception. The Board of Directors of the Fund may decide to declare dividends from the unrestricted retained earnings of the Fund at a time and percentage as the same Board may deem proper and in accordance with law. The Fund may declare or pay dividends but limits those dividends to come from the Fund’s accumulated undistributed net income, determined in accordance with good accounting practice and including profits or losses realized upon the sale of securities; or from the Fund’s earned surplus so determined for the current or preceding fiscal year. C) Top 20 Stockholders as of April 28, 2014

As of April 28, 2014, there are 3,647 shareholders of the Company’s common stock. Shown below are the top twenty* (20) shareholders, including the number of shares and percentages of ownership held by each.

Account Number No. of Shares %

1 7 132,904,887 14.65%

2 25264 46,951,686 5.18%

3 5890 27,620,970 3.05%

4 6030 18,208,026 2.01%

5 18242 14,737,420 1.63%

6 78 14,633,063 1.61%

7 430 12,813,997 1.41%

8 28750 10,474,052 1.16%

9 26864 9,550,150 1.05%

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10 26937 9,272,381 1.02%

11 23038 8,650,841 0.95%

12 4086 7,707,645 0.85%

13 5672 7,252,383 0.80%

14 8303 6,906,405 0.76%

15 21343 6,521,264 0.72%

16 7939 6,087,743 0.67%

17 27294 5,692,151 0.63%

18 7535 5,598,672 0.62%

19 8260 5,235,386 0.58%

20 6190 5,172,726 0.57%

*In lieu of names, the account numbers were reflected in this report for security reasons (still subject for SEC approval).

Recent Sale of Unregistered Securities

There are no securities of the registrant sold by it during the year which were not registered under the Code.

Legal Proceedings

The Registrant has no material pending legal proceedings to which it is a party. None of the Board of Directors is:

involved in any legal proceeding the past five (5) years that are material to an evaluation of the ability or integrity of any director, any nominee for election as director, executive officer, underwriter, or control person of the Registrant;

involved in any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two (2) years prior to that time;

involved in or convicted by final judgment in any criminal proceeding, domestic or foreign, or subject to a pending criminal proceeding, foreign or domestic, excluding traffic violations and other minor offenses;

subject to any order, judgment, or decree not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, domestic or foreign, permanently or temporarily enjoining, barring, suspending, or otherwise limiting his involvement in any type of business, securities, commodities or banking activities; and

found by a domestic or foreign court of competent jurisdiction( in a civil action), the SEC or comparable foreign body, or a domestic or foreign exchange or organized trading market or self-regulatory organization, to have violated a securities or commodities law or regulation and the said judgment has not been reversed, suspended or vacated.

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External Auditors

The present auditor of FMSALBFI is Sycip, Gorres, Velayo and Company. The reports of said auditors on the financial statements of the company for the years ended December 31, 2012 and December 31, 2011 contained unqualified opinions.

There are no disagreements with the auditors on any matter of accounting principles or practices, financial statement disclosures, auditing scope or procedures, which disagreements, if not resolved to their satisfaction, would have caused the auditors to make reference thereto in their respective reports on the financial statements for such years.

The aggregate fees paid for the professional services rendered by SGV & Company for the audit of our Financial Statements for the years 2013 and 2012 is P=243,765.00 and P=207,000.00 respectively. SGV & Co. conducted the audit in accordance with auditing standards generally accepted in the Philippines to obtain reasonable assurance about whether the financial statements are free of material misstatements. Their audit also includes assessing the accounting principles used and significant estimates made by the management, as well as evaluating the overall financial statement presentation..

There are no tax fees paid for the last 2 years for professional services rendered by SGV & Co. for tax accounting compliance, advice, planning and any other form of tax service.

There are no other fees paid for the last 2 years for products and services provided by SGV & Co. other than the services mentioned above.

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PART IV - MANAGEMENT DISCUSSION AND ANALYSIS

FINANCIAL CONDITION

2014 (Interim) FINANCIAL POSITION

As of March 31, 2014, total resource of the Fund amounted to P2.68 billion, 8.22% or P203.79

million increase from P2.48 billion as of December 31, 2013. The changes in total assets are

primarily due to the movements in the following accounts:

1. Cash and cash equivalents This account consists of:

March 31, 2013 December 31, 2013

Cash in banks P=36,452,261 P=27,623,568

Time deposits 176,722,241 34,364,602

P=213,174,502 P=61,988,170

Cash in banks earn interest at the respective bank deposit rates. Time deposits bear annual interest rates ranging from 0.25% to 1.75%in 2014 and 2013.

The increase of 243.90% from the beginning of the year balance is mainly due to additional deposits which came from proceeds of sale of the Fund’s shares and equity investments.

2. Financial Assets in FVPL

Financial assets at FVPL consist of equity and private debt investment. These securities increase by P=80.14 million or 4.69% amounting to P=1.79 billion for March 31, 2014 compare to P=1.71 billion as of December 31, 2013. The increase was due to the purchases of equity securities during the period.

3. AFS Investments AFS investments consist of private debt and government securities. This account increases to P=497.89 million as of March 31, 2014 from P=476.32 million of December 31, 2013.

4. Loans and receivables This account consists of:


Unquoted debt security P=150,000,000 P=150,000,000 Due from brokers 15,412,748 71,118,864 Dividend receivable 9,380,258 365,318 Accrued interest receivable 5,256,480 7,675,530

P=180,049,486 P=229,159,712

Due from brokers represent receivables for securities sold but not yet settled as of reporting date. Decrease in the ‘due from brokers’ is due to the lower sales

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transactions of investments as of March 31, 2014. Dividend receivable pertains to cash dividends which has been declared but not yet collected as of financial position date. The increase is mainly attributable to the declared dividends from Philippine Long Distance Telephone Corporation (TEL) which amounted toP=8.12 million.

5. Accounts Payable and Accrued Expenses This account consists of:


Financial liabilities: Due to brokers P=158,759,341 P=14,198,218 Accounts payable 6,043,314 12,450,544 Payable to FAMI 4,264,907 4,326,225 Accrued expenses 115,855 132,917

169,183,417 31,107,904

Nonfinancial liabilities: Withholding tax payable 774,011 1,305,356 Documentary stamp tax payable 25,117 33,170

799,128 1,338,526

P=169,982,545 P=32,446,430

Due to brokers represents amounts payable to brokers for securities purchased but not yet settled as of reporting date. The account is short term and is settled three days after the trade date. The increase in ‘due to brokers’ is attributed to the increase in purchases of stocks as of the period ended March 31, 2014. Accounts payable represents amounts payable to shareholders for the unpaid redemption proceeds as well as subscriptions without confirmation from clients. A subscription is confirmed by submitting the required subscription documents. Once confirmed, these subscriptions are reclassified to equity. During the year, most of the subscriptions were already identified and reclassified under equity.

6. Equity Authorized Capital Stock The Fund’s authorized and issued capital stock follow: March 31, 2014 December 31, 2013

Authorized 1,000,000,000 shares 1,000,000,000 shares

Issued 912,123,386 shares 915,581,236 shares

The BOD approved on November 12, 2009, and ratified by the stockholders on June 16, 2010, the first tranche of the increase in authorized capital stock of the Fund from P=100.00 million, (100.00 million redeemable common shares)toP=500.00 million (500.00 million redeemable common shares) with a par value of P=1.00 per share. The increase in authorized capital was approved by the SEC on November 17, 2011 and the Registration Statement was approved on July 2, 2012. The second tranche of the increase in authorized capital stock was approved by the BOD and stockholders on March 14, 2012 and August 4, 2012, respectively, from P=500.00 million (500.00 million redeemable common shares) to P=1.00 billion (1.00 billion redeemable common shares) with a par value of P=1.00 per

22

share. The increase in authorized capital stock was approved by the SEC on April 12, 2013. The third tranche of the increase in authorized capital stock was approved by the BOD and stockholders on February 25, 2013 and July 13, 2013, respectively, from P=1.00 billion (1.00 billion redeemable common shares) to P=2.00 billion (2.00 billion redeemable common shares) with a par value of P=1.00 per share. Also, the BOD adopted a resolution that the increase in the authorized capital stock by P=1.00 billion be made in several tranches. The authorized capital stock will be initially increased by P=500.00 million while the succeeding increase will be executed upon determination and approval of the BOD without the need of going back to the stockholders for approval. The authority of the BOD to increase the authorized capital stock is limited to P=2.00 billion. As of December 31, 2013, the Fund has yet to file an application for the increase in authorized capital stock with the SEC. As of March 31, 2014 and December 31, 2013, the total number of holders of redeemable common shares (including holders of shares in the deposits for future shares subscriptions) is 6,940 and 6,247, respectively. On February 13, 2013, the Fund requested for an exemptive relief from the requirements of SEC Financial Reporting Bulletin (FRB) No. 6 by allowing the Fund to treat its deposits for future share subscriptions as equity and to include the same in the computation of the NAV per share. In its meeting on March 18, 2013, the SEC resolved to approve the request of the Fund and on April 12, 2013, the increase in authorized capital stock of the Fund was approved by the SEC. In 2013, deposits for future shares subscriptions amounting to P=1.44 billion, equivalent to 499.36 million shares, was reclassified by the Fund to issued and outstanding capital stock. The Fund’s capital is represented by redeemable shares. The shares are entitled to dividends when declared and to payment of a proportionate share of the Fund’s NAV on the redemption date or upon winding up of the Fund.

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RESULTS OF OPERATION

For the period ended March 31, 2014, First Metro Save and Learn Balanced Fund, Inc. posted a

net income of P73.04 million as compared to P216.01 million net income for the same period in

2013 as the local equities market decline during the period.

The highlights of the results of operations for the period ended March 31, 2014 are as follows:

A. Trading and securities gains March 31, 2014 March 31, 2013

Realized gains from sale of: Financial assets at FVPL P=73,665,592 P=32,000,916

Changes in fair value: Financial assets at FVPL 6,067,664 186,022,684

P=79,733,256 P=218,023,600

Trading gains represent gains from sale and changes in fair value of stocks and bonds. During the period ended March 31, 2014, this account declined by 63.43% or P138.29 million from P218.02 million in 2013 to P79.73 million in 2014 year-on-year due to the volatility and decline in the value of securities.

B. Dividend income Dividends for the period ended March 31, 2014 amounted to P44.45 million primarily pertains to dividends received from various issuer.

C. Interest income This account consists of interest income from: March 31, 2014 March 31, 2013

AFS investments P=5,199,405 P=2,728,352 Loans and receivables 1,875,000 – Financial assets at FVPL 289,063 – Cash and cash equivalents 188,988 868,129

P=7,552,456 P=3,596,481

During the period ended March 31, 2014,the substantial decline of 63.43% or P138.29 million from P218.02 million in 2013 to P79.73 million in 2014 year-on-year

D. Operating Expenses Total operating expenses include management fees paid to FAMI, who serves as the Fund’s Investment Adviser, directors’ fees, transaction charges and professional fees. The P5.7 million increase from the balance as of the same period in 2013 is mainlyattributed to the rise in management fees relative to the climb in the net asset value of the Fund.

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Discussion of Key Performance Indicators

The Fund was incorporated on January 29, 2007. It seeks to provide total return consisting of as high a level of current income as is consistent with the preservation of capital and liquidity and long-term capital appreciation by investing in a mix of debt instruments and equity securities. The Fund has appointed FAMI to serve as its Investment Company Adviser, Administrator and Principal Distributor. With the SEC’s approval of FAMI’s license to act as such last September 6, 2005 and its procedures firmed-up at the end of the same month, active management of SALBF’s assets was initiated in May 2007 with the objective to consistently outperform its benchmark, which is the PSEi, and achieve a sizable net income. The Fund has an initial paid-up capitalization of P25.00 million which translates to a minimal share in the mutual fund industry (under the balanced fund category).

The Fund has identified the following as its key performance indicators:

Net Asset Value Per Share - Net Asset Value per share of P2.7544 at the end of March 31,

2014, represents a 2.42% gain on investment over a three-month period from the net asset

value per share at the start of the year of P2.6893. This is primarily due to the net income

earned by the Fund during the first quarter of 2014.

Sales for the quarter ended - The Fund had total sales of P79.06million for the quarter ended

March 31, 2014 whichwas decreased by P527.84million as compared to the P606.88 million

sales for the same period last year.

Redemptions for the quarter ended - The Fund had total redemptions of P89.37 million for the

quarter ended March 31, 2014 which wasdecreased ofP28.53million as compared to P117.90

million redemptions for the same period last year.

Net Income vs. Benchmark – The Fund posted a net income ofP73.04 million for the period

ended March 31, 2014 orP142.98 million lower than the net income of P216.01 as of the same

period last year.

Market Share vs. Benchmark – As of March 31, 2014 the Fund garnered 7.67% share in the

Balanced Funds category while 1.17% share among all mutual funds in terms of net assets.

On the basis of account holders, the Fund has 6,493 account holders (including holder of

deposits for future subscription) or 10.39% of the total accounts in this Fund category.

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2013 (Annual)

The total resources of the Fund rose by P=0.9 billion or 53.8% from P=1.6 billion at the beginning of the year to P=2.5 billion as of December 31, 2013. This consists of the following:

Amount % Amount %

Cash and Cash Equivalents 61.99 2.50% 102.25 6.35%

Financial Assets at Fair Value through Profit or Loss 1,710.34 69.01% 1,292.23 80.20%

Available-for-Sale Investments 476.32 19.22% 204.63 12.70%

Loans and Receivables 229.16 9.25% 11.99 0.74%

Other Asset 0.73 0.03% 0.07 0.00%

Total 2,478.54 100.00% 1,611.17 100.00%

2013 2012

ASSETS

Cash and Cash Equivalents

2013 2012

Cash in banks ₱ 27,623,568 ₱ 24,822,343

Time deposits 34,364,602 77,428,047

₱ 61,988,170 ₱ 102,250,390

December 31

As of December 31, 2013, cash and cash equivalents declined by 39.4% or P=40.3 million from last year’s P=102.3 million to P=62.0 million due to maturity of placements. Cash in banks earn interest at the respective bank deposit rates. Time deposits bear annual interest rates ranging from 0.25% to 1.75% and1.75% in 2013 and 2012, respectively.

Financial Assets at FVPL

2013 2012

Equity securities ₱ 1,685,017,711 ₱ 1,292,226,334

Private bond 25,323,727 –

₱ 1,710,341,438 ₱ 1,292,226,334

December 31

The equity portfolio of the Fund increased by or 32.4% or P=0.4 billion from last year’s balance of P=1.3 billion to P=1.7 billion. Additional investments were made due to the increase of subscriptions

during the year. Dividend income earned from quoted equity securities amounted to P=29.6 million and P=12.45 million in 2013 and 2012 respectively. Private bonds earn interest rate of 4.63% in 2013.

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AFS Investments

2013 2012

Government securities ₱ 279,016,559 ₱ 82,161,104

Private bonds 197,303,798 122,467,680

₱ 476,320,357 ₱ 204,628,784

December 31

AFS investments increase by 132.8% or P=271.7 million from last year’s balance of P=204.6 million. It comprised of government securities and private bonds which earn an annual interest ranging from 4.41% to 7.00% and from 5.50% to 5.88% in 2013 and 2012, respectively. Loans and Receivables

2013 2012

Unquoted debt security ₱ 150,000,000 –

Due from brokers 71,118,864 10,422,414

Accrued interest receivable 7,675,530 906,113

Dividend receivable 365,318 662,178

Accounts receivable – 140

₱ 229,159,712 ₱ 11,990,845

December 31

Loans and Receivables rose by 1,811.1% or P=217.2 million from last year’s balance of P=11.99 million to P=229.2 million. The significant increase was due to unquoted debt security of P=150 million, due from brokers of P=60.7 and accrued interest receivable of P=6.8 million. The outstanding unquoted debt security represents an investment in a commercial paper issued by a private corporation which earns annual interest rate of 5.00%. Due from brokers represent receivables for securities sold but not yet settled as of reporting date.

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Accounts Payable and Accrued Expenses

2013 2012

Financial liabilities:

Due to brokers ₱ 14,198,218 ₱ 24,852,746

Accounts payable 12,450,544 3,615,843

Payable to FAMI 4,326,225 4,177,465

Accrued expenses 132,917 156,497

₱ 31,107,904 ₱ 32,802,551

Nonfinancial liabilities:

Withholding tax payable ₱ 1,305,356 ₱ 372,308

Documentary stamp tax payable 33,170 173,386

1,338,526 545,694

₱ 32,446,430 ₱ 33,348,245

December 31

Total liabilities decline by 2.7% or P0.9 million from last year’s P 33.3 million. It was mainly due to the decrease in Due to brokers of P=10.7 million which represents unpaid purchases to brokers as of the statement of condition date. Accounts Payable represents amounts payable to shareholders for the unpaid redemption proceeds as well as subscriptions without confirmation from clients. A subscription is confirmed by submitting the required subscription documents. Once confirmed, these subscriptions are reclassified to equity. Payable to FAMI includes unpaid management fees, redemption fees, sales load fees and incentive fees while accrued expenses include professional fees, custodianship fees and retainer’s fee Equity

2013 2012

EQUITY

Capital Stock (Note 10) ₱ 915,581,236 ₱ 482,672,086

Additional Paid-in Capital (Note 10) 1,344,104,383 473,231,561

Deposits for Future Shares Subscriptions (Note 10) – 288,233,930

Retained Earnings 182,288,330 329,693,304

Net Unrealized Gain on Available-for-Sale 4,123,713 3,987,900

Investments (Note 7)

₱ 2,446,097,662 ₱ 1,577,818,781

December 31

Total stockholders’ equity rose by 55.0% or P0.9 billion due to increase in net subscriptions to the fund of P1.3 billion. During the year, the Fund issued 506.3 million shares and redeemed 73.4 million shares.

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Authorized Capital Stock On November 12, 2009 the BOD approved the increase in authorized capital stock from P=100.00 million divided into 100.00 million redeemable common shares with a par value of P=1.00 per share to P=500.00 million divided into 500.00 million redeemable common shares with a par value of P=1.00 per share. This action was ratified by the stockholders on June 16, 2010. The application for increase in authorized capital stock and the Registration Statement was approved by the SEC on November 17, 2011 and July 02, 2012, respectively.

On March 14, 2012, the BOD approved the increase of capital stock from P=500.00 million divided into 500.00 million redeemable common shares with a par value of P=1.00 per share to P=1.00 billion divided into 1.00 billion redeemable common shares with a par value of P=1.00 per share. This action was ratified by the stockholders on August 04, 2012. The application for increase in authorized capital stock was approved by the SEC on April 12, 2013. On February 25, 2013, the BOD approved the increase in the authorized capital of the Fund from P=1.00 billion divided into 1.00 billion redeemable common shares with a par value of P=1.00 per share to P=2.00 billion divided into 2.00 billion redeemable common shares with a par value of P=1.00 per share. The BOD also adopted a resolution that the increase in the authorized capital stock of P=1.00 billion be made in tranches. The authorized capital stock will be initially increased by P=500.00 million while the succeeding increase will be executed upon determination and approval of the BOD. The authority of the BOD to increase the authorized capital stock is limited to P=2.00 billion.

Deposits for Future Shares Subscriptions Deposits for future shares subscriptions pertain to total consideration received in excess of the authorized capital of the Fund with the purpose of applying the same as payment for future issuance of redeemable shares.

As of December 31, 2013 and 2012, the Fund classified its deposit for future shares subscriptions under equity since the following elements are present as of the reporting date in accordance with Financial Reporting Bulletin (FRB) No. 6 issued by SEC.

1. The unissued authorized capital stock of the Fund is insufficient to cover the amount of

shares classified as deposits for future shares subscriptions; 2. There is BOD approval on the proposed increase in authorized capital stock (for which a

deposit was received by the Fund); 3. There is stockholders’ approval of said proposed increase; and 4. The application for the approval of the proposed increase has been filed with the SEC.

If any or all of the foregoing elements are not present, the deposit for future share subscription should be recognized as a liability. The deposits for future shares subscriptions as of December 31, 2013 is classified under equity section of the statement of financial position as the Fund met all the aforementioned conditions by the SEC. The Fund reclassified the account amounting to P=1.44 billion, equivalent to 499.36 million shares to issued and outstanding capital stock. As of December 31, 2013 and 2012, the total number of holders of redeemable common shares is 6,247 and 2,014, respectively.

The highlights of the results of operations for the year ended December 31, 2013 are as follows:

Trading and securities gains (losses) which contributed P40.1 million to the total loss

generated by the fund for the period, is comprised of realized gain of P112.9 million from

sale of held-for-trading (HFT) securities, P2.8 million from sale of available-for-sale (AFS)

investment and unrealized loss on marking-to-market of P155.7 million on HFT securities.

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Dividend income amounting to P29.6 million came primarily from the cash dividend

received from PSB shares of P6.6 million, TEL shares of P3.8 million, MER shares of P

3.0 million, SMC2C shares of P1.2 million, SCC shares of P1.1 million, BDO shares of

P1.1 million, and SM shares of P 1.0 million, among others.

Interest Income went up by 25.0% or P4.2 million from last years’ P16.7 million due to the

increase in placements in corporate bonds.

Operating Expenses significantly increase by 138.6% or P=48.0 million from last year’s P=

34.6 million due to the increase in taxes and licenses, broker’s commission, management

and retainer’s fees, miscellaneous and custodian and clearing fees.

Provision for income tax moved proportionately with interest income as it represents the

20% final tax on the interest earned from time deposit placements, government securities

and bank deposits.

COMMITMENTS, MATERIAL EVENTS AND UNCERTAINTIES 1. To date, the Fund has no plans of entering into any material commitments for capital

expenditures in the future. 2. To the knowledge and information of the Fund, there are no events or uncertainties that will

have a material impact on the Fund’s liquidity. 3. There are no known events that will trigger direct or contingent financial obligation that is

material to the Fund, including any default or acceleration of an obligation. 4. Also, there were no material off-balance sheet transactions, arrangements, obligations

(including contingent obligations), and other relationships of the Fund with unconsolidated entities or other persons created during the reporting period.

5. Likewise, there are no known trends, events or uncertainties that have had or that are

reasonably expected to cause a material favorable or unfavorable impact on income from continuing operations.

6. Similarly, there were no significant elements of income or loss that did not arise from the

Fund’s continuing operations. 7. Lastly, there were no seasonal aspects that had any material effect on the financial condition

or results of operations of the Fund.

Financial and Other Information

The following are attached as annexes hereto: Audited Financial Statements Annex “1” Statement of Management’s Responsibility Annex “2” for Financial Statements

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After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this report is true, complete and correct. This report is signed in Makati City on June 5, 2014.

FIRST METRO SAVE AND LEARN BALANCED FUND, INC. By: HECTOR C. DE LEON President