notice of annual meeting of the...
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NOTICE OF ANNUAL MEETING OF THE STOCKHOLDERS
Please be informed that the Annual Meeting of Stockholders of FIRST METRO SAVE AND LEARN EQUITY FUND, INC. (SALEF) will be held on Saturday, June 28, 2014 at 1:30 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. Amendment of SALEF the Articles of Incorporation to specifically state in the Articles of Incorporation the exact location of its principal office
8. Appointment of External Auditor 9. Other Matters 10. Adjournments
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 B. 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 EQUITY 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: 238-518-996-000 6. Address of Principal Office: 18
th Floor, PS Bank Center, 777 Paseo de Roxas corner Sedeño St., Makati City
7. Telephone Numbers:
(632) 8912860, 8405710, Fax No. (632) 8160467
8. Date, time, place, of the meeting of security holders:
Saturday, June 28, 2014 at 1:30 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 of P1.00) Common Shares 1,503,789,206
The number of shares outstanding as of April 28, 2014 is 1,503,789,206 common shares which is entitled to 1,503,789,206 votes. The by-laws do not provide for cumulative voting rights. 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 : 1:30 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) Other than election to office, there is no matter to be acted upon in which any director or executive officer is involved or had a direct, indirect or substantial interest. b) No one among the incumbent 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 One (1) vote per share 1,503,789,206
b) Record Date Stockholders of record as of April 28, 2014 are entitled to notice and to vote in the Annual
Stockholders Meeting.
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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
Name of Beneficial Owner
Citizenship No. of Shares Held
% of Holdings
Common Shares
First Metro Investment Corporation/Stockholder/ 45/F, GT Tower, Ayala Avenue, corner HV dela Costa St., Makati City
Same
Filipino
16.45%
Common Shares
BSP Provident/Stockholder/ 4/F Room, 416, 5-Store Building, BSP Main Complex, A. Mabini St., Malate, Manila
Same
Filipino
5.95%
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 The person who will exercise the voting powers over the shares of BSP Provident Fund is Mr. Vicente Q.
Singson.
Security Ownership of Directors/Management: The directors and officers as a group held a total of 1,533,016 common voting shares as of April 28, 2014. This is broken down as follows:
*Independent Director The Corporation knows of no other person holding more than 5% of common shares under a voting trust or similar agreement.
249,088,945
90,920,234
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There is no arrangement that may result in a change in control of the registrant. No change of control in the Corporation has occurred since the beginning of its last fiscal year. 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 as of April 28, 2014 with positions held for the last Five (5) years.
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. (since 2005) First Metro Save and Learn Balanced Fund, Inc.,(since 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 – 50 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
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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 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. EXECUTIVE OFFICERS
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 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 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.
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Atty. Nimfa B. Pastrana - 52 years old, Filipino, Corporate Secretary. Term of office is one year and has served as such since 2005. She is the First Vice President and Asst. Corporate Secretary of First Metro Investment Corporation. She is also the Corporate Secretary of First Metro Save & Learn Fixed Income Fund, Inc., (from May 2005 to present) First Metro Save & Learn Dollar Bond Fund, Inc. (from 2008 to present) First Metro Global Opportunity Fund, Inc. (from 2010 to present), First Metro Securities Brokerage Corporation (2004 to present), PBC Capital Investment Corporation (2004 to present), Prima Ventures Development Corporation and First Metro Asset Management Inc. She graduated from the University of the Philippines with a degree A.B. Philosophy and from San Beda College with a Bachelor of Laws degree.
Mr. Jonathan T. Tabac - 59 years old, Filipino, Compliance Officer. Term of office is one year and has served as such since 2005. He is also the Compliance Officer of First Metro Investment Corporation, First Metro Securities Brokerage Corporation, First Metro Save & Learn Fixed Income Fund, First Metro Save & Learn Equity Fund, and First Metro Asset Management, Inc (from May 2005 to present). 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 finished BSC-Accounting from University of Baguio and MBA units from the University of Santo Tomas. He is a Certified Public Accountant.
Ms. Marie Arabella D. Veron – 53 years old, Filipino, Treasurer. Term of office is one year and has served as such since 2005. She is the Controller and First Vice President of First Metro Investment Corporation, Treasurer/Director of SBC Properties, Inc.(2003-present), Treasurer of First Metro Save & Learn Dollar Bond Fund, Inc., First Metro Global Opportunity Fund, Inc., First Metro Save & Learn Fixed Income Fund, First Metro Save & Learn Equity Fund, First Metro Asset Management, Inc. (from May 2005 to present), Treasurer of PBC Capital Investment Corporation (2006-present). She was a manager of MBTC Domestic Subsidiaries, a Senior Auditor of Joaquin Cunanan & Co./Price Waterhouse (1980-1985) and of Philippine International Trading Corporation (1985-1990). 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 and a Certified Management Accountant.
Dr. Edwin B. Valeroso - 50 years old, Filipino, Asst. Treasurer. Term of office is one year. He is First Vice President of First Metro Asset Management, Inc. He was the President of First Metro Save & Learn Balanced Fund (Jan 2007 to June 2011), First Metro Save & Learn Fixed Income Fund and First Metro Save & Learn Equity Fund (from May 2005 to June 2011), and President of First Metro Save and Learn Money Market Fund, Inc. (2008 to 2011). He is Vice President/Trustee/Corporate Secretary of Philippine Investment Funds Association, Inc. (2006-present) and an Associate Professorial Guest Lecturer at De La Salle University-Graduate School of Business (2000-2009). He was a Mutual Fund Strategist/Consultant at First Metro Investment Corp. (2004-2005). Mr. Valeroso has a BS Actuarial Mathematics degree from University of Santo Tomas, a Master’s degree in Applied Mathematics from University of the Philippines, and a Doctor of Business Administration degree from De La Salle University-Manila. He is also an alumnus of the Trust Institute Foundation of the Philippines.
Significant Employees No person who is not an executive officer is expected by the Corporation to make significant contribution to its business. Nominee Directors The following are nominees to the Board of Directors for election during annual Stockholders Meeting on Saturday, June 28, 2014: Bro. Manuel V. De Leon, FMS Mr. Hector C. De Leon
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Dr. Victor A. Abola* Ms. Bernadette M. Nepomuceno* Ms. Rhodora Angela F. Ferrer*
*Independent Directors
Independent Directors In accordance with SRC Rule 38(8)(F)(v), First Metro Save and Learn Equity 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.
Ms. Rhodora Angela F. Ferrer, Dr. Victor A. Abola and Ms.Bernadette M. Nepomuceno are nominees for independent directors of First Metro Save and Learn Equity Fund, 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 the nominees.
Dr. Victor A. Abola is an independent di rec tor of Firs t Metro Save & Learn F ixed Income Fund, Inc. , (s ince December 2010) F irst Metro Save & Learn Balanced Fund, Inc . (s inc e December 2010), F irs t Metro Save & Learn Money Market Fund, Inc . (s ince December 2010) , Fi rst Metro Save & Learn Global Currency Fund, Inc . (s ince December 2010) and First Metro Secur i t ies Brokerage Corp. (s ince December 2010) . He is the program director of Strategic Bus iness Economics Program of UA&P (2007 -present) , Execut ive Director of Roberto F. de Ocampo Center for Publ ic F inance Regional Economic Cooperat ion Center for Research (2006 -present) , Director of Inkwel l Publ ish ing Co., Inc (1998-present) , and Senior Economist at UA&P School of Economics lectur ing on Economics 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 project of the Department of Finance (1998 -2001) .
Bernadette M. Nepomuceno sits as Independent Director. Ms. Nepomuceno is also an Independent Director of First Metro Save & Learn Equity Fund, Inc. (since August 2012), 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), 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.
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Ms. Rhodora Angela F. Ferrer - 47 years old, Filipino. Ms. Ferrer currently
serves as Executive Director for Catholic Educational Association of the Philippines (since 2010); Asst. Professor, Education Department and Natural Science Department, St. Scholastica’s College (since 2007); Trainer for Teacher -Training Programs, Foundation for Upgrading the Standards of Education (FUSE), since 2004. She also served as Chairperson of the Training Committee, Foundation for Upgr ading the Standards of Education, Inc. (FUSE) (2009 to 2010); Associate Professor, College of Education at the University of the East (2009 to 2012); Chairperson, Natural Science Department, St. Scholastica’s College, and Dean of Student Affairs, St. Scholastica’s College (2004 to 2007).
Ms. Ferrer finished her BS degree in Physics for Teachers (Cum Laude) at the Philippine Normal University and took up Masters in Education, Major in Physics at De La Salle University. She obtained her doctorate degree in Education Major in Curriculum Studies at the University of the Philippines and took up Ph.D. in Educational Leadership and Management (Executive Program) at De La Salle University.
The current members of the Nominat ions Committee are, Bro. Manuel V. De Leon, FMS, and Sister L ioba T iamson. Mr. De Leon is the Chairman of the Committee.
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.
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.
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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. 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
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. Employment Contracts, Termination of Employment and Change-in Control Arrangements There are no compensatory plans or arrangement with respect to any of its executive officers that can result to the resignation, retirement or any other termination of such executive officer’s employment with the Fund; neither from a change in control of the registrant or a change in the named executive officer’s responsibilities. Employment Contracts, Termination of Employment and Change-in Control Arrangements There are no compensatory plans or arrangement with respect to any of its executive officers that can result to the resignation, retirement or any other termination of such executive officer’s employment with the Fund; neither from a change in control of the registrant or a change in the named executive officer’s responsibilities. The Compensation Committee is composed of Bro. Manuel V. De Leon, FMS as Chairman, with Mr. Hector C. de leon and Sister Lioba Tiamson as members. Item 7. Independent Public Accountants SGV & Co. has been the external auditor of First Metro Save and Learn Equity Fund Inc. since 2005. 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 Equity 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.
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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, 2012 and 2011 is P449,680, P422,960 and P372,240 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.
The members of the Audit Committee are Dr. Victor A. Abola as Chairman, 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-N/A 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 Equity 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 May 23, 2013, with the following points:
i) Annual report ii) Approval on the minutes of the previous stockholders meeting iii) Ratification and approval of all acts and resolutions of the Board of Directors
and the Management for the fiscal year 2011; and iv) Approval for the amendment in the Articles of Incorporation increasing the
Authorized capital v) Election of Directors (including independent directors) v) Appointment of External Auditor
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2) Ratification of Corporate Acts
The matters that will be ratified are:
(a) 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
The Board of Director during its meeting held on April 4, 2014, approved the Amendment to the Articles of Incorporation to specifically state in the Articles of Incorporation the exact location of the principal office
Item 19. 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.
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FIRST METRO SAVE AND LEARN EQUITY 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 Equity Fund, Inc. 18
th Floor, PS Bank Center
777 Paseo de Roxas, corner Sedeño 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 6, 2014. FIRST METRO SAVE AND LEARN EQUITY 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 registrant is a stock corporation which was incorporated on May 27, 2005. It appointed 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. These shares of stock were offered to the public beginning October 2005. As of December 31, 2013, the registrant’s total sales were P4.8 billion. This is the main source of the company’s revenues for the year. FAMI’S marketing strategy will be based on the strategic partnership of CEAP, Marist and First Metro Investment Corp. 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 FMIC’s 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 also 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. 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 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. The registrant’s main competitors are the other mutual funds in the Equity Fund category of Philippine mutual funds. It considers the equity funds of Sunlife, Philam, and Philequity, as its main competitors. As of December 31, 2012, these three competitor Funds represent around 67% of the total equity funds sector; the total equity funds industry amounts to P21 billion. The company will be competing initially in terms of return on investment (ROI) and later on in terms of Fund size.
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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 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. The Fund believes that government regulations are intended to grow the mutual fund industry while protecting the interests of the investing public, thus, it will comply with the regulations imposed or to be imposed by government regulators. Also, the passage of the Personal Equity Retirement Account (PERA) and the Collective Investment Scheme bills into law will benefit the mutual fund industry. 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. EXECUTIVE OFFICERS
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 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 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.
Atty. Nimfa B. Pastrana - 52 years old, Filipino, Corporate Secretary. Term of office is one year and has served as such since 2005. She is the First Vice President and Asst. Corporate Secretary of First Metro Investment Corporation. She is also the Corporate Secretary of First Metro Save & Learn Fixed Income Fund, Inc., (from May 2005 to present) First Metro Save & Learn Dollar Bond Fund, Inc. (from 2008 to present) First Metro Global Opportunity Fund, Inc. (from 2010 to present), First Metro Securities Brokerage Corporation (2004 to present), PBC Capital Investment Corporation (2004 to present), Prima Ventures Development Corporation and First Metro Asset Management Inc. She graduated from the University of the Philippines with a degree A.B. Philosophy and from San Beda College with a Bachelor of Laws degree.
Mr. Jonathan T. Tabac - 59 years old, Filipino, Compliance Officer. Term of office is one year and has served as such since 2005. He is also the Compliance Officer of First Metro Investment Corporation, First Metro Securities Brokerage Corporation, First Metro Save & Learn Fixed Income Fund, First Metro Save & Learn Equity Fund, and First Metro Asset Management, Inc (from May 2005 to present). 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 finished BSC-Accounting from University of Baguio and MBA units from the University of Santo Tomas. He is a Certified Public Accountant.
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Ms. Marie Arabella D. Veron – 53 years old, Filipino, Treasurer. Term of office is one year and has served as such since 2005. She is the Controller and First Vice President of First Metro Investment Corporation, Treasurer/Director of SBC Properties, Inc.(2003-present), Treasurer of First Metro Save & Learn Dollar Bond Fund, Inc., First Metro Global Opportunity Fund, Inc., First Metro Save & Learn Fixed Income Fund, First Metro Save & Learn Equity Fund, First Metro Asset Management, Inc. (from May 2005 to present), Treasurer of PBC Capital Investment Corporation (2006-present). She was a manager of MBTC Domestic Subsidiaries, a Senior Auditor of Joaquin Cunanan & Co./Price Waterhouse (1980-1985) and of Philippine International Trading Corporation (1985-1990). 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 and a Certified Management Accountant.
Dr. Edwin B. Valeroso - 50 years old, Filipino, Asst. Treasurer. Term of office is one year. He is First Vice President of First Metro Asset Management, Inc. He was the President of First Metro Save & Learn Balanced Fund (Jan 2007 to June 2011), First Metro Save & Learn Fixed Income Fund and First Metro Save & Learn Equity Fund (from May 2005 to June 2011), and President of First Metro Save and Learn Money Market Fund, Inc. (2008 to 2011). He is Vice President/Trustee/Corporate Secretary of Philippine Investment Funds Association, Inc. (2006-present) and an Associate Professorial Guest Lecturer at De La Salle University-Graduate School of Business (2000-2009). He was a Mutual Fund Strategist/Consultant at First Metro Investment Corp. (2004-2005). Mr. Valeroso has a BS Actuarial Mathematics degree from University of Santo Tomas, a Master’s degree in Applied Mathematics from University of the Philippines, and a Doctor of Business Administration degree from De La Salle University-Manila. He is also an alumnus of the Trust Institute Foundation of the Philippines.
Principal Officers are appointed or elected annually by the Board of Directors at its first meeting following the Annual Meeting 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
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Corporate Governance Self-Rating Form (CG-SRF) shall be accomplished by the Compliance 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.
SALEF 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 (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 Funds exposure to market risk relates 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.
The Fund measures the sensitivity of its investment securities by using PSE index (PSEi) fluctuations.
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 wherein the risk of default is considered minimal. Also, management policies prohibit engaging 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.
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Credit risk exposure is limited to the carrying amount of the financial assets. 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 and the related notes. There are no agreements concluded which reduced the maximum exposure to credit risk as of the reporting date.
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.
The Fund is also not allowed to invest in securities of other investment companies and mutual funds.
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.
PART III - SECURITIES OF THE REGISTRANT
Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters Market Information
a. Below is the list of the highest and lowest Net Asset Value per Share (NAVPS) of SALEF for the
first quarter of 2014, 2013 and 2012:
Year 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter
2014 Highest 5.1065
Lowest 4.6756
2013 Highest 5.4617 5.8136 5.3540 5.2222
Lowest 4.8069 4.7075 4.7210 4.6472
2012 Highest 4.4007 4.5761 5.5776 4.8299
Lowest 3.7426 4.1954 4.4712 4.5445
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.
Holders
As of April 28, 2014 there are 11,323 shareholders of the Company’s common stock. Shown below are the top twenty (20) shareholders, including the number of shares and percentage of ownership held by each (amounts in thousands).
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Account Number No. of Shares %
1 7 249,088,945 16.564
2 137 90,920,234 6.046
3 430 70,311,138 4.676
4 16657 58,688,217 3.903
5 1391 40,490,717 2.693
6 6466 36,414,232 2.421
7 17319 23,833,357 1.585
8 16909 21,814,539 1.451
9 9275 20,653,911 1.373
10 18581 20,407,110 1.357
11 18580 20,360,301 1.354
12 15725 18,583,290 1.236
13 16258 12,901,149 0.858
14 5562 12,774,217 0.849
15 23624 9,391,343 0.625
16 29926 8,978,353 0.597
17 27307 8,790,608 0.585
18 11049 8,735,824 0.581
19 5533 8,710,657 0.579
20 78 8,492,816 0.565
*Computed bases on outstanding shares
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 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. The ability of the Fund to declare dividends therefore will be restricted by the amount of yearly net income generated. This would be dependent on the performance of the market and on the performance of the investment manager.
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.
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PART IV - MANAGEMENT DISCUSSION AND ANALYSIS
Management’s Discussion and Analysis of Financial Condition and Results of Operations
As of March 31, 2014, total assets of the Fund amounted to P7.86 billion, 7.47% or P546.41 million
increase from P7.31 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
The 129.88% increase on this account is mainly due to additional investments in time deposits
amounting to P=764.75 million which were funded from proceeds of sale of the Fund’s shares and
equity investments from P=588.80 million to P=1.35 billion.
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.
2. Financial Assets at Fair Value Through Profit or Loss
This account declined by 7.01% or P=460.23 million and this pertains to the net result of trading of
our government and equity securities portfolio during the period. As of March 31, 2014, this
account consist of quoted equity securities and private bonds held-for-trading amounting to
P=5.88 billion and P=218.82 million respectively and as of December 31, 2013, the balances were P=
6.34 billion and P=219.57 million respectively. Private bonds bear nominal annual interest rates of
4.63% to 6.00%in 2014 and 2013.
As of March 31, 2014 and 2013, financial assets at FVPL include fair value gains of
P=466.43 million and P=850.03 million, respectively.
3. Available-for-Sale Investments (AFS)
This account represents investments in government securities and private bonds. The 17.25% or P=
25.32 million increase was chiefly due to the net effect of P=23.00 million acquisitions in private
bonds, P=75.05 thousand net amortization of premium and discount and P=2.24 million additional
unrealized gains recognized due to the change in fair value of AFS investments.
In 2014 and 2013, government securities bear annual interest rates of 1.63%.
In 2014 and 2013, private bonds bear annual interest rates ranging from 4.41% to 6.15% and
4.41% to 5.09%, respectively.
4. Loans and receivables
This account increased by 1,805.58% or P=216.57 million. Due from brokers represent receivables
for securities sold but not yet settled as of reporting date. It increased by P=191.45 million due to
the increase in sales 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 from P=3.52 million to P=33.22 million or 842.15% increase is mainly
attributable to the declared dividends from various issuers. Accrued interest receivable increase by
P=483.45 thousand or 22.09%. However, accounts receivable decrease by P=5.06 million or 80.65%
due to collections made during the quarter.
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5. Accounts Payable and Accrued Expenses
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’ from P=22.61 million in December 31, 2013 to P=126.17 million as of
March 31, 2014 or P=103.56 million 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. This account decreased by 62.31 % or
P=35.78 million. 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.
Payable to FAMI includes management fees, redemption fees and sales load fees. It increased
from P=11.77 million to P=12.64 million or 7.42%.
Accrued expenses include unpaid professional fees, custodianship fees and retainer’s fee from
P=275.26 thousand last December 31, 2013 to P=288.74 thousand as of March 31, 2014.
Withholding tax payable pertains to withholding taxes from fees payable to the fund manager and
the investment transactions. It increased from P=3.49 million last December 31, 2013 to P=3.69
million at the end of the quarter, March 31, 2014.
Documentary stamps tax payable decrease by 51.16% or P=106 thousand which pertains to unpaid
documentary stamp tax for the month of March 31, 2014.
6. Equity
Authorized Capital Stock
The Fund’s authorized and issued capital stock follow:
March 31, 2014 December 31, 2013
Shares Amount Shares Amount
Authorized 1,250,000,000 P=1,250,000,000 1,250,000,000 P=1,250,000,000
Issued and outstanding 1,006,939,363 P=1,006,939,363 1,127,053,870 P=1,127,053,870
The BOD approved on March 14, 2012 and ratified by the stockholders on August 4, 2012 the
increase in authorized capital stock from P=1.00 billion (1.00 billion redeemable common shares)
toP=1.25 billion (1.25 billion redeemable common shares) with a par value of P=1.00 per share. The
application for increase in authorized capital stock was presented for filing with the SEC on
November 13, 2012 and was approved by the SEC on January 24, 2013.
The next 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=1.25 billion (1.25
billion redeemable common shares) to P=3.00 billion (3.00 billion redeemable common shares)
with a par value of P=1.00 per share. The BOD adopted a resolution that the increase in the
authorized capital stock toP=3.00 billion be made in several tranches. The authorized capital stock
will be initially increased byP=1.00 billion while the succeeding increases will be executed upon
determination and approval of the BOD without the need of going back to the stockholders for
approval. The application of the first tranche of increase amounting to P=1.00 billion was filed
with the SEC on October 17, 2013. As of December 31, 2013, the SEC has yet to approve the first
tranche increase in authorized capital stock.
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As of March 31, 2014 and December 31, 2012, the total number of holders of redeemable
common shares (including holders of shares in the deposits for future shares subscription) is
16,500 and 16,154, respectively.
Deposit 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 March 31, 2014 and December 31, 2013, 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 the 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.
The Fund’s balance of deposits for future shares subscriptions was received in cash from existing
stockholders and new investors. Existing stockholders includes other related parties and other
stockholders. As of March 31, 2014 and December 31, 2013, other related parties amounted to P=
5.38 million respectively and other stockholders amounted to P=1.34 billion and P=1.37 billion
respectively. As of March 31, 2014 and December 31, 2013, new investors amounted to P=1.44
billion and P=780.08 million respectively.
The balance of deposit for future shares subscriptions is equivalent to 523.81 million shares and
399.78 million shares as of March 31, 2014 and December 31, 2013, respectively.
The Fund’s capital is represented by these redeemable shares. Issuance, repurchase and resale of
redeemable shares are based on NAV per share attributable to holders of 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.
RESULTS OF OPERATION
For the period ended March 31, 2014, First Metro Save and Learn Equity Fund, Inc. posted a net income of
P459.31 million as compared to P841.28 million 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
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 45.13% or P383.60 million from P850.03
million in 2013 to P466.43 million in 2014 due to the volatility and decline in the value of
securities held by the Fund.
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B. Dividend income
Dividends for the period ended March 31, 2014 primarily pertains to dividends received
amounting to P=36.26 million.
C. Interest income
This account resulted to P=4.76 million which is 26.05% or P=1.68 million lower than last year’s
incomeP=6.44 million. This includes interest income earned from loans and receivables, deposit in
banks and financial assets at FVPL and AFS investments.
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 P6.66 million
increase from the balance as of the same period in 2013 is mainly attributed to the rise in
management fees relative to the climb in the net asset value of the Fund.
Key Performance Indicators
The Fund, was incorporated on May 27, 2005with the objective of seeking long-term capital appreciation
by investing primarily in carefully selected listed and non-listed equity securities.
FAMI to serves as its Investment Company Adviser, Administrator and Principal Distributor. With the
SEC’s approval of FAMI’s license to act as such on September 6, 2005 and its procedures firmed-up at the
end of the same month, active management of SALEF’s assets was initiated in October 2005 with the
objective of consistently outperforming its benchmark, which is the PSEi, and achieves a sizable net
income.
From an initial paid-up capitalization of P25.00 million which translates to a minimal share in the mutual
fund industry (under the equity fund category).
The Fund has identified the following as its key performance indicators:
Net Asset Value Per Share - Net Asset Value per share rose from P4.7548 as of December 31, 2013 to
P5.0258 as of March 31, 2014, representing an increase of 5.71% over a three month period.
Sales for the quarter ended - The Fund had total sales of P313.05 million for the quarter ended March
31, 2014. This is P2.29 billion lower or 87.98% compared to the P2.61 billion sales for the same period
in 2013.
Redemptions for the quarter ended - The Fund had total redemptions of P296.80 million for the quarter
ended March 31, 2013. This is P1.37 billion or 82.21% lower as compared to the P1.67 billion
redemptions for the same period last year.
Net Income vs. Benchmark - The Fund posted a net income of P459.31 million for the period ended
March 31, 2014 as compared to a net income of P841.28 million net income in the same period last
year.
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Market Share vs. Benchmark – As of March 31, 2014 the Fund garnered 11.05% share in the Equity
Funds category while 3.47% share among all mutual funds in terms of net assets. On the basis of
account holders, the Fund has 16,500 account holders (including holder of deposits for future
subscription) or 17.77% of the total accounts in the Equity Funds category.
Discussion and analysis of material events and/or uncertainties
The Fund Manager is not aware of any event and/or uncertainties that:
(a) will have a material impact on liquidity
(b) will trigger direct or contingent obligation that is material to the Fund including any default or
acceleration of obligation
(c) will have an impact on all material off-balance sheet transactions, arrangement, obligations and
other relationships of the Fund
(d) is a significant element of income or loss that did not arise from the Fund’s continuing
operations.
FINANCIAL SOUNDNESS INDICATORS
As of March 31
2014 2013
(Unaudited) December 31
Current ratio 1/
4,671.09% 2.487.34% 7,480.67%
Acid Test Ratio 2/
4531.49% 2,487.21% 7466.60%
Debt-to-equity ratio 3/
2.14% 4.02% 1.33%
Asset-to-equity ratio 4/
102.14% 104.19% 101.33%
Interest rate coverage ratio 5/
n.a. n.a. n.a.
Profitability ratios:
Return on assets 6/
24.22% 83.70% (4.09%)
Return on equity 7/
24.65% 87.20% (4.14%)
1/Current Assets divided by Current Liabilities 2/ Quick Assets (Cash and cash equivalents and Financial assets at FVPL securities) divided by Current Liabilities 3/ Total Liabilities divided by Total Equity 4/ Total Assets divided by Total Equity 5/ Earnings Before Interest and Tax divided by Interest Expense 6/ Annualized Net Investment Income divided by Average Total Assets 7/ Annualized Investment Income divided by Average Total Equity
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Item 7. Financial Statements Audited Financial Statements Please refer to Exhibit 1. Statement of Management’s Responsibility for Financial Statements Please refer to Exhibit 2.
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 EQUITY FUND, INC. By: HECTOR C. DE LEON President
