Prospectus

The fee and applicable VAT, computed on investment cost that is charged investors for the purchase of the Fund’s shares. All sales fees and VAT on the sales fees are deducted from investment amounts. Sales fees shall be applied according to the following schedule:

The investment objective of the Fund, which is considered to be of high risk, is to generate medium- to long-term capital growth through investments primarily in equity securities issued by Philippine companies. The Fund will implement its proprietary Index Plus investment strategy whereby the majority of the CSCEIF’s investment portfolio is invested in the equity securities of component companies of the Philippine Stock Exchange index (PSEi). A small portion of the net assets of the Fund shall be invested in the equity securities of non-PSEi component companies, which the Fund reasonably expects to perform better than the equity securities of PSEi component companies. For liquidity purposes and as may be called for by investment strategies from time to time, the Fund shall invest no less than five percent (5%) of its net assets in in short-term fixed income instruments, denominated in Philippine Peso time deposits, Treasury Bills and other government securities or debt papers of domestic private corporations.

The fund seeks capital appreciation by emphasizing investments in companies with favorable growth prospects. To pursue this goal, the fund may invest in larger or smaller companies if they represent better prospects for capital appreciation.

The Board of Directors decided to take out mining companies in the list of investible assets which the Fund Manager will take into account.

The CIMAC manages the fund using a “growth style” of investing through PSEi-component companies as well as those companies whose fundamental strengths suggest the potential to provide superior earnings growth over time. The CIMAC uses a consistent, bottom-up approach to build equity portfolios. The CIMAC will apply a consistent analysis and perform intensive qualitative and quantitative in-house research to determine whether companies meet investment criteria and the CIMAC may sell a security if better investment opportunities emerge elsewhere.

1. treasury notes or bills, BSP Certificates of Indebtedness, which are short-term in tenor and other evidences of short-term indebtedness or obligations, the servicing of and repayment of which are fully guaranteed by the Republic of the Philippines; or
2. savings or time deposits with government-owned banks or commercial banks, provided that in no case shall any such savings or time deposit accounts be accepted or allowed under a "bearer", a "numbered" account, or other similar arrangement.

1. The maximum investment of the Fund in any single enterprise shall not exceed an amount equivalent to fifteen percent (15%) of the Fund's NAV except obligations of the Philippine Government or its instrumentalities, and in no case shall the total investment of the Fund exceed ten percent (10%) of the outstanding securities of any one investee company;
2. Until the SEC shall provide otherwise, the Fund shall not sell securities short or invest in any of the following:
3. Margin purchase of securities (investments in partially paid shares excluded)
4. Commodity futures contracts;
5. Precious metals; and
6. Unlimited liability investments.
7. The Fund shall not incur any debt or borrowing unless at the time it is incurred or immediately thereafter, there is an asset coverage of at least three hundred percent (300%) for all its borrowings. In the event that such asset coverage shall at any time fall below 300%, the Fund shall within three (3) days thereafter, reduce the amount of borrowings to an extent that the asset coverage of such borrowings shall be at least 300%;
8. The Fund shall not participate in an underwriting or selling group in connection with the public distribution of securities, except for its own capital stock;
9. The Fund shall not invest in real estate properties and developments;
10. The Fund shall not invest in any company for the purpose of exercising control or management;
11. The Fund shall not invest in the securities of other investment companies;
12. The Fund shall not purchase from or sell to any of its officers or directors or the officers or directors of its investment adviser/s, manager or distributor/s or firm/s of which any of them are members, any security other than the capital stock of the Fund;
13. The total operational expenses of the Fund shall not exceed ten percent (10%) of its average investment fund or net worth as shown in the previous year's audited financial statements;
14. The Fund shall maintain a diversified portfolio of debt securities, focusing on industries and enterprises with strong growth potentials or profitable historical financial performance. There may be concentration on certain industries at various points in time, depending on the overall condition of the financial and capital markets;
15. The Fund shall not engage in lending operations without prior approval of the Board of Directors. Such approval shall be limited only to corporations or other entities, public or private, determined to be financially sound;
16. The Fund anticipates a gradual turnover in portfolio with the aim of ensuring the preservation and appreciation of capital; and
17. The Fund may not change its investment objective without prior approval of a majority of its stockholders.

The shares of the Fund may be purchased and held by any person of legal age or duly organized and existing corporations, partnerships or corporate entities regardless of nationality.  The Investor shall declare and warrant that there are no legal restrictions prohibiting the purchase of the shares applied for and that the Investor is otherwise eligible throughout the duration of the period that the Investor remains a stockholder of the CSCEIF.

Purchase of the shares of the Fund may be restricted by law in certain jurisdictions.  Foreign investors interested in subscribing to the shares should get information on the applicable legal requirements under the laws and regulations of the countries of their nationality, residence or domicile and as to any relevant tax or foreign exchange control laws and regulations affecting them personally.

For investors other than individuals, the following documents, in addition to the Investment Application Form and the signature cards, must be accomplished and shall be considered integral parts thereof:

a. Copy of the Investor's SEC Certificate of Registration, Articles of Incorporation and By-Laws;

b. Notarized corporate secretary's certificate setting forth the resolutions of the Investor's Board of Directors or equivalent body:

1. Authorizing the purchase of a specified Peso amount worth of shares of the Fund; and
2. Designating the signatories for the purpose.

The minimum initial investment is Five Hundred Pesos (Php500.00) inclusive of sales fee and VAT, as approved by the Securities and Exchange Commission En Banc, during its meeting on October 2, 2018, under the SEC Resolution No. 753, series of 2018.

The Regular Subscription Plan (RSP) is an investment program whereby an investor commits to invest in an uninterrupted manner a minimum of Three Hundred Pesos (Php300.00) or Five Hundred Pesos (Php500.00) per month in the CSCEIF for at least sixty (60) months provided such investor has put in the minimum initial investment of Five Hundred Pesos (Php500.00) inclusive of sales fee and VAT, as approved by the Securities and Exchange Commission En Banc, during its meeting on October 2, 2018, under the SEC Resolution No. 753, series of 2018. Any interruption of the periodic investment or any redemptions made during the sixty-month period shall convert the category of the investor to one that is regular. A regular investor’s minimum investment amounts subsequent to his initial minimum investment is One Thousand Pesos (Php1,000.00). All RSP and regular subsequent investment amounts shall also be inclusive of sales fee and applicable VAT on the sales fee.

Shares of the Fund will be offered on a continuous basis at the NAVPS computed at the end of the business day, if payment is made within the daily cut-off time, plus the applicable sales fee and VAT on the sales fee.

The business day cut-off time for the reckoning of the date of submission of the subscription application shall be 12:00 noon. If the application is received on or before the said cut-off time, the shares shall be valued based on the NAVPS computed at the end of the same business day. For applications received after the cut-off time, they shall be deemed to have been received on the next business day. In both instances, an applicable sales fee and VAT on the sales fee shall be charged on top of the investment amount. The NAVPS shall be the computed difference between total assets of the Fund and its total liabilities divided by the number of shares outstanding.

The sales fees applicable for the various levels of investments are as follows:

Subscriptions must be paid in full upon submission of the application for subscription.

Applications for the number of shares and the applicable NAV are subject to acceptance and approval by the Principal Distributor. The Principal Distributor reserves the right to reject, scale-down and reallocate any application for the shares for whatever reason. Applications for which check payments are dishonored upon first presentment, as well as those which do not comply with the requirements set in this Prospectus and Investment Application Form, shall be rejected.

The Principal Distributor shall inform the Investor of such reduction or rejection within three (3) business days after submission of the investment application.

All investment applications shall be covered by the rules and regulations of the Anti-Money Laundering Act. The CSCEIF likewise commits to comply with the same Act.

The holder of any shares of stock of the Fund, upon its presentation to the Fund in its principal office or to any of its duly authorized representatives of the confirmation receipt or stock certificate, and upon filing of the redemption request form, is entitled to receive by way of redemption approximately his proportionate share of the CSCEIF's current net assets or the cash equivalent thereof, i.e. the current NAVPS, subject to the existing laws and By-laws of the Fund. A valid I.D. must be presented to claim the check proceeds of the redemption. Proceeds of redemption requests may either be picked up by the investor at the main office of the CSCEIF or be credited to his bank account, upon written instruction, with the same account name as his investment in the CSCEIF and provided that all credit and/or remittance charges shall be borne by the said Investor.

For securities surrendered for redemption before the business day cut-off time of 12:00 noon, the price, at which the CSCEIF's securities may be redeemed, shall be computed based on the NAVPS at the end of the business day when such request for redemption is received. Should the request for redemption be received after the said business day cut-off time, it shall be deemed to have been received on the next business day, and the applicable NAVPS to be used as basis for redemption shall be that which shall be computed at the end of the next business day when such request for redemption is deemed to have been received.

The Fund shall compute and post its NAVPS on a daily basis and shall publish such daily prices in at least two (2) newspapers of general circulation in the Philippines and post them daily in a conspicuous place at the Fund’s principal office as well as in all its branches or correspondent offices that are designated as redemption centers.

There shall be no minimum holding period as required by law. There are no redemptions fees to be charged by CIMAC. However, the stock transfer agent charges the CSCEIF Php20 + VAT per redemption.

The cost of remittance charges, if any, incurred in the process of paying redemption proceeds shall be for the account of the Investor and shall be deducted from the said proceeds.

The Fund shall not suspend the right of redemption or postpone the date of payment or satisfaction upon redemption of any redeemable security in accordance with the terms appearing in this Prospectus, for more than seven (7) business days after the tender of such security to the CIMAC, except on the instances prescribed by applicable Philippine laws or regulations.

• Professional Management and Supervision - Investing in the Fund gives the Investor an opportunity to become a part owner of a professionally managed portfolio of securities. Thus, the Investor is saved from the very costly and prohibitive management fees of professional investment advisers.  Also, he is relieved from the difficult task of research and analysis.  The CIMAC, which has the expertise, time and facilities to make profitable investment decisions, is in charge of what and when to buy and sell the securities.
• Diversification - One of the tools used to manage investment risk is diversification. Given the limited size of investible funds of a small investor, he does not have the financial resources to diversify.  Investing in the Fund will give him that diversification and thus provide stability by insulating his investment from the ups and downs of any one security, thereby reducing risk.
• Opportunity for Potentially Higher Returns - For a minimal initial amount of Five Thousand Pesos (Php5,000) net of sales fee and applicable VAT on the sales fee, the Investor can get a better opportunity for income compared to other fixed-income investments because of the benefit of economies of scale. However, there is no guarantee of returns on an investment in the Fund as the prices of securities it holds in its portfolio may increase or decrease.
• Liquidity - The Investor of the Fund may, at any time, convert his proportionate share of the Fund's current net assets into its cash equivalent, provided that he submits to the CSCEIF all pertinent requirements as shown in the section headed "Redemption of Shares."  There is no need to find a buyer as the Fund is always ready to redeem its shares.

Market Risk.  The price of equities that the Fund will invest in will fluctuate on a daily basis.  These fluctuations can be a result of a wide variety of reasons such as but not limited to changes in: 1) earnings prospects; 2) interest rates; 3) currencies; 4) senior management; 5) production processes; and 6) capitalization, market reach and coverage of the companies that the Fund invests in.  All these price fluctuations of underlying securities will be reflected in the net asset value per share (NAVPS) of the Fund. Past performance is not a guide to future performance.

To manage the risks to the Fund’s investments arising from fluctuations in market value, the Fund relies on its investment manager, particularly on the latter’s internal pool of seasoned fund management professionals, as well as on the risk-reducing portfolio strategy of diversification of investments. Active monitoring and analysis of the factors influencing the prices of underlying securities is also important to managing the said investment risks. 

Liquidity Risk. There are two types of liquidity risk that the Fund may face. One is the possible absence of buyers for the equity investments that it wants to sell. To manage this risk, the Fund will invest the majority of its net assets in Philippine Stock Exchange index (PSEi) component companies and only a small portion of its net assets in non-index component but still PSEi-listed companies.  The other type of risk is the potential absence of liquid funds with which to service redemptions.  To manage this risk and as required by the Securities and Exchange Commission (SEC), the Fund will maintain at least five percent (5%) of its net assets in liquid securities such as but not limited to time deposits and government securities.

Dilution and Price Risks in Investing in the Fund Itself. Investing in a mutual fund is also open to dilution and liquidity constraints.  By law, investors in mutual funds waive their pre-emptive rights to share offerings because mutual funds are offered on a continuing basis. An investor faces the risk that his percentage holding in the Fund might be diluted as other investors subscribe to Fund’s shares.  Regulation requires mutual funds to put up at least five percent (5%) of their net assets in liquid securities to service redemptions.  Should redemptions exceed five percent (5%) of a Fund’s net assets, it will be compelled to raise cash for servicing the redemptions through selling other investment assets at their current market values, which may be either higher or lower than their original purchased value. 

There could likewise be instances where 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. 

To manage this risk, the CIMAC shall conduct a rigid suitability assessment on each potential investor to ensure that the risk-return profile of such investors is aligned with that of that Fund.  In addition, the CIMAC shall continuously fine-tune the Fund’s investment portfolio to accommodate potential redemptions in excess of five percent (5%) of the Fund’s net assets.

The estimated gross proceeds to be raised by the Fund is Seven Hundred Eighty One Million Three Hundred Ninety Eight Thousand Three Hundred Sixty Seven Pesos (Php781,398,367.00), assuming that the balance of unsubscribed shares are sold at the NAVPS as of September 30, 2017 of Php1.007.

The investment objective of the Fund, which is considered to be of high risk, is to generate medium- to long-term capital growth through investments primarily in equity securities issued by Philippine companies. For liquidity purposes and as may be called for by investment strategies from time to time, the Fund may invest in short-term fixed income instruments, denominated in Philippine Peso time deposits, Treasury Bills and other government securities or debt papers of domestic private corporations.

The proceeds derived by the Fund from the sale of its shares including the payments for original subscriptions during incorporation shall be deposited and held by the Fund's Custodian Bank, BDO Unibank, Inc., as required by Article IV (4.3) of the Rules and Regulations Governing Investment Companies under Republic Act 2629.  The net proceeds from the sale of the shares of stock of the Fund, net of any sales fees and taxes, shall be used for investment purposes in accordance with the policies set forth in the sections headed "Investment Policy" and "Investment Restrictions" given on page 23 of this Prospectus.   No part of the proceeds derived by the Fund from the sale of its shares shall be used to discharge debt.  Neither shall any of the said proceeds be used to reimburse any officer, director, employee or shareholder for service rendered, assets previously transferred, money loaned or advance or otherwise.

No material amount of the proceeds shall be used to acquire assets or finance the acquisition of other businesses.

The shares of the Fund will be offered on a continuous basis at the NAVPS computed at the end of the business day, if payment is made within the daily cut-off time, inclusive of the applicable sales fee and VAT on the sales fee.

The business day cut-off time for the reckoning of the date of submission of the subscription application shall be 12:00 noon. If the application is received on or before the said cut-off time, the shares shall be valued based on the NAVPS computed at the end of the same business day. For applications received after the cut-off time, they shall be deemed to have been received on the next business day. In both instances, an applicable sales fee and VAT on the sales fee shall be charged on top of the investment amount. The NAVPS shall be the computed difference between total assets of the Fund and its total liabilities divided by the number of shares outstanding.

The Fund shall endeavor to give investors the opportunity to enjoy capital appreciation by giving them access to the buoyant local equity market.  In this regard, the Fund, through the CIMAC (the Fund’s principal distributor), shall distribute its shares through SEC CIS who shall secure their appropriate license prior to any solicitation activities.  There shall be special focus on selling to cooperatives and individual cooperative members throughout the Philippines.  To be efficient as well as effective, CIMAC shall conduct investment roadshows for such groups in key cities throughout the country.   

The CLIMBS Share Capital Equity Investment Fund Corporation (the “CSCEIF” or the “Fund”) was organized as a stock corporation on the November 2, 2015 under SEC Registration No. CS201521954. It is a diversified, open-end investment company. 

The Fund is ready to redeem the shareholdings of any investor at the applicable NAVPS.

The investment objective of the Fund, which is considered to be of high risk, is to generate medium- to long-term capital growth through investments primarily in equity securities issued by Philippine companies. For liquidity purposes and as may be called for by investment strategies from time to time, the Fund may invest in short-term fixed income instruments, denominated in Philippine Peso time deposits, Treasury Bills and other government securities or debt papers of domestic private corporations.

The Fund does not expect to hire employees within the next 12 months as all of its operations are performed by the CIMAC.

The CIMAC manages the fund using a “growth style” of investing through PSEi-component companies as well as those companies whose fundamental strengths suggest the potential to provide superior earnings growth over time. The CIMAC uses a consistent, bottom-up approach to build equity portfolios. The CIMAC will apply a consistent analysis and perform intensive qualitative and quantitative in-house research to determine whether companies meet investment criteria and the CIMAC may sell a security if better investment opportunities emerge elsewhere.

For its part, CIMAC will be paid an annual investment management, principal distributor and administration fee equivalent to two percent (2.00%) of the NAV of the Fund, computed on a daily basis.

In addition, the CIMAC shall receive sales fees as follows:

The SEC Certified Investment Solicitors (CIS) of CIMA who solicit investments for the CSCEIF shall receive fifty percent (50%) of all gross sales fees earned by CIMA for such solicited investments. These SEC CIS shall earn a trail commission of one fourth of one percent (0.25%) based on the market value of their solicited investments for as long as such investments remain in the CSCEIF. The CIMA shall require that individual sales agents secure their SEC CIS license prior to any solicitation activities.

Apart from the Fund appointing the CIMA as its investment company adviser, principal distributor and fund administrator, the CSCEIF has no other transactions with and/or dependence on related parties.

The Fund does not need any government approval for the offer of its shares to the public other than the approval of its secondary license with the SEC.

The bill on the Collective Investment Schemes Law (CISL), which aims to updated R.A. 2629 or the law that regulates the mutual fund industry has been filed in Congress. One of the provisions of the CISL bills is to exempt mutual fund companies from certain requirements of the Corporation Code as regards increasing their authorized capital stock. If enacted, the law would streamline operations of mutual funds particularly in securing shareholder approval of certain corporate actions.

The CSCEIF does not intend to acquire assets other than financial securities as it is only in the business of investing, reinvesting and trading in such securities.

Neither the CSCEIF nor any of its subsidiaries/affiliates are the subject of any material pending legal proceedings.

There are no arrangements whereby any underwriter of the CSCEIF is given the right to designate or nominate a member or members of the Board of Directors of the Fund.

There are no shares designated to be sold to specified persons.

There are no discounts or commissions to be allowed or paid to Broker Dealers. Neither are there any cash, securities, contracts and other considerations to be received by any Broker Dealer in connection with the sales of the Fund’s securities.

The CLIMBS Share Capital Equity Investment Fund Corporation (the “CSCEIF” or the “Fund”) was organized as a stock corporation on the November 2, 2015 under SEC Registration No. CS201521954. It is a diversified, open-end investment company. The Fund is offering for sale One Billion One Hundred Forty-Four Million Seven Hundred Thirty-One Thousand (1,144,731,000) common shares of stock, inclusive of those already subscribed for during the Fund’s registration. Each share of stock of the Fund is a voting stock with voting rights equal to every other outstanding share of stock, and subject to the following:

• Right of Redemption

The holder of any shares of stock of the Fund, upon presentation to the Fund  or to any of the Fund's duly authorized representatives, of the Confirmation Receipt or stock certificate, and upon filing of the duly accomplished redemption form, shall receive by way of redemption approximately his proportionate share in the Fund's prevailing net assets or the cash equivalent thereof at the time of filing of the redemption request (i.e., the net current asset value per share, subject to existing laws and the By-Laws of the Fund).  Pursuant to the Investment Company Act Rule 35-1(c)(4), “In case of open-end investment funds, the investment company may establish a network of redemption centers acceptable to the Commission.”  Likewise, Investment Company Act Rule 35-1 (e)(6) states that “The Commission may, whenever necessary or appropriate in the public interest or for the protection of investors, suspend the redemption of securities of open-end companies.”

• Right of Accumulation

The investments of each stockholder shall be totaled in determining the appropriate sales fee to be applied to his subsequent investment. For this purpose, in-trust-for accounts shall be considered as part of the total investments in the Fund of an investor/trustor.

• Waiver of Pre-emptive Rights

No stockholder shall, because of his ownership of stock, have a pre-emptive or other right to purchase, subscribe for, or take any part of any stock or of any other securities convertible into or carrying options or warrants to purchase stock of the Fund.  The Fund's Articles of Incorporation further provide that any part of such stock or other securities may at any time be issued, auctioned for sale, and sold or disposed of by the Fund pursuant to the resolution of its Board of Directors, to such persons and upon such terms as the Board may deem proper, without first offering such stock or securities or any part thereof to existing stockholders.

• Restrictions on Transfer

No transfer of stock of the Fund's stock, which would reduce the stock ownership or equity interest of Filipino citizens to less than the percentage required by applicable laws or regulations, shall be caused or allowed to be recorded in the books of the Fund.

• Distribution of Dividends

The Board of Directors of the Fund is authorized to determine the amount to be reserved or provided for declaration and payment of dividends from the Fund’s unrestricted net earnings for a given fiscal year. The amount of such dividends (whether in cash, stock, property or a combination thereof) shall be dependent on but not limited to the Fund’s profits, cash flows, capital expenditure, and financial condition.  Surplus and unrestricted net earnings are needed before dividends can be declared. These surplus and unrestricted net earnings must, in turn come from the net income for a given fiscal year based on audited financial statements less unrealized income items, which are considered not available for dividend declaration. Whenever circumstances permit, the Fund shall declare total dividends (whether in cash, stock, property or a combination thereof) of not less than one-half percent (0.50%) of its surplus and unrestricted earnings, less unrealized income items, for a given fiscal year. 

Cash dividends and property dividends may be declared by the Board of Directors and no stockholder approval is required.  Stock dividends paid on the securities of the Fund are subject to approval by both the Board of Directors and the stockholders representing at least two-thirds (2/3) of the outstanding capital stock of the Fund at a stockholders’ meeting called for such purpose. 

Under the Corporation Code, Corporations with surplus profit in excess of 100% of its paid-in capital stock are required to declare dividends (cash or stock) and distribute it to its stockholders.  

Holders of securities of the Fund may opt to automatically reinvest their cash dividends in additional shares on behalf of the shareholders, without sales charges, at the NAVPS on the payment date for such dividends. Holders of securities of the Fund may also elect not to have dividends reinvested and receive payment in cash, net of tax. Cash dividends paid by corporations to individuals are subject to the final withholding tax of ten percent (10%).

The target investors, although not exclusively, are individual members of cooperatives around the Philippines. Before any solicitation is consummated, CIMAC shall ensure that each prospective investor is given a copy of the CSCEIF’s prospectus in either electronic or hard copy, that material parts of the prospects are explained clearly and that each prospective investor goes through a suitability test to see the said prospective investor’s investment objectives and risk taking level are aligned with those of the CSCEIF.

There are no other material rights of the common shareholders.  There is no provision in the By-Laws that would delay, deter or prevent a change in control of the Fund.

The Fund is not under any bankruptcy, receivership or similar proceedings.

There are no material reclassifications, mergers, consolidations, or purchases or sales of a significant amount of the assets of the Fund (not in the ordinary course of business).

The Fund had a subscribed and total paid-in capital of Two Hundred Eighty-Sixty Million One Hundred Eighty-Two Thousand Seven Hundred Fifty Pesos (Php286,182,750) at incorporation. Pursuant to Article IV, Section 4.4 of the SEC's rules and regulations governing R.A. 2629, the incorporators of the Fund agreed not to sell, transfer, convey, encumber or otherwise dispose of their shares in the Fund within a twelve-month (12) month lock up period from the registration date of the Fund. Being an open-end investment company, the Fund stands ready to buy back its shares from the investing public subject to the provisions of this Prospectus. The shares of the Fund are not traded on any public trading market or exchange.

The Fund shall endeavor to give investors the opportunity to enjoy capital appreciation by giving them access to the buoyant local equity market. In this regard, the Fund, through the CIMAC, shall distribute its shares through SEC CIS. There shall be special focus on selling to cooperatives and cooperative members throughout the Philippines. To be efficient as well as effective, CIMAC shall partner with cooperatives and conduct investment roadshows for such groups in key cities throughout the country. The CIMAC shall require that all investment solicitors be properly licensed with the SEC prior to any solicitation activities.

By way of their investments in the Fund, the following cooperatives are affiliated with the fund:

• Cebu CFI Community Cooperative
• CLIMBS Life & General Insurance Cooperative
• Oro Integrated Cooperative
• MSU-IIT National Multipurpose Cooperative
• Perpetual Help Community Cooperative
• San Dionisio Credit Cooperative
• Holy Cross Savings and Credit Cooperative
• Nabunturan Integrated Cooperative
• Claveria Grassroots Multipurpose Cooperative
• Holy Child Multi-Purpose Cooperative
• Manatal Multipurpose Cooperative
• Landbankers Multipurpose Cooperative
• Oro Savings and Sharing Cooperative
• Toril Community Cooperative
• Abuyog Saint Francis Credit Cooperative
• Agusan del Norte Teachers Retirees & Employees
• Coop Life General Insurance and Financial Services Agency
• Mactan Island Multipurpose Cooperative
• Palompon Community Multi-Purpose Cooperative
• Baao Parish Multi-Purpose Cooperative
• CLIMBS Employees Cooperative
• Gubat Saint Anthony Mutlipurpose Cooperative

There is no material pending legal proceeding to which the Fund or any of its subsidiaries or affiliates is a party or of which any of their property is the subject. There are no bankruptcy petitions filed by or against any business of which such person was a general partner or executive officer whether at the time of the bankruptcy or within two (2) years prior to that time.  There is no conviction by final   judgment, in a criminal proceeding, domestic or foreign, or the Fund being subject to a pending criminal proceeding, domestic or foreign. The CSCEIF is not 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 its involvement in any type of business, securities, commodities or banking activities. The CSCEIF has not been 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 other 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.     

None of the members of the Board of Directors of the CSCEIF or CIMAC are:

1. involved in any legal proceeding during 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 Fund;
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, domestic or foreign, 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 other 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. 

The Board of Directors of the Fund is authorized to determine the amount to be reserved or provided for declaration and payment of dividends from the Fund’s unrestricted retained earnings. The amount of such dividends (whether in cash, stock, property or a combination thereof) shall be dependent on but not limited to the Fund’s profits, cash flows, capital expenditure, and financial condition.  Surplus and unrestricted net earnings are needed before dividends can be declared. These surplus and unrestricted net earnings must, in turn come from the net income for a year based on audited financial statements less unrealized income items, which are considered not available for dividend declaration.  

Cash dividends and property dividends may be declared by the Board of Directors and no stockholder approval is required.  Stock dividends paid on the securities of the Fund are subject to approval by both the Board of Directors and the stockholders representing at least two-thirds (2/3) of the outstanding capital stock of the Fund at a stockholders’ meeting called for such purpose.  

Under the Corporation Code, Corporations with surplus profit in excess of 100% of its paid-in capital stock are required to declare dividends (cash or stock) and distribute it to its stockholders.  

Holders of securities of the Fund may opt to automatically reinvest their cash dividends in additional shares on behalf of the shareholders, without sales charges, at the NAVPS on the payment date for such dividends. Holders of securities of the Fund may also elect not to have dividends reinvested and receive payment in cash, net of tax. Cash dividends paid by corporations to individuals are subject to the final withholding tax of ten percent (10%).

The Philippine mutual fund industry is a fast-growing industry, which as of September 30, 2018 had sixty-one (61) active funds and a combined NAV of approximately Php263 billion based on information disclosed by the Philippine Investment Funds Association. In 1991, there were only two (2) mutual funds and approximately Php108 million in combined net assets. 

Competition is present throughout the Philippines and is dominated by subsidiaries of banks and life insurance companies. As of September 30, 2018, the combined size of the CSCEIF’s direct competition of equity mutual funds is estimated at Php104 billion with an average investment size of Php556,000. The CSCEIF aims to be one of the major players among local equity-invested mutual funds within the next five (5) years by providing competitive returns and excellent service to the grassroots that remain largely untapped by existing mutual funds.

The principal methods for competition are investment performance followed by risk exposure. The CSCEIF will be one of the few Philippine mutual funds that will effectively have a combination index and pure equity fund through its Index Plus investment strategy whereby the majority of the CSCEIF’s investment portfolio is invested in the equity securities of component companies of the Philippine Stock Exchange index (PSEi). A small portion of the net assets of the Fund shall be invested in the equity securities of non-PSEi component companies, which the Fund reasonably expects to perform better than the equity securities of PSEi component companies. For liquidity purposes and as may be called for by investment strategies from time to time, the Fund shall invest no less than five percent (5%) of its net assets in in short-term fixed income instruments, denominated in Philippine Peso time deposits, Treasury Bills and other government securities or debt papers of domestic private corporations. Having more choices of investments allows for better returns and diversification, hence a more effective management of investment risk.  The CIMAC will rely on its pool of investment experts and consultants to apply its Index Plus investment strategy.

To date until the next General Stockholders’ Meeting, the Board of Directors and the key senior officers of the Fund are as follows:

Rev.Elmo P. Manching, Chairman of the Board and Chief Executive Officer

Rev. Manching, Filipino, 44, is currently the Chairman of CLIMBS Life and General Insurance Cooperative.From year 2006 to 2008, Fr. Manching was member of the Board of Directors of St. Therese Educational Center of Leyte; 2013 to present members of the Board of Directors of OCCCI; 2016 to present serves as Program Director of SMFI and from 2017 to 2018 members of the Board of Directors of CLIMBS.

Doris B. Calapiz, PRESIDENT & Chief Operating Officer

Ms. Doris b. Calapiz, 55, Filipino, is nominated for directorship of the CSCEIFC. Ms. Calapiz is a Certified Public Accountant and is a graduate of Bachelor of Science in Commerce Major in Accounting at Liceo U de Cagayan University, Cagayan de Oro City. She is currently the Chairperson of Oro Integrated Cooperative; a member of the Board of same Cooperative from years 2005 to 2010, and years 2012 to 2017; She is currently member of the Board of Metro Cagayan  de Oro Water Service Coop Federation; Board of Director of Mindanao Cooperative Hostel Services from years 2012 to 2016; Board of Director of MASS-SPECC for year 2017 and Board of Director of Golden Grain Marketing Cooperative from year 2017 to present.

Eric F. Dizon, DIRECTOR

Mr. Dizon, 48, Filipino, has been a Director of the CSCEIF from the latter’s inception up to the present. He is concurrently Chairman of the Manatal Multi-Purpose Cooperative, Chairman of the Bulacan Cooperative Hall of Fame League Union and Development Educator of the Association of Asian Confederation of Credit Unions.

Garibaldi O. Leonardo, DIRECTOR

Mr. Leonardo, 64, Filipino, has been a Director of the CSCEIF from the latter’s inception up to the present. Mr. Leonardo is concurrently the Chairman of the San Dionisio Credit Cooperative, Vice Chairman of Metro-South Cooperative Bank (MSCB), Chairman of the MSCB Foundation, Vice Chairman for NCR/Luzon of the Coop Deposit Insurance System and Vice Chairman of the Parañaque Cooperative Development Council.

Mr. Leonardo has a Doctorate in Business Administration from the University of the Philippines, a Master’s degree in Economics from the University of the Philippines, units leading to a Doctorate in Economics from the University of Santo Tomas, units leading to a Master’s degree in Business Administration from the De La Salle University and a BSC – Economics degree (Magna Cum Laude) from the De La Salle University.

Teodoro A. Balanay, Jr., DIRECTOR

Mr. Balanay Jr., 48, Filipino, has been a Director of the CSCEIF from the latter’s inception up to the present. Mr. Balanay, Jr. is concurrently General Manager of the Claveria Grassroots Multi-Purpose Cooperative. He graduated with a Bachelor of Science degree in Commerce major in Accounting from the Northern Christian College in Laoag City.

Roberto C. Mascariña, DIRECTOR

Mr. Mascariña, 59, 69, Filipino, is nominated for directorship of the CSCEIFC. He is one of the Founder of Barangka Credit Cooperative (formerly UTEX Employees Credit Cooperative) and concurrently the President and Chief Executive Officer of the said institution. He is currently a Board Member of Philippine Cooperative Center, Cooperative Banks Federation of the Philippines and Philippine National Red Cross – Marikina Chapter from year 2017 to present; and Board Member of Metro South Cooperative bank, Cooperative Union of Marikina City and Marikina City Credit Surety Fund (BSP) from year 2016 to present. Mr. Mascariña is currently the Chairman of PFCCO – NCR League and PFCCO NCRL – Marikina Chapter and a member of Duterte Movement – Marikina Chapter. He was Vice-Chairperson of Marikina Cooperative Development Council from year 2013 to 2014; Board of Director of Marikina Federation of Cooperative from year 2010 to 2014. He was the Representative of Ating-Koop Partylist in the House of Representative from year 2013 to 2016 and Executive Director of Ating-Koop Partylist from year 2008 to 2013. He has been the Treasurer of Metro South Cooperative Bank from year 2002 to 2004 and Council Member of Philippine Federation of Credit Cooperative – NCR from year 1994 to 2009. Mr. Mascariña graduated with a Bachelor of Science degree in Industrial Engineering from Central Colleges of the Philippines, Quezon City and a Masters in Business Administration major in Financial Management from National College of Business & Arts, Quezon City.

Ma. Theresa G. Drueco, DIRECTOR

Ms. Ma. Theresa G. Drueco, 58, Filipino, is nominated for directorship of the CSCEIFC.

Ms. Drueco is a Certified Public Accountant and  is a graduate of Bachelor of Science in Business Administration Major in Accounting at University of the East – Manila. She is the owner of DRUECO Buildings and Apartments and Finance Officer of ARC Auto Parts and Services. She served as a member of the Board of the Philippine Cooperative Center from year 2014 to 2018; member of the Board of CLIMBS Life and General Insurance Cooperative from year 2017 to 2018. From year 2012 to present she is member of the Board of Novaliches Development Cooperative.

Wilhelmino R. Mendoza, INDEPENDENT DIRECTOR

Mr. Wilhemino R. Mendoza, 70, Filipino. He is currently the President and CEO at South Bank, Inc. He has been the Director of Factors Lending Corporation and Gopel Finance Corporation from year 2014 to 2017. First Vice President Area Head – Mindanao Region year 2003; Director and Treasurer of  NorthMindanao Mining and Development Corporation year 2001; President and General Manager of Xavier Sports and Country Club year 2001; Senior Vice President of A Brown Company year 2001 to 2002; Vice President and Region Head Manager of Solid Bank Corporation year 1993 to 2000; Vice President and Area Supervisor – Northwestern Mindanao Area year 1991 to 1993; Branch Manager of Republic Planters Bank year 1978 to1991 and Admin Assitant of Philippine National Bank Year 1972 to 1978. Mr. Mendoza graduated with a Bachelor of Arts General Course in Ateneo de Zamboanga.

Jose Romeo B. Ebron, INDEPENDENT DIRECTOR

Mr. Jose Romoe B. Ebron, 44, Filipino. Mr. Ebron is the Cooperative Development Program Manager of Asia Farmers Association for Sustainable Rural Development from April 2017 to present; Consultant/Adviser of Kapandesal Multipurpose Cooperative from August 2016 – March 2017; Networking / Training Officer / Special Projects Officer of MASS-SPECC Cooperative Development Center from February 1999 – July 2010; Community Organizer/Trainer of Balay Mindanaw Foundation, Inc. (BMFI) from July 1998 – January 1999; Chairperson of the Board of Directors of Oro Integrated Cooperative (OIC) from 2006 to 2007 and 2018; Board of Directors of OIC from years 2004 to 2007 and years 2010 to 2012; Secretary to the Board of Directors of OIC from 2000 to 2005; Chairperson of the Board of Directors of National Confederation of Cooperatives (NATCCO) from 2013 to 2015 and Board of Director from 2011 to 2013 and 2018 to present; Founding Chairperson of Mountain View Dairy Cooperative from 2016 to present; Board of Trustee of Zircon Resource from 2015 to present; Board of Director of NATCCO Mutual Benefits Associations, Inc from 2014 to May 2015; Board of Director of Cooperative Bank of Agusan Del Norte from 2012 to 2014; Chairperson of Golden Grains Marketing Cooperative from 2016 to present and he is a member of various electric cooperative like Bukidnon Service Electric Cooperative and Misamis Oriental Electric Cooperative.

No Director has resigned or declined to stand for re-election because of any disagreement with the Fund.

Lillian D. Silubrico, TREASURER

Ms. Silubrico, 54, Filipino, has been the Treasurer of the CSCEIF from the latter’s inception up to the present. She is concurrently the General Manager and Chief Executive Officer of the Holy Cross Savings and Credit Cooperative and Independent Director for CLIMBS Life and General Insurance Cooperative.

She is a Certified Public Accountant for cooperatives and private companies. She graduated with a Bachelor degree in Accountancy from the Polytechnic University of the Philippines.

Aldren S. Masas, COMPLIANCE OFFICER

Mr. Masas has been the Compliance Officer of the CSCEIF from June 2019 up to the present. He is concurrently the Chief Accountant of the CLIMBS Life and General Insurance Cooperative.  He graduated with a Bachelor’s degree in Accountancy from the Central Mindanao University. Mr. Masas is 28 years old.

Antonio Manuel A. Alcantara, CORPORATE SECRETARY

Atty. Alcantara, 68, Filipino, has been the Corporate Secretary of the CSCEIF from the latter’s inception up to the present. He is concurrently the Vice Chairman of PHCCI in Dumaguete City, member of the Board of CLIMBS Life and General Insurance Cooperative, member of the Board of NEORUNCO and First Vice Chairman of the Boy Scouts of the Philippines Negros Oriental Council. He graduated with a Bachelor of Laws degree from the Siliman University. He was formerly a Director of the National Confederation of Cooperatives. He is a retired Judge. Atty. Alcantara was also an Election Registrar, an Assistant City Fiscal, and a City Prosecutor.  He was an instructor at the College of Law Negros Oriental State University.

The Treasurer and Corporate Secretary were appointed in November 2015 while , Compliance Officer was appointed June 22, 2017 with a term of office one (1) year and renewable yearly, thereafter or until such time as they are replaced by the Board of Directors, whichever comes first.

• Investment Manager, Principal Distributor and Administrator

The CIMAC, with principal address at CLIMBS Building, Tiano corner Pacana Streets, Cagayan de Oro City 9000 is the CSCEIF’s Investment Manager, Principal Distributor and Administrator. Under the revised SEC procedures, the CIMAC’s incorporation and secondary license shall be granted only after the approval of the Fund’s secondary license with the SEC. The CIMAC’s proposed authorized capital stock of Ten Million Pesos (Php10,000,000.00), Philippine currency, and said capital stock is divided into Ten Million (10,000,000) shares with the par value of One Peso (Php1.00) per share.

The guidelines for the management of the resources and operations of the Fund by the CIMAC are set in the Management, Distribution and Administration Agreement Between the parties.

The CIMAC is a corporation owned by the CLIMBS Life and General Insurance Cooperative, a company with a solid track record in investment management. The following are the members of the Board of Directors and officers of the CIMAC:

Fermin L. Gonzales – Mr. Gonzales has been the Chairman and Chief Executive Officer of the CIMAC from the latter’s inception up to the present. Mr. Gonzales is concurrently the President and Chief Executive Officer of the CLIMBS Life and General Insurance Cooperative (CLGIC), a position he has held since 1993. Mr. Gonzales was previously the National Marketing Manager of the Coop Life Mutual Benefit Services Association (1987-1992) and General Manager of the Nabunturan Integrated Cooperative (1975-1987). He was President of the Misamis Oriental-Cagayan de Oro Federation of Cooperatives (1997-1999), Oro Integrated Cooperative (1996-1999), and MASS-SPECC Cooperative Development Center (1997-1999). Mr. Gonzales was Board member of the National Confederation of Cooperatives (1997-1999) and the Small Economic Enterprise Development (1998). He earned a degree of Bachelor of Science in Elementary Education from the University of Southern Philippines. Mr. Gonzales is currently 79 years old.

Jorge G. Lumasag, Jr. – Mr. Lumasag, Jr. has been the director, President and Chief Operating Officer of the CIMAC from the latter’s inception up to the present. Mr. Lumasag, Jr. is also the Chief Investment Officer of CIMAC. Previously, Mr. Lumasag, Jr. was Executive Vice President and Chief Financial Officer of the CLGIC from 2014-2015. He was Executive Vice President and Chief Operating Officer of the CLGIC from 2009-2013, Vice President for Marketing from 2006-2009 and Marketing Manager from 2004-2006. He was employed with the Regional Educators Multi-Purpose Cooperative from 2000-2003 where his last position was Operation Head. Mr. Lumasag, Jr. graduated Magna cum Laude with a degree of Bachelor of Arts major in Theology from the Davao Bible College. He is an Associate Financial Planner, Certified Investment Solicitor and licensed Life and Non-life insurance agent. Mr. Lumasag, Jr. is currently 49 years old.

Edgar M. Palarca – Mr. Palarca has been a director of the CIMAC from June 2017 to present. He is currently the Chairman of the Agusan del Norte Teachers, Retirees, Employees and Community Cooperative. He is also concurrently the Community Affairs Officer IV of the Province of CARAGA, a position held since 2015.  Mr. Palarca is the Chairman of Provincial Employees Credit Cooperative of Agusan del Norte. He graduated with a Bachelor of Arts major in Political Science from the Father Saturnino Urios University and a Master’s degree in Public Administration from CARAGA State University. Mr. Palarca is currently 49 years old.

Floriano R. Hilot – Mr. Hilot has been a director of the CIMAC from the latter’s inception up to the present. He is currently the Chief Executive Officer of the Oro Integrated Cooperative (OIC). He was employed with OIC since 1995 and rose from the ranks, being Special Project Collector in 1995 all the way up to his current position as Chief Executive Officer. Mr. Hilot graduated from the Divine Word College. Mr. Hilot is currently 45 years old.

Daniel O. Evangelio, Jr. – Atty. Evangelio, Jr. has been a director of the CIMAC from the latter’s inception up to the present. He is currently the Vice Chairman of the Toril Community Cooperative (TCC), a position he has held since 2008. He was a Board member of TCC from 2004 up to the present as was its Chairman from 2000-2003. He was a Board member of CLGIC from 2001-2012 and was its Chairman from 2003-2004. Atty. Evangelio, Jr. is also a private law practitioner since 1984 up to the present.  He was the in-house lawyer and Legal Manager of the Antonio Floirendo Management and Investment Corporation from 1989-2006. He received a bachelor of Arts degree from the Rizal Memorial Colleges and a Bachelor of Laws degree from the University of Mindanao. Atty. Evangelio, Jr. is currently 65 years old.

Eufemio L. Calio, Ph.D., Ed.D – Dr. Calio has been a director of the CIMAC from June 2017 up to the present. Dr. Calio is currently the Chairman of the MSU-IIT National Multi-Purpose Cooperative, a position he also held from 2015 to present. Dr. Calio was presiding Chairman of the Iligan City Cooperative Development Council.  He is also a member of the Board of Directors of CLIMBS Life and General Insurance Cooperative from 2015 to present, a member of the Board of Directors of the NATCCO from 2015 to 2018 and Finance Committee Member of MASS-SPECC from 2015 to present.

Sofronio V. Talisic – Mr. Talisic has been the independent director of the CIMAC from the latter’s inception up to the present. Mr. Talisic was the Chairman of the Nabunturan Integrated Cooperative 2011-2014 and 2006-2008. He was previously Chairman of the Provincial Cooperative Union of Davao, Davao Allied Development Services and Cooperative, and the Federation of Peoples Sustainable Development Cooperative. He was Vice Chairman of the Model Cooperative Network. He graduated college from the PMI Colleges in Tagbilaran City and earned a post graduate degree from the Ateneo de Davao University. Mr. Talisic is currently 68 years old.

Danilo T. Cabahug – Mr. Cabahug has been the independent director of the CIMAC from the June 2017 up to the present. He has a Master’s in Business Administration degree from the St. Columban College, Pagadian City. Mr. Cabahug is a member of the Board of Director of Perpetual Help Community Cooperative from 2013 to the present, the Vice Chairman of the Philippine Cooperative Central Fund Federation (PCF), Cebu City from April 2015 to present. He is the member of the Mediation and Conciliation Committee of CLIMBS Life and General Insurance Cooperative from May 2015 to present. Mr. Cabahug is currently 57 years old.

Clemencia Q. Neri – Ms. Neri has been Treasurer of the CIMAC from June 2017 up to the present. Ms. Neri is concurrently the Chairperson of the Oro Savings and Sharing Cooperative from June 2008 to present. She graduated with a Bachelor’s degree in Science major in Accountancy at University of Bohol. Ms. Neri is 65 years old.

Teddy A. Obsina – Mr. Obsina has been the Chief Marketing Officer of CIMAC from its inception up to the present. Mr. Obsina was previously the Program Director of the CLIMBS Institute for Financial Literacy from 2011-2014. He held various positions at Union Bank of the Philippines from 1990 to 2005, the last position being Business Manager for the Northern Mindanao Area. Mr. Obsina graduated with a Bachelor of Arts major in Economics from the Xavier University and a Master’s degree in Management from the Liceo de Cagayan University. Mr. Obsina is 52 years old.

Reynaldo G. San Andres – Mr. San Anders has been the Compliance Officer of the CSCEIF from its inception up to the present. Mr. San Andres is concurrently the Compliance Officer and Comptroller of the CLIMBS Life and General Insurance Cooperative and Chairman of the CLIMBS Employees Cooperative. He was formerly the President of the Novaliches Development Cooperative. Mr. San Andres graduated with a Bachelor’s degree in Science major in Accountancy from the Metro Manila College and a Master’s degree in Business Administration also from the same college. Mr. San Andres is a Certified Public Accountant. Mr. San Andres is 57 years old.

• Custodian Bank

The Custodian Bank of the CSCEIF is BDO Unibank, Inc. The Custodian Bank Agreement establishes the partnership between the Fund, the CIMAC and the Custodian Bank. It covers the Custodian Bank's duties on receipt of investments, redemption procedures to be used, reports and records to be accomplished by the custodian bank, procedures governing the transfer of the CSCEIF's shares and accounts of investors, custody of certificates representing investments made by the fund manager for the Fund and fees of the Custodian Bank.

BDO Unibank, Inc. charges One Tenth of One Percent (¹/₁₀ of 1%) per annum (accrued daily) of the market value of the assets under custody or Fifty Thousand Pesos (Php50,000.00) per year, whichever is higher, plus value added or any other tax imposed by the Philippine government thereon (the “Annual Fee”) and shall be payable monthly in arrears. BDO Unibank, Inc. will also collect a transaction fee of One Hundred Twenty Pesos (Php120.00) plus applicable VAT per transaction on local equities, fixed rate treasury notes and government securities.

Additionally, the CSCEIF shall pay for inward real time gross settlement (RTGS) of Php250 per transaction and outward RTGS of Php500 per transaction. The CSCEIF shall also pay for Philippine Depository and Trust Corp. (PDTC) charges of Php100 per transaction.

• Stock Transfer Agent

The BDO Unibank, Inc. is the designated Stock Transfer Agent of the Fund.  BDO Unibank, Inc. charges the Fund an opening fee of Ten Thousand Pesos (Php10,000.00) plus applicable VAT and a monthly retainer fee of Ten Thousand Pesos (Php10,000.00) plus applicable VAT. BDO Unibank, Inc. also charges an issuance fee of Forty-Five Pesos (Php45.00) for each stock certificate issued plus applicable VAT if certificated and Twenty-Five Pesos (Php25.00) plus applicable VAT if scripless. BDO Unibank, Inc. charges a redemption fee of Twenty Pesos (Php20.00) plus applicable VAT if certificated and Ten Pesos if scripless. For the computation of cash dividends and preparation of dividend checks, BDO Unibank, Inc. charges the Fund Thirty Pesos (Php30.00) plus applicable VAT per shareholder.

• Legal Counsel

Atty. Fe V. Puyos serves as the Fund's legal counsel.  There is no expert or independent counsel hired on a contingent basis. The retainer fee is Five Thousand Pesos (Php5,000.00) per month plus applicable VAT.

• External Auditor

SGV & Co. is the Fund’s external auditor. 

There is no monthly retainer fee, just an annual fee which is not determinable yet as of this point. Annual audit fee to be determined is based on business volume of the year under examination.

The audit fee covering the fiscal year 2017 was quoted at Sixty Five Thousand (Php33,600,00) plus VAT.

The external auditor was chosen based on the following criteria followed by the Audit Committee:

• capacity to provide the following
  • audit services
    • audit of financial statements submitted to the SEC and BIR
    • statutory audits
    • tax or information technology control assistance for audit services
  • audit-related services
    • employee benefit plan audits
    • due diligence assistance
    • accounting research on proposed transactions
  • tax services
    • tax compliance
    • tax planning and advice
  • other services
    • special investigations to assist the Audit Committee
    • assistance with regulatory activities
    •  
  • not providing any service that would result in the external auditor
    • functioning in the role of management;
    • auditing its own work; and
    • serving in an advocacy role
  • none of the following is hired or to be hired by the Fund to fill a financial reporting oversight role
    • lead partner for the audit
    • concurring partner for the audit
    • any other member of the audit engagement team that provides audit, review or attest services for the Fund
  • willingness to rotate the lead and concurring partners as often as required by the SEC

• Management, Distribution and Administration Agreement

Under this agreement, CIMAC was appointed as the Investment Manager, Principal Distributor and Administrator of the Fund.  Under the agreement, the services of the CIMAC shall include the following:

1. Investment and reinvestment of the resources of the Fund in accordance with the investment policies and guidelines set by the Fund's Board of Directors in conformity with the Fund's Prospectus, the ICA and other applicable laws and regulations;
2. Preparation and submission of such information and data relating to economic conditions, industries, business, corporations, or securities as may be reasonably required by the Fund's Board of Directors or as the CIMAC may deem to be necessary in formulating and evaluating its investment policies or guidelines;
3. Coordination of the activities of, and extension of all necessary cooperation or assistance to the Fund's Custodian Bank, the Transfer Agent, the auditors, and the legal counsel without prejudice to the direct responsibility of such firms to the Fund;
4. Preparation of such reports, circulars, notices and other information on internal corporate affairs that may be required, from time to time, by the Fund, its stockholders, Board of Directors, and/or officers, which shall include a monthly report on:
5. Revenues and disbursements broken down as to investments and expenses;
6. Sales and redemptions; and
7. Performance, changes in or status of the Fund's assets;
8. Representation with Government offices, instrumentalities and agencies, including all work required in registering the Fund's securities, obtaining proper licenses and permits, complying with other legal requirements including those requirements relevant to the CIMAC's own operations, and submitting regular reports to various government agencies;
9. Accounting, bookkeeping, clerical and other administrative services in the ordinary conduct of the Fund's activities, other than those services provided by the Custodian Bank, the auditors, and the legal counsel;
10. Transactions with fixed income securities dealers for the account of the Fund in connection with the CIMAC's investment and reinvestment of the Fund's assets;
11. Provide office space and other administrative facilities; and
12. Distribution of the shares of the Fund.

The fees payable to the CIMAC as Investment Manager is a monthly fee equivalent to two percent (2.00%) per annum of the NAV of the Fund, computed on a daily basis. 

The CIMAC shall receive the sales fees as follows:

The SEC Certified Investment Solicitors (CIS) of CIMAC who solicit investments for the CSCEIF shall receive fifty percent (50%) of all gross sales fees earned by CIMAC for such solicited investments. These SEC CIS shall earn a trail commission of one fourth of one percent (0.25%) based on the market value of their solicited investments for as long as such investments remain in the CSCEIF. The CIMAC shall require that individual sales agents secure their SEC CIS license prior to any solicitation activities.

• Custodian Bank Agreement

Under the agreement, the Custodian Bank shall receive, safe keep, record, and account for the proceeds of the sale of the shares of stock of the Fund.  The Custodian Bank shall, likewise, hold all the certificates representing the investments made by the Investment Manager in behalf of the Fund in accordance with the regulations of the SEC.

• Stock Transfer Agent Agreement

Under the agreement, the Stock Transfer Agent shall render the following services:

1. File the reports pertaining to the Fund as may be required by SEC and other government entities;
2. Prepare the list of stockholders for all regular or special meetings of the Fund's stockholders;
3. Prepare and mail out all notices, reports, and circulars to all stockholders upon prior request of the Fund or Investment Manager;
4. Prepare and mail dividend checks;
5. Prepare and issue stock certificates; and
6. Register all liens constituted on the shares of stock of the Fund.

Officers are not compensated under the Fund. The directors each receive Five Thousand Pesos (Php5,000) per diem per meeting. For 2017, the estimated total compensation for directors and officers of the Fund is One Hundred Forty Six Thousand Three Hundred Fifty Five Pesos (Php146,355).

There are no other arrangements between the Fund and its directors.

The Fund has no employment contracts and termination of employment and change-in-control arrangements.

There are no warrants or options outstanding or repricing thereof.

Security Ownership of Certain Record and Beneficial Owners as of September 30, 2019

Each of the above persons paid the corresponding net asset value per share plus sales fee and applicable VAT on the sales fee for the shares they own in the Fund. These persons are designated to vote for the shares indicated across their name in the above table during stockholders’ meetings.

The original proponents have agreed not to sell, transfer, convey, encumber or otherwise dispose of their shares of the CSCEIF within twelve (12) months from the approval by the SEC of its secondary registration. 

There are no voting trust arrangements for holders of 5% or more of the Fund’s securities.

There are no arrangements that may result in a change in control of the Fund.

There are no securities to be registered that are being offered for the account of security holders.

The incorporators, directors & several cooperatives are holders of the CSCEIF shares as shown below:

There are no shares of the Fund that are designated to be sold to specified persons.

The Fund has one thousand two hundred fifty five (1,255) shareholders as of September 30, 2019. There were no underwriters for the sale of shares to the aforementioned shareholders. All shares were sold for cash at net asset value per share of the specific date of subscription.

The Fund does not claim any exemption from the registration of its shares with the SEC.

There is no significant employee who is expected by the Fund to make a significant contribution to the business. There are no employment contracts, termination of employment and change-in-control arrangements between the Fund and its directors and officers.  There are no compensatory plans or arrangements between the Fund and any of its executive officers.

There are no family relationships up to the fourth civil degree either by consanguinity or affinity among directors, executive officers or persons nominated or chosen by the Fund to become directors or executive officers.

There are no material transactions with or involving the Fund or any of its subsidiaries in which a director, executive officer, or stockholder owns ten percent (10%) or more of the total outstanding shares, and any member of their immediate family had or is to have a direct or indirect material interest.

There are no transactions during the last two (2) years or proposed transactions, to which the Fund was or is to be a party in which any of the Fund’s directors, executive officers or stockholders had or is to have a direct or indirect material interest.

There are no transactions by any security holder named in response to Part IV, paragraph C of Securities Regulation Code.

There are no transactions with promoters and there are no transactions that involve the nature and amount of anything of value (including money, property, contracts, options or rights of any kind) received or to be received by each promoter, directly or indirectly, from the Issuer and the nature and amount of any assets, services or other consideration received or to be received by the Fund. There are no transactions as to any assets acquired or to be acquired from a promoter.

The Fund and the CIMAC doesn’t have interlocking director.

In compliance with the requirements of the R.A. No. 2629, otherwise known as the Investment Company Act of 1960 or ICA, and the Rules Governing the Act, the Fund is organized as a stock corporation with a minimum subscribed and total paid-in capital of Two Hundred Eighty Sixty Million One Hundred Eighty-Two Thousand Seven Hundred Fifty Pesos (Php286,182,750).

All the Members of the Board of Directors of the Fund are Filipino citizens and all shares of its capital stock are common and voting shares. The Articles of Incorporation of the Fund provide for the waiver of pre-emptive rights of stockholders.

All of the directors and officers of the Fund shall have attended seminars on corporate governance given by SEC-accredited providers.

The Board of Directors of the Fund shall review and update its Manual on Corporate Governance at least annually to ensure that it is in line with global leading practices and principles on good corporate governance and with regulations of the SEC. The Board of Directors shall likewise accomplish a Self-Evaluation Questionnaire to determine its and top management’s level of compliance with the Manual on Corporate Governance.

The Fund’s summary of comparative financial information for the nine months ended September 30, 2018 and year ended December 31, 2017 and is given in the following tables:

Summary of Financial Information

As of September 30, 2018, the Fund’s NAVPS stood at Php0.8807 computed on net assets of Php343,557,351 divided by 390,080,726 shares outstanding. The total revenues of the Fund for the nine months ended September 30, 2018 amounted to Php8,783,550. Expenses, comprised mainly of operational expenses led to the Fund’s net income Php2,074,218.00 for the same period. 

Unrealized losses are the result of a negative change of valuation of market price for held investments by the Fund. As the accumulated value of held investments showed a positive change for the Fund, the Fund recognizes no unrealized loss. The Fund’s investment strategy called for the accumulation of equity position only during dips in market value that would provide significant potential capital appreciation to the fair value of issues. These opportunities were scarce to materialize during the period hence the relatively heavy position of the Fund in cash.

Liabilities amounted to Php4,589,391, which represented pre-operating and operating expenses and payable to the investment company adviser and distributor of the fund. In the ordinary course of business, the Fund’s pre-operating expenses were paid by CLIMBS Life and General Insurance Cooperative (CGLIC), a shareholder of the Fund, in behalf of the Fund. The related expenses are presented under the Fund’s pre-operating expenses as “Taxes and licenses”, “Professional fee”, “Advertisement” and “Miscellaneous” accounts in the interim statements of comprehensive income. Charges from CLGIC, which are recognized specifically as payable in cash, on demand and non-interest bearing, are presented as “Payables” account in the statements of financial position. Generally, payables to related parties are initially recognized at fair market value and are subsequently measured at amortized cost using the effective interest rate method.

Management's Discussion and Analysis of Financial Position (September 30, 2018 vs. December 31, 2017) and Results of Operations (January 1 – September 30, 2018 vs. December 31, 2017)

Total resources of the Fund amounted to Php348,146,742 million and Php248,740,162 million as of September 30, 2018 and December 31, 2017, respectively. The increase of 39.96% or Php99,406,580 million for the nine-month period was mainly due to the following:

1. Cash in banks

Cash in banks represent the Fund’s savings, checking and time deposit accounts in local banks and bear annual interest between 0.25% and 6.00%. This account substantially decreased by 56.61% or Php96,629,936 million, from Php170,689,417 million in December 31, 2017 to Php74,059,481 million in September 30, 2018, mainly due to the investment in equity securities.

2. Available for sale (AFS) Investments

Available-for-sale (AFS) investments increased by 251.93% or Php196,096,654 million  as a result of additional investments made during the period but is affected by decreased of value of equity securities on hand. This account consist of quoted available for sale equity securities amounting to Php273.9 million and Php77.8 million as of September 30, 2018 and December 31, 2017, respectively.

3. Receivables

Receivables consist of accrued interest receivables from time deposit placements. This account is lower by 28.06% or Php60,138 pesos from the December 31, 2017 balance of Php214,324 pesos. 

4. Accounts payable and accrued expenses

This account is composed of payable to CLIMBS Life and General Insurance Cooperative, payable to CIMAC, withholding taxes payable and other accrued expenses. Accounts payable and other accrued expenses increased by 2.81% or Php0.126 million from Php4.5 million as of December 31, 2017.

Payable to CLIMBS Life and General Insurance Cooperative pertains to unpaid pre-operating expenses of the Fund.

Payable to CIMAC pertains to unpaid management fee and sales fee as of reporting date. Accrual of management fee is based on the level of Fund’s net assets. This account decrease by 28.90% or Php0.491 million from Php1.7 million as of December 31, 2017 to Php1.209 million as of September 30, 2018.

Accrued expenses include withholding and documentary stamps taxes.

5. Capital stock

The authorized capital of the Fund is Php11,447,310 million divided into 1,144,731,000 million redeemable shares of Php0.01 par value with each share carrying one vote. As of September 30, 2018 and December 31, 2017, issued and fully paid shares amounted to Php3.9 million and Php2.4 million, respectively. The Fund’s capital is represented by these redeemable shares. The shares are entitled to dividends when declared and to the payment of a redemption date or upon winding up of the Fund. The Fund’s issued shares are redeemed at their NAV calculated in accordance with redemption requirements.

The net increase of 62.4% or Php1.2 million was due to the subscriptions during the period.

6. Additional paid-in capital

Additional paid-in capital represents subscriptions received in excess of par of Php0.01 per share amounting to Php382 million as of September 30, 2018 and Php238.43 million as of December 31, 2017. The increase of Php143.63 million primarily came from subscriptions during the period.

7. Retained earnings

Retained earnings decreased from Php3.4 million as of December 31, 2017 to Php42.3 million deficits as of September 30, 2018 mainly due to decreased performance of the equity securities it carry.

8. Unrealized loss

Unrealized losses are the result of a negative change of valuation of market price for held investments by the Fund. As the accumulated value of held investments showed a positive change for the Fund, the Fund recognizes no unrealized loss.

The results of operations for the period ended September 30, 2018 resulted to a net income of Php2.1 million, higher by 244.86% or Php3.5 million compared to negative Php1.4 million net loss as of December 31, 2017.

Detailed discussions of the changes in statement of income accounts are as follows:

7. Realized gain
   Realized gains were derived from income realized in the sale of stock investments of the Fund and the change in fair value of stocks during the period. This account resulted to Php4.1 million as of September 30, 2018 or 100% increase compared to December 31, 2017.
8. Dividend income
   Dividend income totaled Php3.1 million for the period September 30, 2018 or 100% increase as of December 31, 2017.
9. Interest income
   This account pertains to interest earned from cash in banks.
10. Management fees
    Management fees amounting to Php5.4 million consist of fees accrued and paid to the Fund’s Investment Adviser or 19.43% increase as compared to December 31, 2017 balance.
11. Custodian and transfer agency fee
    This account increase by 291.29% as compared to December 31, 2017 as a result of the transaction charges incurred relative to the high volume of purchase and sale transactions during the period.
12. Directors and officers fees
    Directors and officers fees amounted to Php70,174.00 and Php146,355.00 for the period ended September 30, 2018 and December 31, 2017, respectively.
13. Brokers’ commission
    Brokers’ commission increased by Php71,112.00 or 100% as a result of higher volume of rebalancing trades performed during the period as compared to previous period last year wherein no trade transactions had been executed.
14. Taxes and licenses
    Taxes and licenses totaled Php185,105.00 and is 136.58% or Php106,862 higher compared to Php78,243 as of December 31, 2017 mainly due to higher payment of municipal and national taxes like stock transaction tax.
15. Travel and transportation
    Travel and transportation totaled Php145,768.00 incurred for the period of 42.25% decrease as compared to December 31, 2017 balance.
16. Meeting and conferences
    Meetings and conferences totaled Php52,600.00 incurred for the period of 5.82% increase as compared to same period last year.
17. Miscellaneous expense
    Miscellaneous expense totaled Php3,926.00 incurred for the period of 99.28% decrease as compared to December 31, 2018.

The Fund was incorporated on November 02, 2015 with the objective of providing returns which would reflect the performance of the Philippine equities market by investing in a basket of securities which is included in the PSEi of the PSE (“Underlying Index”).

The Fund has appointed CIMAC to serve as its Investment Company Adviser, Administrator and Distributor. With the SEC’s approval of CIMAC’s license to act as such, active management of the Fund’s assets was initiated in May 2017.

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

• Net Asset Value Per Share – Net Asset Value per share decreased from Php1.017 as of December 31, 2017 to Php0.8807 as of September 30, 2018.

Third quarter Net Asset Value Per Share (NAVPS) decreased from P1.017 at the beginning of the period to P0.8807; this constitutes around a 14% decrease on NAVPS. This decrease is a direct result of a decrease in value of the investments purchased by the Fund for the period. This devaluation can be attributed to market weakness that pervaded the second quarter which is comprised of a number of factors including global concerns over trade conflict, domestic inflation data, Federal Reserve meetings regarding the prevailing interest rate; among others. The Fund believes, however, that underlying fundamentals are still favourable for these picks and will create value in the future.

• Sales for the period ended – The Fund had total sales of Php25.7 million for the period ended September 30, 2018. This is Php11.1 million higher compared to the Php14.6 million sales for the same period 2017.
• Redemptions for the period – The Fund had Php330,283.69 redemption for the period while no redemption has been received for the same period 2017.

Net Income vs. Benchmark – The Fund posted a net investment income of Php2.1 million for the period ended September 30, 2018 and Php0.8 million net investment income for the same period last year.