PhilEquity Prospectus

8/10/2019 PhilEquity Prospectus

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As of May 24, 2013



No dealer, selling agent and any other person has beenauthorized to give information or make representation notcontained in this Prospectus. This Prospectus does not constituteany offer to any securities other than those to which it relates in

any jurisdiction to any person to whom it is unlawful to make suchan offer or solicitation in such jurisdiction. The delivery of thisProspectus at any time does not imply that the information hereincontained is correct as of any time subsequent to this date.

The information contained in this Prospectus has been suppliedby PhilEquity Fund, Inc. unless otherwise stated. PhilEquity Fund,Inc. accepts full responsibility for the accuracy of the information

given herein, and confirms that there are no omissions of factwhich would make any statement in this Prospectus misleading.PhilEquity Management, Inc., the investment manager ofPhilEquity Fund, Inc. has exerted reasonable efforts to verify theinformation herein and does not make any representations orwarranties as to the accuracy or completeness of the materialscontained herein.

PhilEquity Fund, Inc. has filed Registration Statements with theSecurities and Exchange Commission in accordance with thePhilippine Investment Company Act and the Revised PhilippineSecurities Act relating to authorized capital stock of the Company.

The Securities and Exchange Commission has issued an Orderdated 27 th April 1994 rendering effective the RegistrationStatements of the Company covering all of the common units of its

authorized capital stock and a permit to offer the securities for saledated 27 th April 1994.



TABLE OF CONTENTS

SECTION PAGE

FUND FEATURES ................................................................................... .1

GLOSSARY .............................................................................................. 2

THE COMPANY ........................................................................................ 3

A. THE FUND’S INCORPORATION ............................................................. 3 B. CAPITALIZATION ................................................................................. 4 C. INCORPORATORS, BOARD OF DIRECTORS, AND OFFICERS ................... 5 D. COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS ................. 5 E. EFFECTS OF GOVERNMENT REGULATION ............................................. 5 F. PROPERTIES ....................................................................................... 5 G. LEGAL PROCEEDINGS......................................................................... 6

INVESTMENT GUIDELINES AND STRATEGY ...................................... 6

INVESTMENT LIMITATIONS/RESTRICTIONS ....................................... 7

BENEFITS DERIVED FROM INVESTING IN THE FUND ....................... 8

A. PROFESSIONAL MANAGEMENT AND SUPERVISION ................................ 8 B. DIVERSIFICATION AND MATCHING THE PHISIX ...................................... 8 C. LIQUIDITY ........................................................................................... 8 D. SATISFACTORY RETURN ......................................................................9

RISK FACTORS ....................................................................................... 9

USE OF PROCEEDS .............................................................................. 10

INVESTMENT PROCEDURE………………………………………………11

A. INDIVIDUAL APPLICANTS .................................................................... 11 B. CORPORATE INVESTOR REQUIREMENTS ............................................. 11 C. ACCEPTANCE OF APPLICATIONS ......................................................... 11D. DELIVERY OF STOCK CERTIFICATES .................................................... 12

REDEMPTION OF SHARES .................................................................. 12

A. NAV PER SHARE COMPUTATION ....................................................... 12 B. M ANNER AND METHOD OF REDEMPTION ............................................ 12 C. REDEMPTION PRICE .......................................................................... 13 D. MINIMUM HOLDING PERIOD AND REDEMPTION CHARGES .................... 13 E. SPECIAL CONSIDERATIONS ................................................................ 13 F. APPLICABLE T AXES ........................................................................... 14



COMPUTATION OF NET ASSET VALUE ............................................. 14

PARTIES INVOLVED IN THE FUND ..................................................... 16

A. INVESTMENT MANAGER AND PRINCIPAL DISTRIBUTOR..........................16 B. CUSTODIAN BANK ............................................................................ 16

C. TRANSFER AGENT ............................................................................ 17 D. LEGALCOUNSEL………………………………………………………..17 E. EXTERNAL AUDITOR ......................................................................... 17 F. SIGNIFICANT EMPLOYEE .................................................................... 17 G. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................... 17

EXPENSES CHARGEABLE TO THE FUND ......................................... 18

MANAGEMENT FEE .............................................................................. 18

EXPENSES CHARGEABLE TO THE INVESTMENT MANAGER ........ 18



The Securities and Exchange Commission’s approval of thisProspectus, the order registering the authorized common capitalstock of the Company, and the issuance of the certificate or permitto sell are permissive only and do not constitute a

recommendation or endorsement by the Securities and ExchangeCommission of the securities permitted to be sold.

The common shares of the Company are not listed or traded onthe Philippine Stock Exchange.

The reader should consult his stockbroker, legal counsel, professional accountant, or other professional adviser with respect

to the acquisition, holding or disposal of the securities described inthis prospectus.





1 PhilEquity Fund, Inc.

FUND FEATURES

Type of InvestmentOpen-end mutual fund

Shares OfferedCommon stock

Offering price At Net Asset Value (NAV) per share for the banking day, ifpayment is made within the daily cut-off time, plus a salesload/fee. The NAV per share on the following banking day will be

used for payment made after the daily cut-off time. The daily cut-off time shall be 12 o’clock noon of a banking day. NAV per shareis defined as the difference of the total assets of the company lessits total liabilities divided by the number of shares outstanding.NAV per share is computed daily on each banking day and postedin the office of the Company. A banking day is a day whencommercial banks in Metro Manila are required or authorized bylaw to open.

Minimum Purchase

The minimum initial purchase is P5,000 and a minimum of P1,000worth of shares for additional purchases,

Sales Load/Fee

Investment Amount Sales Load

5,000 - 99,999 3.50%

100,000 - 249,999 3.25%

250,000 - 499,999 3.00%

500,000 - 999,999 2.75%

1,000,000 - 1,999,999 2.50%

2,000,000 - 4,999,999 2.00%

5,000,000 - 9,999,999 1.50%10,000,000 - 19,999,999 1.00%

20,000,000 – 49,999,999 0.50%

50,000,000 & above 0.25%



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Redemption PriceThe redemption price of shares surrendered for redemption beforethe daily cut-off time 12:00 o’clock noon shall be the next

computed net asset value, i.e. the NAVPS computed at the end ofthe same business day. Requests for redemptions received by thefund after the said cut-off time shall be considered received thefollowing business day and processed accordingly.

Redemption charge

Term Fee

Less than 1 year 2.00%

1 year - less than 2 years 1.50%

2 years and above 0.00%

GLOSSARY

Investment Manager

Philequity Management, Inc.

Principal DistributorPhilequity Management, Inc.

The "Fund" or the "Company"PhilEquity Fund, Inc.

BSPBangko Sentral ng Pilipinas

Custodian BankPhilippine Depository and Trust Corp.

Investor Any person, association or corporation who desires to invest in the

shares of the Fund

NAVNet Asset Value




NIRC or R.A. 8424National Internal Revenue Code of 1997

Pesos or P

Philippine Peso, lawful currency of the Philippines

PSE or the "Exchange"Philippine Stock Exchange, Inc.

R.A. 2629Republic Act No. 2629 or the Investment Company Act

SEC or the "Commission"Securities and Exchange Commission

"Shareholder" or "Stockholder” Any natural or juridical person who has subscribed to the sharesof the Fund.

Transfer Agent

Banco de Oro Universal Bank

THE COMPANY

A. The Fund’s Incorporation The PhilEquity Fund, Inc. which was incorporated in thePhilippines on February 21, 1994 under the Republic Act No. 2629or the Investment Company Act as a diversified, open-endinvestment company. The Fund is engaged in the sale of itsshares of stock and in the investment of the proceeds from thesale of its shares into a well-selected portfolio of securities, bothdebt and equity. The fund is designed to accommodate both bigand small investors seeking capital appreciation to avail of theprofessional management of their investments at the lowest

possible cost, liquidity, growth opportunity, and satisfactory returnson their investments. Upon notice, the Fund is ready to redeemthe shareholdings of any investor at the applicable Net AssetValue per share.



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B. Capitalization and OwnershipThe Fund has an authorized capital of One Billion Pesos(P1,000,000,000.00) divided into 1.0 billion shares with a par

value of P1.00 per share.

The incorporators of the Fund agreed not to sell, transfer, convey,encumber or otherwise dispose of their shares of PhilEquity Fund,Inc. within twenty-four (24) months from the issuance by theSecurities and Exchange Commission of an order authorizing thesale of PhilEquity Fund shares to the public.

Each share of stock of the Company is a voting stock with votingrights equal to every other outstanding shares of stock, andsubject to right of redemption.

1. Right of RedemptionThe holder of any share of stock of the Company, upon itspresentation to the Company, or its duly authorizedrepresentatives, is entitled to receive by way of redemption

approximately his proportionate share of the Company’s assets orcash equivalent thereof, i.e. the current Net Asset Value, subjectto the existing laws and the by-laws of the Corporation; provided,however that no such redemption may be made unless theremaining unimpaired capital of the Corporation shall be 50% ofits outstanding liabilities to its creditors of the Company. Provided,further, the redemption may be suspended during any periodspecified under the by-laws and under any applicable laws and

regulations.

2. Waiver of Preemptive RightsNo Stockholder shall, because of his ownership of stock, have apre-emptive right or other right to purchase, subscribe for, or takeany part of any stock or any other securities convertible into orcarrying options or warrants to purchase stock of the Company.The Company’s Article of Incorporation further provided that anypart of such stock or other securities may at any time be issued,optioned for sale and sold or disposed of by the Companypursuant to resolution of its Board of Directors, to such personsand upon persons and upon such terms as such Board may deem




proper, without first offering such stock or securities on any partthereof to existing stockholders.

3. Restriction on Transfer

No transfer of stock of the Company which would reduce the stockownership or equity interest of Filipino citizens to less than thepercentage required by applicable laws and regulations shall becaused or allowed to be recorded in the proper books of theCompany.

C. PhilEquity Fund Inc. Directors and Officers

Chairman / President Ignacio B. GimenezTreasurer Violeta O. Luym

Director Fidel P. Purisima

Director Gregorio T. Yu

Director Felipe U. Yap

Director Valentino C. Sy

Director Frederick Tiu

D. Compensation of Directors and Executive Officers

The directors and executive officers of the Fund have not receivedany form of compensation from inception up to present. Theircontributed efforts to the Fund are on voluntary basis only. Also,there is no per diem, bonus, profit sharing or other compensationplan, pension or retirement plan, contract or arrangement in which

any director or executive officer of the Fund will participate.

E. Effects of Government Regulation

With the lowering of the threshold amount of covered transactionsunder the Anti-Money Laundering Act of 2001 (Republic Act No.9160) from P4,000,000.00 to P500,000.00, the investing publicwould be wary of attempting to invest an amount that would placetheir investment in such a position that would entail a report to the AMLA Council. Moreover, investors appear to consider thereportorial provision of the Anti-Money Laundering Act as aninvasion of their secrecy of deposit, more so if the source of suchinvestment is legitimate. Hence, with the AMLA as a discouraging



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factor, the Fund expects limited capital investment byshareholders in the near future.

F. Properties

Operations are conducted within the premises of the fundmanager. All facilities are either owned or provided by the fundmanager. Being a fund, the Fund has neither properties under itsfixed assets accounts nor hire employees for its operation.

G. Legal Proceedings

The Fund has not been involved in any litigation or disputes. TheFund does not foresee any legal dispute to be instituted either byany government agency or entity or by third persons.

INVESTMENT GUIDELINES AND STRATEGY

Investment PolicyPhilEquity Fund, Inc. (“Fund”) is an open-end mutual fund. TheFund’s investment objective is to seek long-term capitalappreciation through investment primarily in equity securities oflisted Philippine companies while taking into consideration theliquidity and safety of its investments to protect the interest of itsinvestors.

The Fund intends to invest its assets in a variety of Philippineindustries to achieve diversification, but will act as such within theprovision of applicable laws and regulations.

A. Fixed Income Portfolio A portion of the Fund’s investment portfolio shall be invested inshort to medium term corporate debt papers registered with the

Securities and Exchange Commission and had been approved bythe Board of Directors of the fund management company.

The fund shall allocate at least 10% of its assets in short-termgovernment securities, bonds or other evidences of indebtednessissued by the Philippine government or any of its instrumentalities,




savings or time deposits with commercial banks and approved bythe Board of Directors of the fund management company.

B. Equity Portfolio

The Fund shall invest its assets in a variety of selected and listedPhilippine industries. These companies must have shown a recordof profit growth, dividend payment and stability. In selectingindustries and companies for investment, the Investment Managerwill consider factors such as overall growth prospects, competitiveposition in markets served, technology, research anddevelopment, productivity, labor costs, raw materials sources andcosts, capital resources, profit margins, return on investments,

government regulations, and experience, quality andcompetitiveness of management. While it is expected that theFund will invest principally in securities of established companies,investments may also be made in securities of newly listedcompanies. Studies on these companies shall be considered fromtime to time. The Fund intends to purchase and hold securities forlong-term gain, except on a case-to-case basis.

INVESTMENT LIMITATIONS/RESTRICTIONS

The following are the limitations and fundamental policies of theCompany and the provisions of the Securities and ExchangeCommission:1. The Fund shall not participate in any underwriting or selling

group in connection with public distribution of securities,except for its own capital stock.

2. The maximum investment in any single enterprise shall notexceed an amount equivalent to ten percent (10%) of theFund’s Net Asset Value, and in no case shall the totalinvestment of the Fund exceed ten (10%) of the outstandingsecurities of any one investee company.

3. The Fund shall not incur any further debt or borrowings unlessat the time of its occurrence 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 coverageshall fall below 300%, the Fund shall within three (3) daysthereafter reduce the amount of its borrowings to an extentthat the asset coverage of such borrowings shall be at least300%.



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4. Operational expenses shall not exceed ten percent (10%) ofits total investment fund or total net worth as shown in theprevious year ’s audited financial statements.

5. The Fund shall not make any investment for the purpose ofexercising control of management.6. The Securities and Exchange Commission, by order, unless it

provides otherwise, the Fund may not engage in any of thefollowing:

- margin purchase of securities;- commodity futures contracts;- precious metals;

- unlimited liability investments;- short selling of currencies;- short selling of investments;- other investments as the SEC shall, from time to time,

prescribe.

BENEFITS DERIVED FROM INVESTING

IN THE FUNDA. Professional Management An investor receives professional management at rock-bottomfees. No matter how small or big your investments are,professional care is given to your Fund. The managers keep trackof your investments in order to achieve the highest possiblereturns consistent with sound investment management and

judgment.

B. LiquidityThe investor can purchase and redeem shares easily. Thecompany redeems the shares from the investor at the applicableNet Asset Value per share, subject to the rules and regulations setby the Securities and Exchange Commission.

C. DiversificationOwning a large portfolio of stocks is a standard reason given forbuying funds. There are two basic risks in owning stocks. The riskthat the market may go down, and the risk that an individualcompany may do poorly. Diversification is more complicated thanit might appear. It is not enough to own a dozen or more stocks.




Proper diversification demands investments in stocks of differentindustries that are likely to behave the same way at the same timeresulting in a long-term appreciation of the Fund.

D. Satisfactory ReturnPerformance becomes an important element in the mutual fundoperation. Although there is no guarantee of yield on aninvestment in the mutual fund, the Fund offers better opportunityfor income growth compared to other fixed-income investmentsbecause of its investments in equities.

RISK FACTORS

As with any investment, the Fund’s past performance is noguarantee of its future success. Over the long-term, however, thesuccess or failure to profit in the fund will depend on the risks andvolatility inherent in the combination of shares in the fund’sportfolio.

THE FUND DOES NOT CARRY A GUARANTEED RATE OF

RETURN. INVESTMENT RETURN AND PRINCIPAL VALUE OFAN INVESTMENT WILL FLUCTUATE SO THAT ANINVESTOR’S SHARES WHEN REDEEMED MAY BE WORTHMORE OR LESS THAN THEIR ORIGINAL COST.

Various risk factors can affect the market value of the assets ofthe Fund and can cause fluctuations in the Fund's net asset value.The Fund, however, adopts steps to minimize, if not eliminate, theeffect of these risks. The major risks facing the Fund include thefollowing:

1. Market Risk is the risk that the value of your mutual fund

investment will be adversely affected by the fluctuations in theprice level or volatility of one or more of the underlying instrumentsof the mutual fund. This consists of two main components:

a. Systematic Risk – is the variability in price caused byfactors that affect all securities across all markets (e.g.significant economic or political events). As an illustration,when the country's general political and economicsituations are perceived to be in turmoil, the stock market,



Prospectus 10

in general, experiences lack of trading interest that willconsequently result in thin volume trading and wide pricevolatility. Such situations generally will trigger a downward

momentum for both the stock prices and trading volumesuntil the political and economic condition normalize. As aconsequence, these instances can result in the redemptionprices of redeemed shares being less than the prices atwhich the shares were originally purchased. Investors whoredeem their shares during this time may not recover thefull cost of their investment.

b. Unsystematic Risk – is the variability in price causedby factors which are specific to the particular issuer(corporation) of the shares of stocks. Through properportfolio diversification, this risk can be minimized aslosses on one particular stock may be off-set by gains inanother.

2. Liquidity Risk is the risk that an investment may not find a

ready buyer. This is minimized by the fact that the Fund onlyinvests in listed, marketable equities.

USE OF PROCEEDS

The proceeds from the sale of the securities shall be held by thecustodian bank. It shall be invested and reinvested by the Fund instocks comprising the Phisix. The Fund shall be guided by theinvestment policies and restrictions on its investments under thetopics Investment Objective and Investment Policies andInvestment Restrictions. Inasmuch as immediately investing theentire Fund, or large amounts of investments, at any one time inthe Index stocks may result in an artificial increase in stock prices,a portion of the Fund shall also be invested in short-term debtsecurities and fixed-income securities until such time that the

entire Fund can be properly allocated among all the Index stocks.

As of the filing of this Amended Prospectus, total proceeds fromthe issuance of the shares of stock of the Fund is P25,000,000.00which were invested in various securities listed with the PhilippineStock Exchange.




INVESTMENT PROCEDURE

A. Individual Applicants

Any qualified individual may purchase PEFI shares, through itsprincipal distributor, or any authorized investment salesman.

An application form in triplicate must be accomplished by theinvestor and must be submitted together with the payment orderpayable to PhilEquity Fund, Inc. An official receipt will be issued tothe investor if the investment was made in cash or a copy of theInvestment Application Form will be provided if payment was

made in check. The investor shall also be furnished a confirmationtogether with a copy of his approved Account Opening Form.

The minimum initial purchase is P5,000.00 with additionalinvestment at a minimum of P1,000.00.

B. Corporate Investor RequirementsThe following documents must be submitted together with the

application form by the corporate investors:1. Certified copy of the corporation’s SEC Certificate of

Registration, Articles of Incorporation and By-Laws;2. Board resolution duly certified by the corporation’s

Secretary, authorizing the subscription to the share appliedfor and specifying the authorized signatories;

3. Certification of the corporation’s Secretary indicating thepercentage of holdings by nationality of the corporation’sstockholders.

C. Acceptance of Application Application to purchase are subject to confirmation of PEMI as toamount of shares and the applicable NAV with the final approvalby the investment manager and distributor of PEFI. Applications

should comply with the requirements set in this Prospectus andsuch other rules, regulations and applicable laws.

The Fund Manager of PEFI reserves the right to accept or reducethe number of shares indicated in the Application Form at its solediscretion and in such manner that it may deem appropriate. In the



Prospectus 12

event the Investment Application Form is not accepted as a wholeor in part, the Fund manager will refund the correspondinginvestments to the applicant, without interest within seven (7)

banking days from submission of the Application.

D. Delivery of Stock CertificatesStock certificates are issued to investors in scripless form. Stockcertificates and Custodian Receipts evidencing ownership ofshares shall be issued by the transfer agent, Banco De OroUniversal Bank, only upon the request of the investor. The cost onthe issuance of stock certificates shall be borne by the Investor.

The stock certificate shall be delivered as soon as practicableafter the application has been approved by PEMI, at the addressof the investor indicated in the Application Form to Purchase PEFIshares, the investor will also receive a periodic Fund Statementindicating the status of their investment in the Fund.

REDEMPTION OF SHARES

A. NAV Per Share Computation

The NAV per share shall be the computed difference between thetotal assets of the Fund and its total liabilities divided by thenumber of shares outstanding. The NAV shall be posted in theconspicuous place of the principal office of the Fund as well as inall its branches and designated redemption centers. It shall alsobe published in at least two (2) newspapers of general circulationin the Philippines on a daily basis.

B. Manner and Method of Redemption

Upon the presentation to PEMI of the securities for redemption,the holder of the shares of the Fund is entitled to receive by wayof redemption approximately his proportionate share of the Fund's

current net assets or the cash equivalent thereof, i.e. the netcurrent asset value per share, subject to existing laws and the By-Laws of the Fund. Any request for redemption should always beaccompanied by duly endorsed stock certificates and custodianreceipt/s, if they have been issued. The redemption proceeds shall




be paid within seven (7) banking days from receipt of the dulyaccomplished redemption application.

C. Redemption Price

The redemption price of the securities surrendered within the dailycut-off time shall be the next computed NAV per share after therequest for redemption is received. Securities surrendered afterthe daily cut-off time shall be deemed to have been received onthe next banking day. The daily cut-off time shall be 12:00 o'clocknoon.

D. Minimum Holding Period and Redemption Charges

A redemption fee of two percent (2.0%) of the redemptionproceeds shall be deducted therefrom, if redemption is made onthe first year, one and a half percent (1.5%) if redeemed on thesecond year, and no redemption fee shall be deducted ifredeemed beyond the second year from the time of purchase.

E. Special Considerations

No redemption will be allowed should any of the followingcircumstances exist:

1. The Philippine Stock Exchange is closed for reasons other thanthe customary weekend or holiday closings;

2. Trading at the Philippine Stock Exchange is suspended orrestricted;

3. There exists an emergency as a result of which disposal by theFund of securities owned by it is not reasonably practicable, or thecomputation or determination of the net asset value is notpracticable;

4. The Securities and Exchange Commission, by order, permitssuspension of the right of redemption for the protection of theFund's stockholders; or



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5. Such other circumstance as the applicable Philippine laws orregulations may allow.

F. Applicable Taxes

Under the National Internal Revenue Code of 1997 ("NIRC"),gains realized by the investor upon redemption of shares of stockin a mutual fund company are excluded from the computation of ataxpayer's gross income and are thus exempt from taxation.However, a final tax on the amount of cash and/or propertydividends received by an individual from a mutual fund company

are taxable, beginning January 1, 2000, at the rate of 10% forFilipino citizens and resident aliens, and 20% for non-residentaliens. On the other hand, cash and/or property dividendsreceived by corporations are not subject to tax, with the exceptionof dividends received by non-resident foreign corporations which,in general, shall be taxed at the rate of 15% of the amount ofdividends received.

COMPUTATION OF NET ASSET VALUE

The net asset value of each share of the capital stock of the Fund,as of the close of business of any day, shall be the quotientobtained by dividing the value, as of such closing date, of theassets of the Fund less the liabilities (exclusive of capital stockand surplus) by the total number of shares of capital stockoutstanding at such close, all determined and computed asfollows:

(a) The assets of the Fund shall be deemed to include (i) all cashon hand, deposit in a bank, (ii) all bills and notes and accountsreceivable, (iii) all shares of stock and subscription rights andother securities owned or contracted for by the Fund, other thanits own capital stock, (iv) all stock and cash dividends and cash

distributions to be received by the Fund and not yet received by itbut declared to stockholders of record on a date on or before thedate as of which the net asset value is being determined, (v) allinterests accrued on any interest bearing securities owned by theFund, (vi) all other property of every kind and nature includingprepaid expenses.




In determining the value of the assets of the Fund for the purposeof obtaining the net asset value for acquisition, purchase,repurchase or redemption by the Fund of shares of its capital

stock from its stockholders, each security listed in the PhilippineStock Exchange shall be valued on the basis of the averageclosing price thereon on the business day on which such net assetvalue for sale and redemption purposes is to be calculated. Ifthere be no transaction on particular issue listed, then the value tobe used is that of the previous day or the last day that atransaction was closed. As used herein "business day" shall meana day on which the Philippine Stock Exchange is open for trading

in securities and each business day will be at the hour and minutewhen such Exchange closes for the trading of securities for theday.

All other assets of the Fund, including real estate, prepaid andaccrued expenses and dividends receivable shall be valued bysuch standard and acceptable accounting methods as the Boardof Directors and its auditor shall deem to reflect their fair market

value.

(b) The liabilities of the Fund shall be deemed to include (i) all billsand notes and accounts payable, (ii) all administrative expensespayable and/or accrued (including management fees), (iii) allcontractual obligations for the payment of money or property,including the amount of any unpaid dividend declared upon theFund's stock and payable to stockholders of record on or before

the day as of which the value of the Fund's stock is beingdetermined, (iv) all reserves authorized or approved by the Boardof Directors for taxes or contingencies, and (v) all other liabilitiesof the Fund of whatsoever kind and nature except liabilitiesrepresented by the outstanding capital stock and surplus of theFund.

The NAV per share shall consistently be computed in accordance

with the foregoing formula. Any change of the computation orvaluation shall be subject to the approval of the Commission.



Prospectus 16

PARTIES INVOLVED IN THE OPERATION OFTHE FUND

The different entities that are directly involved in the operations ofPhilEquity Fund, Inc. (PEFI) are: PhilEquity Management, Inc.(PEMI) the investment manager; Banco de Oro Universal Bankthe transfer agent; and Philippine Depository and Trust Corp. thecustodian bank of PEFI.

A. Investment Manager and Principal DistributorPhilEquity Management, Inc. is the investment manager of theFund. PEMI provides and renders professional management andtechnical services to corporations. PEMI also acts as the principaldistributor of the Fund. It takes charge of the sales of PEFI shares.The guidelines for the management and operations of PEFI areset in the Fund Management and Distribution Agreement betweenPEFI and PEMI. PEMI is a corporation organized by a group ofindividuals who have a track record in the stock brokerage

business, having successfully managed their clients’ resources.

PhilEquity Management Inc. Directors and Officers

Chairman of the Board Roberto Z. Lorayes

President Edmundo Marco P. Bunyi, Jr.

Director Leo McGuire Garcia

Director Wilson L. Sy

Director Washington Z. Sycip

Director Aurora L. Shih

Director Ramon Y. Sy

Director Antonio R. Samson

Treasurer Joseph L. Ong

B. Custodian BankThe Custodial Agreement covers the custodian bank’s duties onreceipt of investible funds, the redemption procedure, reports andrecords required by the Fund and the fund manager, custody ofcertificates representing investments made by the fund manager




for the Fund and fees of the custodian bank. The custodian bankof PEFI is Philippine Depository and Trust Corp.

C. Transfer Agent

The transfer agent of PEFI is Banco De Oro Universal Bank.

D. Legal CounselThe law offices of Tan Venturanza and Valdez serve as the legalcounsel for PEFI.

E. External AuditorThe accounting firm of Sycip Gorres Velayo and Company acts as

the external auditor of PEFI.

F. Significant Employee

The Fund has no employee, significant or otherwise, as theoperation of the Fund is being made through and within thepremises of its fund manager.

G. Certain Relationships and Related Transactions

During the last two (2) years the Fund has not been a party to anytransaction or proposed transaction, in which any director orexecutive officer of the Fund or any security holder owning 5% ormore of the securities of the Fund or any member of theimmediate family of such persons, had a direct or indirect materialinterest except the Management and Distribution Agreement

entered into by the Fund and its fund manager last 14 March2003, which was amended last 11 August 2004.

EXPENSES CHARGEABLE TO THE FUND

The following expenses shall be for the account of the Fund andshall be given priority in determining compliance by the Fund with

any limitation on operational expenses set forth in applicablePhilippine laws, rules and regulations.

1. Compensation of the officers and directors of the Fund;

2. Audit and legal fees;



Prospectus 18

3. Brokerage charges and other customary fees and charges inconnection with the acquisition, appraisal and disposition of the

Fund's assets;

4. Fees of the custodian bank and auxiliary custodian banks, tothe extent not absorbed by buyers of the Fund's securities;

5. Cost of printing and mailing reports, notices, proxy forms, andother communications to stockholders of the Fund, except thoseborne by the custodian bank;

6. Fees of transfer agents for the securities of the Fund and othertransfer fees to the extent not absorbed by buyers of the Fund'ssecurities;

7. Costs of the registration of the Fund and its securities with theSEC; and 8. Taxes, including income taxes, license fees,documentary stamp taxes, to the extent not absorbed by buyers of

the Fund's securities, including cost of bonding the Fund'spersonnel and officers as may be required by law or by rules andregulations of the SEC.

MANAGEMENT FEE

A management fee equivalent to one and a half percent (1.5%)per annum of the average net asset value of the Fund's assetscomputed on a daily basis, shall be payable by the Fund to itsinvestment manager, Philequity Management, Inc.

EXPENSES CHARGEABLE TO THEINVESTMENT MANAGER

The following expenses shall be deemed covered by the

management fee of one and a half percent (1.5%) per annum ofthe average net asset value of the Company's assets paid underSection 3 of the Management and Distribution Agreement andshall therefore be for the account of PEMI, to wit:



1. Salaries, bonuses, allowances and other compensation of thepersonnel hired by PEMI to perform the services in Section 1(a) ofthis Agreement, including other costs incurred by PEMI'ssalesmen, personnel and officers, in connection with the selling of

the Fund's shares as may be required by applicable Philippine lawor by rules and regulations of the SEC;

2. Expenses of providing the office space and other administrativefacilities referred to in Section 1(b) of this Agreement, includingoffice rentals, cost of office equipment and supplies, cost ofutilities, such as telephone, light and water facilities; and

3. All other operating expenses of the Fund, subject to theexceptions specified above under the topic Expenses Chargeableto the Fund.

Documents

PhilEquity Prospectus