Fixed Income Instruments
- Divided into short-term (maturity ≤ 365 days) and long-term.
- Includes government securities (minimum 10% of trust fund equity).
- Savings/time deposits and common trust funds with duly rated commercial banks.
- Commercial papers registered with SEC; credit rating of "1" (short-term) or "Aaa" (long-term).
- Limits: max 15% of trust fund equity for long-term commercial papers; max 10% exposure per commercial paper.
- Direct loans to financially stable, profitable corporations secured by real estate mortgages (up to 60% appraised property value).
- Direct loans max 5% of trust fund equity; max 10% per borrower; loan term max 2 years.
Mutual Funds
- Must be registered with the Securities and Exchange Commission.
- Investments restricted to fixed income instruments and blue chip stocks.
- Subject to prescribed legal and regulatory limitations.
Equities
- Investments only in stocks listed on the Philippine Stock Exchange Big Board.
- Criteria for stocks: financially stable companies, actively traded, good growth record, and dividend declaration in last three years.
- Allocation max 25% of trust fund equity; max 10% exposure per stock issue.
- Valuation: recorded at lower of cost or market value.
- Non-compliant existing investments to be disposed of within 1.5 years from circular effectivity.
Real Estate
- Limited to properties in strategic areas of cities and first-class municipalities.
- Title requirements: TCT in seller's name, free from liens/encumbrances; transferred to trustee unless seller is pre-need company.
- Recorded at acquisition cost; subject to appraisal every 5 years by accredited appraiser.
- Appraisal adjustment: 50% of increased value recorded; full decrease recorded.
- Appraisal increment cannot be used to meet mandatory contributions.
- Total real estate investment capped at 25% of trust fund equity.
- Existing excess real estate investments must be reduced to limit within 2 years.
Trustee Responsibilities
- Exercise due diligence, exclusive management and control over trust fund assets.
- Maintain liquidity reserve to cover benefits due within the year, minimum 20% of net asset value.
- Requires submission of payable fully paid plans every fiscal year start.
- Prohibits investing trust funds or extending loans to the pre-need company, its insiders, or related entities.
Securities and Exchange Commission Powers
- May demand conversion of investments to cash or near-cash assets to protect planholders' interests.
Repealing Clause
- All conflicting circulars, rules, or regulations are repealed or modified accordingly.
Effectivity
- The circular takes effect immediately upon adoption on June 21, 2000.