COVER SHEET

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A ITV. CHARLES ALBERT R. LEJANO 8880999 Contact Person Company Telephone Number

I 3 I 1 I Day

Letter FORM TYPE

I 1 I O I Month

I 1 I 4 I Day

Fiscal Year Annual Meeting

Secondary License Type, If Applicable

Dept. Requiring this Doc. Amended Articles Number/Section

Total No. of Stockholders

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16 February 2017

DIRECTOR JUSTINA F. CALLANGAN Corporate Governance and Finance Department Securities and Exchange Commission G/F North Wing Hall, Secretariat Building PICC Complex, Vicente Sotto Street Pasay City

Dear Director Callangan,

We write in reply to your comments on the checklist attached to your letter of 14 February 2017 regarding the Preliminary Information Statement (SEC Form 20-IS) of Philam Fund, Inc.

Please find attached an updated version of said checklist with an additional column to reflect our responses.

We hope that we have provided you with sufficient clarification.

TR. LEJANO

COVER SHEET

iPIHI I ILIAIM I IFIUINI DI 'I 11 INICI . 1 I

(Compon)"s Full Name)

1117 1/ IFI INIEITI ILll iMIAI IBIUII ILIDII INIG l, I ISIT IHI IAIVIEI . j , I ICIOIR I .1 l2l 6ITIH I ISITI .1, I IBIOIN I I IFIA ICI I 101 IGILIOIBIAIL I ICI I IT IYI ' I

(Business Address : No. Street/City/Province)

ATTY. CHARLES ALBERT R. LEJANO 8880999 Contact Person Company Telephone Number

I 1 I 2 I I 3 I 1 I SEC Form 20-IS I 1 IO I I 1 I 4 I Month Day FORM TYPE Month Day

Fiscal Year Annual Meeting

Secondary License Type, If Applicable

Dept. Requiring this Doc. Amended Articles Number/Section

Total Amount of B;;.c.corr-"-'ow=in=gs ____ ~ .---- - ------, I..__ _____ ....., Total No. of Stockholders Domestic Foreign

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SECURITIES AND EXCHANGE COMMISSION

SEC FORM 20-IS INFORMATION STATEMENT PURSUANT TO SECTION 20

OF THE SECURITIES REGULATION CODE

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

2. Name of Registran~ as specified in its charter Philam Fund, Inc. ("PFl"l or ("Fund")

3. Philippines Province, country or other jurisdiction of incorporation or organization

4. SEC Identification Number 39191

5. BIR Tax Identification Number 000-507-003-000

6. 17/F Philam Life Head Office, Net Lima Building, 5th Avenue corner 25th Street. Bonifacio Global City, Taguig City Address of principal office

7. Registrant's telephone number, including area code (632) 521-6300

8. Date, time and place of the meeting of security holders Date: March 13, 2017 Time: 2:00 p.m. Place: Premier Agency Centre, Philam Life Head Office

15/F Net Lima Building 5th Avenue corner 25th Street, Bonifacio Global City, Taguig City

1634 Postal Code

9. Approximate date on which the Information Statement is first to be sent or given to security holders February 20, 2017

10. Proxy Solicitation Name of Person filing the Statement/Solicitor: Mr. Eric S. Lustre Address and Telephone No.: 17/F Philam Life Head Office, Net Lima Bu ilding,

5th Avenue corner 25th Street. Bonifacio Global City, Taguig City (632) 521-6300

11 . Securities registered pursuant to Sections 8 and 12 of the Code or Sections 4 and 8 of the RSA (information on number of shares and amount of debt is applicable only to corporate registrants):

Title of Each Class

Common Shares of PHP1 .00 par value

Number of Shares of Common Stock Outstanding or Amount of Debt Outstanding

(as of December 31, 2016)

654,417,248

12. None of PFl's securities is listed on the Philippine Stock Exchange.

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NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Please be informed that a Special Meeting of the Stockholders of PHI LAM FUND, INC. (the "Company") will be held on March 13, 2017, Monday, at 2:00 p.m. at Premier Agency Centre, Philam Life Head Office, 15th Floor Net Lima Bldg., 5th Avenue corner 26th Street, Bonifacio Global City, Taguig.

The agenda for the Special Stockholders' Meeting shall be as follows:

1 . Call to Order

2. Certification of Notice and Quorum

3. Management Report

Items for Approval

4. Registration of Additional Shares

5. Authority of SEC to Examine Bank Accounts

6. Implementation of Exemptive Relief; Minimum and Additional Investment

7. Amendment of Dividend Policy

8. Amendment of Articles of Incorporation to Reflect Change in Principal Address; Certain Proposed Amendments to the Fund's Registration Statement and Prospectus, as indicated in Annex "A" Hereof

9. Amendment of the Registration Statement and Prospectus of the Company to reflect the matters from Items 4 through 8

10. Other Matters

11. Adjournment

The Board of Directors has fixed 12:00 n·oon on February 8, 2017 (the "Record Date") as the record date for the determination of stockholders entitled to notice of and to vote at the Special Meeting of the Stockholders. Only holders of shares of common stock as at the Record Date will be entitled to vote at the Special Meeting of the Stockholders.

CHA LE ALBE T R. LEJANO Corpor e Secretary

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PART I.

INFORMATION REQUIRED IN INFORMATION STATEMENT

A. GENERAL INFORMATION

1. Date, time and place of meeting of security holders

Date: Time: Place:

March 13, 2017 2:00 p.m. Premier Agency Centre, Philam Life Head Office 15th Floor, Net Lima Building 5th Avenue corner 26th Street, Bonifacio Global City, Taguig City

Registrant's Mailing Address: 17/F Philam Life Head Office, Net Lima Building, 5th Avenue corner 26th Street, Bonifacio Global City, Taguig City

The date on which the Information Statement is first to be sent or given to stockholders is February 201 2017.

2. Dissenters' Right of Appraisal

As provided by Title X of the Corporation Code of the Philippines (Batas Pambansa Big. 68) ("Corporation Code"), any stockholder of a corporation shall have the right to dissent and demand payment of the fair value of his shares in the following instances:

2.1 In case any amendment to the Articles of Incorporation has the effect of changing or restricting the rights of any stockholders or class of shares, or of authorizing preferences in any respect superior to those of outstanding shares of any class, or of extending or shortening the term of corporate existence;

2.2 In case of sale, lease, exchange, transfer, mortgage, pledge or other disposition of all or substantially all of the corporate property and assets as provided in the Corporation Code; and

2.3 In case of merger or consolidation.

In order for the stockholder to exercise the right, he or she must vote against any of the enumerated instances which the corporation will pursue. The procedures in the exercise of the right are the following:

2.4 Written demand on the corporation within 30 days after the date that the vote was taken. 2.5 Submission of the shares of the dissenting stockholder to the corporation for notation within 10 days

from the written demand. The corporation has to pay the stockholder with the fair value of the shares within 30 days after demanding payment for his or her shares.

2.6 Failure to make the demand within 30 days shall be deemed a waiver of the appraisal right.

There will be no matters that will be taken up at the meeting which may warrant the exercise of this right.

3. Interest of Certain Persons in or Opposition to Matters to be Acted Upon

There is no person who has been a director or officer of PFI at any time since the beginning of the last calendar year, or who is a nominee for election as director, or an associate of any of the foregoing persons who has a substantial interest in any matter to be acted upon at the Special Stockholders' Meeting. No member of the Board of Directors (the "Board") has informed PFI that he intends to oppose any action to be taken by PFI at the Special Stockholders' Meeting.

B. CONTROL AND COMPENSATION INFORMATION

4. Voting Securities and Principal Holders Thereof

(a) The total number of outstanding shares as of December 31 , 2016 is 654,417,248, all of which are common and voting. Each share shall be entitled to one vote with respect to all matters to be taken up during the Special Stockholders' Meeting.

(b) All stockholders of record as of February 8, 2017 are entitled to receive this Information Statement, and to receive notice of, and vote during the Special Stockholders' Meeting.

(c)(i) Security Ownership of Certain Record and Beneficial Owners

The name, address, citizenship, number of shares held, and percentage of total ownership of a person (including any group) owning more than 5% of the outstanding voting shares of PFl's as of December 31, 2016 is as follows:

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(2) Name and Address of (3) Name of Beneficial (1) Title of

Record Owner and Owner and (4) (5) No. of (6) Percentage Class

Relationship with the issuer relationship with Citizenship Shares of Class Held Record Owner

The Philippine American Life and General Insurance Co (Philam Life) The Philippine 15/F Net Lima Building American Life and

Common 5th Avenue corner 26th Street General Insurance Co Filipino 342,227,248 52.2950% Bonifacio Global City, Taguig (Philam Life)1

Record Owner is an affiliate of the Issuer.

The Board and Philam Asset Management, Inc., the investment adviser or fund manager ("Fund Manager") of PFI have no knowledge of any person who, as of the Record Date, is or was directly or indirectly the beneficial owner of more than 5% of PFl's outstanding shares of common stock or who has voting power or investment power with respect to shares comprising more than 5% of PFl's outstanding common stock.

(c)(ii) Security Ownership of Management as of December 31, 2016

Title of Class Name of Beneficial Owner Amount and Nature of Citizenship Percent of Class Beneficial Ownership

Roberto F. De Ocampo Eugenio Lopez Foundation Building

Common Col. Joseph R. Mcmicking Campus 1 123 Paseo de Roxas, Makati City

(R) Filipino 0.0000002%

Chairman}

Elenita G. Villamar

Common 17/F Net Lima Building, 5th Avenue comer 26th Street 1 (R) Filipino 0.0000002% Bonifacio Global City, Taguig City

/Director & Treasurer) Eric S. Lustre

Common 17/F Net Lima Building, 5th Avenue comer 26th Street 1 (R) Filipino 0.0000002% Bonifacio Global City. Taguig City

I /Director\ Reynaldo G. Geronimo

Common No. 5 Zinia Street. Valle Verde 2, Pasig City I/President & Director)

1 (R) Filipino 0 .0000002%

Arleen May S. Guevara

Common 17/F Net Lima Building, 5th Avenue comer 26th Street 1 (R) Filipino 0 .0000002% Bonifacio G lobal City, Taguig City

I (Director) Armand F. Braun, Jr.

Common No. 45 Magdalena Circle, Magallanes Vi llage

1 (R) Filipino 0.0000002% Makati City 111 ndecendent Director) Meliton 8 . Salazar, Jr.

Common No. 28 Hunt Street, Filinvest East, Quezon City l/1 ndecendent Director)

1 (R) Filipino 0.0000002%

Ma. Adelina S. Gatdula

Common Penthouse, Liberty Center, 104 H.V. Dela Costa 0 Filipino 0% Street Salcedo Village, Makati City

I/Corporate Secretary) Charles Albert R. Lejano

Common Penthouse, Liberty Center, 104 H.V. Dela Costa

0 Filipino 0% Street Salcedo Village, Makati City I/Assistant Corcorate Secretarv) Jose Ivan T. Justiniano

Common 18/F Net Lima Building, 5th Avenue comer 26th Street 0 Filipino 0% Bonifacio Global City, Taguig City

I/Compliance Officer)

TOTAL 7 (R) Filipino 0.00017%

(c)(iii) Voting Trust Holders of 5% or more

As of December 31, 2016, there is no voting trust or similar arrangement for 5% or more of PFl's shares. There are no arrangements which may result in a change of control in PFI.

(d) Change of Control

There was no change in control in PFI that occurred since the beginning of the last calendar year.

C. MANAGEMENT REPORT

1 Ms. Arleen May S. Guevara is the person with the power to vote and dispose of the shares of the Philippine American Life and General Insurance Co (Phi/am Life). Ms. Guevara is the Chief Investment Officer of the said company.

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5. Financial and Other Information

The following are PFl's top five (5) key performance indicators:

A. Assets Under Management ("AUM")

PFl 's AUM increased by 4.2% from Php9.99 billion in December 2015 to Php 10.3 billion in December 2016. The increase in total assets is due to the continuing client subscription and the strategy of the fund manager in the management of the Fund's assets, despite the poor performance of the market for the period then ended.

B. Net Asset Value Per Share ("NAVPS") per quarter

QTR YEAR DATE NAVPS YEAR DATE NAVPS YEAR DATE NAVPS

1 LOW 10-Jan 14.7464 5-Jan 16.8364 21-Jan 14.9914 HIGH 11-Mar 15.9650 4-Mar 17.6969 30-Mar 16.5452 ,___

2 LOW 1-Apr 15.9333 9-Jun 16.7501 5-May 16.2381

2014 HIGH 20-May 16.4360 13-Apr 17.9705 29-Jun 17.2173 ,___ 2015 2016

3 LOW 1-Jul 16.3174 29-Sep 16.0347 27-Sep 16.9246 HIGH 24-Sep 16.8947 23-Jul 17.1731 21-Jul 17.6579 -

4 LOW 17-Dec 16.4397 11-Dec 15.6940 23-Dec 15.3821 HIGH 26-Nov 17.0112 26-0ct 16.6441 4-0ct 17.0476

Market Information

PFI is not listed in the Philippine Stock Exchange (PSE). Its shares are sold by PAMl's main distribution channels. These channels are its certified investment solicitors, independent sales consultants, its Philam Life licensed agents, and its ten offices nationwide.

Holders

As of December 31, 2016, there were a total of 11,071 holders of redeemable common stock (one class of shares only) totaling 654,417,248 shares.

On July 15, 2014, the Securities and Exchange Commission resolved to grant the request of Philam Fund, Inc. that the names of their top 20 shareholders be kept confidential in SEC Form 20-IS, subject to the following conditions:

1. That they will disclose the names of their top 20 shareholders in a separate letter submitted to the Commission; and

2. The period of confidentiality shall not be more than five (5) years from date of approval.

Dividends

Although there are no restrictions that limit the Fund's ability to pay dividends, PFI has not declared any cash dividends for the last five (5) years. On October 27, 2016, during its Regular Quarterly Meeting, the Board of PFI resolved that the Company does not plan to declare cash dividends. The Board further resolved that surplus profits of the Company (if any), will be used as additional proceeds to invest in eligible securities.2

Under R.A. 2629 ("The Investment Company Act" ), PFI shall not pay any dividend, or make any distribution in the nature of a dividend payment, wholly or partly from any source other than: (i) from PFl's accumulated undistributed net income, determined in accordance with good accounting practice and including profits or losses realized upon the sale of securities or properties; or (ii) from PFl's earned surplus so determined for the current or preceding calendar year, unless such payment is accompanied by a written statement which adequately discloses the source or sources of such payment. The Securities and Exchange Commission ("SEC") may prescribe the form of such statement by rules or regulations or by order in the public interest and for the protection of investors. PFI shall also not to advertise such dividends in terms of centavos or pesos per share without also stating the percentage they bear to the par value per share.

C. Sales & Redemptions

The following table summarizes the performance of PFI (January to November 2016) in PhP:

FUND NAME SALES REDEMPTIONS NET SALES

PHILAM Fund. Inc. 1,426,589,643.41 976,272,843.06 450,316,800.35

2 Amendment is subject to approval by PFI stockholders during the Special Shareholders Meeting on March 13, 2017.

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D. Fund Performance Against Competition

The following table summarizes a comparison of PFI against its competitors for January to November 2016:

FUND NAME SALES REDEMPTIONS NET SALES

ATRAM Dynamic Allocation Fund, Inc. 1,842,880.29 9,019,365.44 (7,176,485.15) (formerly, Optima Balanced Fund, Inc.)

A TRAM Philippine Balanced Fund, Inc. 104,944,158.36 698,156,612.80 (593,212,454.44) (formerly, ATRKE Philippine Balanced Fund,

BahayPari Solidaritas Fund, Inc. 299,999.32 15,554,494.80 (15,254,495.48)

First Metro Save and Learn Balanced Fund, Inc. 80,793,430.64 174,793,526.70 (94,000,096.06)

NCM Mutual Fund of the Phils .• Inc. 264,448,245.97 380,910,009.71 (116,461,763.74)

PAM! Horizon Fund, Inc. 145,251,723.75 299,107,090.27 (153,855,366.52)

Philam Fund, Inc. 1,426,589,643.41 976,272,843.06 450,316,800.35

Sun Life Prosperity Balanced Fund, Inc. 1,088,226,683.25 3,045,671,052.45 (1,957,444,369.20)

Sun Life Prosperity Dynamic Fund, Inc. 0.00 304,201,823.06 (304,201,823.06) ..

•source: Ph1ltppine Investment Funds Association (PIFA)

E. Fund Management & Environmental Analysis:

Market and Economic Review

The PSEi was down for the fourth straight month, dropping 8.4% to 6,781 on the back of the Trump victory and EM-to-DM fund flows ahead of the looming Fed rate hike. Net foreign selling was the largest in any single month this year at $383million. Daily value traded rose 7% month-on-month to average P7.2billion.

Third quarter GDP grew 7.1%, beating the 6.7% consensus forecast. This was primarily driven by strong growth in capital formation (20%year-on-year). Inflation rose further to 2.5%, its highest level since February 2015. The10-year yield rose for the fourth straight month, climbing 59bps to 4.5198.The Peso depreciated 2.5% to 49.676, its weakest level since 2006.

Outlook

A domestically-driven demand for its goods and services implies that the stock market will weather the ups and downs of the global economy.

DISCUSSION OF FINANCIAL CONDITIONS

Financial Position

Interim (December 31, 2016)

Net assets as of the end of 2016 was Php10.3 billion, a Php310 million growth from December 31, 2015's net assets of Php9.99 billion.

NAVPS on December 31, 2016 was at Php15.7516, a 1.5% decrease from the NAVPS of December 31, 2015 at Php15.9855.

Interim (September 30, 2016)

Net assets as of September 30, 2016 was posted at Php10.81 billion, a Php361 million increase from December 31 , 2015's net asset of Php9.99 billion.

NAVPS on September 30, 2016 was at Php16.9676, an increase of 0.98 from December 31, 2015 NAVPS of Php15.9855.

FY 2015 vs. FY 2014

Net assets for 2015 was Php9,958 million, a 2.11% increase from 2014's Php9,752 million.

NAVPS on December 31, 2015 was at Php15.9855, a 4.74% drop from the previous year's Php 16.7825.

FY 2014 vs. FY 2013

Net assets for 2014 was Php9,752 million. This figure was 35.72% higher compared to 2013's net assets of Php7, 185 million.

Results of Operations

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FY 2016 vs. FY 2015

Net loss as of the year ending December 2016 was Php143 million. This figure amounted to a Php363 million rise from the same period last year.

Loss Per Share as of December 31 , 2016 was Php0.2259, a Php0.4954 increase from the same period last year. Loss Per Share as of December 31 , 2015 was Php0.7213.

Interim Period ending September 30, 2016 vs. FY 2015

The net investment income of the Fund as compared to September 2015 increased by approximately Php962.26 million.

Earnings Per Share (EPS) as of September 30, 2016 was at Php0.8165, an increase of 1.56 from the same period ending September 2015.

FY 2015 vs. FY 2014

Net loss for 2015 was Php-506.329 million. This figure amounted to a Php1.541 billion decline from the previous year's Php1 .035 billion.

Loss Per Share fell to Php0.7213 in 2015, a Php8.8785 drop from 2014's Earnings Per Share of Php3.1572.

FY 2014 vs. FY 2013

Net income for 2014 was Php1 .001 billion. This figure was 112% higher compared to 2013's net loss of Php-860.196 million.

Earnings per share (EPS) for the year 2014 was Php3.1572. This was 247% higher compared to 2013's earnings per share of Php-2.1396).

Uquidity

There are no demands, commitments, events or uncertainties which will impair the liquidity of the Fund. The Fund is mandated by SEC, through the Investment Company Act, to maintain at least 10% of its net assets to be invested at liquid assets (ICA Rule 35 - 1 p. d4). There are no events that triggered direct or contingent financial obligations that are material to the Fund.

Material Transactions

There are no material off-balance sheet transactions, arrangements, obligations and other relationships of the Fund with unconsolidated entities or other persons created during the period. There are no known trends, events or uncertainties that have had or that are reasonably expected to have material favorable or unfavorable impact on net sales, revenues or income from continuing operations. PFI knows no events that w ill cause a material change in the relationship between costs and revenues.

The Fund, being subjected to mark-to-market revaluation, depends significantly on the market value fluctuations of listed stocks being held by it.

Recent Safes of Unregistered or Exempt Securities including Recent Issuances of Securities Constituting and Exempt Transactions - NONE

External Audit Fees

The following are the aggregate fees billed by the external auditors for each of the last two calendar years (in Php):

Year Amount 2016 /Estimated) 600,000

2015 587,829 2014 470,000 Total 1,657,829

Note: No tax fees were paid since there were no professional services rendered by Isla Lipana for tax

accounting compliance, advice, planning and any other form of tax service.

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Similarly, no other fees were paid for products and services provided by Isla lipana other than the regular annual audit report.

Corporate Governance

The evaluation system adopted by PFI to determine the level of compliance of the Board and top level management with its Manual of Corporate Governance is based primarily on the SEC Corporate Governance Self-Rating Form (CG-SRF).

PFI has undertaken the following measures to fully comply with the adopted leading practices on good corporate governance:

o Consider changes, improvements, or additions to current corporate disclosure procedures o Implement processes for identifying items where timely corporate disclosure is necessary

Except for the required changes mandated by SEC, PFI has no material deviations from its Manual of Corporate Governance since it filed its CG-SRF with the SEC.

Apart from the foregoing changes or improvements being considered for corporate disclosures, there are no plans to improve the current corporate governance of PFI.

Other Disclosures

• There were no disagreements with the former accountant, on any matter of accounting any financial disclosure.

• There were no known trends, events or uncertainties with material impact on liquidity and sales. Neither were there events that would trigger direct or contingent financial obligations that are material to the Fund, including any default or acceleration of an obligation.

• There were no material off-balance sheet transactions, arrangements or obligations (including contingent obligations) and other relationships of the Fund with unconsolidated entities or other persons created during the reporting period.

• There were no material commitments for capital expenditures. , The realized and unrealized gains on stock and fixed income investments brought by market appreciation represent the significant element of income from continuing operations.

6. Mergers, Consolidations, Acquisitions and Similar Matters

PFI does not have any plans to merge or consolidate with any entity. Neither does it have any plans to acquire the securities of any other entity, any other going business, or the assets thereof. It does not have any plan to sell or transfer all or any substantial parts of its assets. Neither does it have any plans to dissolve or liquidate.

7. Acquisition or Disposition of Property

PFI does not own any real property and does not intend to acquire any real property.

8. Restatement of Accounts

PFI does not intend to restate any of its asset, capital or surplus accounts.

D. OTHER MATTERS

9. Matters Required to be Submitted and Amendment of Charter, By-laws or Other Documents

The Fund will submit the following matters to the stockholders for approval, which matters were approved by the Board during its meeting on October 27, 2016:

A. Registration of Additional Shares

The Board approved the registration of additional shares amounting to Three Hundred Twenty­Nine Million Six Hundred Sixty-Two Thousand Eight Hundred Eight (329,662,808) shares, resulting in an increase from Six Hundred Three Million Three Hundred Fifteen Thousand Six Hundred Sixty-Four (603,315,664) to Nine Hundred Thirty-Two Million Nine Hundred Seventy-Eight Thousand Four Hundred Seventy-Two (932,978,472) registered shares of stock.

On December 10, 2015, the Board of Directors approved an additional increase in the Fund's authorized share capital from 603,315,664 shares to 932,978,472 shares with par va lue of Php1.00 per share. The Fund received cash from certain investors for future subscriptions amounting to

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Php1 ,429,007.00. On January 4, 2016, the Fund filed an application with the Securities and Exchange Commission for the increase in authorized capital stock which is currently pending approval.

Pursuant to Section 8.1 of the Securities Regulation Code (SRC), the Fund was advised on October 13, 2016 by the Corporate Governance and Finance Department to file its application to register the 329,662,808 additional common shares on SEC Form 12-1. This section of the SRC requires that "Securities shall not be sold or offered for sale or distribution within the Philippines, without a registration statement duly filed with and approved by the Commission. Prior to such sale, information on the securities, in such form and with such substance as the Commission may prescribe, shall be made available to each prospective purchaser."

B. Authority of SEC to Examine Bank Accounts

The Board further approved the granting of authority to the Securities and Exchange Commission ("SEC") to examine its bank accounts.

C. Implementation of Exemptive Relief,· Minimum and Additional Investment

The Board confirmed and ratified the authority to request from the SEC exemptive relief from the minimum investment of Five Thousand Pesos (PhpS,000.00), proposing that the following amounts be set: (i) minimum investment of Php1 ,000.00 or the minimum amount allowed by the SEC and (ii) minimum additional investment of Php500.00 or the minimum amount allowed by the SEC.

Total Financial Inclusion is among the objectives of Philam Asset Management, Inc. (PAMI) as a fund manager. Total Financial Inclusion means the delivery of financial services, including investment management, at affordable costs to sections of disadvantaged and low-income segments of society.

Said investment management services are intended to be total and complete, and include proper advice and execution of investment choices depending on the customer's risk profile and financial goals. As such, a complete range of investment options should also be made available to the customer, who should be in no way forced or coerced to invest in a fund which is not within his or her investment appetite.

In line with this objective, the Fund has requested for the exemptive relief from the Securities and Exchange Commission to allow for lower minimum investment amounts, namely Php1 ,000 minimum initial investment and Php500 minimum subsequent investment. The Commission en Banc in its meeting held on October 18, 2016 resolved to grant the request, subject to the condition that the Fund Prospectus be amended indicating the foregoing changes, before the same can be implemented.

D. Dividend Policy

The Board approved the amendment of the Company's dividend policy to read, as follows:

"The Company does not plan to declare cash dividends. Surplus profits of the Company (if any) will be used as additional proceeds to invest in eligible securities."

The Fund will likewise submit the following matters to the stockholders for approval, which matters were approved by the Board during its meeting on June 14, 2016.

E. Amendment of Articles of Incorporation to Reflect Change in Principal Address; Amendment of Registration Statement and Prospectus to Reflect Certain Proposed Amendments, as indicated in Annex "A" hereof

F. Amendment of Registration Statement and Prospectus

The Board then approved the amendment of the Registration Statement and the Prospectus of the Company to reflect the matters from items (A) through (E) above. This is in compliance with the condition that the Prospectus should be amended prior to implementation of these changes.

10. Other Proposed Action

There are no other proposed actions with respect to any matter not specifically referred to above.

11. Voting Procedures

Unless otherwise provided by law, each stockholder shall, at every meeting of the stockholders, be entitled to one vote, in person or by proxy, for each share with voting rights held by such stockholder.

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In accordance with the Corporation Code, the Third Article of the Articles of Incorporation of PFI shall be amended to reflect its principal address through the affirmative vote of stockholders representing at least two­thirds (2/3) of the outstanding capital stock of PFI, a quorum (majority of the issued and outstanding capital stock having voting powers) being present.

The amendment of the Registration Statement and Prospectus of PFI shall be approved by the affirmative vote of stockholders representing at least a majority of the outstanding capital stock of PFI, a quorum (majority of the issued and outstanding capital stock having voting powers) being present.

Unless required by law, or demanded by a stockholder present in person or by proxy at any meeting and entitled to vote thereat, the vote on any question will not be by ballot, and will be conducted and counted by a raising of hands. In case of a vote by ballot, each ballot shall be signed by the stockholder voting in his name or by his proxy if there be such proxy, and shall state the number of shares voted by him or her. The Corporate Secretary of PFI will count the votes.

12. Interest of Certain Persons in or Opposition to Matters to be Acted Upon

No person who has been a director or officer of PFI, or a nominee for election as a director of PFI, nor any of their associates, has a substantial interest in any matter to be acted upon at the Special Stockholders' Meeting.

No director of PFI has informed it in writing that he or she intends to oppose any matter to be acted upon at the Special Stockholders' Meeting.

UPON WRITTEN REQUEST OF ANY OF THE STOCKHOLDERS OF RECORD ENTITLED TO NOTICE OF, AND TO VOTE AT, THE MEETING, PFI SHALL FURNISH HIM WITH A COPY OF ITS ANNUAL REPORT ON SEC FORM 17-A AND ITS QUARTERLY REPORT FOR THE PERIOD ENDED 31 DECEMBER 2016 WITHOUT CHARGE. ANY SUCH WRITTEN REQUEST SHOULD BE ADDRESSED TO:

PHILAM FUND, INC. 17/F Philam Life Head Office

Net Lima Building, 5th Avenue corner 6th Street Bonifacio Global City, Taguig City 1634

Philippines

11

PARTII.

INFORMATION REQUIRED IN A PROXY FORM

1. Identification

The proxy solicitation is made by PHILAM FUND, INC. (the "Company"), represented by Mr. Eric S. Lustre, the President and Chief Executive Officer of Philam Asset Management, Inc. ("PAMI"), the Company's investment adviser. The proxy solicitation is in favor of Mr. Lustre or in case of his non­attendance, the Chairman of the Special Stockholders' Meeting chosen in accordance with the Company's By-Laws.

All costs and expenses incidental to the proxy solicitation will be borne, directly or indirectly, by the Company.

2. Instructions

(a) The security holder is instructed to complete and affix his or her signature on the attached form.

(i) If the securities are owned by two or more joint owners, the proxy form must be signed by all of the joint owners.

(ii) If the securities are owned in an "and/or" capacity, the proxy form must be signed by either one of the owners.

(iii) If the securities are owned by a corporation, association, partnership or unincorporated entity, the proxy form must be accompanied by a certification, signed by a duly authorized officer, partner or representative of such corporation, association, partnership or unincorporated entity, that designates and empowers an authorized signatory to sign the proxy form pursuant to the constitutive documents or duly approved policies of such corporation, association, partnership or unincorporated entity for this particular purpose.

(b) The security holder appoints Mr. Eric S. Lustre, or in case of his non-attendance, the Chairman of the Special Stockholders' Meeting, to represent and vote all shares registered in his or her name as proxy of the undersigned security holder.

(c) The security holder shall clearly indicate the date of execution of the proxy form. A proxy form which is undated, post-dated, or which provides that it shall be deemed to be dated as of any date subsequent to the date on which it is signed by the security holder, shall not be valid.

(d) The security holder shall sign the proxy form or have the form signed by a duly authorized representative, and file the same with the Corporate Secretary not later than 5:00 p.m. on March 10, 2017.

(e) Retrieval and validation of all the proxy forms shall be administered by the Corporate Secretary and persons designated by the Corporate Secretary who shall be under his supervision and control from February 20, 2017 to March 13, 201 7.

3. Revocability and Validity of Proxy

The proxy form in favor of the Company shall be irrevocable and shall be effective and valid for a period of five (5) years from the date of its execution. There is no formal procedure or limitation for the right of revocation of a proxy before it is exercised.

4. Persons Making the Solicitation

PFI is not soliciting any votes. Neither is PFI aware of any director who intends to oppose any action intended to be taken by PFI.

5. Interest of Certain Persons in Matters to be Acted Upon

There is no person who has been a director, independent director, or nominee for election as director, or independent director, or officer of the Company and, to the best knowledge of the Company, no associate of a director or independent director, or officer, or nominee for election as a director or independent director, or officer of the Company, at any time since the beginning of the last calendar year, has any substantial interest in any matter to be acted upon at the Special Stockholders' Meeting.

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PART Ill.

SIGNATURE PAGE

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this report is true, complete and correct. This report is signed in Makati City on 1 6 FEB 20~7

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*PLEASE FILL UP AND SIGN THIS PROXY FORM AND RETURN OR FAX IMMEDIATELY TO: PHI LAM ASSET MANAGEMENT, INC.

17th Floor Net Lima Building, 5th Avenue corner 26th Street, Bonifacio Global City, Taguig City Email: phi.philamasset@aia.com

Fax: (02) 5285093

STOCKHOLDER PROXY

The undersigned stockholder (the "Stockholder'') of PHI LAM FUND, INC. (the "Company") , hereby appoints: Eric S. Lustre, with full power of substitution and delegation, or, in case of his non-attendance, the Chairman of the Special Stockholders' Meeting of the Company, chosen in accordance with the Company's By-Laws, as the Stockholder's proxy to represent the Stockholder and vote all shares registered in the Stockholder's name in the books of the Company, at the Special Meeting of the Stockholders to be held at Premier Agency Centre, Philam Life Head Office, 15th Floor Net Lima Building, 5th Avenue corner 26th Street, Bonifacio Global City, Taguig on March 13, 2017 at 2:00 pm, and any adjournments and postponements thereof, as fully to all intents and purposes as the stockholder might or could do if present in person, hereby ratifying and confirming any and all actions to be taken during any said meetings and adjournments thereof for the purpose of acting on the following matters:

1. Registration of Additional Shares

o For o Against o Abstain

2. Authority of SEC to Examine Bank Accounts

o For o Against o Abstain

3. Implementation of Exemptive Relief; Minimum and Additional Investment

o For o Against o Abstain

4. Approval to amend the Dividend Policy

o For o Against D Abstain

5. Approval of amendment of Articles of Incorporation to reflect change in principal address and of certain proposed amendments to the Fund's Registration Statement and Prospectus, as indicated in Annex "A" hereof

D For o Against o Abstain

6. Approval to amend the Fund's Registration Statement and Prospectus to reflect items (1) through (5) above

o For o Against o Abstain

This proxy revokes and supersedes any previously executed proxy or proxies. This proxy shall be valid for a period of five (5) years from the date of its execution.

This proxy, when properly executed, will be voted in the manner as directed herein by the stockholder. If no direction is made, this proxy will be voted "For" the approval of the matter stated above and for such other matters as may properly come before the meeting, including matters which the solicitors do not know a reasonable time before the solicitation are to be presented at the meeting, and those incidental to the conduct of the meeting, in the manner described in the information statement and/or as recommended by management or the board of directors.

Signed on this _ __ day of _ _ ___ ___ in _________ _

Signature of Stockholder or Stockholder's Representative over Printed Name / Portfolio Number

14

Annex "A"

I. Change in Principal Business Address

From:

5TH FLOOR. SALUSTIANA D. TY TOWER. 104 PASEO DE ROXAS CORNER NIEVA & PEREA STREETS.LEGASPI VILLAGE. MAKATI CITY 1226 TELEPHONE NUMBERS: {632) 867-39-12 to 18 FAX NUMBERS: {632) 813-68-13 and 18

To:

17th FLOOR NET LIMA BUILDING. 5TH AVENUE CORNER 26TH STREET BONIFACIO GLOBAL CITY. TAGUIG 1634 TELEPHONE NUMBERS: {632) 5216300 FAX NUMBERS: {632) 5285093

II. Insertion of paragraphs under Introduction

The Fund's NAVPS will be valued based on market prices and its performance benchmarked against the blended index composed of 50% Philippine Composite Index /Total return) + 40% Hong Kong & Shanghai Bank Corp. {HSBC) Philippine Local Currency Bond Total return + 10% Philippine 30-day Saving rate general average (net of 20% withholding tax).

The Fund may also engage in securities lending for the purpose of generating additional capital or income in accordance with the guidelines set down by the SEC.

Ill. Revision of paragraphs under Introduction

From:

The Philam Fund, Inc. ("PFI" or the "Fund") is an open-end investment company established in accordance with Republic Act No. 2629, otherwise known as the Investment Company Act (RA 2629) and duly registered with and regulated by the Securities and Exchange Commission.

PFI will be denominated in Philippine Peso, and its shares will be offered to the public based on its Net Asset Value per Share (NAVPS) with a minimum initial investment of Php 10.000.00 and a minimum subsequent investment of Php 1,000.00. All sales shall be on a cash basis and installment sales are prohibited.

The investment objective of the Fund is capital growth with returns and inflows derived out of investments in both equity and fixed-income securities. PFI considers a medium to long-term investment horizon for its shareholders. The Fund will be positioned to compete directly with other balanced mutual funds and unit investment trust funds offered by commercial banks.

The Net Asset Value of the Fund will fluctuate with changes in the market value of the Fund's investments. Such changes in market value may occur as a result of various factors, including material changes in the Fund. general economic conditions or interest rate policy changes.

Philam Asset Management Inc. /PAM(} is the investment manager of the Fund and a wholly owned subsidiary of Philippine American Life and General Insurance Company /"Philam Life") , one of the largest insurance companies in the Philippines and an affiliate of American International Assurance /"AIA"). Philam Life is a household brand in insurance with over 65 years of presence in the country providing protection and savings to more than one million individual and corporate clients.

For a description of the additional risk factors associated with the purchase of PFI shares. see "Risk Factors" and other information.

To:

The Philam Fund, Inc. ("PFI" or the "Fund") is an open-end investment company established in accordance with Republic Act No. 2629, otherwise known as the Investment Company Act (RA 2629) and duly registered with and regulated by the Securities and Exchange Commission.

PFI will be denominated in Philippine Peso, and its shares will be offered to the public based on its Net Asset Value per Share (NAVPS). All sales shall be on a cash basis and installment sales are prohibited.

The investment objective of the Fund is capital growth with returns and inflows derived out of investments in both equity and fixed-income securities. PFI considers a medium to long-term investment

15

horizon for its shareholders. The Fund will be positioned to compete directly with other balanced mutual funds and unit investment trust funds offered by commercial banks.

The Net Asset Value of the Fund will fluctuate with changes in the market value of the Fund's investments. Such changes in market value may occur as a result of various factors, including material changes in the Fund, general economic conditions or interest rate policy changes.

PAMI is the Investment Manager. PAM(, through its Treasury Manager, will handle all investments of the Fund with the guidance from PAMl's Asset Liability Committee {ALCO) and the officers of the Treasury Division of Philam Life.

IV. Deletion of the underlined phrases from the Investment Objective

PFI seeks growth and income, and will invest, under normal conditions, in both equity and fixed income securities. The Fund will invest in equities of companies listed in the primary and secondary boards of the PSE. Likewise the Fund will invest in domestic fixed-income instruments, including but not limited to. treasury bills, Bangko Sentral ng Pilipinas' {BSP) Certificate of Indebtedness. other government securities or bonds and such other evidences of obligations issued by the BSP or guaranteed by the Philippine Government.

The objectives of the Fund:

• The preservation of capital. • Long-term capital appreciation through investments in equity securities. • A steady stream of income payments through investments in a broadly diversified portfolio of

fixed income securities.

V. Deletion of the underlined phrases from the Investment Plans

The Fund's fixed-income portfolio shall be invested in fixed-income instruments including but not limited to medium to long-term government securities (notes, bonds, and other certificate of indebtedness issued by the Philippine Government both locally and abroad), short-term government securities, bonds or other evidences of indebtedness issued by the Philippine government or any of its instrumentalities. Likewise, the Fund's fixed income portfolio shall be invested in SEC registered corporate debt papers subject to at least PRS2 rating by the Philippine Rating System, savings or time deposits, and other deposit substitutes, preferred shares, and convertibles, the issuers of whom had been pre-approved by the Board of Directors of the Fund Management Company and transacted with commercial banks and financial institutions pre-approved by the Board of Directors of the Fund Management Company.

VI. Revision of the paragraph on Eligible Applicants

Shares of the Fund may be held by any person of legal age or any duly organized and existing corporation, partnership, or any other legal entity regardless of citizenship or nationality. If the applicant is a corporation, partnership or other legal entity, copies of the articles of incorporation and by-laws, certificate of registration and the resolution of the applicant's Board of Directors authorizing the investment, all duly certified, must be submitted with the application.

VII. Deletion of the underlined phrases from the Portfolio Mix

Under normal circumstances the Fund will invest approximately 50% of its assets in equity securities and 50% in fixed income securities. Equity investments comprise of companies listed in the primary and secondary boards of the PSE. Fixed income investment comprise domestic fixed-income instruments, including but not limited to, treasury bills, BSP Certificate of Indebtedness, other government securities or bonds and such other evidences of obligations issued by the BSP or guaranteed by the Philippine Government.

However, the Fund Manager may, at its discretion, and when in its judgment the conditions so warrant, invest a substantial amount of the Fund's assets in equity securities up to the maximum allowed under prevailing Philippine laws or up to 100% in fixed income securities (i.e. liquid or semi-liquid assets), subject to any existing liquidity requirements as may be required by law. In addition. as a defensive strategy. the Manager. at its discretion. may elect to invest up to 100% of the Fund's assets in cash and/or other liquid assets. again. subject to any existing liquidity requirements as may be required by law. SEC Memorandum Circular #7 Series of 2005 or the "Guidelines on the Evaluation of Foreign Investments by Mutual Fund Companies" allows mutual fund companies to invest up to 100% of its assets in foreign securities

16

VIII. Change in Investment Restrictions

The maximum investment of the Fund in any single enterprise shall not exceed an amount equivalent to fifteen percent {15%) of the Fund's net asset value except obligations of the Phil ippine government or its instrumentalities; provided that in no case shall the total investment of the Fund exceed ten percent (10%) of the outstanding securities of any one investee company.

For liquidity purposes, unless otherwise prescribed by the SEC, in case of open-end companies, at least five percent {5%) of its fund shall be invested in liquid/semi-liquid assets.

Provided that. the open-end company fund shall submit a liquidity contingency plan to the Commission before it implements a decreased investment of less than ten percent {10%) in liquid/semi-liquid assets.

IX. Inclusion of Taxpayers Identification Number (TIN) requirement for applications

X. Insertion of paragraph on Acceptance of Applications

PAMI reserves the right to reject subscriptions, or to restrict purchases by an investor, when such purchase is disruptive to the interests of the other shareholders and management of the Fund as determined by the Fund Manager. The subscription amount will be returned to the investor without interest and after deducting applicable bank charges, within five business days.

XI. Deletion of the Plan of Operations

PFI is capable of managing its cash requirements as the Fund is held and will continue to be held in liquid fixed income and equity securities which have a standard settlement cycle of between T +1 {trade day plus one business day) and four {4) days, respectively. Given excellent fund management. the Fund's entire portfolio could be liquidated within the said time frame.

Also, there are no known trends nor demands, commitments, events or uncertainties that will drastically affect its liquidity nor will there be a negative impact on sales from operations. Furthermore. there are no known events that can trigger direct or contingent financial obligations of the Fund. PFI has no off­balance sheet transactions.

Operational expenses are also minimized as PFI employs no personnel. It functions solely through its primary Fund Manager, PAMI. Also. PFI does not own any real or personal properties {such as real estate. plant and equipment. mines. patents, etc.). Neither does the Fund lease any property nor does it intend to acquire any real or personal properties within the next 12 months.

XII. Deletion of the underlined phrases from the Corporate Profile

PFI is a stock corporation incorporated on August 29, 1969 as Trinity Shares, Inc.•. The company's sole product is securities distributed as shares of PFI. PAMI will directly distribute the Fund's shares. PFI is an open-ended mutual fund offering shares to the public at NAV with a minimum investment of Php 10,000.00.

XIII. Update on Compliance with Regulations

Anti-Money Laundering Act

SEC Memorandum Circular No. 2, Series of 2015, describes Money Laundering as "the processing of the proceeds of a crime to disguise their origin. It is a process intended to mask the benefits derived from serious offenses or criminal conduct as described under the Act, so that they appear to have originated from a legitimate source." Money Laundering whether it be facilitating or assisting in such act is considered as a criminal offense.

PAM! strictly enforces its PAMI Anti-Money Laundering SOP and Guidelines, procedures and training. This is also in compliance with the laws and regulations under the Anti-Money Laundering Act.

PAMI Sales Representatives shall ascertain the identity of each client by performing their KYC (Know Your Customer). PAMI Sales Representative shall also obtain competent evidence of their client's identity and/or proof of source of funds by requiring the submission of certain documents as stated in the Anti-Money Laundering Guidelines prior to opening an account. Any additional subscriptions /top ups should also be in compliance of the said guidelines.

17

PAMI reserves the right to reject any application to purchase shares of the Fund if found to be non­compliant with the foregoing.

Foreign Account Tax Compliance Act ("FATCA")

The U.S. Foreign Account Tax Compliance Act ("FATCA") has the objective of preventing tax evasion by U.S. persons by placing certain compliance and reporting obligations on Foreign Financial Institutions (" FFls") including mutual funds such as PAMI Income Payout Fund. If the Fund is found to be non­compliant it may be subject to a 30% withholding on U.S. source income or proceeds. As such, establishing and continually maintaining FATCA-compliant processes across all business functions is of critical importance to PAMI and the mutual funds it manages.

The requirements of FATCA are complex and requires FFls such as PAMI Income Payout Fund to undertake due diligence to identify U.S. customers, report U.S. customers to the U.S. Inland Revenue Services ("IRS") or the Philippines Bureau of Internal Revenue ("BIR") together with customers who are unable or unwilling to confirm their corresponding U.S. status (recalcitrant customers) and in certain circumstances to withhold against or terminate accounts of recalcitrant customers. In line with this, PAMI strictly enforces its PAMI FATCA SOP and Guidelines, procedures and training.

Similarly, as an internal control, PAMI will not accept clients who are U.S. Citizens. However, PAMI will accept clients with U.S. lndicias provided that, together with the Customer Information Sheet or Subscription form, they submit the required FATCA documents.

PAMI reserves the right to reject any application to purchase shares of the Fund if found to be non­compliant with the foregoing.

XIV. Change in Transfer Agency from Bank of the Philippine Islands ("BPl'J to Phi/am Asset Management, Inc. ("PAM/'')

XV. Change in External Auditor from SyCip Gorres Velayo and Company ("SGV'') to Isla Lipana & Co.

XVI. Change in Legal Counsel from SyCip Salazar Hernandez and Gatmaitan ("SyCip'') to Picazo Buyco Tan Fider & Santos

XVII. Updated PAM/ Board of Directors and Curriculum Vitae

XVIII. Updates on Sa/es Load, Redemption Fee, and Other Fees

Updates to the Sa/es Load

Sales load for each investment will not be more than 3% (exclusive of VAT).

Total Relationship Amount (in Php) Sales Load Sales Load with VAT less than 100,000 3% 3.36% 100,000 - 499,999.99 2.5% 2.80% 500,000 - 999,999.99 2% 2.24% 1 M-4.99M 1.5% 1.68% 5 M-9.99M 1% 1.12% 10M & up 0.5% 0.56%

Changes to the Redemption Fee

The entry fee is 3%, aggregated of all investments of the client (exclusive of VAT). For exit fee. the applicable holding period is six /6} months Redemptions made within six /6) months are subjected to an exit fee of no more than 1 % /exclusive of twelve percent VAT.} of the redemption proceeds.

Update to the Management Fee

As investment manager and principal distributor, PAMJ is entitled to a management fee of 2% (exclusive of VAT.) per annum.

Amendment on Subscription and Redemption Process for B-Shares

18

For B-shares option, a client needs to open a new portfolio number to allow required tagging in the system.

The applicable holding period for option B or B-shares is five (5) years. Redemptions made before 5 years are subject to an exit fee of no more than 5% ( exclusive of twelve percent VAT) of the redemption proceeds. Redemption fee is based on the following schedule:

Placement Period Exit 12% VAT on Exit Exit Fee + 12%

Less than 1 year 5.00% 0.60% 5.60% More than 1 year but less than 4.00% 0.48% 4.48% More than 2 years but less 3.00% 0.36% 3.36% More than 3 years but less 2.00% 0.24% 2.24% More than 4 years but less 1.00% 0.12% 1.12%