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SECURITIES AND EXCHANGE COMMISSION

SEC FORM 17-Q

QUARTERLY REPORT PURSUANT TO SECTION 17 OF THE SECURITIESREGULATION CODE AND SRC RULE 17(2) (b) THEREUNDER

1. For the quarterly period ended: June 30, 2016

2. Commission identification number: CS201300728

3. BIR Tax Identification No.: 008-447-745-000

4. Exact name of issuer as specified in its charter: FIRST METRO PHILIPPINE EQUITYEXCHANGE TRADED FUND, INC.

5. Province, country or other jurisdiction of incorporation or organization: Metro Manila,Philippines

6. Industry Classification Code: (SEC Use Only)

7. Address of issuer's principal office Postal Code18th Floor, PSBank Center, Paseo de Roxas corner Sedeño St., Makati City 1200

8. Issuer's telephone number, including area code: (632) 891-2860

9. Former name, former address and former fiscal year, if changed since last report: N/A

10. Securities registered pursuant to Sections 8 and 12 of the Code, or Sections 4 and 8 of the RSA

(a) Authorized capital stock: 30,000,000 shares P=3,000,000,000.00

(b.) Number of shares outstanding as of: June 30, 2016

Common shares 7,650,000

(c.) Amount of debt outstanding (unpaid subscriptions): None

11. Are any or all of the securities listed in the Philippine Stock Exchange?

Yes [ ] No [ ]

12. Indicate by check mark whether the registrant:

(a) has filed all reports required to be filed by Section 17 of the Code and SRC Rule 17thereunder or Sections 11 of the RSA and RSA Rule 11(a)-1 thereunder, and Sections26 and 141 of the Corporation Code of the Philippines, during the preceding twelve (12)months (or for such shorter period the registrant was required to file such reports)

Yes [ ] No [ ]

(b) has been subject to such filing requirements for the past ninety (90) days.

Yes [ ] No [ ]

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PART I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

FIRST METRO PHILIPPINE EQUITY EXCHANGE TRADED FUND, INC.(An Open-End Mutual Fund Company)

INTERIM STATEMENTS OF FINANCIAL POSITION

As of

June 30, 2016 December 31, 2015ASSETSCash in banks P=18,517,432 P=2,907,564Financial assets at fair value through profit or loss 961,440,275 1,337,424,578Receivables 841,723 1,042,939Other asset 95,340

TOTAL ASSETS P=980,894,770 P=1,341,375,081

LIABILITIES AND EQUITY

LIABILITIESAccounts payable and accrued expenses P=894,348 P=961,591

EQUITYCapital stock 765,000,000 1,180,000,000Additional paid-in capital 15,840,805 85,665,585Retained earnings 199,159,617 74,747,905

980,000,422 1,340,413,490

TOTAL LIABILITIES AND EQUITY P=980,894,770 P=1,341,375,081

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FIRST METRO PHILIPPINE EQUITY EXCHANGE TRADED FUND, INC.(An Open-End Mutual Fund Company)

INTERIM STATEMENTS OF CASH FLOWS

For the Period Ended June 30

2016 2015

CASH FLOWS FROM OPERATING ACTIVITIESNet investment income before final tax P=124,411,762 P=57,573,745Adjustments for:

Net unrealized gains from changes in fair value of equitysecurities (105,079,271) (40,507,005)

Dividend income (13,173,834) (14,716,473)Interest income (248) (226)Changes in operating assets and liabilities:

(Increase) decrease in:Financial assets at FVPL 481,063,574 (417,458,712)Receivables 200,000Other assets (95,340) (98,280)

Increase (decrease) in accounts payable and accruedexpenses (67,245) 639,798

Net cash generated from (used in) operations 487,059,398 (414,367,153)Dividend received 13,375,052 14,266,523Interest received 248 226Income tax paid (50) (45)Net cash generated from (used in) operating activities 500,434,648 (400,100,449)

CASH FLOWS FROM FINANCING ACTIVITIESPayment for shares redeemed (505,934,710) (76,447,560)Proceeds from issuance of capital stock 21,109,930 486,981,260Net cash provided by (used in) financing activities (484,824,780) 410,533,700

NET INCREASE IN CASH IN BANKS 15,609,868 10,433,251

CASH IN BANKS AT BEGINNING OF PERIOD 2,907,564 2,116,686

CASH IN BANKS AT END OF PERIOD P=18,517,432 P=12,549,937

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FIRST METRO PHILIPPINE EQUITY EXCHANGE TRADED FUND, INC.(An Open-End Mutual Fund Company)

NOTES TO INTERIM FINANCIAL STATEMENTS

1. Corporate Information

First Metro Philippine Equity Exchange Traded Fund, Inc. (the Fund) was incorporated onJanuary 15, 2013. PhilippineInvestment Company Act, Securities and Exchange Commission (SEC) Exchange Traded Fund(ETF) Rules, and the Securities Regulation Code is an open-end investment company engagedin the business of investing, reinvesting and trading in and issuing and redeeming its shares ofstock in creation unit in exchange for basket of equity securities representing an index. The

ppine Stock Exchange (PSE) on December 2, 2013.

As a licensed ETF, the Fund offers to qualified trading participants, on a continuous basis, theshares of the Fund which are issuable and redeemable in predetermined creation units. TheBoard, during its meeting on December 11, 2015, approved the reduction of the number ofshares comprising one creation unit from the current Two Hundred Thousand (200,000) to FiftyThousand (50,000) shares. Shares of the Fund may be directly redeemed in exceptionalcircumstances as approved by the SEC.

The Fund is majority-owned by First Metro Investment Corporation (First Metro or the ParentCompany) and its ultimate parent company is Metropolitan Bank & Trust Company (MBTC).First Metro Asset Management, Inc. (FAMI), a majority-owned subsidiary of First Metro, servesas the fund manager and principal distributor of the Fund. Metropolitan Bank & Trust Company- Trust Banking Group (MBTC-Securities Brauthorized participants are FMSBC and IGC Securities, Inc. (IGC).

The registered office address of the Fund is at 18th Floor, PSBank Center, 777 Paseo de Roxaset, Makati City.

2. Summary of Significant Accounting Policies

Basis of Financial Statement PreparationThe accompanying interim financial statements have been prepared in accordance withPhilippine Accounting Standard (PAS) 34 Interim Financial Reporting. Accordingly, theinterim financial statements do not include all of the information and disclosures required in the

audited financial statements as of and for the year ended December 31, 2015.

The accompanying interim financial statements have been prepared under the historical costbasis except for financial assets at fair value through profit or loss (FVPL) that have beenmeasured at fair value. The financial statements are presented in Philippine peso,functional currency. All amounts in the financial statements are rounded to the nearest pesounless otherwise indicated.

Presentation of Financial StatementsThe Fund presents its statements of financial position in order of liquidity. As of June 30, 2016and December 31, 2015, financial assets comprised of cash in banks, financial assets at FVPL,and receivables which are realizable within one year from reporting date.

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liabilities consist of accounts payable and accrued expenses which are due to be settled withinone year from reporting date.

Statement of ComplianceThe financial statements of the Fund have been prepared in compliance with PhilippineFinancial Reporting Standards (PFRS).

Changes in Accounting PoliciesThe accounting policies adopted are consistent with those of the previous financial year exceptfor the following new and amended PFRSs and Philippine Accounting Standards (PAS), whichwere adopted as of January 1, 2015:

PAS 19, Defined Benefit Plans: Contributions (Amendments)Annual Improvements to PFRSs (2010-2012 cycle)

o PFRS 2, Share-based Payment - Definition of Vesting Conditiono PFRS 3, Business Combinations - Accounting for Contingent Consideration in a

Business Combinationo PFRS 8, Operating Segments - Aggregation of Operating Segments and

Assetso PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets -

Revaluation Method - Proportionate Restatement of Accumulated Depreciation andAmortization

o PAS 24, Related Party Disclosures - Key Management PersonnelAnnual Improvements to PFRSs (2011-2013 cycle)

o PFRS 3, Business Combinations - Scope Exceptions for Joint Arrangementso PFRS 13, Fair Value Measurement - Portfolio Exceptiono PAS 40, Investment Property

The aforementioned new and amended standards and interpretation did not have any impact onthe financial position or performance of the Fund.

Summary of Significant Accounting Policies

Fair Value MeasurementThe Fund measures financial instruments, such as financial assets at FVPL, at fair value at eachreporting date.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in anorderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset ortransfer the liability takes place either:

in the principal market for the asset or liability, orin the absence of a principal market, in the most advantageous market for the asset orliability.

The principal or the most advantageous market must be accessible to the Fund. The fair value ofan asset or a liability is measured using the assumptions that market participants would usewhen pricing the asset or liability, assuming that market participants act in their economic bestinterest. If an asset or a liability measured at fair value has a bid price and an ask price (e.g. aninput from a dealer market), the price between the bid-ask price spread that is mostrepresentative of fair value in the circumstances shall be used to measure fair value regardless ofwhere the input is categorized within the fair value hierarchy.

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The Fund uses valuation techniques that are appropriate in the circumstances and for whichsufficient data are available to measure fair value, maximizing the use of relevant observableinputs and minimizing the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statementsare categorized within the fair value hierarchy, described as follows, based on the lowest levelinput that is significant to the fair value measurement as a whole:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets orliabilitiesLevel 2 - Valuation techniques for which the lowest level input that is significant to the fairvalue measurement is directly or indirectly observableLevel 3 - Valuation techniques for which the lowest level input that is significant to the fairvalue measurement is unobservable

For assets and liabilities that are recognized in the financial statements on a recurring basis, theFund determines whether transfers have occurred between Levels in the hierarchy byreassessing categorization (based on the lowest level input that is significant to the fair valuemeasurement as a whole) at the end of each reporting period.

Financial Instruments - Initial Recognition and Subsequent MeasurementDate of recognitionThe Fund recognizes a financial asset or a financial liability in the statement of financialposition when it becomes a party to the contractual provisions of the instrument. Purchases orsales of financial instruments that require delivery within the time frame established byregulation or convention in the marketplace are recognized on settlement date. Deposits andreceivables are recognized when cash is advanced or when the earning process is completed.

Initial recognition of financial instrumentsAll financial instruments are initially recognized at fair value. Except for financial instrumentsat FVPL, the initial measurement of financial instruments includes transaction costs. The Fundclassifies its financial assets in the following categories: financial assets at FVPL, available-for-sale (AFS) investments, held-to-maturity (HTM) investments and receivables. Financialliabilities are classified as financial liabilities at FVPL and other liabilities carried at cost. Theclassification depends on the purpose for which the investments were acquired and whether theyare quoted in an active market. Management determines the classification of its investments atinitial recognition and, where allowed and appropriate, re-evaluates such designation at everyreporting date.

As of June 30, 2016 and December 31, 2015, the Fund has no AFS investments, HTMinvestments and financial liabilities at FVPL.

Financial assets at FVPLFinancial assets at FVPL include quoted equity securities purchased and held principally withthe intention of selling them in the near term. These securities are carried at fair value; realizedand unrealized gains and losses on these and securitiesgains (losses) - ement of comprehensive income. Dividend earned onfinancialcomprehensive income.

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ReceivablesThese are non-derivative financial assets with fixed or determinable payments that are notquoted in an active market. They are included in current assets, except for maturities greaterthan 12 months after the reporting date, which are then classified as non-current assets.

After initial measurement, receivables are subsequently measured at cost or amortized cost usingthe effective interest method, less any allowance for credit losses. Amortized cost is calculatedby taking into account any discount or premium on acquisition and fees and costs that are anintegral part of the effective interest rate (EIR). The amortiza

come. The losses arising from impairment are

This accounting policy applies to the Fun anks

Financial liabilities at amortized costIssued financial instruments or their components, are classified as liabilities under theappropriate financial liability accounts (e.g. Accounts payable), where the substance of thecontractual arrangements result in the Fund having an obligation either to deliver cash oranother financial asset to the holder, or to satisfy the obligation other than by the exchange of afixed amount of cash or another financial asset for a fixed number of own equity shares. Thecomponents of issued financial instruments that contain both liability and equity elements areaccounted for separately, with the equity component being assigned the residual amount afterdeducting from the instrument as a whole the amount separately determined as the fair value ofthe liability component on the date of issue.

After initial measurement, financial liabilities not qualified and not designated at FVPL aresubsequently measured at amortized cost using the effective interest method. Amortized cost iscalculated by taking into account any discount or premium on the issue and fees that are anintegral part of the EIR.

Offsetting of Financial InstrumentsFinancial assets and financial liabilities are offset and the net amount reported in the statementof financial position if, and only if:

there is a currently enforceable legal right to offset the recognized amounts not only in thenormal course of business, but also in the event of default, and in event of bankruptcy orinsolvency; andthere is an intention to settle on a net basis, or to realize the asset and settle the liabilitysimultaneously.

Derecognition of Financial Assets and LiabilitiesFinancial assetsA financial asset (or where applicable, a part of a financial asset or part of a group of financialassets) is derecognized when:

the rights to receive cash flows from the asset have expired; orthe Fund retains the right to receive cash flows from the asset, but has assumed anobli -arrangement; orthe Fund has transferred its rights to receive cash flows from the asset and either (a) hastransferred substantially all the risks and rewards of the asset, or (b) has neither transferrednor retained substantially all the risks and rewards of the asset but has transferred control ofthe asset.

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Where the Fund has transferred its rights to receive cash flows from an asset or has entered into-th

and rewards of the asset nor transferred control of the asset, the asset is recognized to the extentuing involvement in the asset. Continuing involvement that takes the form

of a guarantee over the transferred asset is measured at the lower of original carrying amount ofthe asset and the maximum amount of consideration that the Fund could be required to repay.

Financial liabilitiesA financial liability is derecognized when the obligation under the liability is discharged orcancelled or has expired. Where an existing financial liability is replaced by another from thesame lender on substantially different terms, or the terms of an existing liability are substantiallymodified, such an exchange or modification is treated as a derecognition of the original liabilityand the recognition of a new liability, and the difference in the respective carrying amounts isrecognized in the statements of comprehensive income.

Impairment of Financial AssetsThe Fund assesses at each reporting date whether there is objective evidence that a financialasset or group of financial assets is impaired. A financial asset or group of financial assets isdeemed to be impaired if, and only if, there is objective evidence of impairment as a result of

ure cash flows of thefinancial asset or the group of financial assets that can be reliably estimated. Evidence ofimpairment may include indications that the borrower or a group of borrowers is experiencingsignificant financial difficulty, default or delinquency in interest or principal payments, theprobability that they will enter bankruptcy or other financial reorganization and whereobservable data indicate that there is a measurable decrease in the estimated future cash flows,such as changes in arrears or economic conditions that correlate with defaults.

ReceivablesFor Receivables, the Fund first assesses whether objective evidence of impairment existsindividually for financial assets that are individually significant, or collectively for financialassets that are not individually significant.

If there is objective evidence that an impairment loss has been incurred, the amount of the loss is

of the estimated future cash flows (excluding future credit losses that have not been incurred).

The carrying amount of the financial asset is reduced through use of an allowance account andthe amount of loss is charged against profit or loss. Interest income continues to be recognizedbased on the original EIR of the asset. Receivables, together with the associated allowanceaccounts, are written off when there is no realistic prospect of future recovery and all collateral,if any, has been realized. If, in a subsequent year, the amount of the estimated impairment lossdecreases because of an event occurring after the impairment was recognized, the previouslyrecognized impairment loss is reduced by adjusting the allowance account. If a future write-off

in the statements of comprehensive income.

If the Fund determines that no objective evidence of impairment exists for individually assessedfinancial asset, whether significant or not, it includes the asset in a group of financial assets withsimilar credit risk characteristics and collectively assesses for impairment. Those characteristicsare relevant to the estimation of future cash flows for groups of such assets by being indicative

being evaluated.

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Assets that are individually assessed for impairment and for which an impairment loss is, orcontinues to be, recognized are not included in a collective assessment for impairment. Assetsindividually assessed for impairment for which no impairment loss was measured are alsocollectively assessed for impairment.For the purpose of a collective evaluation of impairment, financial assets are grouped on thebasis of such credit risk characteristics as industry, past-due status and term. Future cash flowsin a group of financial assets that are collectively evaluated for impairment are estimated on thebasis of historical loss experience for assets with credit risk characteristics similar to those in thegroup. Historical loss experience is adjusted on the basis of current observable data to reflectthe effects of current conditions that did not affect the period in which the historical lossexperience is based and to remove the effects of conditions in the historical period that do notexist currently.

Revenue RecognitionRevenue is recognized to the extent that it is probable that economic benefits will flow to theFund and the revenue can be reliably measured, regardless of when payment is being made.Revenue is measured at the fair value of the consideration received or receivable, excludingdiscounts, rebates and other sales taxes or duties. The Fund assesses its revenue arrangementsagainst specific criteria in order to determine if it is acting as a principal or as an agent. TheFund has concluded that it is acting as a principal in all of its revenue arrangements.

The following specific recognition criteria must also be met before income is recognized:

Trading and securities gains (losses) - netTrading and securities gains (losses) represents results arising from all gains and losses fromchanges in the fair values and realized gains (losses) on sale of financial assets at FVPL.

Dividend incomeablished.

Interest incomeInterest income is recognized in the statement of income as it accrues, taking into account theeffective yield of the asset. Interest income includes the amortization of any discount orpremium or other differences between the initial carrying amount of an interest-bearinginstrument and its amount at maturity calculated on an EIR basis.

Expense RecognitionExpenses are recognized when decrease in future economic benefits related to decrease in anasset or an increase of a liability has arisen that can be measured reliably. Expenses arerecognized as incurred.

The following specific recognition criteria must also be met before expense is recognized:

Management feeManagement fee is accrued over time at 0.50% of average daily NAV of the Fund plus 12.00%value added tax (VAT).

Custodian and transfer agency feesThis includes custodian fee, retainers fee and transaction charges which are accrued upon receiptof monthly billings.

Brokerage commission is recognized upon execution of trade.

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Taxes and licensesThis includes stock transaction tax incurred on sale of equity securities listed and traded throughthe PSE amounting to 0.50% of gross selling price of stocks sold and all other local taxes whichare recognized when incurred.

Income TaxesIncome tax on profit or loss for the year comprises current and deferred tax. Income tax isdetermined in accordance with Philippine tax laws. Income tax is recognized in profit or loss,except to the extent that it relates to items recognized directly in other comprehensive income.

Current income taxCurrent tax assets and liabilities for the current year are measured at the amount expected to berecovered from or paid to the taxation authorities. The tax rates and tax laws used to computethe amount are those that are enacted or substantively enacted at the reporting date.

Deferred taxDeferred income tax is provided using the balance sheet liability method on all temporarydifferences at the reporting date between the tax bases of assets and liabilities and their carryingamounts for financial reporting purposes.

Deferred tax liabilities are recognized for all taxable temporary differences, with certainexceptions. Deferred tax assets are recognized for all deductible temporary differences, carryforward benefits of unused tax credits from excess minimum corporate income tax (MCIT) overregular corporate income tax (RCIT) and unused net operating losses carryover (NOLCO), tothe extent that it is probable that sufficient future taxable income will be available against whichthe deductible temporary differences and carry forward of unused tax credits from excess MCITover RCIT and unused NOLCO can be utilized. Deferred tax, however, is not recognized whenit arises from the initial recognition of an asset or liability in a transaction that is not a businesscombination and, at the time of the transaction, affects neither the accounting income nortaxable income.

The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to theextent that it is no longer probable that sufficient future taxable income will be available toallow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets arereassessed at each reporting date and are recognized to the extent that it has become probablethat future taxable profit will allow the deferred tax assets to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are applicable to the periodwhen the asset is realized or the liability is settled, based on tax rates (and tax laws) that havebeen enacted or substantively enacted at the reporting date.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists toset off current tax assets against current tax liabilities and the deferred tax relate to the sametaxable entity and the same taxation authority.

Net Asset Value (NAV) Per Share

assets (total assets less total liabilities) by the total number of redeemable shares outstanding asof the reporting date.

Earnings Per ShareBasic earnings per share (EPS) is computed by dividing net income for the year by the weightedaverage number of common shares issued and outstanding during the year, after givingretroactive effect to stock dividends declared, stock rights exercised and stock splits, if any,

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declared during the year. As of June 30, 2016 and December 31, 2015, there were no potentialcommon shares with dilutive effect on the basic EPS of the Fund.

Share Capital TransactionsThe Fund issues redeemable shares in creations units, whioption. Redeemable shares can be put back to the Fund at any time in creation units for a basket

have all of the following features which qualify them as puttableinstruments classified as equity instruments:

The shares are in the class of instruments that is subordinate to all other classes ofinstruments.All shares in the class of instruments that is subordinate to all other classes of instrumentshave identical features.The shares do not include any contractual obligation to deliver cash or another financial

The total expected cash flows attributable to the shares over their life are based substantiallyon the statement of income, the change in the recognized net assets or the change in the fairvalue of the recognized and unrecognized net assets of the Fund over the life of the shares.

In addition, the Fund does not have other financial instruments or contract that have:

total cash flows based substantially on the profit or loss, the change in the recognized netassets or the change in the fair value of the recognized and unrecognized net assets of theFund; andthe effect of substantially restricting or fixing the residual return to the puttable instrumentsholders.

The Fund continuously assesses the classification of its redeemable shares. If the redeemableshares cease to have all the features or meet the conditions stated above, the Fund will reclassifythe shares as financial liabilities and measure them at fair value at the date of reclassification,with any differences from the previous carrying amount recognized in equity. If the redeemableshares subsequently have all the features and meet the above conditions, the Fund will reclassifythem as equity instruments and measure them at the carrying amount of the liabilities at the dateof reclassification.

The issuance, acquisition and resale of redeemable shares are accounted for as equitytransactions. Upon issuance of shares (or sale of treasury shares), the consideration received isincluded in equity. Own equity instruments which are acquired (treasury shares) are deductedfrom equity and accounted for at amounts equal to the consideration paid, including any directlyattributable incremental costs.

Transaction costs incurred by the Fund in issuing, acquiring or selling its own equitytional paid- If the APIC is not

Additional Paid-in CapitalAdditional paid-in capital is the excess amount paid by an investor over the par value of a stockissue reduced by excess of redemption costs over the original selling price of redeemed shares.

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Retained EarningsThe amounts in retained earnings include accumulated investment income of previous periods.

Dividend DistributionDividend distributions are at the discretion of the Fund.shareholders is accounted for as a deduction from retained earnings. A proposed cash dividendis recognized as a liability in the period in which it is approved by the Board of Directors(BOD). A proposed stock dividend is recognized as a reduction in equity in the period in whichit is approved by the BOD and shareholders representing at least two-thirds (2/3) of theoutstanding capital stock.

ProvisionsProvisions are recognized when the Fund has a present obligation (legal or constructive) where,as a result of a past event, it is probable that an outflow of resources embodying economicbenefits will be required to settle the obligation and a reliable estimate can be made of theamount of the obligation. Where the Fund expects some or all of a provision to be reimbursed,the reimbursement is recognized as a separate asset but only when the reimbursement isvirtually certain. The expense relating to any provision is presented in the statement ofcomprehensive income, net of any reimbursement.

If the effect of the time value of money is material, provisions are determined by discounting theexpected future cash flows at a pre-tax rate that reflects current market assessments of the timevalue of money and, where appropriate, the risks specific to the liability. Where discounting is

ContingenciesContingent liabilities are not recognized in the financial statements but are disclosed unless thepossibility of an outflow of resources embodying economic benefits is remote. Contingent assetsare not recognized in the financial statements but are disclosed when an inflow of economicbenefits is probable.

Events After the Reporting DatePost year-end events up to the date of the approval of BOD of the financial statements that

are reflected in the financial statements. Post year-end events that are non-adjusting events aredisclosed in notes to the financial statements when material.

Future Changes in Accounting Policies

Standards issued but not yet effective as of December 31, 2015 are listed below. The listing ofstandards and interpretations issued are those that the Fund reasonably expects to be applicableat a future date. The Fund intends to adopt these standards and interpretations when theybecome effective.

Deferred with No Definite Adoption Date

Philippine Interpretation IFRC 15, Agreements for the Construction of Real Estate

Effective January 1, 2016

PFRS 10, Consolidated Financial Statements, and PAS 28, Investments in Associates andJoint Ventures - Investment Entities: Applying the Consolidation Exception (Amendments)

PAS 27, Separate Financial Statements - Equity Method in Separate Financial Statements(Amendments)

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PFRS 11, Joint Arrangements - Accounting for Acquisitions of Interests (Amendments)

PAS 1, Presentation of Financial Statements - Disclosure Initiative (Amendments)

PFRS 14, Regulatory Deferral Accounts

PAS 16, Property, Plant and Equipment, and PAS 38, Intangible Assets - Clarification ofAcceptable Methods of Depreciation and Amortization (Amendments)

PAS 16, Property, Plant and Equipment, and PAS 41, Agriculture - Bearer Plants

Annual Improvements to PFRSs (2012-2014 Cycle)

PFRS 5, Non-current Assets Held for Sale and Discontinued Operations - Changesin Methods of Disposal

PFRS 7, Financial Instruments: Disclosures - Servicing Contracts

PFRS 7, Applicability of the Amendments to PFRS 7 to Condensed InterimFinancial Statements

PAS 19, Employee Benefits - Regional Market Issue Regarding Discount Rate

PAS 34, Interim Financial Reporting - DisclInterim Financial Report

Effective Subsequent to December 31, 2016

Effective January 1, 2018

PFRS 9, Financial InstrumentsIn July 2014, the International Accounting Standards Board (IASB) issued the final versionof IFRS 9, Financial Instruments. The new standard (renamed as PFRS 9) reflects all phasesof the financial instruments project and replaces PAS 39, Financial Instruments:Recognition and Measurement, and all the previous versions of PFRS 9. The standardintroduces new requirements for classification and measurement, impairment, and hedgeaccounting. PFRS 9 is effective for annual periods beginning on or after January 1, 2018,with early application permitted. Retrospective application is required, but providingcomparative information is not compulsory. For hedge accounting, the requirements aregenerally applied prospectively, with some limited exceptions. Early application of previousversions of PFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application isbefore February 1, 2015. The Fund did not early adopt PFRS 9. The adoption of PFRS 9 is

s financial statements except forclassification of financial assets.

The following new standard issued by the IASB has not yet been locally adopted by theFinancial Reporting Standard Council (FRSC), BOA and PRC.

IFRS 15, Revenue from Contracts with CustomersIFRS 15 was issued in May 2014 by the IASB and establishes a new five-step model thatwill apply to revenue arising from contracts with customers. Under IFRS 15, revenue isrecognized at an amount that reflects the consideration to which an entity expects to beentitled in exchange for transferring goods or services to a customer. The principles in IFRS15 provide a more structured approach to measuring and recognizing revenue.

The new revenue standard is applicable to all entities and will supersede all current revenuerecognition requirements under IFRS. Either a full or modified retrospective application is requiredfor annual periods beginning on or after January 1, 2018. Early adoption is permitted.

IFRS 16, LeasesOn January 13, 2016, the IASB issued its new standard, IFRS 16, which replacesInternational Accounting Standard (IAS) 17, the current leases standard, and the relatedInterpretations. Under the new standard, lessees will no longer classify their leases as eitheroperating or finance leases in accordance with IAS 17. Rather, lessees will apply the single-

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asset model. Under this model, lessees will recognize the assets and related liabilities formost leases on their balance sheets, and subsequently, will depreciate the lease assets andrecognize interest on the lease liabilities in their profit or loss. Leases with a term of 12months or less or for which the underlying asset is of low value are exempted from theserequirements.

The accounting by lessors is substantially unchanged as the new standard carries forwardthe principles of lessor accounting under IAS 17. Lessors, however, will be required todisclose more information in their financial statements, particularly on the risk exposure toresidual value.

The new standard is effective for annual periods beginning on or after January 1, 2019.Entities may early adopt IFRS 16 but only if they have also adopted IFRS 15. Whenadopting IFRS 16, an entity is permitted to use either a full retrospective or a modifiedretrospective approach, with options to use certain transition reliefs.

The Fund will adopt IFRS 15 and IFRS 16 on their effective dates. The Fund does notexpect the adoption of these standards to have significant impact on the financial statements.

3. Significant Estimates and Judgments

The preparation of the financial statement in compliance with PFRS requires the Fund to useestimates, assumptions and judgments. These estimates and assumptions affect the reportedamounts of assets and liabilities and contingent assets and liabilities, if any, at the reporting date,as well as the reported income and expenses for the period. Although the estimates are based on

outcome may differ from these estimates, which may possibly be significant.

Judgments and estimates are continually evaluated and are based on historical experience andother factors, including expectations of future events that are believed to be reasonable under thecircumstances.

JudgmentClassification of financial instrumentsThe Fund exercises judgment in classifying a financial instrument, or its component parts, oninitial recognition as either a financial asset, a financial liability or an equity instrument inaccordance with the substance of the contractual arrangement and the definitions of a financialasset, a financial liability or an equity instrument. The substance of a financial instrument,rather than its legal form, governs its classification in the statement of financial position. TheFund determines the classification at initial recognition and, where allowed and appropriate, re -evaluates each classification at each reporting date.

Fair value of financial instrumentsWhen the fair values of financial assets and financial liabilities recorded in the statement offinancial position cannot be derived from active markets, their fair value is measured usinginternal valuation techniques that include the use of generally accepted market valuation models.The inputs to these models are taken from observable markets where possible, but when this isnot feasible, a degree of judgment is required in determining fair value. These judgments mayinclude considerations of liquidity and identification of comparable investments and applicablecredit spreads to arrive at adjusted quoted market prices. Changes in assumption about thesefactors could affect the reported fair value of financial instruments.

Classification of redeemable shares as equityThe Fund continually assesses whether all of the conditions indicated in its accounting policy on

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Share Capital Transaction (Note 2) are met by the redeemable shares it issues to retain theclassification of the shares as equity instruments.

In applying its judgment, management considers the rights and claims that each shareholder is

terms of any contractual obligation, and the basis for the cash flows attributable to the entirety ofthe term of the shares.

EstimateRecognition of deferred tax assetsDeferred tax assets are recognized for all unused tax losses to the extent that it is probable thattaxable profit will be available against which the losses can be utilized. Significant managementjudgment is required to determine the amount of deferred tax assets that can be recognized,based upon the likely timing and level of future taxable profits together with future tax planningstrategies.

The estimates of future taxable income indicate that benefit from unused losses will not berealized in the future.

4. Financial Risk Management Objectives and Policies

The Fund has exposures to the following risks from the use of financial instruments:a. Credit riskb. Liquidity riskc. Market risk

Risk Management Framework

Supporting the BOD in this function is the Audit Committee (AC).

The AC is responsible for monitoringprocedures, and for reviewing the adequacy of risk management practices in relation to the risksfaced by the Fund. The AC is assisted in these functions by the Internal Audit Group (IAG) ofMBTC. T -hoc reviews of risk management

Investment Manager, the results of which are reported to the AC.

Under the management and distribution agreement of the Fund with FAMI as its InvestmentManager and Principal Distributor, FAMI handles the management and administration of theFund and is authorized to setup marketing network and accredited sub-dealers and agents to sellthe shares of the Fund. In addition, under the memorandum of agreement between FAMI andFirst Metro, the former engages the latter to provide research assistance and technical advice onthe implementation and ongoing management of the Investment Guidelines outlined in the

-level Risk Oversight Committee (ROC), has an oversightfunction in reviewing and assessing all risks associated with the Fund.

The Compliance Division (CD) of First Metro also collaborates with the ROC. The main taskof the CD is to monitor and assess compliance of the Fund to the rules and regulations outlined

The CD is also tasked to properly disseminate these rules and regulations to the Fund.

18

-to-day activities of theRisk Management Division (RMD). RMD is tasked with identifying, analyzing, measuring,controlling and evaluating risk exposures arising from fluctuations in prices or market values ofinstruments, products and transactions of the Parent Company and subsidiaries. It is responsiblefor recommending trading risk and liquidity management policies, setting uniform standards ofrisk assessment and measurement, providing senior management with periodic evaluation andsimulation and analyzing limit compliance exceptions. The RMD furnishes daily reports toFAMI and provides monthly reports to the ROC.

Nature of Risks and Risk Management Objectives and Policies

financial performance.

The Fund is governed by the provisions in its prospectus that incorporated relevant investmentrules and regulations by regulators such as the Investment Company Act, SEC ETF Rules, andthe SEC, among others.

the following limits/conditions:

Investments in margin purchases of securities, commodity futures contracts, preciousmetals, unlimited liability investments, short-selling of currencies and securities are notallowed.

It shall not incur any further debt or borrowing.

It shall not participate in underwriting or selling activities in connection with the publicdistribution of securities except for its own capital stock.

Investment in any company for the purpose of exercising control or management.

Investment in the securities of other investment companies.

Investment in real estate properties and developments.

Purchasing or selling of securities other than capital stocks of the Fund from or to any of itsofficers or directors or the officers and directors of its investment adviser/s, manager ordistributor/s or firm/s of which any of them are members is prohibited.

It shall not engage in lending operations.

As an ETF, the Fund is not subject to the maximum or minimum investment limitations orliquidity requirements provided under the Investment Company Rule.

Credit RiskCredit risk is the risk that one party to a financial instrument will fail to discharge an obligationand cause the other party to incur a financial loss.

The Fund manages its credit risks by setting limits for issuers/borrowers. As credit ratings can

procedure that will support in assessing the credit quality and the credit worthiness of thecounterparty. Transactions are structured to include collaterization or various creditenhancements when necessary. Credit exposures are closely monitored to ensure payments aremade on time.

Maximum Exposure to Credit RiskThe maximum exposure to credit risk is represented by the carrying amounts of the financialassets that are carried in the statements of financial position.

As of June 30, 2016 and December 31, 2015, the Fund does not hold collateral or has no othercredit enhancements for the outstanding financial assets.

19

Concentration of risks of financial assets with credit risk exposure

High grade - Entities that are highly liquid, sustain operating trends, unlikely to be affected byexternal factors and have competent management that uses current business models.

Standard grade - Entities that meet performance expectation, unlikely to be affected by externalfactors and have competent management that uses current business models.

Substandard grade - Entities with marginal liquidity and have a declining trend in operations oran imbalanced position in their statements of financial position, though not to the point thatrepayment is jeopardized.

Not Rated - Entities for which there is no established credit rating.

As of June 30, 2016 and December 31, 2015, the Fund has no past due or impaired receivables.

Liquidity RiskLiquidity or funding risk is the risk that an entity will encounter difficulty in raising funds tomeet commitments associated with the financial instruments. Liquidity risk may result fromeither the inability to sell financial assets quickly at their fair values; or the counterparty failingon repayment of a contractual obligation; or the inability to generate cash inflows as anticipated.

The Fund is also exposed to daily cash redemptions of redeemable shares. The Fund therefore

The Fund anticipates a gradual turnover in portfolio with the aim of ensuring the preservation ofcapital and liquidity. As an ETF, the Fund is not subject to the maximum or minimuminvestment limitations or liquidity requirements provided under the Investment Company Rule.

Market RiskMarket risk is the risk of change in fair value of financial instruments from fluctuations in equityprices (price risk), whether such change in price is caused by factors specific to the individualinstrument or its issuer or factors affecting all instruments traded in the market.exposure to market risk relates to equity price risk.

As of June 30, 2016 and December 31, 2015, the Fund does not have debt instruments thatwould expose it to interest rate risk.

The risks inherent to equity ETFs are related to the volatility of the stock market. Changes invary in

a short span of time. The performance of the companies whose shares are included in theportfolio of the Fund is very much dependent on the people behind those companies. Added tothat, stock prices are sensitive to political and economic conditions that normally change fromtime to time. Fluctuations in the value of securities in which the Fund invests will cause theNAV of the Fund to fluctuate

Other price risk is the risk that the fair values of equities or future cash flows of a financialinstrument will fluctuate because of changes in market prices (other than those arising frominterest rate risk or currency risk).

to outperform the Philippine Stock Exchange index (PSEi) but to track this index as close as

20

possible. Consequently, the Fund does not intend to seek provisional defensive position duringinstances of market decline or overvaluation.

The approach used to select the Underlying Index may prevent the Fund from considerablyoutperforming the PSEi, however, the indexing approach may also result to the reduction of therisks that the Fund is faced with.

replication strategy, which involves investing in substantially all of the securities and inapproximately the same weights as in the PSEi. When conditions permit, as determined byFAMI, FAMI may use a representative sampling indexing strategy, instead of full repl icationstrategy, to manage the Fund. This would involve investing in a representative sample ofsecurities that collectively has as investment profile optimally similar to the PSEi, which it aimsto track. The securities selected, in this particular case, are expected to have, in the aggregate,investment and fundamental characteristics, as well as liquidity measures, substantially similarto those in the PSEi. The use of representative sampling may result in higher chances ofincurring tracking error risk as opposed to replication of an index.

A change in the index tracking strategy may result in a change in the composition of thesecurities in the Underlying Index, but shall not be a change in the investment objective orpolicy of the Fund in accordance with the SEC ETF Rules.

The Fund will at times be substantially fully invested. In case when rebalancing the portfolio isrequired due to changes in the index composition or diminishing liquidity of certain indexcomponent stock, the portfolio may be under invested but limited to at least 80% of its assets.The Fund may then temporarily invest the remainder of its assets in liquid investments,including cash, cash equivalents, money market instruments, and shares of money market fundsadvised by FAMI.

Equity price risk-end relates to financial assets whose values will fluctuate

as a result of changes in market prices. Such investment securities are subject to price risk due tochanges in market values of instruments arising either from factors specific to individualinstruments or their issuers or factors affecting all instruments traded in the market.

The Fund measures the sensitivity of its investment securities by using the Philippine StockExchange index (PSEi) fluctuations.

Index RiskThe Fund is subject to the risk that the Underlying Index may underperform other segments ofthe equity market or the equity market as a whole. The Fund aims to track the PSEi, as theUnderlying Index, which is rebalanced every six months. The returns of the Fund may beaffected by such rebalancing, and the Fund is subject to the risk that it may not accurately trackthe returns of the PSEi.

5. Fair Value Measurement

As of June 30, 2016 and December 31, 2015, the carrying valuesand liabilities as reflected in the statements of financial position approximate their fair values.The methods and assumptions used by the Fund in estimating fair values of financialinstruments are as follows:

Financial assets at FVPLFair values are based on quoted market prices, which are considered as Level 1 input.

21

Financial assets and liabilities carried at amortized costCarrying values approximate fair values since these instruments are liquid and have short-termmaturities (less than three months). These financial instruments comprise cash in banks,receivables, and accounts payable and accrued expenses.

As of June 30, 2016 and December 31, 2015, the Fund has no financial instruments that arereported under levels 2 and 3, and there were no transfers made among the three levels in thefair value hierarchy.

6. Other information

Compliance with US Foreign Account Tax Compliance Act (FATCA) RegulationsPursuant to SEC Memorandum Circular No. 8, series of 2014, the following actions wereundertaken to comply with the US Foreign Account Tax Compliance Act (FATCA)requirements, as follows:

1. Metrobank, being the Lead FFI of an Expanded Affiliate Group (EAG), has identified2. Metrobank, being the Lead FFI, has created FATCA accounts for First Metro and the

covered subsidiaries;3. First Metro has created a FATCA Compliance Ad Hoc Committee last December 27,

2013 to oversee the FATCA implementation requirements for First Metro andsubsidiaries;

4. First Metro, through its Compliance Division, has registered last January 6, 2014 withthe US IRS for FATCA purposes, including the covered subsidiaries. The IRS issued aGlobal Intermediary Identification Number (GIIN) for each of the following FFI:

a. First Metro Investment Corporationb. First Metro Securities Brokerage Corporationc. PBC Capital Investment Corporationd. FMIC Equities, Inc.e. Resiliency (SPC), Inc.f. First Metro Asset Management, Inc.g. First Metro Save and Learn Dollar Bond Fund, Inc.h. First Metro Asia Focus Equity Fund, Inc.i. First Metro Philippine Equity Exchange Traded Fund, Inc.j. First Metro Save and Learn Equity Fund, Inc.k. First Metro Save & Fixed-Income Fund, Inc.l. First Metro Save and Learn Balanced Fund, Inc.

5. First Metro and its subsidiaries has conducted initial runs for search of US Indicia intheir databases;

6. First Metro has adopted the Metrobank template for Letters to Depositors and theCertification, Consent and Waiver Form for identified US Indicia accounts;

7. First Metro is finalizing the establishment of the policies and procedures to identify USIndicia and tag the sa the pre-existing accounts andonboarding procedures for new accounts;

8. First Metro is rolling out training awareness on FATCA for all its employees, includingthe covered subsidiaries; and

9. First Metro, through its Compliance Division, has continuously coordinated with itsparent bank Metrobank and the Association of Bank Compliance Officers or ABCOMPto raise issues and queries on FATCA implementation.

22

Seasonality or Cyclicality of Interim OperationsThe operations is driven mainly by prevailing market and economic conditions, aswell as, by the demands and or needs of the investors and borrowers and is not influencedby seasonal or cyclical pulls.

No Unusual ItemsThere are no items affecting assets, liabilities, equity, net income or cash flows, which maybe considered unusual by virtue of their nature, size or incidence.

Subscriptions and Redemptions of SecuritiesThere were 0.20 million shares subscribed and 4.35 million shares redeemed during theperiod.

DividendsThere were no dividends declared and paid for the period ended June 30, 2016.

Material EventsThere were no material events that happened for the period ended June 30, 2016.

Subsequent EventsThere were no material subsequent events that took place after the period ended June 30,2016.

Commitments and Contingent AccountsThere were no commitments and contingent accounts for the period ended June 30, 2016.

Net Asset Value (NAV) Per ShareThe total expected cash outflow on redemption of all the shFor the purpose of calculating the NAV per share attributable to holders of redeemableshares, the Fund's investments in listed equity securities held for trading are valued on thebasis of closing prices.

As of June 30, 2016 and December 31, 2015and the NAV per share calculated using closing prices follows:

June 30, 2016 December 31, 2015Total equity calculated under PFRS P=980,000,422 P=1,340,413,490Adjustment from bid prices to closing prices

and PDST - R2Net asset value attributable to holders of

redeemable shares (a) 980,000,422 1,340,413,490Number of redeemable shares (b) 7,650,000 11,800,000

NAV per share (a/b) P=128.1046 P=113.5944

23

Earnings Per ShareEarnings per share is determined by dividing the net income for the period by the weightedaverage number of common shares issued and outstanding during the period, computed asfollows:

June 302016 2015

a. Net Income P=124,411,712 P=57,573,700b. Weighted average number of common shares 9,420,330 10,160,773c. Earnings per share (a/b) P=13.2067 P=5.6663

(June 30, 2016 vs. December 31, 2015) AND RESULTS OF OPERATIONS (January 1 June30, 2016 vs. January 1 June 30, 2015)

FINANCIAL POSITION

The total resources of the Fund decreased by 26.87% or P=0.36 billion from P=1.34 billion at thebeginning of the year to P=0.98 billion as of June 30, 2016. Also, liabilities declined by 6.99% fromP=0.96 million to P=0.89 million for the six-month period.

The movement in total assets and liabilities are primarily due to the changes in the followingaccounts:

1. Cash in banksThis account substantially improved by 536.87% or P=15.61 million, from P=2.91 million inDecember 31, 2015 to P=18.52 million in June 30, 2016, mainly due to the cash dividendsreceived during the period. Cash in banks represent ccountsin local banks and earn interest at the respective bank deposit rates.

2. Financial assets at FVPLFinancial assets at FVPL consists of quoted equity securities held for trading amounting toP=0.96 billion and P=1.34 billion as of June 30, 2016 and December 31, 2015, respectively. Thisaccount went down by 28.11% or P=0.38 billion as a result of sale of investments in equitysecurities relative to redemptions made during the period.

3. ReceivablesReceivables consist of dividends and other receivables. This account is lower by 19.29% orP=0.20 million from the December 31, 2015 balance of P=1.04 million, mainly due to collectionof dividends earned from investment in equity securities.

4. Other assetThis account pertains to the prepayment made for the annual listing maintenance feeamounting to P=0.10 million to be amortized over the remaining six months.

5. Accounts payable and accrued expensesAccounts payable and accrued expenses consist of payable to FAMI, custodian fee payable,accounts payable, accrued expenses and withholding taxes payable. Accounts payable andaccrued expenses diminished by 6.99% or P=0.07 million from P=0.96 million in December 31,2015 to P=0.89 million as of June 30, 2016 due to the lower balances of management feepayable, listing fee payable and withholding tax payable.

Payable to FAMI pertains to unpaid management fees as of reporting date. Accrual ofs. This account went down by

24

28.97% or P=0.16 million due to the decline during the period.

custodian for daily fees charged

securities.

Accounts payable includes cash component of redemption, unpaid retainer fees, informationtechnology fees and listing fees.

Accrued expenses include professional fee and transfer agency fee.

6. Capital stockThe authorized capital of the Fund is P=3.00 billion divided into 30.00 million redeemableshares of P=100 par value with each share carrying one vote. This is far beyond the P=0.25billion minimum required capital by the SEC. As of June 30, 2016 and December 31, 2015,issued and fully paid shares amounted to P=0.76 billion and P=1.18 billion, respectively. The

is represented by these redeemable shares. The shares are entitled to dividendswhen declared and to theredemption date or upon winding up of the Fund.their NAV calculated in accordance with redemption requirements.

The net decrease of 35.17% or P=0.42 billion was due to the subscriptions and redemptionsamounting to P=0.02 billion and P=0.44 billion, respectively, during the period.

7. Additional paid-in capitalAdditional paid-in capital represents subscriptions received in excess of par of P=100.00 pershare amounting to P=15.84 million as of June 30, 2016 and P=85.67 million as of December 31,2015. The decline of 81.51% or P=69.82 million resulted from redemptions over subscriptionsduring the period.

8. Retained earningsRetained earnings went up by 166.44% or P=124.41 million from P=74.75 million as ofDecember 31, 2015 to P=199.16 million as of June 30, 2016 mainly due tooperation for the period.

RESULTS OF OPERATIONS

The results of operations for the period ended June 30, 2016 resulted to a net income ofP=124.41 million, higher by 116.09% or P=66.84 million P=57.57 million net income.

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

1. Trading and securities gainsTrading and securities gains resulted to P=115.99 million and P=47.81 million for the periodended June 30, 2016 and 2015, respectively. The increase of 142.61% or P=68.18 million wasmainly due to the increase in the fair market value of equity securities during the period.This account was derived from income realized in the sale of stock investments of the Fundand the change in fair value of stocks during the period.

2. Dividend incomeDividend income earned from financial assets at FVPL amounted to P=13.17 million andP=14.72 million for the period ended June 30, 2016 and 2015, respectively. This accountdropped by 10.48% or P=1.54 million due to the lower number of investee companies thatdeclared dividends during the period.

25

3. Interest incomeThis account pertains to interest earned from cash in banks.

4. Management feesManagement fees consist of fees accrued and Thisaccount amounted to P=3.09 million as of June 30, 2016, a decline of 10.57% or P=0.37million due to the lower asset under management during the first half of 2016 as comparedto the same period last year.

5. Information technology expensesInformation technology expenses pertain to the prime portal services being used by theFund. Thisthe calculation of its Indicative NAV during the trading day.

6. Custodian and transfer agency feesThis account rose by 5.47% or P=0.02 million as a result of the higher transaction charges

net asset value plus transaction charges incurred for each security traded.

7. Directors and officers feesDirectors s fees amounted to P=0.21 million for the period ended June 30, 2016and 2015 respectively.

8. Regulatory and filing feesThis account decreased by 7.98% or P=0.01 million due to the lower asset under managementin the first quarter which is the basis for the listing and filing fees charged quarterly by theregulatory bodies.

9. Taxes and licensesTaxes and licenses totaled P=0.08 million and is 41.23% or P=0.06 million lower compared toP=0.14 million for the same period last year mainly due to the lesser amount of stocktransaction taxes paid as a result of the decline in the volume of sales transactions thisperiod.

10. s commissionss amounting to P=0.03 million was incurred during the period relative to

purchase and sale transactions of investments. This account is 82.85% or P=0.16 millionP=0.19 million due to the lesser volume of

rebalancing trades during the period.

11. Miscellaneous expenseMiscellaneous expense amounted to P=0.49 million for the period ended June 30, 2016. Theincrease of 319.90% or P=0.37 million from P=0.12 million in the same period last year wasmainly due to professional fees paid for the listing of ETF shares in Japan.

DISCUSSION OF KEY PERFORMANCE INDICATORS

The Fund was incorporated on January 15, 2013 with the objective of providing returns whichwould reflect the performance of the Philippine equities market by investing in a basket of securities

.

The Fund has appointed FAMI to serve as its Investment Company Adviser, Administrator andDistributor. , active management of the

26

Fund December 2013 with the objective of consistently outperforming itsbenchmark, which is the PSEi, and achieves a sizable net income.

From an initial paid-up capitalization of P=0.75 billion which translates to a minimal share in themutual fund industry (under the equity fund category), the -up capital is now P=0.78billion as of June 30, 2016.

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

Net Asset Value Per Share - Net Asset Value per share soared from P=113.5944 as of December31, 2015 to P=128.1046 as of June 30, 2016.

Sales for the period ended - The Fund had total sales of P=21.11 million for the period ended June30, 2016. This is P=465.87 million lower compared to the P=486.98 million sales for the sameperiod in 2015.

Redemptions for the period ended - The Fund had total redemptions of P=505.93 million for theperiod ended June 30, 2016. This is P=429.49 million higher as compared to the P=76.45 millionredemptions for the same period last year.

Net Income vs. Benchmark - The Fund posted a net income of P=124.41 million for the periodended June 30, 2016 and P=57.57 million net income for the same period last year.

Market Share vs. Benchmark As of June 30, 2016 the Fund garnered 0.98% share in the EquityFunds category while 0.39% share among all mutual funds in terms of net assets. On the basis ofaccount holders, the Fund has 675 shareholders owning at least one board lot or 0.43% of thetotal accounts in the Equity Funds category.

NAVPS vs. Benchmark-will not exceed 5%. The highest and lowest tracking error during the period are 0.03% and0.02% respectively.

COMMITMENTS, MATERIAL EVENTS AND UNCERTAINTIES

1. To date, the Fund has no plans of entering into any material commitments for capitalexpenditures in the future.

2. To the knowledge and information of the Fund, there are no events or uncertainties that willhave a material impact on the Fund

3. There are no known events that will trigger direct or contingent financial obligation that ismaterial to the Fund, including any default or acceleration of an obligation.

4. Also, there were no material off-balance sheet transactions, arrangements, obligations(including contingent obligations), and other relationships of the Fund with unconsolidatedentities or other persons created during the reporting period.

5. Likewise, there are no known trends, events or uncertainties that have had or that arereasonably expected to cause a material favorable or unfavorable impact on income fromcontinuing operations.

6. Similarly, there were no significant elements of income or loss that did not arise from theFund continuing operations.

7. Lastly, there were no seasonal aspects that had any material effect on the financial conditionor results of operations of the Fund.

27

FINANCIAL SOUNDNESS INDICATORS

Performance Indicators

As of

June 30, 2016 June 30, 2015 December 31, 2015

(Unaudited) (Unaudited) (Audited)

Current ratio 1/ 109,677.08% 94,634.94% 139,495.39%

Acid test ratio 2/ 109,666.42% 94,628.15% 139,495.39%

Debt-to-equity ratio 3/ 0.09% 0.11% 0.07%

Asset-to-equity ratio 4/ 100.09% 100.11% 100.07%

Interest rate coverage ratio 5/ n.a. n.a. n.a.

Profitability ratios:

Return on assets 6/ 21.43% 10.15% (4.64%)

Return on equity 7/ 21.45% 10.16% (4.65%)

1/ Current Assets divided by Current Liabilities2/ Quick Assets (Cash and cash equivalents, Financial assets at FVPL securities and Current receivables) divided by Current

Liabilities3/ Total Liabilities divided by Total Equity4/ Total Assets divided by Total Equity5/ Earnings Before Interest and Tax divided by Interest Expense6/ Annualized Net Investment Income divided by Average Total Assets7/ Annualized Net Investment Income divided by Average Total Equity

OTHER RELEVANT PERCENTAGES

As ofJune 30, 2016 June 30, 2015 December 31, 2015

(Unaudited) (Unaudited) (Audited)Liquid/Semi liquid assets to total

assets 1/ 99.99% 99.99% 100.00%Total operating expenses to total net

worth 2/ 0.41% 0. 44% 0.89%Total assets to total borrowing 3/ n.a. n.a. n.a.

1/ Liquid/Semi Liquid Assets (Cash and cash equivalents and Financial assets at FVPL securities and Current receivables)divided by Total Assets

2/ Total Operating Expenses divided by Average Equity3/ Total Assets divided by Total Borrowings

28

FIRST METRO PHILIPPINE EQUITY EXCHANGE TRADED FUND, INC.OTHER RATIOS REQUIRED FOR MUTUAL FUNDSAS OF JUNE 30, 2016

Name of issuing entity and association of eachissue

(i)

Number ofshares orprincipalamount of

bonds or notes

Valued based onmarket

quotation atbalance sheet

date

Percentage ofInvestment to

Net AssetValue (i)

Percentage toOutstanding

Shares ofInvestee

Company (ii)

Financial assets at fair value through profit or loss

SM Investments Corporation 101,170 P=97,831,390 9.98% 0.01%Ayala Land, Inc. 2,083,800 80,851,440 8.25% 0.01%SM Prime Holdings, Inc. 2,446,200 66,781,260 6.81% 0.01%Philippine Long Distance Telephone Company

"Common" 29,445 63,306,750 6.46% 0.01%JG Summit Holdings, Inc. 699,470 60,154,420 6.14% 0.01%

Ayala Corporation 67,950 57,689,550 5.89% 0.01%

Universal Robina Corporation 262,740 54,649,920 5.58% 0.01%

Aboitiz Equity Ventures, Inc. 697,620 54,379,479 5.55% 0.01%

BDO Unibank, Inc. 448,470 50,228,640 5.13% 0.01%

Bank of The Philippine Islands 514,910 50,100,743 5.11% 0.01%

Metropolitan Bank & Trust Company 425,820 38,472,837 3.93% 0.01%

GT Capital Holdings, Inc. 21,140 30,441,600 3.11% 0.01%

Jollibee Foods Corporation 125,330 30,329,860 3.09% 0.01%

Metro Pacific Investments Corporation 3,654,200 25,469,774 2.60% 0.01%

Globe Telecom, Inc. 8,305 19,699,460 2.01% 0.01%

Manila Electric Company 58,890 18,255,900 1.86% 0.01%

International Container Terminal Services, Inc. 283,880 17,458,620 1.78% 0.01%

Alliance Global Group, Inc. 1,177,800 17,431,440 1.78% 0.01%

Aboitiz Power Corp. 377,500 17,383,875 1.77% 0.01%

Megaworld Corporation 3,020,000 14,043,000 1.43% 0.01%

Energy Development (EDC) Corporation 2,506,600 13,836,432 1.41% 0.01%

Robinsons Land Corporation 437,900 12,918,050 1.32% 0.01%

DMCI Holdings, Inc. 1,011,700 12,747,420 1.30% 0.01%

LT Group, Inc. 770,100 12,259,992 1.25% 0.01%

Semirara Mining Corporation 78,520 9,822,852 1.00% 0.01%

First Gen Corporation 332,200 8,271,780 0.84% 0.00%

San Miguel Corporation 98,150 7,690,052 0.78% 0.01%

Petron Corporation 619,100 6,896,774 0.70% 0.01%

Emperador, Inc. 830,500 6,021,125 0.61% 0.01%

Bloomberry Resorts Corporation 906,000 6,015,840 0.61% 0.01%

24,095,410 P=961,440,275 98.08%

29

FIRST METRO PHILIPPINE EQUITY EXCHANGE TRADED FUND, INC.FORM AND CONTENT OF SCHEDULESAS OF JUNE 30, 2016

Schedule A - Financial Assets

Name of issuing entity and association ofeach issue

(i)

Number ofshares orprincipalamount of

bonds or notes

Amountshown in thebalance sheet

(ii)

Value based onmarket

quotation atend of

reportingperiod

(iii)

Incomereceived and

accrued

Financial assets at fair value through profit or loss

SM Investments Corporation 101,170 P=97,831,390 P=97,831,390 P=1,182,269Ayala Land, Inc. 2,083,800 80,851,440 80,851,440 660,164

SM Prime Holdings, Inc. 2,446,200 66,781,260 66,781,260 618,516

Philippine Long Distance Telephone Company"Common" 29,445 63,306,750 63,306,750 2,167,425

JG Summit Holdings, Inc. 699,470 60,154,420 60,154,420 176,130

Ayala Corporation 67,950 57,689,550 57,689,550 -

Universal Robina Corporation 262,740 54,649,920 54,649,920 1,227,744

Aboitiz Equity Ventures, Inc. 697,620 54,379,479 54,379,479 927,574

BDO Unibank, Inc. 448,470 50,228,640 50,228,640 305,082

Bank of The Philippine Islands 514,910 50,100,743 50,100,743 466,488

Metropolitan Bank & Trust Company 425,820 38,472,837 38,472,837 504,780

GT Capital Holdings, Inc. 21,140 30,441,600 30,441,600 139,440

Jollibee Foods Corporation 125,330 30,329,860 30,329,860 115,636

Metro Pacific Investments Corporation 3,654,200 25,469,774 25,469,774 265,716

Globe Telecom, Inc. 8,305 19,699,460 19,699,460 471,900

Manila Electric Company 58,890 18,255,900 18,255,900 832,229

International Container Terminal Services, Inc. 283,880 17,458,620 17,458,620 283,993

Alliance Global Group, Inc. 1,177,800 17,431,440 17,431,440 -

Aboitiz Power Corp. 377,500 17,383,875 17,383,875 847,098

Megaworld Corporation 3,020,000 14,043,000 14,043,000 153,627

Energy Development (EDC) Corporation 2,506,600 13,836,432 13,836,432 434,588

Robinsons Land Corporation 437,900 12,918,050 12,918,050 187,920

DMCI Holdings, Inc. 1,011,700 12,747,420 12,747,420 533,856

LT Group, Inc. 770,100 12,259,992 12,259,992 126,990

Semirara Mining Corporation 78,520 9,822,852 9,822,852 345,280

First Gen Corporation 332,200 8,271,780 8,271,780 -

San Miguel Corporation 98,150 7,690,052 7,690,052 126,000

Petron Corporation 619,100 6,896,774 6,896,774 73,390

Emperador, Inc. 830,500 6,021,125 6,021,125 -

Bloomberry Resorts Corporation 906,000 6,015,840 6,015,840 -

24,095,410 P=961,440,275 P=961,440,275 P=13,173,834