CONTENTS ABRIDGED ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2015

Transcription

1 OLD MUTUAL UNIT TRUST MANAGERS (RF) (PTY) LIMITED ABRIDGED ANNUAL REPORT 2015

2 CONTENTS ABRIDGED ANNUAL REPORT Page Chairman s message to unitholders 3 to 4 Abridged financial statements as at 31 December to 7 Portfolio composition as at 31 December Investment performance as at 31 December Income distribution per unit (cents) as at 31 December Price, total expense ratio and performance fee as at 31 December Trustees report, important notice, statutory information 12 Unit Trust (RF) (Pty) Ltd (Registration no. 1965/008471/07) Physical address: Mutualpark, Jan Smuts Drive, Pinelands 7405 Postal address: PO Box 207, Cape Town 8000 Telephone: (021) Client Support Service centre: Facsimile: Internet: (021) Client Support unittrusts@oldmutual.com Please note: This Abridged Annual Report contains limited information on s retail funds. For more detailed information on these funds please go to or call Copies of the audited financial statements and the report of the Shari ah Supervisory Board may be obtained, free of charge, and on request, from the management company. Printed on paper that is made with concern for the environment. To show that you care for the environment, opt to receive your correspondence electronically in future by contacting our service centre. 2

3 CHAIRMAN S MESSAGE TO UNITHOLDERS 2015 was a difficult year for South Africa and other emerging market economies. The global economy and commodity prices weakened further and oil producers, together with the mining sector, were hard hit. China s growth has slowed significantly, after remarkable productivity-led growth over the past decade, with less emphasis on infrastructure. Recovery in the US has been relatively slow triggering fears of rising interest rates. Against this weak backdrop and experiencing the effects of the widespread drought on agriculture, South Africans will also remember December 2015 as the month of having three Finance Ministers in less than one week. The dismissal of respected Finance Minister Nhlanhla Nene, and his replacement with little-known David van Rooyen, caused a dramatic loss of investor confidence, evidenced by a slump in the rand and a sell-off in bonds with a surge in yields. The re-appointment of former Finance Minister Pravin Gordhan a few days later restored some measure of calm, but the events caused significant and lasting damage. HIGHER INFLATION AND TAXES The damage includes an impact in the shorter term, as the failure of the rand to retrace its losses will result in higher than expected inflation in 2016 and probably more interest rate increases than would otherwise have been necessary. In addition, the higher bond yields and deteriorating growth outlook will put further pressure on South Africa s fiscal situation. ECONOMIC GROWTH OUTLOOK LOW Higher food prices due to the drought, the necessity for a brake on government spending and the relatively weak position of household finances have adversely impacted the economic outlook for As a result of the weak data, 2015 and 2016 growth forecasts have generally been cut to around 1% for both years, with risks perceived to be skewed to the downside. JUNK STATUS LOOMS Against this backdrop, concerns are relentlessly mounting that South Africa will lose its investment grade status in the not-too-distant future an event that could have a further negative impact on the already weak growth potential of the economy and, if effected, could cause significant economic and market turmoil in the short term. It should be noted, however, that it is the rating on hard-currency debt that is under threat in other words, the rating relating to domestic, randdenominated government debt (the bulk of the national debt) is not in danger. LOOKING AHEAD With the world economy likely to grow at a moderate rate, and in light of the aforementioned factors, a scenario of low growth, a weak rand and inflationary pressures is likely. There will, however, be opportunity for sectors that benefit from currency weakness. NOT ALL DOOM AND GLOOM In the aftermath of the events in December, we have seen a broad recognition of the reality that we are a small open economy and reliant on foreign capital and trade to grow and meet the aspirations of our people. We have recently seen much-improved dialogue between Government and the business and commercial sectors in an effort to find solutions to South Africa s economic challenges. It is crucial that South Africa make the most of this crisis to address structural impediments to growth. As the National Development Plan says, The future is ours, we must make it work. And making it work requires collaboration between Government, business and labour. STICK TO YOUR PLAN We can never predict the future, but we ve learnt a lot from the past. Amid turbulent times and stock market volatility, investors need to stay calm and ignore the noise. Most of all, resist the temptation to react impulsively and remember that investing is for the long term. Stick to a plan based on sound investment principles. OUR KEY INVESTMENT PRINCIPLES A comprehensive financial plan helps build confidence regardless of what the market is doing. A diversified portfolio will help to manage your risk. Always consider your investments as a whole. It s time in the market that counts, not timing the market. Cash is unlikely to deliver the returns needed to outpace inflation over the long term. Investing regularly over the longer term mostly generates the best returns. Invest with the assistance of a financial planner who is experienced in managing different market conditions. Each investor s solution is unique. HIGHLIGHTS Unit Trusts Tax-Free Investment National Treasury has introduced new regulations to the Income Tax Act of South Africa that make investments of R per tax year (subject to a maximum of R over your lifetime) 100% tax free. This means that your investment, any income earned and all capital growth are free of income tax, dividend tax and capital gains tax. 3

4 Unit Trusts was quick to launch complying investment products, offering a market-leading tax-free solution. To invest in our tax-free product, visit or contact your adviser. You can also call our service centre at or send an to unittrusts@oldmutual.com. ENHANCEMENTS TO OUR STRATEGY FUNDS We have introduced a number of enhancements to our Strategy range to offer appropriate returns aimed at meeting long-term goals, including: Introducing the Moderate Balanced, our new fund designed to deliver inflation plus 3-4% Renaming the SYm metry range to Launching two new multi-manager funds, namely the Manager Aggressive Balanced of s and the Manager Maximum Return of s We will be balloting all investors involved regarding the possible merger of the Enhanced Income into the Real Income. This will improve the ability of investors in the Enhanced Income to meet the objective of a growing income stream over time. The Investors will be celebrating its 50th anniversary in May 2016 and has delivered great long-term performance over all periods. IT IS YOUR TRUST THAT DRIVES US I would like to take this opportunity to thank you for your continued trust and support. I am humbled by the tremendous effort, passion and dedication of our employees, financial advisers, brokers, management and the Board of Directors in delivering excellent results in a very volatile environment. It is your commitment and focus that enables us to deliver to clients needs. We remain focused on understanding your goals and helping you to achieve them as we continue to build for the future. Peter de Beyer Chairman: Unit Trusts PERFORMANCE AND AWARDS The Global Equity and International Growth of s both won awards in their respective categories at the 20th annual Raging Bull Awards held in January The Global Equity went home with two wins. For the fourth year in a row, the fund was awarded a Raging Bull Award for Top Performance by a Domestic Collective Investment Scheme for the three-year period ended 31 December 2015, as the Best (SA- Domiciled) Global Equity General. It was also recognised with a certificate for Best Performance on the basis of Risk-adjusted Returns by a Domestic Collective Investment Scheme for the five-year period ended 31 December 2015, in the category (SA Domiciled) Global Equity General s. The International Growth of s received a certificate for Top Performance by a Domestic Collective Investment Scheme for the three-year period ended 31 December 2015, in the category (SA-Domiciled) Global Asset Flexible s. These awards showcase the excellence of our offshore offering in both the global equity and global multi-asset space, offering diversified exposure to quality assets across the globe. 4

5 ABRIDGED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2015 R 000 Balanced CLASSIC INVESTMENT COLLECTION FUNDS Flexible Maximum Return of s Moderate Balanced Money Market Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders Real Income Stable Growth Albaraka Balanced Albaraka Equity Bond Net (loss)/income from operations before finance costs ( ) Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders ( ) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders Capital Builder Core Diversified Dynamic Floor Enhanced Income Financial Services Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders ( ) ( 1 181) ( ) ( ) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders

6 ABRIDGED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2015 R 000 Global Bond Feeder Global Currency Feeder Global Emerging Market Global Equity Global FTSE RAFI All World Index Feeder Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders Gold Growth High Yield Opportunity Income Industrial Net (loss)/income from operations before finance costs ( ) ( ) Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders ( ) ( ) ( ) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders Interest Plus International Growth of s Investors' Managed Alpha Equity Mid & Small- Cap Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders (19 738) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders

7 ABRIDGED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2015 R 000 Mining & Resources RAFI 40 Tracker SA Quoted Property Top 40 Old Mutual Top Companies Net (loss)/income from operations before finance costs ( ) (59 058) Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders ( ) (84 855) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders Aggressive Balanced of s Balanced of s MULTI-MANAGER FUNDS Cautious of s Defensive of s Enhanced Income of s Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders ( 400) (2 150) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders Equity of s Maximum Return of s Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends 56 - Change in net assets attributable to unitholders Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders

8 PORTFOLIO COMPOSITION (%) AS AT 31 DECEMBER 2015 Cash and cash equivalents* Money market instruments Derivatives at fair value # Bonds Unit trusts Equity Local Foreign Local Foreign Balanced Flexible Maximum Return of s Moderate Balanced Money Market Real Income Stable Growth Albaraka Balanced Albaraka Equity Bond Capital Builder Core Diversified Dynamic Floor Enhanced Income Financial Services Global Bond Feeder Global Currency Feeder Global Emerging Market Global Equity Global FTSE RAFI All World Index Feeder Gold Growth High Yield Opportunity Income Industrial Interest Plus International Growth of s Investors' Managed Alpha Equity Mid & Small-Cap Mining & Resources RAFI 40 Tracker SA Quoted Property Top Top Companies Aggressive Balanced of s Balanced of s Cautious of s Defensive of s Enhanced Income of s Equity of s Maximum Return of s * Only capital, current and call deposits are included. # Where portfolios hold SAFEX instruments the fair value of derivative assets and liabilities is zero. 8

9 INVESTMENT PERFORMANCE (%) AS AT 31 DECEMBER YEAR 3 YEARS 5 YEARS 7 YEARS (Class A) (Class R) (Class A) (Class R) (Class A) (Class R) (Class A) (Class R) Balanced Flexible Maximum Return of s Moderate Balanced * Money Market Real Income Stable Growth Albaraka Balanced Albaraka Equity Bond Capital Builder Core Diversified * Dynamic Floor Enhanced Income Financial Services Global Bond Feeder Global Currency Feeder Global Emerging Market Global Equity Global FTSE RAFI All World Index Feeder Gold Growth High Yield Opportunity Income Industrial Interest Plus International Growth of s Investors' Managed Alpha Equity Mid & Small-Cap Mining & Resources RAFI 40 Tracker SA Quoted Property Top Top Companies Aggressive Balanced of s* Balanced of s Cautious of s Defensive of s Enhanced Income of s Equity of s Maximum Return of s* * No performance figures are available as these funds have traded for less than one year. 9

10 INCOME DISTRIBUTION PER UNIT (CENTS) AS AT 31 DECEMBER 2015 MARCH 2015 JUNE 2015 SEPTEMBER 2015 DECEMBER 2015 (Class A) (Class R) (Class A) (Class R) (Class A) (Class R) (Class A) (Class R) Balanced Flexible Maximum Return of s Moderate Balanced Money Market Real Income Stable Growth Albaraka Balanced Albaraka Equity Bond Capital Builder Core Diversified Dynamic Floor Enhanced Income Financial Services Global Bond Feeder Global Currency Feeder Global Emerging Market Global Equity Global FTSE RAFI All World Index Feeder Gold Growth High Yield Opportunity Income Industrial Interest Plus International Growth of s Investors' Managed Alpha Equity Mid & Small-Cap Mining & Resources RAFI 40 Tracker SA Quoted Property Top Top Companies Aggressive Balanced of s Balanced of s Cautious of s Defensive of s Enhanced Income of s Equity of s Maximum Return of s

11 PRICE, TOTAL EXPENSE RATIO (TER) AND PERFORMANCE FEE AS AT 31 DECEMBER 2015 LAST PUBLISHED PRICE TOTAL EXPENSE RATIO (TER) PERFORMANCE FEE COMPONENT OF TER (31/12/2015) Percentage per Class (%) % (Class A) (Class R) (Class A) (Class R) Balanced Flexible Maximum Return of s N/A Moderate Balanced N/A Money Market N/A Real Income N/A Stable Growth Albaraka Balanced N/A Albaraka Equity N/A Bond N/A Capital Builder Core Diversified N/A Dynamic Floor Enhanced Income N/A Financial Services N/A Global Bond Feeder N/A Global Currency Feeder N/A Global Emerging Market Global Equity N/A Global FTSE RAFI All World Index Feeder N/A Gold N/A Growth High Yield Opportunity N/A Income N/A Industrial N/A Interest Plus N/A International Growth of s N/A Investors' Managed Alpha Equity Mid & Small-Cap N/A Mining & Resources N/A RAFI 40 Tracker N/A SA Quoted Property N/A Top N/A Top Companies Aggressive Balanced of s N/A Balanced of s N/A Cautious of s N/A Defensive of s N/A Enhanced Income of s N/A Equity of s N/A Maximum Return of s N/A 11

12 OLD MUTUAL UNIT TRUST MANAGERS (RF) (Pty) Ltd ABRIDGED ANNUAL REPORT 2015 TRUSTEES REPORT Standard Bank of South Africa Limited provides custodian services for a fee as disclosed in the statement of comprehensive income. Report in terms of section 70(f) of the Collective Investment Schemes Control Act (the Act), No. 45 of 2002, for the period 1 January 2015 to 31 December 2015 Unit Scheme and Investors Scheme. We confirm that according to the records available to us, no losses were suffered in the portfolios and no investor was prejudiced as a result thereof. We conclude our report by stating that we reasonably believe that the Manager has administered the Schemes in accordance with: (i) the limitations imposed on the investment and borrowing powers of the manager by the Act; and (ii) the provisions of the Act and the deed. Standard Chartered Bank We hereby confirm that as required in terms of section 70 (3) of the Collective Investment Schemes Control Act, No. 45 of 2002, as amended (the Act), we have satisfied ourselves that every statement of comprehensive income, statement of financial position and other return prepared by the Manager of the Scheme in terms of section 90 of the Act fairly represent the assets and liabilities, as well as the income and distribution of income, of every portfolio of the Scheme administered by the Manager of the Scheme. IMPORTANT NOTICE: In terms of the Collective Investment Schemes Control Act, the trustees of all unit trust companies must report on their adherence to limitations imposed on investing, borrowing powers and the general provisions of the Act and Trust Deed. Our trustees, Standard Bank of South Africa Limited and Standard Chartered Bank, have released Unit Trusts report for The report does not detail any material breaches and is available from the Manager on request and may be viewed at the registered offices of the Manager. STATUTORY INFORMATION: Only the A and R Class fund portfolios have been included in this Abridged Annual Report. Performance figures are only disclosed for funds that have been in existence for more than one year. A fund portfolio is identical for all the respective classes of that fund. Different classes purely reflect different fee structures, not different portfolio compositions. The A and R Classes have been selected for this Annual Report as these are the only two classes of units which a retail investor can purchase directly from Unit Trust (RF) (Pty) Ltd. Note that full details of all the funds and classes are available in the full Annual Report. All performance figures are based on lump sum investments to December Unit trusts are generally medium- to long-term investments. Past performance is no indication of future growth. Shorter term fluctuations can occur as your investment moves in line with the markets. Fluctuations or movements in exchange rates may cause the value of underlying international investments to go up or down. Unit trusts can engage in borrowing and scrip lending. The fund s Total Expense Ratio (TER) reflects the percentage of the average Net Asset Value of the portfolio that was incurred as charges, levies and fees related to the management of the portfolio. A higher TER does not necessarily imply a poor return, nor does a low TER imply a good return. The current TER cannot be regarded as an indication of future TERs. A schedule of fees, charges and maximum commissions is available from the company. You may sell your investment at the ruling price of the day (calculated at 15h00 on a forward pricing basis and 17h00 at month-end for the RAFI 40 Tracker, Top 40 and the Equity of s). The Money Market unit price aims to be static but investment capital is not guaranteed. The total return is primarily made up of interest (declared daily at 13h00), but may also include any gain/loss on any particular instrument. In most cases this will merely have the effect of increasing or decreasing the daily yield, but in an extreme case it can have the effect of reducing the capital value of the fund. Specialist equity funds may hold a greater risk as exposure limits to a single security may be higher. A feeder fund is a portfolio that, apart from assets in liquid form, consists solely of participatory interests in a single portfolio of a collective investment scheme. A fund of funds unit trust invests only in other collective investment schemes, which may levy their own charges. Certain funds may be capped to be managed in accordance with their mandates. is a member of the Association for Savings and Investment SA. Source: Morningstar. The performance is calculated on a NAV-NAV basis and does not take any initial fees into account. Income is reinvested on the ex-dividend date. Actual investment performance will differ based on the initial fees applicable, the actual investment date and the date of reinvestment of income. The trademarks Research Affiliates, amental Index, amentals Weighted and RAFI are the exclusive intellectual property of and are being used under licence with Research Affiliates, LLC. Any use of these trade names and logos without the prior written permission of Research Affiliates, LLC is expressly prohibited. amental Index, the non-capitalisation method of creating and weighting an index of securities, is the patent-pending property of Research Affiliates, LLC (Patent Pending. Publ. Nos. US A1, US A1, US A1, US A1, WO 2005/076812, WO 2007/ A2 and EPN ).