ABRIDGED ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2014

Transcription

1 ABRIDGED ANNUAL REPORT FOR THE YEAR ENDED 31 MARCH 2014

2 CONTENTS PAGE CHIEF EXECUTIVE OFFICER S REPORT 2 RETAIL CLASS UNITS 4 UNIT TRUSTS 5 FINANCIAL INFORMATION 10 TRUSTEES REPORT 11

3 Chief Executive Officer s Report It gives me great pleasure to report on the activities and results of the EMHPrescient Collective Investment Schemes for the year ended 31 March The annual financial statements have been audited by KPMG and we are delighted that both the auditors and the Trustees of the Scheme (Nedbank) have given the Scheme a clean bill of health. The information contained in this report relates to the financial year ended 31 March 2014 and thus does not reflect current market and fund performance. More up to date fund fact sheets that contain more detailed fund information and commentary are available on our website. Market Comment 31 March 2014 Global economic news remained mixed over the past year. Signs of recovery are evident in the US; however the Fed has indicated that they will maintain liquidity in the market. The US started tapering but has maintained a slow and steady pace with commentary indicating that this stance will continue for some time to come. The steady tapering has resulted in long-term bond yields remaining depressed, albeit off the lows. In South Africa, economic news has been poor, mainly affected by continued strikes in the gold and platinum sectors. Forecasters reduced expectations for South African growth and, combined with the increased ceiling on the Debt-to-GDP ratio announced in the budget, it fuelled fears of a rating and/or outlook down grade by the major rating agency, a fact that materialised following the year end. On the contrary, Fitch affirmed Namibia s long-term foreign and local currency issuer ratings at BBB- and BBB respectively. Continued stimulus resulted in global equity markets delivering strong returns over the past year with the MSCI World Index gaining 19.1%. In US dollar terms, the Eurostoxx 50 which rose by 33.3% was one of the stronger performers, gaining from both equity market as well as strong currency performance. The S&P 500 was up 21.9%, while the FTSE100 only gained 16.9%, mainly due to currency gains as the equity market delivered a lack luster 6.7% in Sterling. The Japanese market was the weakest over the year (+11.0%). Japanese economic data suggests a weak economy with the weak currency driving inflation higher, an outcome that many hoped to avoid with their aggressive quantitative easing (QE) program. In South Africa, the FTSE/JSE All Share Index (ALSI) gained 23.6% for the year, following on the gains of over 20% the previous year. Similar to the previous year, basic materials continued to lag, delivering 15.1% as the sectors plagued by the strikes did poorly. Gold mining, coal mining and platinum mining delivered minus 21.2%, minus 12.1% and plus 2.6% respectively.

4 Chief Executive Officer s Report (continued) The Banks all lagged the overall index over the year, with Barclays Africa being the poorest of the lot, delivering a negative return. The Rand / N$ depreciated by 14% relative to the dollar over the year and this buoyed rand hedge shares. Counters such as Richemont and Naspers faired extremely well, delivering more than 100% each. Another star performer was Telkom (+124%); this was in anticipation of a strong recovery off a very low base. The price earnings ratio of the ALSI was 17.1x at the end of March, above its long-term average. In Namibia, the NSX Overall Index returned % for the year under review, against % for the Local Index. The best performing share on the Overall Index in January was Namibia Asset Management at %, while B2Gold was the worst performer at -3.60%. The South African bond market reacted negatively in mid-2013 to the US tapering and the Fed s announcement that rates must normalise over the cycle. This saw longer dated bond yields move from 7.4% at the end of March last year to 8.23% at the end of December In early 2014, fears surrounding the fragile five, which includes South Africa, resulted in yields moving closer to 9% in January, before dropping back to 8.4% at the end of March. The 1% upward movement in yield resulted in capital losses for bond holders, which after including interest equates to a paltry total return of 0.6% on the All Bond Index. Following movements in the South African and most EM capital markets, Namibia government bonds were also under pressure in mid This saw longer dated bond yield GC27, which is benchmarked against R186, pushed over 9.75% level. Due to close ties between South African and Namibian economies, fears surrounding the fragile five also had a negative impact on the Namibia bond yields with GC27 breaking through the 9.8% level in January before stabilising down to around 9.4% in March. Volatility has been dropping in equity and currency markets around the globe reflecting that markets are pricing in good times. This is often a signal to be more cautious. Funds and assets under management EMHPrescient s first two unit trust funds, namely; the EMHPrescient Income Provider Fund and EMHPrescient Balanced QuantPlus Fund, were launched on 20 July In February 2013 the business launched the EMHPrescient Money Market Fund. All three funds are compliant with Regulation 28 of the Pension Funds Act. After March 2014 we launched another exciting addition to our range of funds, namely the EMHPrescient Diversified Income Fund that is now available to investors. Many thanks to our investors for their continued support. Melanie Allen Chief Executive Officer 25 August 2014

5 RETAIL CLASS UNITS Emhprescient Funds Annual Management Fee (excl vat) EMH Prescient Balanced QuantPlus Fund 1.00% EMH Prescient Income Provider Fund 0.65% EMH Prescient Money Market Fund 0.50% ABRIDGED ANNUAL REPORT 4

6 RETAIL CLASS UNITS (continued) Distributions EMHPrescient Funds Annual Distributions Fund Declaration date Cents per unit EMHPrescient Balanced QuantPlus Fund 1 April EMHPrescient Income Provider Fund 1 April Note: The EMHPrescient Money Market Fund distributes monthly. ABRIDGED ANNUAL REPORT 5

7 OUR UNIT TRUSTS EMHPrescient Funds EMHPrescient Balanced QuantPlus Fund EMHPrescient Income Provider Fund EMHPrescient Money Market Fund ABRIDGED ANNUAL REPORT 6

8 Emhprescient Balanced QuantPlus Fund Fund Information Fund manager Fund classification: Benchmark: Fund size: Guy Toms, Liang Du Domestic - Asset Allocation - Prudential Variable Equity Namibia CPI+3% N$10.7m Inception date: 17 July 2012 Risk profile Moderate Objective The Fund seeks to deliver real returns over the long term. In periods of rising markets, the Fund delivers as much upside as it can, while in periods of equity market crashes, the Fund has structures in place to cushion the impact, delivering steady, low volatility real returns. The Fund is Regulation 28 compliant. Asset Allocation Financials 12.77% Resources 7.84% Industrials 1.31% Specialist securities 12.97% Unit trusts 32.59% Cash 32.52% Performance Fund Benchmark 1 Year (p.a) 11.05% 8.59% Since inception (p.a.) 11.70% 9.05% ABRIDGED ANNUAL REPORT 7

9 Emhprescient Income Provider Fund Fund Information Fund manager Fund classification: Farzana Bayat, Kevin Dewar Namibian Domestic Fixed Interest Varied Specialist Benchmark: SteFi Call 110% Fund size: N$8.5m Inception date: 17 July 2012 Risk profile Moderately Conservative Objective The Fund aims to generate income and outperform the South African cash and short-term bond market through a full interest rate cycle. In addition, the Fund aims to provide some growth in capital. At least 35% of the Fund will be invested in Namibian assets. The Fund is Regulation 28 compliant. Asset Allocation Financials 1.61% Derivatives 0.09% Unit trusts 31.41% Bonds 7.71% Cash and money market instruments 59.18% Performance Fund Benchmark 1 Year (p.a) 7.66% 5.37% Since inception (p.a.) 7.33% 5.15% ABRIDGED ANNUAL REPORT 8

10 Emhprescient Money Market Fund Fund Information Fund manager Fund classification: Benchmark: Fund size: Farzana Bayat, Teresa Lu Money Market NAD/ZAR SteFi Call N$90.4m Inception date: 11 February 2013 Risk profile Conservative Objective The Fund aims to achieve returns above the benchmark (SteFi Call), while minimising the risk of any underperformance. At the same time, it aims to maintain capital stability and liquidity. This Fund complies with 35% domestic asset requirement as well as to Regulation 28. Asset Allocation Bonds 15.02% Cash and money market instruments 84.98% Performance Fund Benchmark 1 Year (p.a) 5.49% 4.76% Since inception (p.a.) 5.45% 4.73% ABRIDGED ANNUAL REPORT 9

11 Our Financial Information Statement of Financial Position Emhprescient Funds R'000 Assets EMHPrescient Balanced QuantPlus Fund EMHPrescient Income Provider Fund EMHPrescient Money Market Fund Securities at market value Other assets Total Total unitholder funds Total liabilities Total Net income Distributions Undistributed income at year end ABRIDGED ANNUAL REPORT 10

12 Trustees Report As a trustee for the EMHPrescient Unit Trust Ltd we confirm that the following funds established under this scheme, have complied with the requirements of the Unit Trust Control Act and applicable regulations. The scheme has been administered in accordance with the limitations imposed on the investment and borrowing powers of the manager by this Act and in accordance with the provisions of this Act and Trust Deed during the April 2013 to March 2014 period. There were no material instances of compliance contraventions and therefore no consequent losses incurred by the Portfolios in the year. Yours truly Hilda van Wyk Senior Manager Treasury Operations Christine Carstens Controller Treasury Operations ABRIDGED ANNUAL REPORT 11

13 Contact Information 18 Liliencron Street, The Village, Units PO Box Windhoek Namibia Tel: Fax: Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. CIS are traded at the ruling price and can engage scrip lending and borrowing up to 10% of the market value of the portfolio to bridge insufficient liquidity. A schedule of fees, charges and maximum commissions is available on request from Prescient Management Company Ltd. Commission and incentives may be paid and if so, would be included in the overall costs. Different classes of units may apply in a portfolio and are subject to different fees and charges. A fund of funds is a portfolio that invests in portfolios of collective investment schemes, which levy their own charges, which could result in a higher fee structure for these portfolios. 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. Forward pricing is used. Fluctuations or movements in exchange rates may cause the value of any underlying international investments to go up and down. CIS prices are calculated on a net asset basis, which is the total value of all the assets in the portfolio including any income accruals and less any permissible deductions (Brokerage, STT, VAT, Auditor s fees, Bank Charges, Trustee and Custodian fees and the annual Management fee) from the portfolio divided by the number of participatory interests (units) in issue. 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 TER's. DuringthephaseinperiodTER s do not include information gathered over a full year.