2014 ABRIDGED ANNUAL REPORT OLD MUTUAL UNIT TRUST MANAGERS (RF) (PTY) LIMITED

Transcription

1 2014 ABRIDGED ANNUAL REPORT OLD MUTUAL UNIT TRUST MANAGERS (RF) (PTY) LIMITED

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 Managers (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 An action-packed start to 2015 Fall in oil price good for global economy Global economic growth remains positive, led by a resurgent United States. Europe s weak economy seems to be picking up some momentum, while Japan exited its fourth recession in seven years in the fourth quarter. Lower oil prices should be good for global economic growth, and will lead to much lower inflation. This will allow central banks to keep interest rates lower for longer. So far in 2015, we have seen several central banks cut interest rates, while the European Central Bank announced a massive bond-buying programme to stimulate its economy. Brighter outlook for local interest rates The implications of the sharply lower oil price came into focus over the past month as the oil price dropped further. Apart from a considerable saving for households and forecasts of sharply lower inflation into 2015, the foreign trade balance should also benefit, as oil imports account for about 9% of South Africa s total imports of goods and services. Looking forward, chances have improved that further interest rate increases (repeatedly stated as necessary by the South African Reserve Bank) will be postponed to 2016 (and may also be lower than expected). The decline of oil prices also has an undeniably positive effect on the global economy. From the United States to China, people are driving more and spending more, a much-needed economic boost in generally glum times. Load shedding hits economy As load shedding continues, even more worrying is the growing realisation that the electricity bind is going to constrain the economy for far longer than previously anticipated. Eskom indicated that even if the Medupi power station comes on line as planned, albeit more than two years later than originally scheduled, the electricity supply will remain restricted for at least another two years. This is because extensive maintenance is required at existing power stations and will have to be done as soon as Medupi s additional capacity becomes available. This again starkly highlighted the considerable constraint being placed on the economy not only dampening growth in the short term, but also acting as a serious constraint on the country s medium-term growth potential. As a result of this and other structural headwinds, both the South African Reserve Bank (SARB) and the International Monetary (IMF) now reckon economic growth in 2015 will be 2.2% instead of 2.5% as thought earlier, and 2016 growth 2.4% instead of 2.9%. This is far below the rate needed to absorb new entrants into the labour market, let alone making a dent in the already huge pool of unemployed people. A few things to keep in mind for investing in 2015 Stay diversified At Unit Trusts, we remain focused on offering you solutions which provide the benefits of diversification. Our strategy funds invest across different asset classes (bonds, equities, property and cash) and jurisdictions (local and offshore) making them the perfect solution to reach your investment goals over time. They also diversify within asset classes, so that the equity portion of the fund is spread over a range of shares, and the bonds portion could include government bonds, inflation-linked bonds and corporate bonds. If you diversify your portfolio, your investment performance should fluctuate less because losses from some investments are offset by gains in others. Therefore, you should have less risk than if you put all your money in one type of investment. Maintain a long-term view We also believe that you are more likely to achieve your goals through a long-term plan that you review regularly with your financial planner. It is important to stick to a long-term perspective, as too often we react on the normal ups and downs of the markets. Developments during the past year At Unit Trusts, we have worked hard to create a business that puts its clients first and provides superior products and services to the market. We are continually looking to the future, pursuing new ideas and projects that will transform us into the best financial services provider we can possibly be. Here s a snapshot of what Unit Trusts has achieved in 2014 and what we re continuing to work on: Change in fee basis We have reviewed the fee basis on our multi-asset class funds and decided to switch to a flat-fee basis from 1 January The new fee basis will give you more certainty when investing in our funds. 3

4 Awards Raging Bull awards Global Equity Raging Bull Award for: Top Performance by a Domestic Collective Investment Scheme for the three-year period ended 31 December 2014 for Best (SA-Domiciled) Global Equity General. Certificate Award for: Best Performance on the basis of Risk-adjusted Returns by a Domestic Collective Investment Scheme for the five-year period ended 31 December 2014, in the category (SA-Domiciled) Global Equity General. Special thanks I would like to take this opportunity to thank you, our clients, for your continuing trust and support. I appreciate your contribution and the commitment of our staff, management and Board of Directors. Let s work together to scale even greater heights in 2015! Peter de Beyer Chairman: Unit Trusts International Growth of s Certificate Awards for: Top Performance by a Domestic Collective Investment Scheme for the three-year period ended 31 December 2014, in the category (SA-Domiciled) Global Multi-Asset Flexible. Best Performance on the basis of Risk-adjusted Returns by a Domestic Collective Investment Scheme for the five-year period ended 31 December 2014, in the category (SA-Domiciled) Global Multi- Asset Flexible. Morningstar awards Global Equity won the Morningstar category award for the Best Risk-adjusted Performance within the Global Large-Cap Equity category, based on one-, three- and five-year performance periods to 31 December Introducing Tax-Free Investment (TFI) In an effort to further encourage personal savings in South Africa, Government introduced new tax-free savings accounts from 1 March All proceeds of investments through these accounts will be tax free in the hands of the individual, including dividends, capital gains and interest. We have created the Unit Trusts Tax-Free Investment, which takes into account all the regulatory and administrative requirements. This investment must be separate from an existing standard unit trust portfolio because of the different requirements. As from March 2015, clients can invest in this new product online or by calling our Customer Service Centre. What you can expect in 2015 There are a few new developments underway and you will receive fund specific information as they evolve. 4

5 Abridged FINANCIAL STATEMENTS AS AT 31 DECEMBER 2014 R 000 Balanced CLASSIC INVESTMENT COLLECTION FUNDS Enhanced Income Flexible Maximum Return of s 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 (14 059) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders Real Income Stable Growth Active Quant Equity Albaraka Balanced Albaraka Equity 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 Bond Capital Builder Dynamic Floor Financial Services Global Bond Feeder Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends (15) - Change in net assets attributable to unitholders Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders

6 Abridged FINANCIAL STATEMENTS AS AT 31 DECEMBER 2014 R 000 Global Currency Feeder Global Emerging Market Global Equity Global FTSE RAFI All World Index Feeder Gold 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 Growth High Yield Opportunity Income Industrial Interest Plus Net (loss)/income from operations before finance costs Total finance costs Distributions Withholding tax on foreign dividends Change in net assets attributable to unitholders (13 873) (1 158) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders International Growth of s Investors' Mining & Resources RAFI 40 Tracker SA Quoted Property Net (loss)/income from operations before finance costs ( ) Total finance costs Distributions Withholding tax on foreign dividends (169) Change in net assets attributable to unitholders ( ) Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders

7 Abridged FINANCIAL STATEMENTS AS AT 31 DECEMBER 2014 R 000 Small Companies Top 40 Old Mutual Top Companies 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 MULTI-MANAGER FUNDS SYm metry Balanced of s SYm metry Cautious of s SYm metry Defensive of s SYm metry Enhanced Income of s SYm metry Equity 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 Total assets Total liabilities, excluding net assets attributable to unitholders Net assets attributable to unitholders

8 Portfolio composition (%) AS AT 31 DECEMBER 2014 Cash and cash equivalents* Money market instruments Derivatives at fair value # Bonds Unit trusts Equity Local Foreign Local Foreign Balanced Enhanced Income Flexible Maximum Return of s Money Market Real Income Stable Growth Active Quant Equity Albaraka Balanced Albaraka Equity Bond Capital Builder Dynamic Floor 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' Mining & Resources RAFI 40 Tracker SA Quoted Property Small Companies Top Top Companies SYm metry Balanced of s SYm metry Cautious of s SYm metry Defensive of s SYm metry Enhanced Income of s SYm metry Equity 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 Enhanced Income Flexible Maximum Return of s Money Market Real Income Stable Growth Active Quant Equity Albaraka Balanced Albaraka Equity Bond Capital Builder Dynamic Floor 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' Mining & Resources RAFI 40 Tracker SA Quoted Property Small Companies Top Top Companies SYm metry Balanced of s SYm metry Cautious of s SYm metry Defensive of s SYm metry Enhanced Income of s SYm metry Equity of s

10 Income Distribution Per Unit (cents) AS AT 31 DECEMBER 2014 MARCH 2014 JUNE 2014 SEPTEMBER 2014 DECEMBER 2014 (Class A) (Class R) (Class A) (Class R) (Class A) (Class R) (Class A) (Class R) Balanced Enhanced Income Flexible Maximum Return of s Money Market Real Income Stable Growth Active Quant Equity Albaraka Balanced Albaraka Equity Bond Capital Builder Dynamic Floor 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' Mining & Resources RAFI 40 Tracker SA Quoted Property Small Companies Top Top Companies SYm metry Balanced of s SYm metry Cautious of s SYm metry Defensive of s SYm metry Enhanced Income of s SYm metry Equity of s

11 PRICE, Total Expense Ratio (TER) AND Performance Fee AS AT 31 DECEMBER 2014 Last published price Total Expense Ratio (TER) Performance Fee Component of TER (31/12/2014) Percentage per Class (%) % (Class A) (Class R) (Class A) (Class R) Balanced Enhanced Income N/A Flexible Maximum Return of s N/A Money Market N/A Real Income N/A Stable Growth Active Quant Equity Albaraka Balanced N/A Albaraka Equity N/A Bond N/A Capital Builder Dynamic Floor 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' Mining & Resources N/A RAFI 40 Tracker N/A SA Quoted Property N/A Small Companies N/A Top N/A Top Companies SYm metry Balanced of s N/A SYm metry Cautious of s N/A SYm metry Defensive of s N/A SYm metry Enhanced Income of s N/A SYm metry Equity of s N/A 11

12 Unit Trust Managers (RF) (Pty) Ltd Abridged Annual Report 2014 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 2014 to 31 December 2014 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 Scheme 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 Managers (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 SYm metry 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 ).