INVESTMENTS PPS Retirement and Savings Products
Professional Provident Society Investments (PPS Investments) is a stand-alone business formed with the specific single purpose of providing enhanced investment services to members of the Professional Provident Society (PPS) Limited. Our majority shareholder, PPS Insurance has provided a committed service to professionals for more than 65 years and is dedicated to continually developing new solutions to meet members requirements. In a market flooded with investment services, products and advice, PPS researched and assessed the potential for the creation of investment services specific to the changing needs of its members. Through a productive and successful relationship over a number of years with Coronation Fund Managers, PPS and Coronation combined their respective areas of expertise in 2007 to form PPS Investments. PPS Trusted provider of risk benefi ts to professionals since 1941 The largest multi-disciplinary group of graduate professionals in the world Comprehensive range of risk cover and healthcare solutions PPS 51% Investments 49% Coronation Fund Managers Founded in 1993 One of the country s most successful fund management companies Focussed on excellence of investment performance, client service and creation of innovative products At PPS Investments, our purpose is to provide members with an investment product offering that is transparent, flexible and cost-effective. OUR INVESTMENT APPROACH To provide optimal fi nancial solutions for our members, PPS Investments presents members with a variety of investment products that are linked to unit trusts managed by PPS Multi-Managers and other top fund managers. Through PPS Multi-Managers, we have developed a suite of multi-managed unit trusts to meet the demanding professional s investment planning needs. We have appointed leading fund managers, with proven track records to manage assets according to the specifi c requirements and mandates of the PPS multi-managed unit trusts. To further enhance our offering to members, we provide you with the ability to invest in some of the country s premier unit trusts through the PPS Preferred Funds platform. This platform provides a convenient way for members to access a one-stop shop of unit trust funds. 1
STRATEGY By selecting a range of PPS Preferred Funds, we have simplifi ed your decision-making process which would otherwise be unnecessarily complicated by the perplexing array of funds in the market. We have clearly classifi ed our products into single-manager, market-linked and infl ation-linked groups, allowing us to carefully combine fund managers with specifi cally mandated portfolios. PHILOSOPHY Ensuring the investment integrity of the PPS Investments product range is our most important objective. The clearly defi ned ethical standards followed by our investment team and Investment Policy Committee incorporate the CFA Institute s Code of Ethics and Standards of Practice. Our investment philosophy assumes a holistic view of the factors that inform portfolio construction decisions from expected returns and risks, to allowing for realworld limitations like tax, costs and regulatory constraints. Our philosophy is further underpinned by our dedication to understanding fund managers qualitatively (their business, personnel and processes), and quantitatively (their performance, likely risks and sources of return). Thorough research enables us to appoint genuinely skilled managers for the long term. No single manager will be a top performer throughout entire market cycles. But, we do expect that regardless of market circumstances, our appointed managers will be true to their philosophies and processes which led to their appointment. There are fi ve key areas of the investment management process: Assessing clients investment requirements: We ensure that the investment objectives and benchmarks of each of our products are aligned to the investment objectives of our clients. Asset allocation: We carefully focus on ensuring that the broad strategic structure and allocation across different investment classes is appropriate to achieve the investment objective of each of the PPS multi-managed unit trusts. Investment strategy implementation: Implementing our investment strategies is achieved by appointing fund managers who we believe have genuine skill in the management of particular investment classes. Before we make such an appointment, we carefully research both the qualitative and quantitative aspects of the manager s offering. Ongoing manager assessment: Once we have appointed a particular fund manager, we evaluate all aspects of their investment management through performance analysis tools and face-to-face performance reviews. Investment performance reporting: We are committed to keeping our members informed of investment performance by means of regular reports that are clear and understandable, and explain the investment actions we have taken. Finally, consistent returns are paramount. Frequent, small outperformances of benchmarks are preferred to occasional shoot-the-lights-out results. A steadier stream of returns is more likely to deliver on investment objectives over appropriate periods of time. 2
INVESTMENT POLICY COMMITTEE Our investment management function is undertaken by our team of investment analysts together with our Investment Policy Committee appointed by PPS nvestment s board of directors. The independent members of the committee are Cyril Ginsburg (chairman), James Downie and Ebrahim Moolla. They are joined by PPS Investments chief executive offi cer, Nick Battersby and chief investment offi cer, David Green. The Investment Policy Committee s task is to ensure strict adherence to our investment philosophy and to ensure that decisions are implemented according to the investment process. The committee s members have been appointed because of their extensive knowledge and experience in asset consulting, investment management and governance. CYRIL GINSBURG INVESTMENT POLICY COMMITTEE CHAIRMAN (INDEPENDENT) Cyril Ginsburg is managing director of Ginsburg Asset Consulting (Pty) Limited which provides investment advice to a selection of major pension funds. He is also a director of Stenham Advisors (Pty) Limited, a subsidiary of Stenham plc which provides investment advice to high net-worth individuals and trusts. Cyril was previously chief executive offi cer of Ginsburg Malan and Carsons Consultants and Actuaries, and was a pioneer of multi-management in South Africa when he launched Superfl ex, South Africa s fi rst multi-manager investment business in the early 1990 s. EBRAHIM MOOLLA INVESTMENT POLICY COMMITTEE MEMBER (INDEPENDENT) Ebrahim Moolla is a practising attorney who has served periods as an acting judge of the High Court of South Africa. He is the chairman of PPS Investments as well as deputy chairman of PPS Limited, and has served on both the remuneration and the risk and audit committees of PPS. He has published widely in legal journals and has a keen interest in corporate governance issues. 3
JAMES DOWNIE INVESTMENT POLICY COMMITTEE MEMBER (INDEPENDENT) James Downie is a professional retirement fund trustee, asset consultant to large pension funds, asset manager and creator of fi nancial services websites. He is director of Assetbase International, an independent service provider to stakeholders in the investment industry. He is the author of Essentials of retirement fund management in Southern Africa. James holds a bachelors degree in mathematics and statistics and an MBA which he completed at the University of Cape Town s Graduate School of Business. He is also a certifi ed fi nancial planner. NICK BATTERSBY INVESTMENT POLICY COMMITTEE MEMBER CHIEF EXECUTIVE OFFICER OF PPS INVESTMENTS The appointment of Nick Battersby as chief executive offi cer follows his key involvement in the creation of PPS Investments. Prior to taking on his current role, Nick was head of operations for both personal investments and asset management operations at Coronation Fund Managers. In this latter role, he was responsible for numerous core operational functions, as well as being a member of Coronation s executive management team. He was responsible for bringing Coronation s range of retirement and savings products to market in 2005. Nick holds an MBA, a BCom honours degree, and a mechanical engineering degree, all from the University of Cape Town. He is also a certifi ed fi nancial planner. DAVID GREEN INVESTMENT POLICY COMMITTEE MEMBER CHIEF INVESTMENT OFFICER OF PPS INVESTMENTS David Green joins PPS Investments as chief investment offi cer after several years as head of research and investment management at acsis Limited (formerly ipac South Africa (Pty) Limited) and consulting to other fi nancial services businesses His wide-ranging academic and professional background and extensive experience in developing targeted investment strategies, determining optimal investment combinations, conducting in-depth asset manager research and building performance monitoring systems equip him to take charge of the business s investment strategies and processes, and to head up our team of investment analysts. David holds a bachelors degree in psychology, an LLB, an MBA from the University of Cape Town s Graduate School of Business focusing on investment management, and the globally recognised chartered fi nancial analyst designation from the CFA Institute. 4
PPS RETIREMENT AND SAVINGS PRODUCTS These products are available exclusively to you as a PPS member, to assist you in building retirement capital, providing post-retirement income and for any other important savings and investment objectives that you may have. The products are strikingly simple and uncomplicated. You will choose underlying investments from a range of daily priced unit trusts, which ensures that you are always able to obtain current investment valuations. You have the freedom to manage your investment by switching between unit trusts without limitation or punitive costs. Our product fees are refreshingly clear, transparent and competitive. PPS Personal Pension The PPS Personal Pension is an individual pension fund which allows you to take charge of planning for your post-retirement fi nancial security. It provides an ideal way for you to build retirement capital while remaining completely in control of your investment, within a structured and tax-effi cient framework. The fl exible design of the PPS Personal Pension is particularly suited to members who are self-employed or who have irregular earning patterns, as you are able to stop, reduce and resume contributions into your fund at any time without incurring any fi nancial penalties. PPS Preservation Funds The PPS Preservation Funds are pre-retirement products which are structured to preserve your retirement capital once you have left either a pension or provident fund and are particularly benefi cial to members who have changed employment as a result of retrenchment, resignation or the closing of an occupational retirement fund. You may transfer to a preservation pension or provident fund without paying tax at transfer, which means you are able to delay your tax liability until retirement. Preserving the tax status of an investment in this way has the effect of maximising the tax-free lump sum available and translates into higher investment returns. PPS Living Annuity The PPS Living Annuity provides income after you have retired from a retirement annuity, pension, provident or preservation fund. An appropriate investment portfolio can be created from the PPS Preferred Funds range of unit trusts. The PPS Living Annuity is designed to allow you the fl exibility to change your level of post-retirement income and/or switch between investment options as circumstances change without incurring any penalties. PPS Endowment Plan The PPS Endowment Plan is a tax-effi cient investment vehicle which is structured with the creation of long-term wealth in mind. It is most suitable for investors with a marginal tax rate greater than 30% and a minimum investment time horizon of fi ve years. The PPS Endowment Plan offers a simple and transparent cost structure and allows you unlimited fl exibility in changing your underlying investments as well as in managing the timing of investments into the fund. Minimum Investment Products Debit order Lump sum investment Ad-hoc contribution PPS Personal Pension R500 p.m.* R10 000 R5 000 PPS Preservation Funds n/a R50 000 n/a PPS Living Annuity n/a R100 000 n/a PPS Endowment Plan Discretionary Unit Trust Investment R500 p.m.* R10 000 R5 000 R500 p.m.* R2 000 R500 * The minimum recurring debit order amount for a student member is R200 per month, which will escalate to the normal minimum of R500 per month on qualifi cation. 5
PPS PREFERRED FUNDS Whether investing in one of the PPS retirement and savings products or simply into one of the available unit trusts, the ultimate decision of which unit trust to invest in will have a significant impact on the future value of your investment. To ensure that you are provided with an appropriate and well-structured range of options, PPS Investments provides you with the PPS Preferred Funds range. Within this range we offer a suite of multi-managed funds through PPS Multi-Managers and a range of single-manager unit trusts managed by a selection of leading unit trusts management companies. PPS MULTI-MANAGED UNIT TRUST FUNDS Once you have familiarised yourself with the products offered by PPS Investments, you can begin planning your investment portfolio. We have simplifi ed this process by designing our range of multi-managed unit trust funds from which to choose. We believe that these funds should form the basis of your portfolio and have been designed to assist you in putting together a plan that meets your investment requirements. At the core of our range are three risk-profi led funds. These funds are managed with the objective of delivering a spectrum of real returns (returns in excess of infl ation) over specifi c investment periods. As such these funds can be extremely effective when constructing individual investment plans. The three funds in this range are the PPS Conservative Fund, the PPS Moderate Fund and the PPS Managed Flexible Fund. PPS Conservative Fund The investment objective is to maximise total portfolio return while outperforming a conservative real return target of CPIX (Consumer Price Index) +2% per annum over the medium term. The manager employs real return strategies to provide real capital growth. Flexible asset allocation provides diversifi cation across all asset classes and sectors, with equity exposure limited to not more than 40% of the portfolio value. The fund suits investors with long-term savings or retirement objectives and a medium-term time horizon, and those who have a conservative, real return requirement. PPS Moderate Fund The investment objective is to maximise total portfolio return while outperforming a moderate real return target of CPIX (Consumer Price Index) +4% per annum, over the medium term. The manager employs real return strategies to achieve real capital growth. Asset allocation is fl exible and provides diversifi cation across all asset classes and sectors, with equity exposure limited to not more than 65% of the portfolio value. The fund suits those who desire moderate, real returns over a mediumterm time horizon or those who have long-term savings or retirement objectives. PPS Managed Flexible Fund The investment objective is to maximise total portfolio return while outperforming an aggressive real return target of CPIX (Consumer Price Index) + 6% per annum over the long term. The manager employs real return strategies, combining fl exible asset allocation with valuebased security selection processes to meet the benchmark. The fund is most suitable for investors who have a more aggressive outlook, a longer time horizon, a high real return requirement, and long-term savings or retirement objectives. In addition to these core risk profi led funds, we offer a set of market-linked unit trusts providing members with investment exposure to specifi c asset classes. These funds are the PPS Enhanced Cash Fund, the PPS Flexible Income Fund and the PPS Equity Fund. 6
PPS Enhanced Cash Fund The investment objective is to provide an enhanced level of income in excess of a broad, short-term, fi xed interest benchmark. Consequently, the manager is allowed to invest in a broader range of interest-bearing instruments than traditional money market funds. The fund suits individuals who are looking for income generation, capital preservation, security from equity market volatility, and short-term parking for funds while phasing in or out of other funds. PPS Flexible Income Fund The investment objective is to provide a total return with a strong income bias in excess of a broad, fi xed interest market index, as well as some capital growth. To achieve the objective, the fund has a fl exible mandate to enable active management without prescribed maturity limits. Asset allocation is defensive with exposure to fi xed interest instruments, including high yielding, corporate bonds and securities, government bonds, preference shares, and infl ation-linked bonds. The fund suits investors who seek a regular income stream but are risk averse and who appreciate managed exposure to income-generation opportunities. PPS Equity Fund The investment objective is to provide long-term capital growth that exceeds that provided by a broad equity market index. Defi nitely the most aggressive of the funds offered, the manager actively manages exposures to domestically listed equities to deliver solid, long-term performance. The fund suits investors who have a longterm savings objective with little requirement for income, and who are able to tolerate short-term volatility. SINGLE-MANAGER UNIT TRUST FUNDS In addition to the range of multi-managed unit trusts brought to you by PPS Multi-Managers; we have also made available a selected suite of single-manager funds that are managed by other asset managers. These are made available through the PPS Preferred Funds platform. Our Investment Policy Committee oversees the selection of single-manager unit trust funds for the PPS Preferred Funds platform. In doing so, we have assembled a focussed range of funds from recognised unit trust management companies. The committee will continuously monitor the funds that have been included as well as those that have not, with a view to ensuring that the PPS Preferred Funds platform continues to provide you with access to an appropriately sized range of well managed funds provided by fund managers that we have thoroughly researched and appointed. Whether investing directly into the PPS Preferred Funds range of unit trust funds, or through the structure of one of the PPS retirement and savings products, you have the ability to select funds from within the multi-managed and single-managed ranges and can blend the funds to meet your investment requirements. 7
PPS PRODUCT FEES Initial fees We do not charge an initial fee on amounts invested in any of the PPS retirement and savings products or on any of the PPS multi-managed unit trusts that you select as investment options. Should you, however, choose to invest with one of the underlying single fund managers, an initial fee of 0.25% excluding VAT may be charged. Annual fees When you invest in the PPS retirement and savings products your investment will be subject to annual unit trust management fees and an annual administration fee. Both of these fees are fully disclosed to you on the investment option schedule. The annual management fee of the unit trusts that you have selected will be charged by the fund manager, and will be refl ected in the daily price of the unit trusts in which you have invested. An annual administration fee will be charged by PPS Investments which is calculated as 0.7% per annum excluding VAT (0.8% including VAT) for all investments across our range of products. Depending on which of the underlying unit trusts you have chosen to invest in, this fee may be reduced to as little as ZERO due to partnership savings that are received from the managers of the unit trusts and which it passes on in full to you. By way of example, when you invest in any of the unit trusts managed by PPS Multi-Managers, the partnership saving provided by PPS Multi-Managers is equivalent to the administration fee thereby removing the administration fee entirely. Details of the annual management fees of each of the available unit trusts and the currently applicable negotiated partnership savings are included on the respective product application forms. Early Maturity and Withdrawal No fees are levied for either of these events. Switching Although we would caution against frequent changes to the composition of your investment, there are no restrictions applied to the number of switches that you can make between funds. We do not levy a charge for processing such switches, and the only cost that you may incur would be initial fees charged by some of the managers of the single-manager funds when you invest in their funds. FINANCIAL ADVICE The decisions you make when investing in the PPS range of retirement and savings products are extremely important in terms of your personal fi nancial planning. Selecting the appropriate product and the most suitable underlying investment options from those provided by PPS Investments is a crucial decision and your choice can signifi cantly impact your ability to meet your lifestyle requirements. We therefore recommend that if you are at all uncertain of any aspect of your available choices, you should consult a licensed fi nancial advisor. Financial advice fees are payable upon agreement between yourself and your appointed advisor. PPS Investments will facilitate payment of advice fees upon instruction from you in terms of that agreement and will fully disclose these fees to you in your regular investment statement. For investments with PPS Investments, fi n- ancial advice fees are limited to: Initial advice fee Initial advice fees for the PPS retirement and savings products are defi ned as follows: PPS Personal Pension PPS Preservation Funds PPS Endowment Plan PPS Living Annuity Ongoing advice fee Ongoing advice fees for the PPS retirement and savings products are defi ned as follows, relative to the agreed initial advice fee: Initial fee 1.5% excl. VAT 0-3% excl. VAT 0-3% excl. VAT 0-3.42% incl. VAT 0-1.71% incl. VAT Initial fee > 1.5% excl. VAT PPS Personal Pension 0-1% excl. VAT 0-0.5% excl. VAT PPS Preservation Funds 0-1% excl. VAT 0-0.5% excl. VAT PPS Endowment Plan 0-1.14% incl. VAT 0-0.57% incl. VAT PPS Living Annuity 0-0.57% incl. VAT 0-0.57% incl. VAT For investments made directly into unit trusts within the PPS Preferred Funds range, maximum initial and ongoing advice fees are specifi ed in the respective unit trust fund fact sheets. 8
Communication and access to information We ve made it possible for you to access your latest PPS retirement and savings portfolio information through a number of easily accessible channels. Our dedicated client service team is available between 07h30 and 17h30, Monday to Friday and may be reached on 0860 468 777. In addition to providing you with access to our team of consultants, this telephone number also provides a convenient way of requesting investment portfolio and transaction details, application forms and statements via an interactive voice facility that will guide through a few simple steps to have your information faxed or emailed to you. This service is available 24 hours a day, 7 days a week. We also provide an easy to use secure online facility which allows you access to view and to manage your portfolio as a registered user of our website, www.ppsinvestments.co.za. Current functionality includes facilities to view investment portfolio details, draw statements, update personal details and perform various transactions, including purchases and switches. You can also link all of your separate PPS Investments accounts to have a consolidated online view. DISCLAIMER: The information, opinions and any communication from PPS Investments, whether written, oral or implied are expressed in good faith and not intended as investment advice, neither does it constitute an offer or solicitation in any manner. Furthermore, all information provided is of a general nature with no regard to the specifi c investment objectives, fi nancial situation or particular needs of any person. It is recommended that investors fi rst obtain appropriate legal, tax, investment or other professional advice prior to acting upon such information.
Client Service Centre Sharecall: 0860 468 777 (0860 INV PPS) Email: clientservices@ppsinvestments.co.za Fax: (021) 680 3680 www.ppsinvestments.co.za Professional Provident Society Investments Reg. No. 2005/029098/07 PPS Investments 0507