• Madam Chairman,
• Directors of the Corporation,
• Representative of the Auditor General,
• Specially Invited Guests,
• Our valued unitholders,
• Members of the Executive Team,
• Management and Staff of the Corporation, Representatives of the Media,
• Ladies and gentlemen, a special good afternoon.

This afternoon I join the Chairman in extending a warm welcome to all gathered here as well as those listening on the nation’s airwaves and those joining us via the internet. We are delighted to have you join us at this, the 30th Annual General Meeting of the Trinidad and Tobago Unit Trust Corporation, and, our 30th Anniversary Celebrations which are ongoing. I trust that you will enjoy the tokens we handed out this afternoon.

2012 marks three decades of operations for us at the Corporation, another milestone achievement of which we are extremely proud. We are happy to report that in those 30 years of operations we have achieved our mandate. Our mandate required us to provide a platform through which the average citizen of this country could access the local and capital markets. Today at the Corporation alone more than 500,000 unitholders take full advantage of the collective investment schemes which afforded them access to local and international money and capital markets.

We have come a long way from our humble beginnings in 1982 when our investment offering consisted only of the Growth & Income Fund. The fund-size of which was reported to be TT$42.05 million at the end of that year. Today, some 30 years later, we are proud to offer the investing public a suite of ten mutual funds thereby providing the unitholder with greater options. As at March 31, 2012, the aggregate sum invested in the unit schemes and mutual funds at the Corporation stood at of TT$18.73 billion.

We have been able to attract in excess of 550,000 customers who as at March 31, 2012, access our products and services through a total of 789,134 accounts. These are but some of the significant achievements that we are proud to celebrate today with our unitholders and the investing public.

In my presentation this afternoon I would like to underscore some of the areas covered in the letter to unitholders contained in our 2011 Annual Report. The contents of the annual report have also been published in the daily newspapers and are posted on the Corporation’s website for ease of access.

First, I will examine the Corporation’s performance as an entity in its own right; then I will review the Funds’ performance in 2011 against the backdrop of the economic and financial market conditions described earlier by our Chairman. Thereafter, I will provide an update on the key strategic initiatives which we have embarked upon in our bid to reposition the Corporation for another phase of growth with particular emphasis on improving the financial well being of the citizens of Trinidad and Tobago. In closing, I will share with you our outlook for 2012 as well as the Funds’ year-to-date investment performance to April 30, 2012.

UTC’S 2011 FINANCIAL PERFORMANCE

Despite the prevailing challenges in the economic environment and the volatility and underperformance which characterised most financial markets in 2011, the Corporation’s overall outturn for the year just ended was favourable. That conclusion is supported by the following:

• Total Funds Under Management increased by 3.1% from TT$20.8 billion to TT$21.53 billion.
• Net capital inflows for 2011 amounted to TT$569 million compared to negative net capital outflows of TT$1 billion in 2010.
• Investment income earned by the unit schemes and mutual funds, declined by 11.16% from $784.86 million to $697.27 million. This was due to the ultra low interest rates in the domestic and developed financial markets.
• Total expenses decreased by 41.67% from TT$421.56 million in 2010 to TT$180.3 million in 2011. Impairment charges of $245.90 million, relating mainly to Merchant Banking activities, were recognized as expenses in 2010.
• Total distribution payments to unitholders increased by 6.23% from $334.1 million to $354.9 million year on year.
• The total number of registered unitholders increased by 3.5% year on year from 518,334 to 546,820 while the number of accounts grew by 2.39% from 765,818 to 784,107.
• The Corporation’s retained earnings grew by 9.95% from TT$704.6 million in 2010 to TT$774.8 million in 2011.

Ladies and gentlemen, our enabling legislation does not give the Corporation powers to raise capital. As such, the TT$70.2 million growth in the retained earnings is very significant for us as it is the only source of capital available to the Corporation.

FUNDS’ PERFORMANCE 2011

I turn now to the funds’ performance in 2011. Permit me at the outset to mention that the full narratives on the performance of all of the funds are included in our Annual Report. I will therefore restrict my comments this afternoon to some of the more salient features of our funds’ performance.

In 2011 the investment professionals had to contend with international economic slowdown and mounting challenges in the domestic money and capital markets. In Trinidad and Tobago investors were faced with high liquidity, weak credit demand, exceedingly low interest rates and deteriorating credit quality

In 2011, the Corporation’s four (4) Unit Schemes namely the TTD Income Fund, the USD Income fund, the Growth and Income fund and the Universal Retirement Fund all posted positive returns of 1.88%, 1.69%, 7.58% and 10.27% respectively.

With respect to the TTD Income Fund and the USD Income Fund which posted returns below 2% the true measure of their performance could only be appreciated when one considers that interest rates across the maturity spectrum which collapsed in 2009 continued to decline throughout 2011 and closed the year at historically low levels.

This is evidenced by the decline in the yield on the TT 3-month treasury bill which decreased by 5.70% in 2009 from 7.06% in 2008 and continued to trend down in 2010. In Trinidad and Tobago 3-month treasury bills fell further in 2011 down by 9 basis points from 0.37% at the end of 2010 to 0.28%. Similarly, the yield on the Government of Trinidad & Tobago 5-year Bonds declined 50 basis points from 4.04% at the end of 2010 to 3.54% by the end of 2011.

Owing to the paucity of investment opportunities in the money and capital markets over 50% of the assets held by the fixed income portfolios are in cash and near cash instruments. Going forward, given the high cash and near cash balances the funds will be able to capitalize on any increases in interest rates

In 2011, the regional and domestic stock market were among the best performing stock markets in the world. As a consequence, both the Growth and Income Fund net return to unitholders of 7.58% and the URF 10.27% net return to unitholders benefitted from the regional and domestic stock market performance.

The Corporation’s other six mutual funds, namely the UTC Energy Fund, North American Fund, Asia Pacific Fund, European Fund, Global Bond Fund and Latin American Fund all posted negative returns to investors.

Comparatively, the various stock market indices for the different regions and/or sectors in which these funds were invested posted negative returns for 2011. This was primarily as a result of the European Sovereign Debt Crisis and its contagion effect on Asia, Latin America and North America.

Notwithstanding the 2011 performance of these funds, we are resolved to continue to employ best efforts to turn things around in 2012.

UPDATE ON STRATEGIC INITIATIVES

In my 2010 Letter to the unitholders, I drew your attention to the fact that the Corporation had developed and adopted a Strategic Plan for the period 2011-2015 which embodied the following strategic objectives:

• Financial Restructuring;
• Improved Efficiency and Corporate Governance;
• Reputational Enhancement; and
• Enhanced Customer Relations

Today I am happy to report that implementation is proceeding well on all fronts and the Corporation has started to benefit from the positive impact of these initiatives. Permit me at this juncture to expand briefly on each of them:

Financial Restructuring:

During 2011, the Corporation successfully disposed of the assets previously held by its Merchant Banking operations and closed its subsidiary in Belize. Further, the Corporation undertook and successfully implemented a series of measures aimed at cost reduction.

Efficiency and Corporate Governance

With respect to Efficiency and Corporate Governance, the UTC Act is currently under review at the highest level in order to ensure compliance with international best practice and the SEC’s Guidelines governing the operations of mutual funds.

Consistent with our renewed focus on efficiency a Business Systems Unit was created in 2011. The main responsibility of that unit is to build a capability to facilitate continuous re-engineering of our business processes, thereby ensuring that our operations are efficient and cost effective. Our objective is to take the cost out of the business so that we will be able to distribute to unitholders an increasingly large share of the income earned by the funds.

Reputational Enhancement

We at the UTC have made it a key strategic objective to conscientiously protect and enhance the Corporation’s reputation in all that we do. Towards this end, we have embarked on a series of town-hall staff meetings, crisis management training and we have identified and trained a number of spokes-persons from within the organization who will speak on behalf of the Corporation at different fora.

Refocus on the Customer:

At the Corporation the ultimate aim of all of our strategic initiatives is to better serve our customers. Toward meeting that goal in 2011 we conducted a Financial Well-Being Survey which had the customer as its sole focus. The results of that survey will enable us to create the next generation of products and services and position the Corporation to better meet the needs of existing and potential clients.

In 2011, the Corporation also hosted a two-day Investment Conference entitled ¡§Reset your Investment Strategy for Growth.¡¨ Gauging from the feedback received it was a resounding success as it fulfilled an unmet need of many of our customers. We have every confidence that the cross-fertilization of ideas facilitated by that conference would bear good fruit.

GLOBAL OUTLOOK FOR 2012

I will now examine the expected 2012 investment environment. According to the IMF, the global economy is projected to grow by 3.5% in 2012 with growth in Emerging Markets and Developing Economies forecast at 5.7% compared to 1.4% in Advanced Economies. Headline inflation is expected to average 1.9% in the developed economies and 6.2% in the emerging markets and developing economies. Oil prices are generally expected to average US$110 per barrel.

US Outlook

In the US the economic outlook is for growth of 2 to 2.5%. This level of growth will be facilitated by continued accommodative monetary policy given the Federal Reserve willingness to keep interest rates low through quantitative easing.

Equities in the US are relatively cheap with price to earnings ratio of 13 times versus historical 5-year average of 16 times. Also the average dividend yields of 2% on the S&P 500 index may draw investors to US equities. Given these projections US equities are expected to out-perform in 2012.

Euro Zone Outlook

On the other side of the Atlantic, Europe is expected to enter a mild recession with real GDP contracting by 0.25%. Already the UK and Spanish economy are experiencing a double dip recession that is a recession followed by a short-lived recovery, followed by another recession.

Europe’s expected economic under performance in 2012 is due to the sovereign debt crisis which has severely reduced the fiscal flexibility of several European government and resulted in rising borrowing cost, austerity measures and exceedingly high unemployment.

The European Central Bank has been providing liquidity to the region’s banking system to contain the crisis. However, structural reforms at national level and better co-ordinated fiscal policies are both urgently required to reverse the current economic trend in Europe, which comprises several of the large economies in the world.

Asian Outlook

In Asia, economic growth is expected to average 7.3% in 2012. Growth in Asia is being facilitated by domestic demand and South South trade which is growing in importance. This mix varies from country to country. In 2012, China and India are expected to grow at a rate of 8.2% and 6.9% respectively. Whereas Japan, South Korea, Indonesia and Taiwan are expected to grow 2.0%, 3.3%, 6.3% and 3.7% respectively.

Latin American Outlook

Latin America is projected to grow 3.7%. The Latin American economies will continue to be driven by strong domestic demand. The European recession is expected to impact exports negatively. Central Banks in Latin America are adequately positioned to adopt more accommodative monetary policy measures. Likewise the governments in Latin America have fiscal flexibility which affords them greater opportunity to adopt measures to impact economic activity positively.

Caribbean Outlook

In the Caribbean growth is forecast to be moderate at 3.7% for 2012. Tourism and foreign direct investment may be negatively impacted by the slow-downs in the US and Europe.

Caribbean governments will be severely constrained as most countries are burdened with high public debt and lack adequate fiscal space to provide meaningful stimulus internally.

Trinidad & Tobago Outlook

At home, in 2012 the Trinidad and Tobago economy is projected to grow 1.5%. Renewed exploratory activity and new capital investments in the energy sector are expected to be the main growth drivers.

LNG and petrochemical production are expected o normalize. LNG revenues are likely to surpass the 2011 average well-head natural gas price of US$3.00 per MMBtu. The non-energy sector is expected to improve mainly as a result of increased government capital investments.

UPDATE ON FUND PERFORMANCES FOR 2012

For 2012 thus far, the performance of our funds has been very encouraging. Some of the highlights are as follows:

• Net sales for the period January to March 2012 amounted to TT$190.1 million.
• Eight of our ten funds recorded growth in fund-size.

All of our funds posted positive YTD returns up to April 30, 2012.

All indications point towards another challenging year ahead. At the Corporation we pledge to remain vigilant and committed to the same prudential risk management philosophy and conservative investment principles that have enabled the Corporation to provide unitholders with safe, stable, and secure investments over the last thirty years.

I thank our Chairman and all the members of the board of directors for their leadership in steering the Corporation forward, and for their continuing support and guidance. To the members of the Executive and Management team and all our UTC staff members, I am especially grateful for your dedicated hard work over the past year and look forward to your continued efforts.

Finally, I sincerely thank all our loyal unitholders, for your continued patronage, and wish you all the very best for the rest of 2012. As we celebrate our thirty-year anniversary we will continue to engage you.

I thank you.

Welcome to you all.

On September 29 this year, the Trinidad and Tobago Unit Trust Corporation will celebrate its 30th Birthday. The UTC was met with deserved fanfare as a medium through which an individual investor with modest means could . through the pooling of resources in the mutual fund structure- participate in the investment process by which the economy is financed, and thereby participate in the gains that the economy produced. This was part of an economic strategy that began in the 1970s to modernise the financial infrastructure in the country and involve the general population in the process of economic development.

After just a few months of operation, the Assets of the Corporation on December 31 1982 totalled TT$ 42 million. History will show that the economy and the stock markets began a slow decline that eventually culminated in an adjustment program in 1989. Some of us will remember that, during this period, oil prices fell below US$10 a barrel.

The UTC has come a long way since those early beginnings. Today, the TTUTC manages Assets of TT$ 21.5 billion. There are 10 Funds under management, and over half a million unit holders who look to us to manage their savings.

I believe that we have truly transformed the investment environment in this country through the work that we have done in investor education. Many of the staff who are still with us remember long drives across the country to meet with small groups of people in many companies, credit unions, trade unions, schools and anyone who would have us to help them make sense of investment terms and negotiate the different financial options available. We are still doing that today, as we believe that information is key to making the choices that fit our own personal needs.

The competition for savings has increased tremendously as there are now a number of local competitors in the mutual fund market and those of you who are internet savvy can go directly to the world markets for mutual fund products. There have been periods of volatility during those 30 years, but the current market scenario is proving even more difficult.

Current Market Setting

• Activity in recent weeks continues to display the volatile nature of the markets, symptomatic of uneasiness about the level of debt of a number of European countries. You appreciate the extent of the globalisation when you recognise the reach of the debt problems in Europe through the re-action in all significant markets whenever unfavourable news is pending or is broadcast.
• The debt problem affects the scope of economies to finance growth, so that economic growth has been slow in the traditionally leading economies in North America and Europe and unemployment remains high.
• I mentioned in the published Annual Report that the newly emerging economies in Latin America, Africa and Asia, while continuing to grow at a relatively fast pace, do not yet displace the demand power of the traditionally strong economies and, because of the role of international trade in the growth in many of these economies, they will depend on revived demand from those export markets if they are to continue to grow at their recent pace. Growth in some of these newly emerging economies has therefore slowed.
• Because of the sheer size of the US stock markets and the global presence of many of the companies quoted there, the stock market indices in the US continue to maintain their role as an important benchmark. 2011 has certainly been a roller-coaster although over the calendar year the market did gain about 5.5 percent and, since the start of 2012, has been on an upward trend gaining about 8.8 percent, notwithstanding the fluctuations we have seen in recent days. Even today, a day after the elections in France and Greece, the market exhibited uncertainty but has returned to its opening levels of the day.
• The stock markets have provided positive returns but, because of volatility also comes at higher risk.

What of our own Markets

• 1. Domestic economy is still slow. Until the budgeted infrastructure projects make an impact, credit demand continues to be subdued and interest rates (those that matter to you as savers and investors) have been at truly historically low levels:
  • The 3 month Treasury Bill rate (the rate at which the Government Treasury can fund its short .term borrowing) fell to 0.04 percent in March, but has since risen to 0.10 percent in April. It was 0.28 percent in December 2011.
  • The typical savings deposit attracted an interest rate of 0.20 percent for most of 2011 and continues at this level today.
  • on the other hand this is good news for those borrowing to grow their business with commercial prime at 7.75 percent.
• 2. There is some comfort in other indicators:
  • The reported unemployment rate seems to be holding up well at about 5 ¨ö percent.
  • Core inflation is still moderate at 1.8 percent, although headline inflation year-on-year to April 2012 is somewhat higher than what it was a year ago (just over 9 percent), mainly due to domestic food prices.
  • The Government.s budget for 2011/12 has been based on fairly conservative prices for oil and gas – US$75 per barrel for oil and US$ 2.75 per mmbtu. Oil prices are in the vicinity of US$100 a barrel. Gas prices are much lower than in recent years as world supply continues to grow and is slightly below the Budgeted price as global supplies have been on the increase.

What about the Corporation

As we have mentioned in the Annual Report, the Corporation has re-examined its business strategy:

• It has disposed of its merchant banking assets and will exit the loan origination side, but we propose to continue to offer services in the securities trading.
• We have also closed the Belize operation primarily because of the small uneconomical size of the business there.
• We had adopted in 2011 a renewed focus on the customer and we are continuing on that path in the immediate future.
• And a resulting re-organization of staffing resources. Some separations are inevitable and sometimes painful when an organization re-structures its operations.

What you can expect in the coming year(s)

We conducted a Financial Well-being survey in 2011 to determine how we can add value to our clients, you the unit-holders. Our plan is therefore to work with our customers to improve their understanding of the options that are available and financial planning. This is an extension of our original objective of investor education. In this incarnation we will be offering wealth management services, to all our clients, big and small.

This current period of low interest rates has obviously put pressure on the returns that our customers enjoy. This is likely to continue for some time, both in the global and local markets. We know that this affects a large majority of our unit-holders. We know that you are wary of the relatively higher risk in the equity markets and many of you prefer the relative ¡°safety¡± and predictability of the fixed income markets. For our part, we at the UTC must raise our efficiency in how we produce those returns. I referred already of the re-structuring of the organization and our goal to reduce expenditure.

We are also improving our Technology infra-structure to be more responsive to our customer needs. Some of us are not comfortable with new technology, but as the young people will say ¡°we have to get with it¡±. We recognise the potential of the technology to reach untapped audiences. We are now actively using the social media sites like .facebook. and ¡°twitter¡±. We know that we must focus on our young people to convince them that they cannot wait until they are close to retirement to plan for retirement. This has to be a long term plan. This is where I hope our Wealth management advice can be productive.

To summarise:

• Global markets will continue to be difficult
• The low interest rate environment can also be expected to continue
• There will be opportunities for investors who are willing to take on risk in the equity markets
• The UTC is in the process of tackling its cost structure

In this presentation, I had not mentioned the promised amendments to the legislation. We have completed our initial review and the suggestions will make their way through the complex process attendant on making legislative changes.

While our Financial Reports may look a little different to conform with the Securities Industry Legislation, our relationship with is not expected to change.

As we move through our 30th year, you will hear more on how you can participate in our anniversary. Let me now thank all of you for making us the institution that we are today. The staff are also to be commended for continuing to live the original concept of building a shareholding democracy. This race is not done. It must continue.

]]> http://www.ttutc.com/media-centre/?feed=rss2&p=908 0 http://www.ttutc.com/media-centre/?p=893 http://www.ttutc.com/media-centre/?p=893#comments Wed, 18 Apr 2012 07:49:47 +0000 admin http://www.ttutc.com/media-centre/?p=893 The Unit Trust Corporation (UTC) recently conducted a Financial Wellbeing Survey to determine the attitudes and behaviors that lead to financial safety, security and health of Trinidadians and Tobagonians.

The survey, conducted between July 5-30, 2011 among 1,000 adult citizens, aged 18 and over, both in Trinidad and Tobago, was done in conjunction with KRC Research, based in Washington DC and Caribbean Market Research.

The objectives of the survey were to determine how citizens define financial wellbeing and to identify the indicators used to do so.

Of particular significance, the survey identified that the citizens of T&T are not a homogeneous group when it comes to financial wellbeing. Four distinct groups, defined by their current attitudes and practices toward their financial wellbeing, were identified :

• Financially Savvy who are the most informed when it comes to making financial decisions;
• Financially Striving who acknowledge that they need a better understanding of finance to reach their financial goals in life;
• Financially Struggling tend to view financial wellbeing as having enough to cover basic expenses and
• Financially Slow or disengaged who also view financial wellbeing as having enough to cover basic expenses but who spend more than they earn.

Together, three segments (Financially Savvy, Striving and Struggling) are most engaged in their financial wellbeing and account for a fairly sizeable 56 percent of the population.

In our last article we focused on the Financially Slow (you can click on the UTC Investment Column link on the website homepage to read). Today we will discuss the Financially Struggling. The Financially Struggling makes up 15% of the surveyed population.  The persons in this segment are more likely to be women and are most likely to report that they ‘don’t know’ what their monthly income is.  Their household fiscal management practices consists mainly of participating in Sou Sou (31%), paying off credit cards (2%), having a salary deductions or standing orders to pay bills (3%),  making investments or saving money (7%) and creating a budget (1%).

The Financially Struggling tend to view financial wellbeing as having enough to cover basic expenses. When they do manage to save, it is primarily for an emergency fund. The vast majority of these individuals (85%) never plan to meet with a financial planner.  However, this segment  is the most trusting of their financial institution, with 91 percent of them reporting that they turn to their banks for financial advice;  family and friends rank a distant second  at 54 percent.

CREATE A BUDGET
Financial wellbeing is, however not unattainable for the Financially Struggling.  For this segment, one important aspect of determining financial health and creating financial stability is creating and following a budget. Why does budgeting matter?  This will allow this segment to identify their income and expenditure on a monthly basis.  Money is a tool that enables you to reach your goals, but until you know where your money is spent and on what, you can’t use this tool effectively.

SET GOALS

Like the Financially Slow or Disengaged, another crucial step for the Financially Struggling to take to improve their financial health is to begin setting financial goals – short , medium, and long term goals.  As we discussed in our last column, (you can click on the UTC Investment Column link on the website homepage to read),  short-term goals are generally defined as those that may be achieved in two years or less, medium in three to five years and long term goals are over five years.  Not only does this help improve your financial outlook but it serves as an important guide that will allow you to identify what investment vehicle is best suited to help you to realize your goals.

DEVELOP A SAVINGS HABIT

Another strategy is to develop a regular, consistent and disciplined saving and investing habit. This could mean the difference between being always in financial distress and having some measure of financial security and wellbeing.

Having payroll deductions made into any of UTC’s funds, namely UTC Universal Retirement Fund or UTC TT $ Income Fund or Growth and Income Fund, can ignite the savings habit and create an investment mindset.  In this way, you assure yourself of having secure, stable and diversified investments.

Such actions can go a long way towards putting the Financially Struggling segment on the path to improving their financial health.  The rule of thumb is, it is not how much you earn but how much you keep from what you earn and what you do with it.

Do you have any questions or comments about this column? Are there any topics that you would like covered? Please email us at n@ttutc.com

]]> http://www.ttutc.com/media-centre/?feed=rss2&p=893 0 http://www.ttutc.com/media-centre/?p=875 http://www.ttutc.com/media-centre/?p=875#comments Tue, 17 Apr 2012 14:20:45 +0000 admin http://www.ttutc.com/media-centre/?p=875





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