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May 28th, 2015

ED’s speech at 33rd Annual General Meeting





Thank you Master of Ceremony for your kind words of introduction. Mr. Wendell Mottley, Chairman of the Unit Trust Corporation, fellow Directors of the Trust, Representative of the Auditor General, Specially invited guests, Members of my Executive Team, Management and Staff of the Corporation, Unitholders, Representatives of the print and electronic media, ladies and gentlemen.

Consistent with the promise we made to take our Annual General Meeting to varied communities across the country, I bid a fond welcome to everyone from the Daaga Auditorium on the St. Augustine Campus of the University of the West Indies. This location is unique for many reasons. Not only is the St. Augustine campus a premier seat of learning and academic excellence and the largest of the three campuses of the UWI by student intake, it is also the Alma Mater for most of the UTC’s Leadership.  We must also note that this Daaga Auditorium, the venue for this evening’s meeting, pays tribute to Mr. Makandal Daaga, one of the most influential figures in domestic and regional social evolution in the late 20th century and whose legacy of social empowerment would have contributed to the seeds of the “shareholder democracy” philosophy which gave rise to the establishment of the Unit Trust in 1981. I am certainly delighted to be here today.

Following from our Chairman’s earlier address, my presentation will describe briefly the economic and financial market conditions which influenced our thinking and shaped our performance outcomes in 2014. Thereafter, I will touch on salient features of our Funds’ Performance, which were extensively addressed on pages 27 & 28 of the Annual Report. Finally, I will review our strategy achievements over the last planning cycle from 2011 – 2015 and share with you our approach to our “Strat Plan 2020” and our outlook for 2015. On completion, my hope is that there would be no doubt that the evolution of the TTUTC into a best in class, fit for purpose organization continues apace.

Economic and Financial Market Condition

The macro economic and financial market conditions which prevailed in 2014 were at best challenging. Capital Markets practitioners have had to adjust to the “new normal” which is characterized by anemic GDP growth, historically low interest rates and an increasingly rigid regulatory environment. In that regard, global GDP growth in 2014 is estimated to be of the order of 3.3%, with the USA leading the way among the developed economies with GDP growth of 2.4%, decline across much of Europe and Japan’s economy advancing by a mere 0.1%.

With respect to interest rates, although the US Federal Reserve ended its Quantitative Easing Program in 4th Quarter 2014, the influential Fed fund rate remained at 0.25%, while the European Central Bank has signaled its intention to deepen its accommodative monetary stance by embracing QE, in order to promote economic growth in the Euro zone. In these circumstances, interest rates which provides the “bread and butter” for our income funds remained at record lows and therefore continue to negatively impact the performance of our low risk income fund, which makes up approximately 69.5% of our funds under management.

Domestically our local economy continues to be characterized by high levels of liquidity; currently in excess of TT$ 3.09 billion which of course poses a significant challenge to TTUTC as the largest mutual fund manager in the local industry.

Despite the Central Bank of Trinidad & Tobago’s decision to raise its benchmark repo rate by 50 basis points to 3.25% in an effort to reduce inflation, and address the differential between the US and TT benchmark, interest rates generally remained low.

Indeed rates across the short-term interest rate spectrum, although increasing from the lows of 2013, remained depressed in 2014 and ranged from a low of 0.02%, 0.20% and 0.10% for 30, 60 and 90 day maturities respectively to a high of 0.07%, 0.20% and 0.25%.

Ladies and Gentlemen, with respect to equities, the situation in the US remained positive, the S&P 500 and the Dow Jones posted returns of 11.39% and 7.52% respectively, while the European based FTSE and CAC Indices provided negative returns of -2.7% and -0.5% respectively. Closer to home on the regional front, with the exception of Jamaica, all markets were in negative territory. The All Jamaican Composite posted positive returns of 3.0%. The T&T Composite posted -2.9% while its Barbadian counterpart returned -17.4%.

Ladies and Gentlemen, those were the Capital Market conditions in which our predominantly TT Dollar Funds operated in 2014. It should be therefore of little surprise that our North American Fund, which is entirely invested in the equity markets, was amongst the best performing funds in 2014.

Fund Performance

Funds under management increased marginally over the period 2013 to 2014 moving from TT$19.5 billion to TT$19.8 billion. Despite increasing fund size, we acknowledge that the local stock market contributed to a difficult environment for harvesting favorable returns and as such, the US equity market provided opportunities which allowed for the equity and balanced funds posting relatively modest positive performance results.

The size of the Growth and Income Fund increased to $4.7 billion up marginally by 5.6 % from $4.5 billion a year ago. This positive result was generated partly by capital appreciation and an additional TT$182 million in sales. The bid price appreciated from TT$16.78 to TT$16.99 over the course of the year and its cash distribution to Unitholders for 2014 was of the order of $16.5 million, providing a net return to Unitholders of 1.25%.

The UTC North American Fund fund-size grew by 16.4 % during 2014 and its Net Asset Value increased to US$11.77 per share, up from US$10.84 a year ago. The Fund produced a net return to investors of 8.58 % in 2014 compared to 14.68% for the prior year. This was predominantly due to a fall in net realized gains on equities and a decrease in generated interest income on the bond portfolio, due to the low interest rate environment in the US.

We continue to walk the tight line between taking decisions that provide competitive and attractive returns for our Unitholders and ensuring that the risks we take preserve the overall value of your investments. The TT Dollar Income Fund’s fund-size declined minimally by 1.76 % to TT $10.5 billion during 2014. The Fund distributed TT $99 million in 2014, down 20.8% from distributions of TT $125 million in 2013 and the net return to unitholders fell to 0.91 % in 2014, from 0.92% in 2013.

As at year-end 2014, the US Dollar Income Fund stood at US$635.6 million, which was up 3.9% from the 2013 fund size of US$611.5 million. The Fund enjoyed higher subscriptions than many of the other funds for 2014 and provided a stable and competitive return of 0.80% to Unitholders.

Some other highlights of our financial performance in fiscal 2014 were as follows:

  • The customer base of the TTUTC grew to roughly 586,000 Unitholders accounts reflecting a 1.8 percent increase on the 575,602 Unitholder accounts as at 2013.
  • Net Investment Income from Group Operations declined by TT$13 million or 36.08% to TT$23 million in 2014 which was in keeping with the trends mentioned previously, which have resulted in overall contractions in fee and interest income.
  • The Corporation’s Retained Income grew by 13.67 percent from TT$ 946 million to TT$1.076 billion and our total asset base remained relatively stable at TT $21.5 billion.
  • Total expenses from continuing operations (excluding finance charges, guarantee provisions and taxation) rose minimally by 0.6 percent or from TT$426 million to TT$428 million during the year, led mainly by an increase of TT$14 million in Administrative expenses which was offset by numerous operational efficiency efforts across the Corporation.


Ladies and gentlemen, there could be no gain saying the fact that whilst the TTUTC’s Mission Statement is supremely focused on the Unitholder, it also speaks to an Organization that is cost effective, endowed with dynamic leadership and good governance, and attended by advanced technology and a knowledgeable and empowered staff.

 In that regard, in 2014, the Board and Management have devoted significant focus on measures aimed at strengthening the organization, bringing it into closer alignment with its Strategic Objectives, thereby rendering it truly fit for purpose.

Thus, addressing the corporate side of the equation in 2014, we have achieved a number of milestones, bringing to a close a Strategic Plan which began in 2011. Many of these achievements have taken place in terms of Legislative changes, Risk Management, Performance Management and the Unitholder Register reconciliation, some of which I will now share with you. We certainly did not let the interest rate downturn “go to waste”.

Legislative Change – Phase 1

At the outset of the current plan period of 2011 – 2015 it was realized that the over 30 year old UTC Act was in need of a serious legislative overhaul if the Organization was to compete effectively in a fast change economic and financial market environment. Toward that end a series of legislative amendments were proposed and in the Finance Act 2015 a number of changes were enacted. The first phase Amendments included:

  1. The redefinition of “income allocated for distribution”
  2. The redefinition of “securities”
  3. The power to close, open, suspend or amend unit schemes
  4. The removal of the 10% investment restriction in relation to government guaranteed debt securities or short term debt securities with a maturity of less than one year
  5. The removal of the Upper Limit on Unit Prices
  6. The extension of Corporation’s power to borrow from term of 90 days to 180 days
  7. Enabling Unitholders to sell their units to persons other than the Corporation where the Corporation establishes a close-end fund which is listed on an organized and regulated financial market

Risk Management

Another area of ongoing attention was to embed and further strengthen our culture of Risk Management. Our Risk Management capabilities have been enhanced and redesigned with the focus on enterprise wide risk management as well as the building of business resilience through our fully operational Business Continuity Planning Framework. Our Risk Management philosophy is the conscious undertaking of risk in order to maximize opportunities as they arise.

Furthermore, the Corporation’s Management has also been engaged in an extensive Unitholder Register cleanup exercise which has ensured:

  • Our compliance with statutory and regulatory guidelines and due diligence framework of the CBTT & FATCA
  • Our compliance with ‘KYC’ principles for better risk analysis consistent with Anti-Money Laundering and Counter-Terrorist Financing laws.
  • The integrity of our customer database to support future business development initiatives.
  • The avoidance of penalties and fines for non-compliance– thereby avoiding reputational loss.
  • Improved service to our Unitholders.

As you visit any of our centres, we urge you to take the time to update your information in order for us to serve you better in the future.

In putting ourselves on a footpath consistent with international best practice we have initiated a number of actions relating to the adoption of appropriate accounting standards and valuation of our portfolios, some of which are ongoing. Moreover, in line with our recent designation as a Systemically Important Financial Institution (SIFI) we are required to comply with the statutory guidelines and the regulatory frameworks of both the Central Bank of Trinidad and Tobago and the Financial Action Task Force, ensuring that we do our part to strengthen the financial system.

Performance Management

In 2014 in keeping with our quest for excellence, we implemented a new Performance Management System geared towards ensuring continuous performance feedback for our staff. This initiative was complemented by an “I am TTUTC” Program, which was designed to encourage all staff to adopt our “Universal Standards” through which we all live the UTC’s shared values every day.

Certainly the focus we have maintained on Performance Management aims to enable the transformation of our Human Capital into a highly motivated and engaged workforce, which will provide the key resource for the TTUTC to achieve its ongoing mandate to provide a superior customer experience. We believe we are taking the necessary steps to ensure that we are world class and running as lean and efficient an Organization as possible.


As we entered 2015, there was continuity regarding the global and domestic issues which confronted financial markets and the TTUTC in 2014. We treated with the repercussions from the International Political Economy; namely, the fiscally challenged Greek economy, the new realities of ISIS, high liquidity levels, low interest, and the generally sluggish levels of GDP growth across the board. Domestically, equities continued to underperform with our traditional blue- chip stocks remaining flat for the year to date period, save for a few bright spots provided by companies such as Trinidad Cement Limited and National Flour Mills which have posted positive year to date returns for investors.

However, developments in 2015 reinforce that we must continue to closely monitor and anticipate these trends. As you may know recently, on April 15th, Standard & Poor’s Rating Agency lowered its bond and issuer rating on State Agency Petrotrin’s debt to below investment grade i.e. to BB+ from BBB-. This was shortly followed on April 30th by Moody’s Investors Services downgrading Government’s bond and issuer ratings from Baa1 to Baa2. On May 6th, these movements were further compounded when Moody’s issued the same assessment for state-owned Petrotrin, the National Gas Company (NGC) and the Tobago House of Assembly (THA).

Generally speaking, sovereign ratings strongly influence market prices for their related securities – thus, the announcement of a rating downgrade is usually followed by lower bond values. These movements could have a negative impact on a country’s cost of borrowing as well as the attractiveness of locally issued bonds to investors. In Trinidad and Tobago’s case these repercussions are somewhat mitigated by the scarcity of its sovereign paper in the market as many investors continue to hold their T&T bonds until maturity.

Despite these realities, TTUTC remains steadfast in its commitment to strategic excellence and to steering our Organization through sometimes turbulent waters and preserving the interests of our Unitholders. In this vein, we take the opportunity to reflect on the strides we have made in moving forward our strategic initiatives for 2011-2015. We have achieved several milestones we had set for the period, which have enabled our Unitholders new flexibilities for their ease of service and transferability. Furthermore, we are committed to embodying the values that will strengthen the integral linkage between our organization and the communities we serve. As part of this commitment, 2015 will see continued efforts to reach out to communities and you our Unitholders in order to develop the products you desire and to deliver service in a manner that is more meaningful.

Following from this, our Strategic Outlook for the period 2016-2020 is focused on a strategy of inclusion for moving TTUTC into the future. We therefore continue to plan our path forward with the involvement of staff at all levels, led by our Executive Management team. Furthermore, in keeping with our vision, we are looking to you, our Unitholders for your input as well.

As you may be aware, in strategic planning the process is just as important as the outcomes, and as a part of our process we will be calling on you – our Unitholders, to give us your thoughts on strategy and product. Some of you can look forward to participating in a Focus Group that will certainly be integral in determining the way forward.

From our initial forays into the work which lies ahead, the following pillars have emerged as being of key interest to the TTUTC Strategic Plan 2020:

  • Human Capital Development/Management
  • Customer-focused Technology
  • Staying Focused On The Customer
  • Financial Strengthening and
  • Sound Regulatory Relationship and Standing

Allow me now to provide a brief insight into the performance of the funds in 2015. For the year to date period ending April 30th 2015 most of our funds are poised to match or surpass their prior year’s performance, with the TTD Income Fund and the USD Income Fund posting annualized returns to Unitholders of 0.90% and 0.80% respectively. On the other hand our pioneering Growth and Income Fund and the Universal Retirement Fund posted net returns of -0.24%, and 0.37% respectively; due in large measure to the flat performance of the local equities market. The North American Fund continues its solid performance with returns of 1.87% as at April 30th 2015. Taking into account the continuing flat performance of the domestic and regional equities markets and the mixed signals emanating from the US Federal Reserve regarding expected higher US interest rates, we remain cautiously optimistic about the rest of 2015.


In closing, permit me ladies and gentlemen to take this opportunity to thank publicly the Chairman and members of the Board of Directors for their support and guidance over the year. Additionally, I thank my Executive Management Team, the Management and Staff of the Corporation for their unwavering support, loyalty and commitment to the service of the Trust. Finally, I say a heartfelt thank you to our loyal Unitholders who continue to place their trust in us through thick and thin and changing market cycles.

I give the assurance, ladies and gentlemen, that the Board, Management and Staff of the Corporation are acutely mindful of the confidence that Unitholders have reposed in the Corporation and the special regard in which this organization is held. We therefore recommit ourselves to your service in 2015, confident that our strategies going forward would enhance Unitholder’s wealth and facilitate the continued growth of the Unit Trust Corporation to better serve you.


I thank you.