Another project : Preparing a new Prospectus for Unit Trust of Fiji

We are currently working on another project; preparing a new Prospectus for the Unit Trust of Fiji. The current prospectus expires on 7 November 2007 and a new prospectus is being prepared that will apply for 3 years from 8 November 2007.

The major part of this work is to ensure that the new Prospectus complies with all capital markets, unit trust, trustee laws, regulations and rules as well as the Unit Trust of Fiji's Trust Deed.

The prospectus is a primary document referred to by potential investors when considering investing in a particular instrument.

Entities that source investments in Fiji's capital markets are required to prepare prospectuses which are to be approved by the Capital Markets Development Authority.

For any assistance on a similar project or any other work involving banking, financial sector, capital markets and unit trusts, please contact us via e-mail to gilbert@connect.com.fj or call telephones (679) 3396427 or (679) 9921427.

Strategic Planning for Unit Trust of Fiji

We are currently completing some work for the Unit Trust of Fiji wherein we conducted Strategic Planning workshops for managers and staff of the Trust using a strategic planning model that we designed.

During the workshops, together with the managers and staff of the Trust we reviewed various scenarios in which the Trust would be expected to operate in over the period 2008 to 2010, we helped develop new Vision and Mission statements, identified SWOT factors that would have a play in the Trust's ability to get to where it wants to be, determined strategies for the Trust and related Key Performance Indicators.

In this project, we were assisted by Mr Nacanieli Rika, Accounting and Finance lecturer, University of the South Pacific.

For more information on our model and related processes that we take clients through, pls e-mail gilbert@connect.com.fj or call telephones (679) 3396427 or (679) 9921427.

More Fijians investing in the stock market

The Capital Markets Development Authority (CMDA) says that more indigenous Fijians are investing in the unit trust and stock markets compared to other ethnic groups.

CMDA said that about 64% of investors in the unit trust market are indigenous Fijians while other residents comprised 36%.

The analysis done by CMDA is interesting is that it may mean the following :

1. confirms that indigenous Fijians are passive investors who when they do invest leave their investments as they are for years without active monitoring of the investment's performance and the markets;
2. Fijians are still not very well educated in terms of finance and financial matters hence the reliance on professional fund managers, such as unit trusts, to manage their investments for them;
3. other races in Fiji use their own savings to set up their own businesses rather than give it to others to use (such as that done by indigenous Fijians);
4. viewed from a different perspective, the above point could also suggest that Fijians are funding the businesses owned by other races (e.g. investment in businesses majority owned by other races which are listed on the South Pacific Stock Exchange, Suva, Fiji).

Further analysis may need to be done by the CMDA to dig into what is behind the statistics it has given out.

Read the commentary on CMDA's review in a Fiji Times article below.



"More Fijians invest in stock market, Saturday, June 30, 2007

More indigenous Fijians are investing in the unit trust and stock market compared to other ethnic groups, says the Capital Markets Development Authority chief executive Suren Kumar.

Mr Kumar said market statistics showed that about 64 per cent of the investors in the unit trust market are indigenous Fijians, while other Fijian citizens and residents comprised 36 per cent.

Mr Kumar said the new trend for Fijians towards investing was heartening and should be supported. "Apart from individuals, a substantial number of provincial and tikina-owned companies, vanua and communal groups also invest in the unit trust and stock market," he said.

Mr Kumar said this as the CMDA launched the Fijian version of "Investing for retirement" (Na vakatubu i lavo me baleta na tiko marau ena gauna ni vakacegu mai na cakacaka) and another booklet, Why should you invest (Na cava na vuna mo vakatubu I lavo kina) this week.

He said financial literacy was fundamental to market development.

This corresponds with the Bureau of Statistics 2002-2003 Household and Income Expenditure Survey which indicates that in aggregate, indigenous Fijian households are saving some 18 per cent of their incomes with little differences between the major ethnic groups.

However, Mr Kumar said the same report highlighted that only 13 percent of indigenous Fijians over the age of 54 considered themselves as retired compared to 26 per cent to 28 per cent of other Fiji citizens.

"These statistics support some of our concerns and initiative to translate and publish the Fijian version of 'investing for retirement' as the statistics indicated some indigenous Fijians could not retire completely because of their financial obligations to their families and communities," he said.

He said there w as a greater need for more indigenous Fijians to plan for their retirement earlier in their working lives.

"We hope many will take advantage of these publications and take time to learn fundamentals and seek advice from licensed advisers, brokers or unit trust representatives before making any investing decision," he said."

Unit Trust of Fiji Performance

Unit Trust of Fiji's (UTOF) returns fell drastically over its financial year ended 30 September 2006. For that period, UTOF recorded :

• dividend yield of 4.70%;
• capital growth return of 1.61%; and
• a total return of 6.31%.

This was a substantial reduction from its performance recorded over the 2005 financial year when it registered :

• dividend yield of 4.67%;
• capital growth return of 9.01%; and
• a total return of 13.68%.

UTOF has said attributed the dismal 2006 results to the increase in official interest rates by the Reserve Bank of Fiji which it said resulted in a decline in value of its government bond portfolio. That reduction, according to UTOF, led further to reduction in UTOF's unit prices.

The decline in share price/market value of various shares listed on the South Pacific Stock Exchange which contributed a negative effect on UTOF's investment portfolio.

Being professional fund managers, one would have expected a bit more diligence from UTOF. Investors in UTOF would be best placed to now question what steps the fund will take if interest rates will continue to rise to avoid a similar result occurring in future. On the other hand, UTOF may be best advised to look at reducing such risks by diversifying its investments and invest overseas.

Read a press release issued by UTOF in the Fiji Times today, Thursday, 26 April 2007, and check the CMDA Annual Reports at www.cmda.com.fj for UTOF's returns over the past years.

Note : Anyone that wants investment advice can contact our company, Gilbert & Samuels Company Limited, for assistance. To contact us, e-mail gilbert@connect.com.fj or call telephones (679) 3396427 or (679) 9921427.