ASB Superannuation Master Trust Annual Report For the year ended 31 March 2016
Welcome It is our pleasure to present the Annual Report for the ASB Superannuation Master Trust (“Scheme”) for the year ended 31 March 2016. The Annual Report provides the summary financial statements for the Scheme. It has information on the Scheme’s membership, as well as fund returns. The latest returns are available from the ASB website asb.co.nz or by calling 0800 ASB RETIRE (0800 272 738). We have also included market commentary by Daniel Snowden, ASB Economist, that contains information about what’s happened with financial markets over the last year. We thank you for your ongoing support and look forward to continuing to assist you with your retirement savings goals.
The ASB Superannuation Master Trust team.
Market Commentary The 12 months ending 31 March 2016 were yet another volatile year for the global economy. There were signs of recovery in the US, with the US Federal Reserve taking its first step on the path of normalising interest rates. However, the world’s secondlargest economy, China, showed signs of slowing growth. The EU had to offer further stimulus to bolster against very low inflation, while many emerging economies, such as Brazil and Russia, faced major economic issues and continue to do so. The slow but steady recovery in the USA allowed the Federal Reserve to lift the Fed Funds rate by 0.25% to 0.25-0.50% in December. This move followed the end of the monthly bond purchase program in late 2014. As of yet, though, the Fed has not felt conditions are suitable for a second interest rate increase, with economic data failing to conclusively convince and a global backdrop of uncertainty. In Europe, the European Central Bank went in the opposite direction, increasing its quantitative easing and setting interest rates at increasingly negative rates. The Bank of Japan also introduced a negative deposit interest rate (-0.1%) at the turn of the year, as it continues to attempt to inflate prices. Given the general move towards further monetary stimulus across the globe (apart from the US), it is little surprise to see global bond yields remain under downward pressure. Along with negative policy interest rates, many government bonds in Europe and Japan now trade at a negative yield. Even with these monetary measures, global inflation remained subdued and growth below average. Global share markets generally had a difficult 12 months, with global growth concerns remaining or heightening. Oil’s turbulent year also had a major impact across bourses and borders. This is well illustrated by the S&P500, which saw a lowhigh range of just over 14%, yet finished the March 2016 year almost exactly at its start point. Growth fears in China saw the Shanghai composite peak in June, before declining 42% by the close of the year, while the Nikkei declined just under 12%. In Europe, the UK FTSE also had to contend with the build-up to the UK’s EU referendum and lost 9% over the year, but with a high-low swing of 22%. Emerging markets did not escape and Brazil’s (the 7th largest economy in the world) Bovespa had to contend with huge political turmoil which saw the market trade in a range of 35%, but ended the year just 4.5% lower. Closer to home, the ASX200 lost 13% but the NZX50 was top of the class, gaining almost 16%. Part of the NZX50’s rise was due to the Reserve Bank of New Zealand (RBNZ) changing tack from interest rate increases to rate cuts, joining in with the easier credit conditions seen elsewhere. The RBNZ made a total of five 0.25% rate cuts, with the final move on March 10, taking the official cash rate (OCR) to 2.25%. The cuts filtered through to the NZ Dollar (NZD) and initially helped to push the NZD’s Trade Weighted Index to a low of 68.3 in September from a high of 80.5 in April 2015. More recently, the NZD has started to appreciate, as interest rates and monetary conditions in general were eased elsewhere at a faster pace than in NZ. As a consequence the NZD finished the March year at USD 0.69 and 73 on a trade-weighted basis, partly reversing the earlier weakness. From here, the RBNZ’s ability to loosen monetary conditions further may be hampered by the continuing housing boom. The boom has spread out from Auckland and into the regions, making the RBNZ more concerned about the risks of the housing market overheating. Daniel Snowden, ASB Economist This market commentary is based on information obtained from sources believed to be reliable and accurate at the time of preparation, but its accuracy and completeness is not guaranteed.
ASB Superannuation Master Trust Statutory Information In accordance with the reporting provisions of Section 14(2) of the Superannuation Schemes Act 1989, the Trustee reports as follows:
Scheme membership for the period 1 April 2015 to 31 March 2016 Total membership as at 1 April 2015 New members joining during the period Less members who left during the period Total membership as at 31 March 2016
21,817 139 1,007 20,949
Trustee’s Statement/Certification •
All contributions required to be made to the Scheme during the financial year were made in accordance with the terms of the Scheme’s Trust Deed.
The Trustee certifies that all benefits required to be paid from the Scheme during the financial year were paid in accordance with the Scheme’s Trust Deed.
The Trustee certifies that the market value of assets of the Scheme at 31 March 2016, equalled or exceeded the total value of all benefits that would have been payable had all members of the Scheme ceased to be members at that date, and had provision been made for the continued payment of all benefits being paid to members and other beneficiaries as at the close of the financial year.
Gerard Field Senior Manager Client Services Corporate Trustee Services Public Trust
Other Information •
The registration date of the most recent prospectus for the Scheme is 11 September 2015. The prospectus was amended on 24 March 2016.
There have been no amendments to the Trust Deed for the Scheme since the date of the last annual report.
The following rates of return before tax and after fees (excluding administration fees) applied for each fund in the Scheme for the year ended 31 March 2016. Diversified Funds
Single Sector Funds
ASB Moderate Fund
ASB NZ Cash Fund
ASB Balanced Fund
ASB NZ Fixed Interest Fund
ASB Growth Fund
ASB World Fixed Interest Fund
ASB Global Property Shares Fund
ASB Australasian Shares Fund
ASB World Shares Fund
• The returns are calculated on the change in unit price of the units in each fund for the year ended 31 March 2016, adjusted for tax credits, and are the returns on funds invested at the beginning of the period, with no subsequent contributions or withdrawals. • The above returns reflect the market indices and asset allocations that applied during the period. These may differ from the current asset allocations. • Returns are a reflection of past performance and are not a guarantee or indication of future performance because returns fluctuate (move up and down). Returns can be negative and you may receive back less than the total amount of your contributions.
For the latest information on returns, check out the Fund Performance section on our website asb.co.nz For further information on the Scheme, please see the product disclosure statement.
Interests in the Scheme are issued by Public Trust. The Manager of the Scheme is ASB Group Investments Limited, a wholly owned subsidiary of ASB Bank Limited. Interests in the Scheme do not represent deposits or other liabilities of ASB Bank Limited or any other member of the ASB group of companies and are subject to investment risk including possible loss of income and principal invested. None of Public Trust, ASB Group Investments Limited, ASB Bank or any other person guarantees the interests in the Scheme (including the repayment of any capital or the performance of those securities).
ASB Superannuation Master Trust Summary Financial Statements Summary of statement of changes in net assets available for benefits for the year ended 31 March ($ thousands)
Profit for the year attributable to members
Total comprehensive income attributable to members
Interest and dividend income Net investment gains
Management, administration and trustee expenses Other expenses Total operating expenses
Members' funds at beginning of year Total comprehensive income attributable to members Contributions from members
Contributions from employer
Administration fees deducted
Transfers out to other schemes
Net cash flows from operating activities
Net cash flows from financing activities
Cash at the beginning of the year
Transfers in from other schemes Benefits paid to members
PIE tax paid/payable Allocated contributions Contributions to be allocated Members' funds at end of year Summary of statement of net assets available for benefits as at 31 March ($ thousands) Financial assets at fair value through profit or loss Other assets Total assets Liabilities Net assets available to pay benefits Summary of statement of cash flows for the year ended 31 March ($ thousands)
Cash at the end of the year
The management and trustee expenses disclosed above were paid/payable to ASB Group Investments Limited (the Manager of the Scheme) and Public Trust (the Trustee of the Scheme) respectively. For full disclosure of related party transactions and balances, refer to ASB Superannuation Master Trust’s full financial statements. The Summary Financial Statements contained in this report comply with FRS-43: Summary Financial Statements. The presentation currency is New Zealand dollars and has been rounded to thousands of dollars. They are a summary of the ASB Superannuation Master Trust’s full financial statements in New Zealand dollars authorised for issue by the board members of the Trustee on 22 July 2016 and, as such, cannot be expected to provide as complete an understanding as provided by the full financial statements. The full financial statements have been audited with an unmodified audit opinion issued thereon. The Summary Financial Statements were approved for issue by the Trustee on 25 August 2016. Refer to page 5 for the Auditor’s report on the Summary Financial Statements. The comparative information has been extracted from the 2015 full audited financial statements in all material respects. The full financial statements comply with New Zealand generally accepted accounting practice and include an explicit and unreserved statement of compliance with New Zealand equivalents to International Financial Reporting Standards and International Financial Reporting Standards as appropriate for profit-oriented entities. The full financial statements are available, free of charge, from ASB Group Investments Limited upon request. 4
Report of the Independent Auditor on the Summary Financial Statements to the members of the ASB Superannuation Master Trust
The accompanying summary financial statements on page 4 which comprise the summary statement of net assets available for benefits as at 31 March 2016, and the summary statement of changes in net assets available for benefits, and the summary statement of cash flows for the year then ended, and related notes, are derived from the audited financial statements of ASB Superannuation Master Trust (the “Scheme”) for the year ended 31 March 2016. The summary financial statements do not contain all the disclosures required for full financial statements under generally accepted accounting practice in New Zealand. Reading the summary financial statements, therefore, is not a substitute for reading the audited financial statements of the Scheme. Our audit of the financial statements for the year ended 31 March 2016 was completed on 22 July 2016 and our unmodified opinion was issued on that date. We have not undertaken any additional audit procedures in relation to those financial statements from the date of the completion of our audit and those financial statements and the summary financial statements do not reflect the effects of events that occurred subsequent to the date of our report on those financial statements. This report is made solely to the Scheme’s members, as a body. Our work has been undertaken so that we might state those matters we are required to state to them in a report from the auditor and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Scheme’s members, as a body, for this report, or for the opinions we have formed. In addition, we take no responsibility for, nor do we report on, any part of the annual report not specifically mentioned in our report. Trustee’s Responsibility for the Summary Financial Statements The Trustee is responsible for the preparation and presentation of the summary financial statements in accordance with FRS-43: Summary Financial Statements (“FRS 43”). Auditor’s Responsibility Our responsibility is to express an opinion on the summary financial statements based on our procedures, which were conducted in accordance with International Standard on Auditing (New Zealand) 810: Engagements to Report on Summary Financial Statements. We are independent of the Scheme. Other than in our capacity as auditor we have no relationship with, or interests in, the Scheme. Opinion In our opinion, the summary financial statements on page 4 derived from the audited financial statements of the Scheme for the year ended 31 March 2016 are consistent, in all material respects, with those audited financial statements, in accordance with FRS 43. Restriction on Use of our Report This report has been prepared for inclusion in the annual report. We disclaim any responsibility for reliance on this report or the amounts included in the summary financial statements, for any purpose other than that for which they were prepared.
Chartered Accountants 25 August 2016 PricewaterhouseCoopers, 188 Quay Street, Private Bag 92162, Auckland 1142, New Zealand T: +64 (9) 355 8000, F: +64 (9) 355 8001, www.pwc.com/nz
Address for Correspondence
The Administration Manager ASB Group Investments Limited FreePost Authority ASB PO Box 35, Shortland Street Auckland 1140
Board Members as at 31 March 2016 Sarah Mary Roberts (Chair) Dilkhush (Dinu) Harry Susan Mary Anna McCormack Fiona Ann Oliver Diana Marie Puketapu David Winiata Tapsell Huei Min (Lyn) Lim John Duncan Simon Craddock The following Board Members have resigned since the last Annual Report: • With effect from 31 October 2015 D W (David) Tapsell resigned as a member of the Public Trust Board
Telephone Telephone: 0800 ASB RETIRE (0800 272 738) Email: [email protected]
Or The Trustee Public Trust Level 9 34 Shortland Street Auckland 1010
• With effect from 1 November 2015 J R (John) Duncan and S M (Simon) Craddock were appointed members of the Public Trust Board. • With effect from 30 April 2016 S (Sue) McCormack’s term ended as a member of the Public Trust Board.
Administration Manager ASB Group Investments Limited
Investment Manager ASB Group Investments Limited
Solicitor Minter Ellison Rudd Watts
ASB Group Investments Limited 56060 1302 0816