Stanlib unitholders say 'yes' to SA's biggest fund merger

The rationalisation of Standard Bank and Liberty's unit trust funds will be completed this weekend. We explain how this will affect ordinary investors.

Stanlib is going ahead with the rationalisation of its unit trust funds, after unitholders voted in favour of the process. This is the biggest consolidation of funds yet in South Africa.

The Stanlib unit trust funds have a combined value of R42 billion.

As a result of the merger of Standard Bank and Liberty's asset management divisions early in 2002, Stanlib had 79 funds under management and some of the funds' investment mandates overlapped.

After this weekend, the asset manager will have a slimmed down suite of 49 funds, which, Stanlib says, will make the funds more cost-effective.

All the funds, except the Standard Bank money market funds, will be rebranded as Stanlib funds. From Tuesday, if you want to look up the price of the units in your fund in a newspaper such as Personal Finance, you will have to search for your fund under the Stanlib name.

Stanlib sent ballots to about 400 000 unitholders late last year, and ballots had to be returned by an extended deadline of January 21 this year.

The results were then counted and audited. Unitholders who did not vote were counted as having voted "yes" to the merger, which accounts for the 99.8 percent vote in favour of the merger. In terms of the Collective Investment Schemes Control Act, a merger cannot go ahead if unitholders who own more than 50 percent of the value of the fund vote against it.

The Financial Services Board has confirmed the results of the ballot.

Twenty-four Standard Bank or Liberty unit trust funds will be merged with 16 others, which have been identified as the "core" funds that will continue after the merger.

Any income that is due to unitholders must be distributed before the funds are amalgamated. A special distribution of income for the 40 funds involved in the merger will be calculated on the funds' values as at the close of business yesterday. Any dividends due will also be calculated - based on Thursday night's prices - and distributed or reinvested, depending on the choice you have made in this regard.

If you own units in one of the 24 funds that are being absorbed, the cash value of your holding in that fund will be calculated as at the close of business yesterday.

This cash value will be used to allocate you units in the absorbing or core funds. The number of units you are allocated may change, because the units of the various funds have different prices, but the rand value of your investment will remain the same.

The assets (shares, bonds and cash) in the funds that are being absorbed will be transferred to the core funds. When the markets re-open on Monday, your investment in the core fund to which your units have been transferred will be valued in terms of the prices of the underlying assets of that core fund.

Unitholders in funds that are being absorbed will not be liable for any additional fees, charges, taxes or brokerage as a result of the amalgamation of their funds.

Stanlib has assured investors in the funds that are being absorbed that their units are being moved into funds with similar mandates, and that there will be no increase in their fees.

Currently, some unit trust funds have what are known as "regulated fees", which cannot be altered except by a ballot of all their unitholders.

Stanlib says the mergers will not result in any investors in regulated unit trust funds being switched into unregulated funds, in which the fees can be increased without the unit-holders' consent.

In fact, Stanlib says, investors should benefit from a simplified fee structure. In some cases, annual fees will be lower and investors may also benefit from a sliding scale of initial fees, Ian van Schoor, an executive director of Stanlib, says.

If you are invested in one of the core funds, or in a fund that is not part of the merger, your investment will not be affected by the merger, apart from the fact that your fund will take on the Stanlib name and there will be a special distribution in the core funds as of Monday.

All the investors in the 24 funds that are being merged will, however, be assigned a new account number. You should receive notification of the account number change by mail shortly. If you want to cash in your units before you receive your new account number, telephone Stanlib and ask for it (see "Expect delays" below).

If you have a debit order to pay a regular monthly amount into a fund, your debit order will not be affected and your account number on the debit order will be updated automatically.

Investors whose unit trust funds are being merged will also be sent an advice showing them the value of their units in the fund that was absorbed, the transfer of this amount to the new amalgamated fund and how many units they were allocated in the new fund. These statements will also reflect the special distributions of income and dividends in your fund. Stanlib will post the statements in the second week of March.

In April or May, you will also be sent an IT3b certificate showing your dividends and interest. You will also be sent an IT3c certificate containing capital gains tax (CGT) details.

If, as at Friday, your investment reflected a capital loss, you should declare this in your tax return for 2003/4. A capital loss means you have lost money since you invested in a unit trust fund.

You must declare any capital losses made since October 1, 2001, when CGT was introduced.

Capital losses must be declared in the year in which you make them. They cannot be offset against your income tax, only against other capital gains. There is a R10 000 exemption on any gains or losses in any tax year.

To the extent that your loss exceeds this R10 000 exemption, it can be carried forward until a year in which you have a capital gain against which to offset your loss. If you have made a capital gain, you will not immediately be liable for any CGT. Your taxable gain will be rolled over until you sell your units in the amalgamated fund, at which time you will pay CGT on the total taxable gain since you first invested, if there is one.

The merged Stanlib funds will reflect the performance histories of the core funds.

A special feature on the amalgamation process may be found on the Stanlib website at www.stanlib.com

Expect delays

Owing to the merger of a number of Stanlib funds this weekend, the asset manager stopped processing transactions (requests to buy or sell units) on Friday. It will only start processing these requests again on Tuesday, and there may therefore be some delay in processing these transactions. If you need to liquidate your units urgently, telephone Stanlib's call centre on 0860 123 003 and ask that your transaction be dealt with as soon as possible when processing resumes on Tuesday.

What the new suite of stanlib funds will look like

This is a list of new funds that will be formed from the merger of two or more funds and the renaming of the core fund into which the others are merged:

Stanlib Industrial Fund

Sector: Domestic Equity: Financial & Industrial

Renamed from: Liberty Industrial Fund

Absorbs: Standard Bank Industrial & Financial Fund

Stanlib Prosperity Fund

Sector: Domestic Equity: General

Renamed from: Liberty Prosperity Fund

Absorbs: Standard Bank Mutual Fund

Stanlib Multimanager Equity Fund

Sector: Domestic Equity: General

Renamed from: Standard Bank Multimanager-manager Equity Fund

Absorbs: Standard Bank Aggressive Fund of Funds; Liberty RSA Equity Fund; Liberty Aggressive Fund of Funds (a prudential high equity fund)

Stanlib Resources Fund

Sector: Domestic Equity: Resources & Basic Industries

Renamed from: Liberty Resources Fund

Absorbs: Standard Bank Mining & Resources Fund

Stanlib Financials Fund

Sector: Domestic Equity: Financial

From: Liberty Financials Fund

Absorbs: Standard Bank Financial Services Fund

Standard Bank Money Market Fund

Sector: Fixed Interest: Money Market

Renamed from: Standard Bank Money Market Fund

Absorbs: Liberty Money Market Fund

Stanlib Stability Fund

Sector: Domestic Asset Allocation: Prudential Low Equity

Renamed from: Liberty Stability Fund

Absorbs: Standard Bank Managed Prudential Fund (currently a Prudential Medium Equity Fund)

Stanlib Multimanager Medium Equity Fund of Funds

Sector: Domestic Asset Allocation: Prudential Medium Equity

Renamed from: Standard Bank Multimanager Medium Equity Fund

of Funds

Absorbs: Standard Bank Balanced Fund of Funds; Liberty Multimanager Moderate Fund of Funds; Liberty Moderate Fund of Funds (a flexible asset allocation fund)

Stanlib Capital Growth Fund

Sector: Domestic Equity: Growth

Renamed from: Liberty Capital Focus

Absorbs: Standard Bank Equity Growth Fund

Stanlib Small Cap Fund

Sector: Domestic Equity: Smaller Companies

Renamed from: Liberty RSA Small

Cap Fund

Absorbs: Standard Bank Emerging Companies Fund

Stanlib Bond Fund

Sector: Domestic Fixed Interest: Bond

Renamed from: Liberty Bond Fund

Absorbs: Standard Bank Gilt Fund

Stanlib Value Fund

Sector: Domestic Equity: Value

Renamed from: Liberty Value Fund

Absorbs: Liberty Phoenix Fund

Stanlib Multimanager Low Equity Fund of Funds

Sector: Domestic Asset Allocation: Prudential Low Equity

Renamed from: Standard Bank Multimanager Low Equity Fund

of Funds

Absorbs: Standard Bank Conservative Fund of Funds; Liberty Multimanager Conservative Fund of Funds; Liberty Conservative Fund of Funds (a flexible asset allocation fund)