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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Robeco | LSE:RBE | London | Ordinary Share | NL0000289783 | ORD EUR1 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.00 | - |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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ROBECO N.V.
ANNUAL REPORT 2006
% ROBECO
CONTENTS
General
information 3
Report of the supervisory board 5
Report of the management board 6
Financial
statements 12
Balance
sheet
12
Profit and loss
account 12
Cash-flow
summary 13
Notes
14
Other
data
21
Spread of net
assets 24
List of
securities
26
Purchases and
sales 31
GENERAL INFORMATION
ROBECO N.V. 1)
(investment company with a variable capital, having its registered
office in Rotterdam, the Netherlands)
Coolsingel 120
Postbus 973
NL-3000 AZ Rotterdam
Tel. +31 - 10 - 224 12 24
Fax +31 - 10 - 411 52 88
Internet: www.robeco.com
Supervisory Board
Paulus C. van den Hoek, chairman
Gilles Izeboud
Philip Lambert
Dirk P.M. Verbeek
Management Board
Robeco Fund Management B.V. (as of 27 April 2006)
Mark R. Glazener (until 27 April 2006)
Volker Wytzes (until 27 April 2006)
Manager
Robeco Fund Management B.V.
(as of 1 January 2006)
Management board:
Mark F. van der Kroft
Edith J. Siermann
Edwin de Weerd (as of 12 January 2006)
Eduard B. van Wijk (as of 1 November 2006)
Fund Manager
Mark R. Glazener
Secretary of the Company
David H. Cross
Management Board of Robeco Groep N.V.
(the holding company of the Robeco Group)
George A. Möller (chairman)
Leni M.T. Boeren
Sander van Eijkern
Constant Th.L. Korthout
Frank L. Kusse [1]
Niek F. Molenaar
GENERAL MEETING OF SHAREHOLDERS
The General Meeting of Shareholders will be held on 26 April 2007 at
09.30 hours at the Hilton Rotterdam, Weena 10, Rotterdam, the
Netherlands. Holders of share certificates to bearer wishing to
attend and vote at the meeting should apply for a written statement
from the Euroclear Netherlands-affiliated institution where their
shares are held, which will give admission to the meeting. The
institutions affiliated with Euroclear Netherlands should submit a
copy of this statement to ABN AMRO Bank N.V. stating the number of
shares held for the shareholder concerned prior to the meeting, and
which will be frozen until after the meeting. This statement should
be submitted not later than 19 April 2007.
Holders of K shares should lodge their share certificates not later
than 19 April 2007 with one of the banks mentioned in the convening
notice of 5 April 2007.
Holders of an account with Robeco Direct N.V. in Rotterdam, Banque
Robeco S.A. in Paris or Robeco Bank Belgium in Brussels wishing to
attend the meeting should inform the management board in writing not
later than 19 April 2007.
This report is also published in Dutch, French, German, Italian and
Spanish. Only the original Dutch edition is binding and will be
submitted to the General Meeting of Shareholders.
SIMPLIFIED AND FULL PROSPECTUS
A simplified prospectus with information on Robeco N.V. and its
associated costs and risks is available. This simplified prospectus
and the full prospectus are available at the company's office and via
www.robeco.com.
REPORT OF THE SUPERVISORY BOARD
We herewith present the Robeco N.V. accounts for the financial year
2006 together with the report of the management board.
The way in which the supervisory board carries out its supervisory
duties is significantly determined by the structure of the Robeco
Group. Discussions on the management of Robeco N.V. can therefore
take place in either the supervisory board of the company or that of
Robeco Groep N.V. As a result of the personal links between members
of the two boards, in practice this presents no difficulties. Robeco
N.V. is managed by Robeco Fund Management B.V., a wholly owned
(indirect) subsidiary of Robeco Groep N.V. The management board of
Robeco Fund Management B.V. consists of Edith Sierman (Chief
Investment Officer Fixed Income), Mark van der Kroft (Chief
Investment Officer Equities), Edwin de Weerd (Manager of Robeco Fund
Services Center) and Ed van Wijk (Executive Vice President at Robeco
Alternative Investments). Mark Glazener is the fund manager of Robeco
N.V.
The purpose of an investment institution such as Robeco N.V., as laid
down in its articles of association, is limited to the investing of
its assets in securities in such a way that risks are diversified
with the object of allowing its shareholders to participate in the
profits. At its meetings the supervisory board therefore primarily
devotes its attention to the investment policy, the realized results
and the development of the assets invested, on the basis of frequent
and detailed reports. Attention is also paid to matters relating to
risk management, such as operational and market risks, and
compliance, such as investment restrictions and compliance with
requirements of the regulator. In connection with what has already
been mentioned regarding the structure of the Robeco Group, matters,
such as the risks associated with the investment policy, the
application of instruments to manage these risks and compliance
issues, may also be discussed at the meetings of the supervisory
board of Robeco Groep N.V.
The general policy of the Robeco Group is determined by the
Management Board of Robeco Groep N.V. in consultation with its
supervisory board. This means that matters such as product
development, acquisitions and risk management and compliance are
discussed at the meetings of the supervisory board of Robeco Groep
N.V. An audit and compliance committee and a nomination, remuneration
and corporate-governance committee have been appointed by this board.
Two members of each of these committees are also supervisory
directors of Robeco N.V. Within these committees extensive
discussions are held about internal audit, risk-management and
compliance issues and the functioning of and remuneration structure
for the Robeco Groep N.V. Management Board and other human-resource
issues. Besides the subjects mentioned, no special issues were
discussed at the meetings of the supervisory board during the
reporting year.
We have taken note of the contents of the auditor's report presented
by Ernst & Young Accountants and recommend approval of the annual
financial statements. We concur with management's proposal to
distribute a dividend of EUR 0.60 per share in cash.
At the General Meeting of Shareholders on 27 April 2006, Dirk Verbeek
was reappointed as a supervisory director of the company with
immediate effect.
According to schedule, Gilles Izeboud will resign at the General
Meeting of Shareholders to be held on 26 April 2007. Mr. Izeboud is
available for reelection. It is proposed that he be reappointed as a
supervisory director of the company with immediate effect.
Rotterdam, 22 March 2007
The supervisory board
SUPERVISORY BOARD
Paulus C. van den Hoek, chairman (68)
Dutch nationality. Appointed in 1990 and last reappointed in 2005.
Lawyer and partner at Stibbe, lawyers and notaries, in Amsterdam, the
Netherlands, since 1965. Former Dean of the Dutch National Bar
(81/84). Supervisory director of ASM International, Bührmann, Wavin,
Robeco Groep, Rolinco and Rorento.
Gilles Izeboud (64)
Dutch nationality. Appointed in 2004.
Former partner and director at PricewaterhouseCoopers. Deputy justice
of the Enterprise Section of the Amsterdam Court of Appeal.
Supervisory director of Buhrmann, Robeco Groep, Rolinco and Rorento.
Philip Lambert (60)
Dutch nationality. Appointed in 2005.
Former head of Corporate Pensions of Unilever N.V. and PLC in London.
Supervisory director of Robeco Groep, Rolinco and Rorento.
Dirk P.M. Verbeek (56)
Dutch nationality. Appointed in 2001 and last reappointed in 2006.
Member of the executive board of Aon Group in Chicago, USA, and
chairman/CEO of the executive board of Aon Holdings in Rotterdam, the
Netherlands. Supervisory director of Robeco Groep, Rolinco and
Rorento.
N.B. Only supervisory directorships at listed companies and the
Robeco Group are mentioned.
REPORT OF THE MANAGEMENT BOARD
GENERAL INTRODUCTION
An excellent year for the world economy
The past year has been an excellent one for the world economy, with
growth recorded at around 5%. However, the composition of growth was
somewhat different from past years. Growth in the United States
slowed down in the course of the year, while Japan and the euro area
recorded higher growth rates. The emerging economies continued their
process of catching up with the developed economies.
Inflationary pressures increased worldwide after oil prices rose to
well above USD 70 per barrel early in the year. Actual inflation
remained contained under the influence of tighter monetary polices in
many countries. The fact that oil prices moved back to levels around
USD 60 per barrel later in the year contributed to a more benign
development of inflation, in combination with restrained wage
increases in many countries.
A very favorable year for equity markets
The combination of high economic growth and modest inflation was a
splendid one for equity markets. Generally corporate earnings
continued strongly, while price/earnings ratios were reasonable at
the beginning of the year. Many central banks around the world hiked
interest rates in the course of the year. On balance, long-term
government yields also increased, although less so than the
short-term interest rates. However, bond yields remained low from a
historical perspective, as a result of which yield developments were
no threat for equity markets.
The second quarter saw a correction, which was more than reversed in
the remainder of the year. In the end most equity markets have
recorded double-digit increases in their indices. After the strong
increase in 2005 the Japanese stock market index recorded a
relatively small increase in 2006. Although the US stock markets had
a favorable year, the outcome for investors with euro-denominated
investments was not that good, because the dollar depreciated by more
than 10% against the euro. The stock markets in the euro area had a
better than average performance.
The US economy
In the course of the year, the US economy slowed down. The
interest-rate hikes by the US central bank (the Fed) since mid 2004
started to take their toll. The Fed funds rate ended the year 2006 at
5.25%. On balance, long-term interest rates increased to around 4.7%
by the end of the year.
The housing market in particular was responsible for the slowdown in
US growth. The marked increase of prices and volumes in the housing
market came to an end in the past year. For the time being the US
consumer appeared to be unaffected by the developments in the housing
market. Consumption continued to grow at a healthy pace, further
facilitated by strong conditions in the labor market.
Initially, core inflation went up, but fell to just above 2% in the
final months of the year.
Japan
Last year, the Japanese economy continued its recovery. This led the
Bank of Japan to abandon its zero interest-rate policy. The policy
rate was increased once by 25 basis points. The recovery was not
convincing in all respects. The Japanese consumer remains hesitant to
spend. Inflation is still very low. Under these circumstances, the
long-term interest rates fluctuated mainly within a bandwidth of 1.5%
and 1.75%.
The euro area
Last year, economic performance in the euro area was strong. Economic
growth amounted to more than 2.5%. Initially inflation increased on
the back of higher oil prices, but ended the year at a level just
below 2%. Strong economic growth, a substantial increase in money
supply and credit growth, and just over 2% projected inflation over
the medium term prompted the European Central Bank (ECB) to increase
interest rates from 2.25% to 3.5%. Long-term rates increased by no
more than 60 basis points.
Outlook
The world economy is continuing to grow rapidly, albeit at a slower
pace than last year. The emerging economies are maintaining their
catching-up course, and Japan and the euro area will record growth
rates of some 2%. For the US economy, a slowdown of growth to around
2% is being penciled in. The ECB and Bank of Japan have not yet
finished their hiking cycle and this is also true for a number of
other central banks. The Fed will probably start to ease its monetary
policy as inflation gets under control. The development of long-term
rates will remain moderate.
All in all this year more or less average returns of around 8% are to
be expected.
INVESTMENT RESULT
Overview 2002 - 2006
(in %) Average
over last 5
2006 2005 2004 2003 2002 years
Based on:
- - market price 7.5 28.6 5.0 1.4 -34.8 ?
- - net asset value 7.0 28.3 5.1 5.4 -34.1 0.1
MSCI World Index1) 7.9 26.8 6.9 11.3 -31.7 ?
Dividend in 0.60 0.48 0.40 0.36 0.44 0.46
euros2)
Total net assets3) 7.1 7.2 6.2 6.5 6.1
1) Currencies have been converted at rates supplied by World Market
Reuters.
2) Proposed for 2006.
3) EUR x billion.
During 2006, the share price of Robeco rose from EUR 27.31 to EUR
28.87. Assuming reinvestment of the dividend of EUR 0.48 per share
distributed in May 2006, this was an investment result of 7.5%. Based
on net asset value, which rose from EUR 27.38 to EUR 28.80, the
investment result was 7.0%.
The fund's benchmark, the MSCI World Index, rose 7.9% over the same
period. After deduction of the management fee the fund slightly
underperformed the benchmark.
During the period under review, the active investment policy led to
an outperformance of 0.2% (before deduction of the management fee)
relative to the benchmark. Sound stock selection in the various
sectors was the driving force behind this performance. Of the 0.2%
mentioned above, 0.9% was attributable to stock selection, -0.4% to
sector-allocation policy and -0.3% to currency policy.
Stock selection was excellent within the consumer-staples, telecom
and energy sectors. The result of the stock selection in utilities
and health care lagged the average. Within the other sectors the
result was average.
The fund Robeco aims to realize a stable outperformance relative to
the benchmark and has been using a more moderate investment policy
since 2004. The fund's performance is generated by a broad range of
stocks rather than just a limited selection. We would nevertheless
like to single out some stocks which realized an above-average
performance.
BellSouth, the US telecom company that operates in the southern
states, rose 80%. The company was taken over by AT&T and also
benefited from the sound stock-price increases in the US telecom
sector as a whole. A similar increase of 77% was booked by Telenor, a
Norwegian telecom company with interests in many emerging markets.
ABB, a company which makes products for electricity transmission, is
also worth mentioning here as it rose 67%. However not all the
portfolio picks were successful. Partygaming dropped no less than 76%
due to the cancellation of its license for online poker games in
North America.
INVESTMENT POLICY
General
Robeco's investment policy focuses on making a global selection of
stocks within business sectors, and determining the relative weights
of those sectors. Regional allocation is mainly determined by this
selection. The sales volume amounted to 39% of the portfolio during
the reporting year.
Robeco does make use of financial instruments, the associated risks
of which are specified in the financial statements. The fund uses
liquidity limits based on market capitalization and tradability for
the stocks in which it invests. The fund invests in 207 names
(excluding the midcap portfolio) diversified over 24 countries and 10
sectors resulting in wide diversification and limited price risk.
Investments are made within the limits stated in the prospectus. On
the basis of reports the management board discussed risk-management
and compliance issues, subjects which were also covered in meetings
with the supervisory board.
Energy
At the beginning of the year this sector was doing very well. Oil
prices rose steadily to a level around USD 80. However, the situation
started to change in August. Demand slowed partially as a result of
the warm winter weather in the US and inventories rose because supply
was not hampered by hurricanes this year. Within this sector we
primarily reduced our holding in former favorite Valero Energy. In
the previous annual report this stock was still the fund's top
performer. Slowly but steadily refinery capacity will increase and
together with the decline in consumer spending demand for gasoline
will also slow down in the US. The proceeds of the sale of Valero
Energy were invested in Chevron, which is a more diversified company
with interests in oil production, refinery and marketing.
Materials
During the year the fund had an underweight position in materials.
The interest in Inco was sold after a takeover battle between Phelps
Dodge and CVRD. For several months nickel producer Inco was the
object of takeover battles but eventually Brazilian company CVRD made
the highest bid and paid in cash. The proceeds were invested in gold
producer Newmont Mining. The outlook for gold is favorable,
particularly because many Asian central banks are expected to want to
diversify their currency reserves over more currencies than just the
US dollar and gold also qualifies as such an investment. Within this
sector we also have interests in agrochemical companies such as
Syngenta and Monsanto. Prices for soft commodities, such as grain,
soy beans and corn will rise due to increased demand from Asia, but
also because these commodities are being used as alternative energy
sources. Syngenta's and Monsanto's products help farmers cultivate
their land as productively as possible.
Industrials
The industrials sector was overweight throughout the year. European
industrial companies represented a large part of the portfolio.
Besides ABB mentioned above, Vinci (construction and toll roads in
France), Volvo (trucks) and Adecco (temping agency) realized
excellent results. Capital gains on Japanese stocks were
disappointing. Japanese trading company Mitsubishi Corp's
performance suffered as a result of the decrease in oil and coal
prices from the second quarter onwards. During the year the
portfolio's cyclical sensitivity to this sector was reduced by
purchasing defense companies. In the US L-3 Communications (defense
software) and Raytheon (defense equipment) were added to the
portfolio.
Consumer discretionary
The consumer-discretionary sector was underweight in the portfolio
throughout the year. In the second half of 2006 US consumers finally
scaled down their spending due to the weakening housing market. As a
result, our interests in KB Home and D.R. Horton suffered, but this
was offset by our interests in Coach (luxury handbags), Kohl's (a
North American retailer of good-quality yet reasonably priced
clothes) and, last but not least, Esprit Holding, already a familiar
name in Germany, the Netherlands, Belgium and Hong Kong and now also
successful in France. The media sector did remarkably well and the
portfolio benefited from its holdings in VNU (taken over), News Corp
(Australian media company headed by media tycoon Rupert Murdoch) and
Time Warner (which, after the unsuccessful merger with AOL at the
height of the Internet bubble, is now increasingly getting its
business in order).
Consumer staples
The weight of this sector was above average throughout the year.
Environmental legislation in the United States means that ethanol
must be added to refined oil from now on. As a result of this the
portfolio's position in Archer Daniels Midland, which processes corn
into ethanol, recorded a considerable price gain. Another rewarding
position was Japan Tobacco, which enjoyed a strong performance in
total contrast to the moderate advance of the Japanese stock market
as a whole. Japan Tobacco is a typical example of a stock which makes
Japan an interesting country for investing. The company was financed
far too conservatively and so its takeover of British cigarette maker
Gallagher and share buy-back swiftly resulted in a sound increase in
the company's earnings per share. Avoiding large US companies such
as Coca-Cola and Wal-Mart Stores clearly contributed to the good
relative performance within this sector. In the course of the year
Molson Coors was added to the portfolio as after four consecutive
profit warnings the stock had become very cheap. To finance this
purchase we sold Energizer Holding (batteries and razor blades,
comparable to Gillette before the takeover by Procter & Gamble) and
Colgate-Palmolive (tooth paste and shampoo) after both had realized
sharp price increases.
Health care
The weight in this sector was kept at overweight. Unfortunately the
sector once again lagged the average. In the second quarter the
sector had a short-lived recovery when the growth outlook for the
global economy dropped and inflation concerns emerged at the same
time. This sector usually holds up well in turbulent economic times.
At the end of the year the sector lost ground again, not helped by
the fact that Pfizer cancelled the development of a promising
cholesterol drug. It seems that the large pharmaceuticals companies
are just not able to launch new innovative drugs. During the year the
fund preferred the services (Aetna, Wellpoint), suppliers (Medtronic)
and biotechnology (Amgen) subsectors, but this year these stocks
realized disappointing results as well. The Democrats' election
victory In the US was the final blow, as for this sector a Democrat
majority is synonymous with government interference and price
restrictions.
Financials
The sector was underweight throughout the year. Yet, its performance
was slightly above average. Investment banks in particular realized
huge profits. Goldman Sachs's EPS, for instance, rose almost 80% and
the share itself rose 57%. Investment banks were well represented in
the portfolio with positions in Goldman Sachs, UBS and later in the
year in Credit Suisse. There were no portfolio holdings in regional
banks in the United States as mortgage growth was expected to slow
down and interest-rate margins, in particular, to come under
pressure. Short-term interest rates have risen, as a result of which
banks have to pay more to attract money. Competition for savings has
also increased due to the fact that Internet banks (such as ING
Direct) offer a higher interest rate on savings than regional banks.
Indirect real estate has also done very well within the sector.
Investors were looking for dividend return and found it from
real-estate companies which distribute their rent income entirely in
the form of dividend. Due to the increase in stock prices dividend
return on real-estate stocks has now dropped to a level below that of
bond yields in many countries. In other words, these stocks have
become too expensive.
Information technology
During the year this sector's weight was increased to overweight.
Large portfolio positions such as Cisco and Oracle realized good
returns and their share prices rose accordingly. We lost some money
on our interest in ADC Telecom, a company which supplies equipment to
the telecom industry. The telecom industry spent less than we
expected and the emphasis remains on software. This is a segment with
an average valuation combined with enormous cash flow as investment
is limited and licenses generate a constant cash flow.
Telecommunication services
The telecommunication sector was kept at market weight. Telephone
rates (fixed and mobile) are still under pressure. As mentioned
before, we achieved good results with our interest in BellSouth. The
interests in Telenor and Singapore Telecom also contributed to the
excellent results in this sector. Both companies have large interests
in telecommunication services in emerging markets, where growth is
considerably higher than in mature markets.
Utilities
The utilities sector had another good performance in 2006. This
sector has a relatively high dividend return, which made it once
again popular among investors The fund's underweight here thus did
not yield the desired result. The valuation of utilities companies
has risen again causing the sector to become still more expensive. We
will therefore maintain our underweight position.
Position in smallcaps
The fund Robeco strives to be a reliable partner for investing in
global equities in mature markets. This goal must be reflected by a
stable outperformance against the MSCI World Index. This index
contains many smallcaps. If these rise sharply, as was the case in
recent years, this will negatively impact Robeco's result compared to
the index. Smallcaps often have reduced liquidity which makes it
difficult to select a limited number of stocks for investment. This
is the reason why this year we built up a position in this segment
through a smallcaps portfolio which was developed especially for the
fund Robeco. The stocks in this portfolio are selected using a
quantitative model. Smallcaps slightly outperformed largecaps. Stock
selection using the quantitative model turned out well.
Top 10 stocks
Country Interest Performance in %
in % 01/01-31/12/2006
31/12/2006
In euros In local
currency
1. Total France 1.7 7.8% 7.8%
2. Royal Dutch Shell
A Netherlands 1.6 7.5% 7.5%
3. United
Bank of America States 1.3 8.0% 20.7%
4. United
Citigroup States 1.3 6.9% 19.6%
5. United
Amgen States 1.1 -22.5% -13.4%
6. Royal Bank of United 1.1
Scotland Kingdom 20.8% 18.4%
7. United 1.1
Exxon Mobil States 24.4% 39.1%
8. United 1.1
J.P. Morgan Chase States 12.4% 25.6%
9. United
Cisco Systems States 1.0 42.8% 59.6%
10. United
GlaxoSmithKline Kingdom 1.0 -3.6% -5.5%
Notes to the top 10 stocks
Total is a French integrated oil company with the best prospects for
production growth. Royal Dutch Shell is a Dutch/British integrated
oil company with a well-diversified portfolio. Bank of America, like
JP Morgan Chase, is a diversified bank. Both banks offer services
ranging from credit cards to corporate loans. Citigroup is one of the
world's largest financial conglomerates. Amgen is the world's largest
biotech company. Royal Bank of Scotland is a bank and insurance
company which mainly focuses on the United Kingdom. Exxon Mobil is a
US integrated oil company. Cisco Systems supplies IP-protocol based
network solutions for companies and governments. GlaxoSmithKline is a
British pharmaceutical company with one of the best new-product
pipelines in the industry.
The fund Robeco
The fund Robeco strives to be a reliable partner for investing in
global equities in mature markets. This goal must be reflected by a
stable outperformance against the MSCI World Index. Within the global
equities segments Robeco Group clients can choose between the
following funds: Rolinco (growth stocks), Robeco Global Value (value
stocks) and Robeco. Rather than making a choice between value and
growth stocks, the Robeco fund unites both worlds in one investment
fund.
Dutch Financial Supervision Act
The Dutch Financial Supervision Act [Wet op het financieel toezicht
(Wft)] became effective on 1 January 2007. This act regulates
supervision of the Dutch financials sector. The Wft has replaced
existing supervision legislation (including the Dutch Investment
Institutions Supervision Act [Wet toezicht beleggingsinstellingen]).
Outlook
We expect that 2007 will be an average to good year for equities.
Growth will continue, albeit at a lower level. Bond yields could pick
up slightly, however, this increase will not amount to much. Equity
valuations are below the long-term average. A clear cause for concern
is earnings growth. In many sectors (such as raw materials and
energy), costs are increasing, whereas the prices of raw materials
are leveling off. Labor costs could demand a larger piece of the pie
which will have a stabilizing effect on profit margins, after years
of growth. Earnings will then grow at the same rate as nominal GDP
growth at most, which means at a slower rate than last year.
Declaration regarding administrative organization and internal
control
General
The administrative organization and internal control of the
Management Company Robeco Fund Management BV are discussed below
insofar as these target the activities of the investment institution.
Administrative organization and internal control are both geared to
the size of the organization and meet the requirements of article 8
of the 2005 Dutch Investment Institutions Supervision Decree [Besluit
toezicht beleggingsinstellingen 2005, or 'Btb']. Administrative
organization and internal control can never offer absolute
guarantees, rather they are designed to provide reasonable assurance
of the effectiveness of internal-control measures in relation to the
risks of the activities of the investment institution.
The assessment of the effectiveness and good functioning of
administrative organization and internal control is the
responsibility of the Management Company.
Activities
Within the scope of the application for a license under the 2005
Dutch Investment Institutions Supervision Act [Wet toezicht
beleggingsinstellingen 2005, or 'Wtb'], the structural aspects of the
administrative organization and internal control applied were
assessed and adjusted to the Wtb. The relevant risks were identified
and corresponding internal-control measures formulated.
The effectiveness and good functioning of administrative organization
and internal control are assessed in various ways. The management
board is informed periodically by means of control reports which are
based on the process descriptions and the internal-control measures
included therein. Furthermore, there are incident and complaints
procedures.
In 2006, the effective functioning of the internal-control measures
was tested by means of partial tests to verify their design,
existence and effectiveness. This involved generic test activities
that were carried out in a process-oriented way for the various
investment institutions for which Robeco Fund Management B.V. acts as
management company. The test activities may therefore differ for the
individual investment institutions. The tests were executed by
various departments at group and business-unit level, in consultation
with internal and external auditors.
The tests did not lead to relevant findings for this annual report.
Report on administrative organization and internal control
In 2006, we assessed the various aspects of administrative
organization and internal control. In our assessment we noted nothing
that would lead us to conclude that the description of the structural
aspects of administrative organization and internal control within
the meaning of article 8 of the 2005 Dutch Investment Institutions
Supervision Decree failed to meet the requirements as specified in
said decree and related regulations. Neither did we conclude that the
internal-control measures were ineffective or failed to function
according to the description provided.
Rotterdam, 22 March 2007
The management board
Robeco Fund Management B.V.
Financial statements
Balance sheet
before profit appropriation,
EUR x thousand
31/12/2006 31/12/2005
Investments
Financial investments
7,192,191
Stocks 1 7,188,880
Derivatives 2, 11 9,660 8,941
7,201,132
Total investments 7,198,540
Accounts receivable
Dividends and interest
receivable 3 4,442 3,819
Receivables on securities
transactions 12,227 14,114
Receivables on affiliated
companies 4 393 199
Sundry debtors 5 35,373 29,686
52,435 47,818
Other assets
Cash 6 15,081 3,280
Accounts payable
Obligations arising from
derivative instruments 2, 11 6,629 2,635
Payable to credit institutions 99,209 17,659
Payable to affiliated companies 7 9,617 6,486
Sundry creditors 8 13,030 2,184
128,485 28,964
Accounts receivable and other
assets less accounts payable -60,969 22,134
Shareholders' equity 9 7,137,571 7,223,266
Composition of shareholders'
equity
Issued capital 10 247,849 263,797
Other reserves 9 6,406,071 5,325,545
Net result 9 483,651 1,633,924
7,137,571 7,223,266
The numbers of the items in the financial statements refer to the
numbers in the Notes.
Profit and loss account
EUR x thousand
2006 2005
Investment income 12, 21 149,720 115,350
Changes in value 1, 2, 12 413,476 1,591,383
563,196 1,706,733
Costs 13
Management costs 14 71,283 65,168
Service fee 14 6,946 6,417
Other costs 15 1,316 1,224
79,545 72,809
Net result 483,651 1,633,924
The numbers of the items in the financial statements refer to the
numbers in the Notes.
Cash-flow summary
indirect method, EUR x thousand
2006 2005
Cash flow from investment activities
Net result 483,651 1,633,924
Realized and unrealized results -413,476 -1,591,383
Purchase of investments -2,199,823 -3,010,642
Sale of investments 2,625,807 3,686,733
Increase(-)/decrease(+) accounts receivable -4,617 -35,586
Increase(+)/decrease(-) accounts payable 10,256 -3,444
501,798 679,602
Cash flow from financing activities
Received for shares subscribed 794,588 643,625
Paid for repurchase of own shares -1,238,931 -1,116,590
Profit distribution -125,003 -108,390
Increase(+)/decrease(-) accounts payable 3,721 -
-565,625 -581,355
Net cash flow -63,827 98,247
Currency and cash revaluation -5,922 -174
Increase(+)/decrease(-) cash -69,749 98,073
Cash at opening date 3,280 1,743
Accounts payable to credit institutions at -17,659 -114,195
opening date
Total cash at opening date -14,379 -112,452
Cash at closing date 15,081 3,280
Accounts payable to credit institutions at -99,209 -17,659
closing date
Total cash at closing date -84,128
-14,379
Notes
General
Robeco N.V. (hereafter also referred to as 'the fund') is a Dutch
investment company with a variable capital within the meaning of
article 28 of the 1969 Dutch Corporate Income Tax Act [Wet op de
Vennootschapsbelasting 1969]. This means that no corporate-income tax
is due, providing that the fund makes its profit available for
distribution to shareholders in the form of dividend within eight
months of the close of the financial year and satisfies any other
relevant regulations.
As a result of the appointment as Manager of Robeco Fund Management
B.V., which holds a license from the AFM [the Netherlands Authority
for the Financial Markets] under the Dutch Investment Institutions
Supervision Act [Wet toezicht beleggingsinstellingen, or 'Wtb'], the
license in accordance with article 5 of the 1990 Dutch Investment
Institutions Supervision Act has been legally cancelled. Since 26
April 2002, Robeco N.V. is subject to the EC directive containing
rules for Undertakings for Collective Investment in Transferable
Securities (UCITS). Under the terms of article 6 of Part II of the
Dutch Investment Institutions Supervision Act, Robeco N.V. was
granted a license as of the same date by the AFM, permitting trade of
its shares in other EC member states.
Manager
The fund appointed Robeco Fund Management B.V. as Manager of the fund
as of 1 January 2006. The tasks for which the Manager will be
responsible include the execution of the investment policy,
management of the fund assets as well as handling the fund's
financial administration, marketing and distribution. Robeco Fund
Management B.V. is part of the Robeco Group and was granted a license
by the Netherlands Authority for the Financial Markets to act as
manager on 29 December 2005. The agreement between the fund's
management board and the Manager includes the stipulation that the
Manager will comply with the provisions of the prospectus, the
Articles of Association and the directives of the fund's management
board, insofar as these are in line with the shareholders' interests,
and that the Manager will observe the applicable legislation and
regulations. The Manager will also regularly report to the management
board on its duties. At the General Meeting of Shareholders held on
27 April 2006 Robeco Fund Management B.V. was appointed as director
of the company.
Models
The annual financial statements have been drawn up in conformity with
the models provided by Dutch legislature. In certain areas,
descriptions have been used which better express the nature of the
items and relate better to the characteristics of an investment
company.
Open-end fund
Robeco N.V. is an open-end investment company, meaning that, barring
exceptional circumstances, Robeco N.V. issues and repurchases its
shares on a daily basis at prices approximating net asset value. A
fixed spread between the bid and offer price applies to cover costs
related to issuance and repurchase of own shares. The issue price
will not be more than 0.5% higher than the net asset value and the
repurchase price will not be more than 0.5% lower than the net asset
value. The abovementioned margin between the net asset value and the
issue and repurchase prices, and the associated costs, are for the
account and risk of Robeco Investment Consulting B.V., as a result of
which Robeco N.V. issues and repurchases its shares at net asset
value. Robeco Investment Consulting B.V. will distribute any positive
spread results to the funds, in proportion to each fund's positive
contribution to the spread result. A buffer is maintained to cover
any future losses. As of 26 February 2007, the new trading system for
open-end investment institutions on Euronext Amsterdam will be
implemented. For the Ccmpany this means that the bid and offer system
described above will no longer be valid. According to the Euronext
guidelines, orders can be placed until 16:00 hours (cut-off time).
Orders that are placed via Euronext Amsterdam will be processed once
a day only and will be executed on the next stock-exchange day at the
net asset value, augmented or reduced by a limited surcharge or
discount. The only purpose of this surcharge or discount is to cover
the costs made by the company related to the entry and exit of
investors.
Non-certificated participation in the Netherlands
Shares may be held in non-certificated form in Robeco Direct N.V. or
via the affiliated branches of Rabobank in the Rabo Securities
Account. Participants pay costs on the sum deposited for each
purchase, and in the event of a sale a percentage of the sum
withdrawn. These participation costs are currently a maximum of 0.4%
via Robeco Direct and a maximum of 0.5% via Rabobank, depending on
the channel selected. These sums will accrue to Robeco Direct and
Rabobank respectively.
Outsourcing core tasks
As a result of the appointment of the Manager, outsourcing of the
administration has been terminated as of 1 January 2006. These costs
were covered by the service fee. Agreements have been made with the
aforementioned party relating to the provision of information and
performance standards.
Accounting principles
General
Unless stated otherwise, items shown in the annual financial
statements are included at nominal value and expressed in thousands
of euros.
Financial investments
Unless stated otherwise, financial investments are included at fair
value. The fair value of stocks is determined on the basis of market
prices or other market quotations at closing date. For derivatives
such as forward exchange transactions, this value is based on the
currency rates and reference interest rates at closing date and for
futures the value is determined on the basis of the market price and
other market quotations at closing date. Transaction costs incurred
in the purchase and sale of investments are included in the purchase
or sale price as appropriate.
Securities lending
Investments for which the legal ownership has been transferred by the
fund for a given period of time as a result of securities-lending
transactions, will continue to be included in the fund's balance
sheet during this period, since their economic advantages and
disadvantages, in the form of investment income and changes in value,
will be added to or deducted from the fund's result. The way in which
collateral ensuing from securities-lending transactions is reported
depends on the nature of this collateral. If the collateral is
received in the form of investments these will not be included in the
Balance sheet as the economic advantages and disadvantages relating
to the collateral will be for the account and risk of the
counterparty. If the collateral is received in cash it will be
included in the Balance sheet as, in this case, the economic
advantages and disadvantages will be for the account and risk of the
fund.
Affiliated parties
Both the fund and its Manager are affiliated to entities belonging to
Robeco Groep N.V. The affiliation with Robeco Groep N.V. stems from
its capacity to have decisive control or a substantial influence on
the fund's or the Manager's business policy. Robeco Groep N.V. is
part of the Rabobank Group. The management structure of Robeco Groep
N.V., in which significant authority is allocated to its independent
supervisory board, is such that Rabobank does not have a meaningful
say in or influence on the fund's business policy. Robeco Groep N.V.
pursues an independent investment policy on behalf of its affiliated
investment companies, taking into account the interests of the
investors involved. Besides services of other market parties, Robeco
N.V. also uses the services of one or more of these affiliated
entities including transactions relating to securities, treasury,
derivatives, custody, securities lending, sale and purchase of its
own shares, fund-administration services, as well as management
activities. Transactions are executed at market rates.
Structure of the Robeco Group
The schematic diagram below shows the position of the entities
referred to in the annual report and their mutual relationship within
the Robeco Group. Only the relationships that are relevant to the
investment institution have been included in the flow chart.
Determination of the result
General
Investment results are determined by investment income, rises or
declines in stock prices, rises or declines in foreign exchange rates
and results of transactions in currencies, including forward
transactions, and derivatives. The results are accounted for in the
Profit and loss account.
Investment income
Net cash dividends declared during the year under review, the nominal
value of stock dividends declared, interest received and paid and
proceeds from loan transactions. Accrued interest at balance-sheet
date is taken into account.
Movements in value
Realized and unrealized capital gains and losses on securities and
currencies.
Foreign currencies
Transactions in currencies other than the euro are converted into
euros at the exchange rates valid at the time. Assets and liabilities
expressed in other currencies are converted into euros at the
exchange rate prevailing at balance-sheet date. Any exchange
differences arising are accounted for in the Profit and loss account.
FINANCIAL INSTRUMENTS
Risks
Transactions in financial instruments may lead to the fund being
subject to the risks described below or to the fund transferring
these risks to another party.
Price risk
Currency risk is the risk that the value of a financial instrument
will fluctuate as a result of changes in exchange rates.
Interest-rate risk is the risk that the value of a financial
instrument will fluctuate as a result of changes in market rates.
Market risk is the risk that the value of a financial instrument will
fluctuate as a result of changes in market prices, caused by factors
that exclusively apply to the individual instrument or its issuer or
caused by factors that affect all instruments traded in the market.
The fund minimizes the risks by investing mainly in large and
well-known companies and by making a balanced selection with regard
to distribution across regions, sectors, individual stocks and
currencies.
Credit risk
Credit risk is the risk that the counterparty of a financial
instrument will no longer meet its obligations, as a result of which
the fund will suffer a financial loss. The fund minimizes this risk
by trading exclusively with reputable counterparties. Wherever it is
customary in the market, the fund will demand and obtain collateral.
As of balance-sheet date collateral ensuing from securities-lending
transactions was received. More information can be found in the Notes
to the balance sheet.
Liquidity risk
Liquidity risk is the risk that the fund is not able to obtain the
financial means required to meet the obligations arising from
financial instruments. The fund minimizes this risk by mainly
investing in financial instruments that are tradable on a daily
basis.
Insight into actual risks
The Report of the management board, the Balance sheet, the Notes to
the balance sheet and the Spread of net assets, which includes the
geographic distribution of the investments, the net currency position
and distribution over sectors, give an insight into the actual risks
at balance-sheet date.
Risk management
Managing risk is a part of the investment process as a whole and with
the help of advanced systems, the risks outlined above are limited,
measured and monitored on the basis of fixed risk measures.
Policy regarding the use of derivative instruments
Investing implies that positions are taken. As it is possible to use
various instruments, including derivative instruments, to construct
an identical position, the selection of derivatives is subordinate to
the positioning of a portfolio. In our published information,
attention is given primarily to the overall position, and secondarily
to the nature and volume of the financial instruments employed.
Derivatives
The market value of derivatives is reported in the Balance sheet. The
presentation of the market value is based on the liabilities and
receivables per counterparty. The receivables are reported under
Financial investments and the liabilities are reported under Accounts
payable. The value of the derivatives' underlying instruments is not
included in the Balance sheet. If applicable, they are explained
under the heading Commitments not shown in the balance sheet.
Notes to the balance sheet
1 Stocks
Movements in the stock portfolio
EUR x thousand
2006 2005
Book value (market value) at opening date 7,192,191 6,293,582
Purchases 2,172,727 3,010,642
Sales -2,625,807 -3,629,005
Realized and unrealized results:
stocks 857,083 1,055,095
currencies -407,314 461,877
Book value (market value) at closing date 7,188,880 7,192,191
A breakdown of the portfolio and overviews of purchases and sales
exceeding an amount of EUR 20 million and the spread of net assets
can be found at the end of this report. Shares worth EUR 921.6
million (EUR 1,103.8 million at the end of 2005) were lent at
balance-sheet date. To cover the risk of non-restitution, adequate
collateral with a value of EUR 1,003.5 million (EUR 1,149.5 million
at the end of last year) was demanded and obtained; this collateral
is not included in the Balance sheet.
2 Derivatives
Movements in
derivatives
EUR x thousand
Forward
exchange Futures Total
transactions
2006 2005 2006 2005 2006 2005
Book value (market
value) at opening 2,413 -14,140 3,893 3,589 6,306 -10,551
date
Sales/expirations 19,334 -16,657 7,762 -41,071 27,096 -57,728
Realized and -25,410 33,210 -4,961 41,375 -30,371 74,585
unrealized results
Book value (market
value) at closing -3,663 2,413 6,694 3,893 3,031 6,306
date
The presentation of derivatives in the balance sheet is based on the
liabilities and receivables per counterparty.
+-------------------------------------------------------------------+
| Presentation of derivatives in the Balance sheet |
|-------------------------------------------------------------------|
| EUR x thousand | | | |
|----------------------------+-----------------+---+----------------|
| | Under financial | | Under accounts |
| | investments | | payable |
|----------------------------+-----------------+---+----------------|
| | | | |
|----------------------------+-----------------+---+----------------|
| | 2006 | 2005 | | 2006 | 2005 |
|----------------------------+--------+--------+---+--------+-------|
| Type of derivative | | | | | |
|----------------------------+--------+--------+---+--------+-------|
| Forward exchange | 2,966 | 5,048 | | 6,629 | 2,635 |
| transactions | | | | | |
|----------------------------+--------+--------+---+--------+-------|
| Futures | 6,694 | 3,893 | | - | - |
|----------------------------+--------+--------+---+----------------|
| | | | | | |
|----------------------------+--------+--------+---+-------+--------|
| Total | 9,660 | 8,941 | | 6,629 | 2,635 |
+-------------------------------------------------------------------+
3 Dividends and interest receivable
Concerns dividends declared but not yet received.
4 Receivables on affiliated companies
This is income receivable ensuing from securities-lending
transactions and recoverable transaction costs.
5 Sundry debtors
This includes recoverable dividend tax, tax withheld at source
outside the Netherlands on behalf of the Dutch Tax Office, in
accordance with article 6 of the Dutch Investment Institutions Decree
['Btb', Besluit toezicht beleggingsinstellingen] and suspense items.
6 Cash
Includes balances in current accounts at banks.
7 Payable to affiliated companies
These are debts arising from issuance and repurchase of own shares
and management and service fees to be paid.
8 Sundry creditors
Current liabilities such as unpaid expenses and suspense items.
9 Shareholders' equity
Composition of and changes in shareholders' equity
EUR x thousand
2006 2005
Issued capital
Situation at opening date 263,797 283,879
Received on shares issued 29,031 27,169
Paid for shares repurchased -44,979 -47,251
Situation at closing date 247,849 263,797
Other reserves
Situation at opening date 5,325,545 5,562,719
Received on shares issued 765,557 616,456
Paid for shares repurchased -1,193,952 -1,069,339
Net result from previous financial year 1,633,924 324,099
Profit distribution -125,003 -108,390
Situation at closing date 6,406,071 5,325,545
Net result 483,651 1,633,924
Shareholders' equity 7,137,571 7,223,266
The company's authorized share capital amounts to EUR 800 million,
divided into 800,000,000 ordinary shares with a nominal value of EUR
1 each.
+----------------------------------------------------------+
| Survey of movements in net assets |
|----------------------------------------------------------|
| EUR x thousand | | | |
|----------------------------+------------+---+------------|
| | 2006 | | 2005 |
| | | | |
|----------------------------+------------+---+------------|
| | | | |
|----------------------------+------------+---+------------|
| Assets at opening date | 7,223,266 | | 6,170,697 |
|----------------------------+------------+---+------------|
| | | | |
|----------------------------+------------+---+------------|
| Company shares issued | 794,588 | | 643,625 |
|----------------------------+------------+---+------------|
| Company shares repurchased | -1,238,931 | | -1,116,590 |
|----------------------------+------------+---+------------|
| | | | |
|----------------------------+------------+---+------------|
| | 6,778,923 | | 5,697,732 |
|----------------------------+------------+---+------------|
| | | | |
|----------------------------+------------+---+------------|
| Investment income | 149,720 | | 115,350 |
|----------------------------+------------+---+------------|
| Management costs | -71,283 | | -65,168 |
|----------------------------+------------+---+------------|
| Service fee | -6,946 | | -6,417 |
|----------------------------+------------+---+------------|
| Custody costs | -795 | | -752 |
|----------------------------+------------+---+------------|
| Other costs | -521 | | -472 |
|----------------------------+------------+---+------------|
| | | | |
|----------------------------+------------+---+------------|
| | 70,175 | | 42,541 |
|----------------------------+------------+---+------------|
| Movements in value | 413,476 | | 1,591,383 |
|----------------------------+------------+---+------------|
| | | | |
|----------------------------+------------+---+------------|
| Net result | 483,651 | | 1,633,924 |
|----------------------------+------------+---+------------|
| Profit distribution | -125,003 | | -108,390 |
|----------------------------+------------+---+------------|
| | | | |
|----------------------------+------------+---+------------|
| Assets at closing date | 7,137,571 | | 7,223,266 |
+----------------------------------------------------------+
10 Assets, shares outstanding and net asset value per share
Assets, shares outstanding and net asset value per share
31/12/2006 31/12/2005 31/12/2004
Assets EUR x 7,137,571 7,223,266 6,170,697
thousand
Shares issued in 29,031,142 27,169,492 39,255,017
financial year
Shares
repurchased in -44,978,555 -47,251,035 -63,097,588
financial year
Number of shares 247,849,812 263,797,225 283,878,768
outstanding
Net asset value 28.80 21.74
per share in EUR 27.38
11 Commitments not shown in the balance sheet
The forward exchange transactions current at closing date represent
purchases of AUD 75 million, CAD 102 million, JPY 33,439 million and
GBP 135 million, against sales of CHF 250 million, EUR 266 million,
NOK 165 million, SEK 255 million and USD 78 million. Futures
contracts purchased at balance-sheet date represent an increase in
assets invested of JPY 24,948 million; futures contracts sold
represent a decrease in assets invested of EUR 178 million. Forward
exchange transactions and futures contracts have been included in the
Spread of net assets at the end of this report. Unrealized results of
these transactions at closing date are included in the Profit and
loss account.
Notes to the profit and loss account
12 Performance
+----------------------------------------------------------------------+
|Performance | | | | | | | | | |
|per share* | | | | | | | | | |
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
|EUR x 1 | | | | | | | | | |
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
| | 2006| | 2005| | 2004| | 2003| | 2002|
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
| | | | | | | | | | |
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
|Investment | 0.58| | 0.43| | 0.37| | 0.37| | 0.45|
|income | | | | | | | | | |
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
|Changes in | 1.60| | 5.89| | 0.92| | 0.91| | -10.93|
|value | | | | | | | | | |
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
|Management | | | | | | | | | |
|costs, | | | | | | | | | |
|service fee | -0.31| | -0.27| | -0.20| | -0.17| | -0.22|
|and other | | | | | | | | | |
|costs | | | | | | | | | |
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
| | | | | | | | | | |
|-------------+-------+---+-------+---+-------+---+-------+---+--------|
|Net result | 1.87| | 6.05| | 1.09| | 1.11| | -10.70|
|----------------------------------------------------------------------|
|*) Based on the average amount of shares outstanding during the |
|reporting year. The average amount of shares outstanding is calculated|
|on a daily basis for the years 2006, 2005, 2004 and 2003 and on a |
|monthly basis for 2002. |
+----------------------------------------------------------------------+
Costs
13 Total expense ratio
Total expense ratio
in % Maximum
2006 prospectus 2005
Cost item
Management costs 1.00 1.00 1.00
Service fee 0.10 0.12 0.10
Other costs 0.02 0.02 0.02
Total 1.12 1.14 1.12
The total expense ratio expresses the costs charged to the fund
during the reporting period as a percentage of the average assets
entrusted during the reporting period. The total expense ratio as
shown does not include transaction costs. The total expense ratio was
1.12% during the reporting period. The management costs relate to all
of the fund's current costs, which include the fees paid for
registering shareholders and all costs resulting from the management
of the fund, with the exception of costs relating to investments and
taxes. The service fee covers the administration, the costs of the
external auditor, other external advisers, regulators, costs relating
to reports required by law, such as the annual and semiannual
reports, and the costs relating to the meetings of shareholders.
Other costs relate to bank charges and the custody fee charged by
third parties for the custody of the fund's securities portfolio. The
custody fee is EUR 795 thousand (last year EUR 752 thousand).
14 Management costs and service fee
Management costs relate exclusively to the management fee of 1.00%
per year. The service fee amounts to 0.12% per year. Formal and
operational expenses are paid from the service fee. These are
explained in the notes to the total expense ratio. For assets
exceeding EUR 1 billion the service fee is 0.10%; for assets
exceeding EUR 5 billion the service fee is 0.08%. The management fee
and service fee are charged by the Manager. These fees are calculated
on a daily basis, based on the average assets entrusted. Wherever in
this report mention is made of the average assets entrusted this is
also calculated on a daily basis, unless stated otherwise.
15 Other costs
This includes custody costs and bank charges.
16 Performance fee
Robeco N.V. is not subject to a performance fee.
17 Transaction costs
Brokerage costs and exchange fees relating to investment transactions
are discounted in the cost price or the sales value of the investment
transactions. These costs and fees are charged to the result ensuing
from changes in value. The quantifiable transaction costs are shown
below. The transaction volume of the quantifiable transaction costs
is 95.0 % (previous year 99.6%) of the total transaction volume.
Transaction costs
EUR x thousand
2006 2005
Transaction type
Stocks 7,756 10,682
Futures 436 428
18 Commission-sharing arrangements, soft-dollar arrangements and
hard commissions
Various independent research institutions/third parties provide
services to the company to support its decision-making process. Part
of the commission paid to brokers is used to pay for these services
through commission-sharing arrangements.. In such cases the
commission is exclusively for research services. In 2006
commission-sharing arrangements represented an amount of EUR 1.905
thousand (last year EUR 1.567 thousand).
Furthermore, there are so-called soft-dollar arrangements to pay for
financial-service companies' services and products. These services
and products are covered by part of the commissions paid to brokers
in connection with the execution of securities transactions. Only the
aforementioned commission-sharing arrangements were used during the
reporting year. There were no soft-dollar arrangements (previous year
EUR 622 thousand) or hard commissions (return commissions) during the
reporting year.
19 Turnover ratio
This shows the turnover of the investments against the average assets
entrusted and is a measure of the incurred transaction costs
resulting from the portfolio policy pursued and the ensuing
investment transactions. In the calculation method used, the amount
of the turnover is determined by the sum of the purchases and sales
of investments less the sum of issuance and repurchase of own shares.
If the outcome is negative, the turnover ratio is 0. The turnover
ratio is determined by expressing the amount of turnover as a
percentage of the average assets entrusted. The turnover ratio over
2006 is 39% (versus 76% in the previous year).
20 Transactions with affiliated parties
Part of the transaction volume over the reporting period relates to
transactions with affiliated parties. The table below shows the
various types of transactions where this was the case.
Transactions with affiliated parties
Part of the total volume in %
2006 2005
Transaction type
Stocks - 0.3
Forward exchange transactions 10.3 4.1
Deposits 100.0 100.0
Call money 80.7 95.8
21 Securities lending
Robeco Securities Lending B.V. is the intermediary for all Robeco
N.V.'s securities-lending transactions. As compensation for its
services Robeco Securities Lending B.V. receives a fee of 40% of the
gross income resulting from these securities-lending transactions. An
external agency periodically assesses whether the agreements between
the fund and Robeco Securities Lending B.V. are still in line with
the market. In 2006 the proceeds for the fund amounted to EUR 3,305
thousand (last year EUR 1,821 thousand). For Robeco Securities
Lending B.V. this was EUR 2,203 thousand (last year EUR 1,214
thousand).
22 Voting policy for stocks in the investment portfolio
In 2006, Robeco N.V. voted at the majority of the general meetings of
shareholders of the companies in which it invests. If the shares of
an investment position have been lent out, the voting rights attached
to those shares may not be exercised during general meetings of
shareholders. If an important event were to occur, the shares that
have been lent out may be recalled in order for the voting rights
attached to these shares to be able to be exercised. The voting
policy and more information about votes cast can be found on the
Robeco Group's Internet site, www.robeco.com.
23 Personnel costs
Robeco N.V. does not employ personnel. Robeco Nederland B.V. is the
employer of Robeco N.V.'s management board and personnel in the
Netherlands. Their remuneration is paid out of the management fees
received.
Robeco Nederland B.V.'s remuneration policy for fund managers
consists of both fixed and variable income. The secondary conditions
of employment are in line with what is common practice in the
financial-services industry.
The fixed income offers a good and competitive remuneration basis
within the Dutch asset-management market. A fund manager is assigned
to a salary scale with a minimum and maximum income based on the
level of responsibility of his function (Hay method for function
valuation). Growth within this scale is linked to (performance)
results and competencies.
The variable income offers the fund manager remuneration for his
individual, long-term outperformance. Payment is related to the
outperformance relative to a preset target. The track record over
both a 1-year and 3-year period is taken into account when
determining the variable remuneration. The variable remuneration to
which the fund manager is entitled for any single year, is paid out
over a three-year period (60% in the first year, 30% in the second
and 10% in the third year).
Fund managers are given the opportunity to participate directly in
Robeco's future through virtual shares (E-notes). The allocation of
E-notes is linked to individual performance and the contribution to
the realization of the strategic targets of Robeco as a whole and the
individual's own business unit. The E notes represent a value which
is directly linked to Robeco Groep N.V.'s value.
Rotterdam, 22 March 2007
Supervisory Board
P.C. van den Hoek, chairman
G. Izeboud
Ph. Lambert
D.P.M. Verbeek
Management Board
Robeco Fund Management B.V.
Other data
Stock-exchange listings
The ordinary bearer shares are listed on Eurolist by Euronext
Amsterdam N.V. in Amsterdam, the Netherlands. In addition, Robeco
N.V. has a stock-exchange quotation in Paris, Brussels, Luxembourg,
London, Berlin, Dusseldorf, Frankfurt, Hamburg, Munich, Vienna and
Zurich.
Articles of Association rules regarding profit appropriation
According to article 39 of the Articles of Association, the profit
less allocations to the reserves deemed desirable by the management
board in agreement with the supervisory board shall be at the
disposal of the General Meeting of Shareholders.
Proposed profit appropriation
We propose to declare a dividend of EUR 0.60 per share for the 2006
financial year (previous year EUR 0.48). If this proposal is
accepted, the dividend will be available on Friday 11 May 2007. With
effect from Monday 30 April 2007, Robeco shares will be listed
ex-dividend coupon no. 105 on the stock exchange.
Shareholders will be offered the opportunity to reinvest the dividend
(less dividend tax) in Robeco shares at the company's expense. The
price used to calculate this is the opening price of the shares on
the stock market of Euronext Amsterdam N.V. on Friday 11 May 2007.
Any collection commissions charged by banks in line with the relevant
regulations in their respective countries will be borne by the
shareholder. In some countries, reinvestment will not be possible for
technical reasons.
Supervisory directors' fee
An amount of EUR 32,670 (previous year EUR 32,670) has been allocated
from the profit appropriation for this purpose. The chairman of the
supervisory board receives a remuneration of EUR 10,890 and an
ordinary member of the supervisory board receives a remuneration of
EUR 7,260.
Directors' interests
Statement pursuant to article 45, paragraph 3, of the 2005 Dutch
Investment Institutions Supervision Decree [Besluit toezicht
beleggingsinstellingen, or 'Btb']. The table below shows the total
personal interests in the investments of the investment institution
held by the directors of the investment institution and/or the
management company on 1 January 2006 and 31 December 2006.
Supervisory directors held a joint interest of 4,708 and 4,769 Robeco
N.V. shares on 1 January 2006 and 31 December 2006, respectively. The
managing directors of the management company held a joint interest of
11,237 and 11,893 Robeco N.V. shares on 1 January 2006 and 31
December 2006, respectively. On 1 January 2006 and 31 December 2006,
no options had been granted to supervisory directors; managing
directors of the management company held options to acquire 18,030
and 14,999 Rolinco N.V. shares on the respective dates.
+-------------------------------------------------------------------+
| Directors' interests in the investments of Robeco N.V. |
|-------------------------------------------------------------------|
| | Description | Supervisory | Management | Total |
| | | directors | Board | Quantity |
| | | Quantity | Quantity | |
|-------------+---------------+-------------+------------+----------|
| At 1 | | | | |
| Januari | | | | |
| 2006 | | | | |
|-------------+---------------+-------------+------------+----------|
| AXA | stocks | 11,239 | - | 11,239 |
|-------------+---------------+-------------+------------+----------|
| BNP Paribas | stocks | 2,460 | - | 2,460 |
|-------------+---------------+-------------+------------+----------|
| Buhrmann | Supervisory | 2 | - | 2 |
| | directorships | | | |
|-------------+---------------+-------------+------------+----------|
| Buhrmann | stocks | 41,133 | - | 41,133 |
|-------------+---------------+-------------+------------+----------|
| ING Groep | stocks | 20,294 | - | 20,294 |
|-------------+---------------+-------------+------------+----------|
| Intel | stocks | 5,000 | - | 5,000 |
|-------------+---------------+-------------+------------+----------|
| KPN | stocks | 4,199 | - | 4,199 |
|-------------+---------------+-------------+------------+----------|
| Nestlé | stocks | 315 | - | 315 |
|-------------+---------------+-------------+------------+----------|
| Novartis | stocks | 1,962 | - | 1,962 |
|-------------+---------------+-------------+------------+----------|
| Pfizer | stocks | 1,000 | - | 1,000 |
|-------------+---------------+-------------+------------+----------|
| Reed | stocks | 5,299 | - | 5,299 |
| Elsevier | | | | |
|-------------+---------------+-------------+------------+----------|
| Royal Bank | stocks | 2,539 | - | 2,539 |
| of Scotland | | | | |
|-------------+---------------+-------------+------------+----------|
| Royal Dutch | stocks | 14,785 | 400 | 15,185 |
| Shell A | | | | |
|-------------+---------------+-------------+------------+----------|
| Syngenta | stocks | 4 | - | 4 |
|-------------+---------------+-------------+------------+----------|
| Telenor | stocks | 15,000 | - | 15,000 |
|-------------+---------------+-------------+------------+----------|
| TNT | stocks | 3,800 | - | 3,800 |
|-------------+---------------+-------------+------------+----------|
| Total | stocks | 610 | - | 610 |
|-------------+---------------+-------------+------------+----------|
| Unicredito | stocks | 12,950 | - | 12,950 |
| Italiano | | | | |
|-------------+---------------+-------------+------------+----------|
| VNU | stocks | 6,294 | - | 6,294 |
|-------------+---------------+-------------+------------+----------|
| | | | | |
|-------------+---------------+-------------+------------+----------|
| At 1 | | | | |
| December | | | | |
| 2006 | | | | |
|-------------+---------------+-------------+------------+----------|
| Axa | stocks | 11,239 | - | 11,239 |
|-------------+---------------+-------------+------------+----------|
| BNP Paribas | stocks | 2,706 | - | 2,706 |
|-------------+---------------+-------------+------------+----------|
| E.ON | stocks | 770 | - | 770 |
|-------------+---------------+-------------+------------+----------|
| HSBC | stocks | 4,550 | - | 4,550 |
| Holdings | | | | |
|-------------+---------------+-------------+------------+----------|
| ING Groep | stocks | 13,200 | - | 13,200 |
|-------------+---------------+-------------+------------+----------|
| Intel | stocks | 5,000 | - | 5,000 |
|-------------+---------------+-------------+------------+----------|
| Nestlé | stocks | 315 | - | 315 |
|-------------+---------------+-------------+------------+----------|
| Novartis | stocks | 3,062 | - | 3,062 |
|-------------+---------------+-------------+------------+----------|
| Reed | stocks | 5,299 | - | 5,299 |
| Elsevier | | | | |
|-------------+---------------+-------------+------------+----------|
| Royal Bank | stocks | 2,539 | - | 2,539 |
| of Scotland | | | | |
|-------------+---------------+-------------+------------+----------|
| Royal Dutch | stocks | 18,692 | 400 | 19,092 |
| Shell A | | | | |
|-------------+---------------+-------------+------------+----------|
| SNS Reaal | stocks | 577 | - | 577 |
|-------------+---------------+-------------+------------+----------|
| Syngenta | stocks | 4 | - | 4 |
|-------------+---------------+-------------+------------+----------|
| Telenor | stocks | 15,000 | - | 15,000 |
|-------------+---------------+-------------+------------+----------|
| TNT | stocks | 1,000 | - | 1,000 |
|-------------+---------------+-------------+------------+----------|
| Total | stocks | 3,700 | - | 3,700 |
|-------------+---------------+-------------+------------+----------|
| Unicredito | stocks | 12,950 | - | 12,950 |
| Italiano | | | | |
+-------------------------------------------------------------------+
Under the option scheme, Robeco Groep N.V. grants the right, at its
own expense, to purchase Robeco N.V. shares for 5 years, the value of
the shares being at least the opening price on the first trading day
following the day on which the options are granted.
Aon Risk Services International, of which Dirk P.M. Verbeek is a
director, acted as an intermediary for various insurance policies
concluded at Rabobank Group level, including a Bankers, General
Liability and D&O liability policy. Furthermore Aon Risk Services
International insures several of Robeco's art objects. Apart from the
above, during the period under review there were no business
relationships between supervisory directors and the company other
than that of their membership of the supervisory board.
Interests of the fund manager
The fund manager should act in accordance with Dutch legislation and,
insofar as is relevant, legislation in other countries. As an
employee of Robeco Nederland B.V. he is bound by Robeco's internal
regulations and procedures, including the Rules and regulations
regarding private investment transactions, which are based on the
Dutch Securities Transactions Supervision Act. These Rules should
guarantee that insider trading and mixing of business and private
interests, or semblance thereof, are avoided at all times.
At 1 January 2006 and 31 December 2006 the fund manager held an
interest of 5,047 and 5,271 Robeco N.V. shares, respectively.
Furthermore, at these same dates he held interests in the following
Robeco N.V. investments: 1,170 Royal Dutch Shell A shares and 3,500
Reed Elsevier shares.
Statement for the London Stock Exchange
The members of the supervisory board and the management board of
Robeco N.V. hereby declare that their beneficial interests and those
of their children below the age of 18 years do not in the aggregate
exceed 5% of the company, in respect of either share capital or
voting control.
Rotterdam, 22 March 2007
To the General Meeting of Shareholders and members of the supervisory
board.
Auditor's report
Report on the financial statements
We have audited the financial statements 2006 of Robeco N.V.,
Rotterdam, which comprise the balance sheet as at 31 December 2006,
the profit and loss account for the year then ended and the notes.
Management's responsibility
The company's management is responsible for the preparation and fair
presentation of the financial statements and for the preparation of
the report of the management board, both in accordance with Part 9 of
Book 2 of the Netherlands Civil Code and the Investment Institutions
Supervision Act. This responsibility includes: designing,
implementing and maintaining internal control relevant to the
preparation and fair presentation of the financial statements that
are free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditor's responsibility
Our responsibility is to express an opinion on the financial
statements based on our audit. We conducted our audit in accordance
with Dutch law. This law requires that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance whether the financial statements are free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
entity's preparation and fair presentation of the financial
statements in order to design audit procedures that are appropriate
in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the entity's internal control. An
audit also includes an evaluation of how appropriate the accounting
policies and how reasonable the management's accounting estimates
are, as well as an evaluation of the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the financial statements give a true and fair view of
the financial position of Robeco N.V. as at 31 December, 2006, and of
its result for the year then ended in accordance with Part 9 of Book
2 of the Netherlands Civil Code and the Investment Institutions
Supervision Act.
Report on other legal and regulatory requirements
Pursuant to the legal requirement under 2:393 sub 5 part e of the
Netherlands Civil Code, we report, to the extent of our competence,
that the report of the management board is consistent with the
financial statements as required by 2:391 sub 4 of the Netherlands
Civil Code.
The Hague, 22 March 2007
for Ernst & Young Accountants
signed by Joost Hendriks
1) Robeco (Schweiz) AG, Uraniastrasse 12, CH-8001 Zurich, is the
fund's appointed representative in Switzerland. Copies of the
prospectus, Articles of Association, annual and semiannual reports
and a list of all purchases and sales in the fund's securities
portfolio during the reporting period are available from the above
address free of charge. UBS AG, Bahnhofstrasse 45, CH-8098 Zurich, is
the fund's paying agent in Switzerland.
[1] As of 2 February 2007.
http://hugin.info/130786/R/1117536/204749.doc
Copyright © Hugin ASA 2007. All rights reserved.
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