Rotterdam, 31 August 2004
RORENTO N.V.
SEMIANNUAL REPORT JUNE 2004
% ROBECO
CONTENTS
General information 1
Report of the management board 2
Balance sheet 5
Profit and loss account 5
Cash flow summary 5
Notes 6
Other data 10
Spread of net assets 10
GENERAL INFORMATION
RORENTO N.V. 1)
(public limited liability company with an open-end structure
established according to the laws of the Antilles, having its
registered office in Philipsburg, St. Maarten, Netherlands Antilles)
Ara Hill-Top, Unit A5
Pletterijweg Oost 1
Willemstad, Cura�ao
Information address for Rorento:
Avirento B.V.
Coolsingel 120
Postbus 973
NL-3000 AZ Rotterdam
Tel. +31 - 10 - 224 12 24
Fax +31 - 10 - 411 52 88
Internet: www.robeco.com
Prospectus
The prospectus is available at the offices of the company and via
www.robeco.com.
REPORT OF THE MANAGEMENT BOARD
GENERAL INTRODUCTION
Global economic recovery takes shape
The economic recovery that began the previous year continued in the
first half of 2004. Consumer and business confidence in the future
showed an upward trend. This was reflected by increasing capital
expenditure and consumer spending. The North American and Asian
regions took the lead. The long-awaited recovery of the labor market
finally materialized in the United States. The rapidly growing
Chinese economy remained another important stimulus for the global
economy. In Japan growth is no longer just driven by an increase in
exports, but also by domestic spending, which has been growing for
the first time in a long while. Continental Europe is still the
lagging region although here too there is reason for cautious
optimism. Monetary authorities were increasingly forced to begin
reversing their accommodative measures of the past years. The US
Federal Reserve, for instance, raised its official rates for the
first time in four years. The trend of falling prices came to an end,
however, inflation is still low for the time being.
Bond markets anticipate higher interest rates
Bond yields rose on balance over the first six months, in response to
the increased likelihood that central banks will raise their official
rates (further) in the coming period. Now that the economic recovery
appears to be sustainable and the period of deflation is behind us,
partly due to higher commodity prices, policy makers took the
normalization of monetary conditions as their starting point.
The European credits market and global high-yield market were mixed
over the past six months, but on balance ended with a slightly
positive return against government bonds. The positive signs
regarding the economic recovery in the US and Europe, as well as
higher corporate earnings, weighed heavier than concerns about rising
interest rates and higher commodity prices. Many businesses are still
working on restoring equilibrium in their balance sheets. Others have
recovered to the point that higher dividends and acquisitions are
back on the agenda. So far, this has not been at the expense of
bondholders.
INVESTMENT RESULT
In the first half of 2004, the share price of Rorento rose from EUR
38.82 to EUR 39.36. This is an investment result of 1.4%. On the
basis of net asset value, which rose from EUR 39.02 to EUR 39.51, the
investment result was 1.3%.
The fund's benchmark, the Lehman Multiverse Index, rose 1.8% over the
same period.
INVESTMENT POLICY
Capital market rates moved in a rather narrow range between August
2003 and March 2004. The return of healthy economic growth,
especially in the United States, has so far been accompanied by low
inflation and little change in the level of unemployment, keeping the
interest-rate markets in balance. Rorento anticipated higher capital
market rates in the US, based on the view that the labor-market
situation would improve. In February, unexpectedly poor US
macroeconomic figures, mostly relating to employment and consumer
confidence, caused interest rates to decline sharply. Our underweight
modified-duration position1) was therefore closed at the beginning of
March. The 10-year US Treasury yield fell from around 4.2% at the
beginning of February to lower than 3.7% in mid-March. The other bond
markets followed. Very quickly however, the markets turned out to
have taken the wrong direction, as an unexpectedly strong increase in
the number of new US jobs caused a sharp correction in all the major
capital markets. Inflation also rose, partly due to the high price of
oil. The Fed, and the prospect of a series of rate hikes, were once
again the center of attention. Since the Japanese economy, after many
years of disappointments, finally began to show clear signs of
recovery, bond yields moved rapidly higher in all markets. Rorento
quickly moved to underweight positions in April, this time not only
in the US but also in the eurozone and Japan. Bond yields reached a
temporary high in mid-June.
Besides its active policy with regard to the interest-rate
sensitivity of the portfolio as a whole, spread trades are used to
take advantage of differences in the relative attractiveness of
countries and regions. From the beginning of the year, Rorento was
overweight in Australia, South Africa and New Zealand. Corresponding
underweight positions were taken in US bonds. The South Africa spread
trade was closed in April. The other positions were still in
portfolio at the end of the reporting period.
Throughout the period under review, the portfolio was positioned to
benefit from a flatter yield curve in the United States. In May a
position was taken to benefit from a steeper yield curve in the
eurozone.
Policy regarding non-government bonds
The continuing economic recovery led to a favorable climate for
corporate bonds. Rorento accordingly remained overweight in
corporates, despite the excellent rally this market had in 2003. This
was a good decision, as corporates slightly outperformed government
bonds. The fund was mainly overweight in the lower rating categories
of A and BBB.
High-yield and emerging-country debt also benefited from the improved
outlook for the global economy. Sentiment in these markets was
however somewhat pressured in the second quarter by fears of an
imminent
series of interest-rate hikes by the US central bank. Both markets
nevertheless ended the period in positive territory. Rorento was more
or less neutrally positioned in these markets throughout the
reporting period.
Currency policy
The underweight in the US dollar which Rorento held at the end of
2003 was closed in early January, after a long period in which the
dollar declined against the euro. After a trend of euro weakness
began in February, Rorento took an overweight position in the dollar
which was brought back to neutral in May. Lastly, overweights were
taken in the euro and the Swiss franc against the dollar in June.
Philipsburg, 3 August 2004
The management board2)
Edith J. Siermann (as of 5 May 2004)
Frank L.E.G. Boll
Karel J.V. Tavernier
BALANCE SHEET
EUR x million
30/06/2004 31/12/2003
ASSETS
Investments
Financial investments
Bonds and other fixed-income securities 3,037 3,471
Deposits 738 1,007
Other financial investments 273 222
_________ _________
Total investments 4,048 4,700
Accounts receivable 106 164
Other assets
Cash 169 -
_________ _________
4,323 4,864
LIABILITIES
Accounts payable 953 1,189
_________ _________
Shareholders' equity 3,370 3,675
Composition of shareholders' equity
Issued capital 256 283
Other reserves 3,067 3,332
Net result 47 60
_________ _________
3,370 3,675
PROFIT AND LOSS ACCOUNT
EUR x million
01/01- 01/01-
30/06/2004 30/06/2003
Investment income 75 93
Movements in value -17 33
_________ _________
58 126
Management costs 11 13
_________ _________
Net result 47 113
CASH FLOW SUMMARY
indirect method, EUR x million
01/01- 01/01-
30/06/2004 30/06/2003
Cash flow from investment activities 497 409
Cash flow from financing activities -293 -451
_________ _________
Net cash flow 204 -42
Currency and cash revaluation -22 68
_________ _________
Increase(+)/decrease(-) cash* 182 26
* Cash and accounts payable to credit institutions.
NOTES
General
Rorento N.V. is established in the Netherlands Antilles. Profit tax
is therefore levied in accordance with local regulations. The
financial statements are in euros and are drawn up in accordance with
regulations prevailing in the Netherlands.
System change
As a result of changes to the Guidelines for Annual Reporting, with
effect from the 2004 financial year changes in the value of
investments, both realized and unrealized, are reported in the Profit
and loss account. The change has no effect on the shareholders'
equity as at 31 December 2003 and 30 June 2004. The effect on the
result for the period 1 January 2003 through 30 June 2003 amounts to
EUR 33 million, and over the period 1 January 2004 through 30 June
2004 EUR -17 million. Comparative figures in this report have been
adjusted accordingly where necessary.
Open-end fund
Rorento N.V. is an open-end investment company, meaning that, barring
exceptional circumstances, Rorento N.V. issues and repurchases its
shares via the intermediary on a daily basis at prices approximating
net asset value. Robeco Investment Consulting B.V. functions as the
intermediary between Rorento N.V. and investors for the issuance and
repurchase of shares, as a result of which Rorento N.V. issues and
repurchases its shares at net asset value. The abovementioned margin
between the net asset value and the bid and offer prices, and the
associated costs, are for the account and risk of the intermediary.
The intermediary will distribute any positive results, calculated on
a cumulative basis, to the funds on a quarterly basis. Distribution
will be in proportion to the positive contribution of each fund to
the intermediary's result. A buffer is maintained to cover any future
losses.
accounting principles
General
The accounting principles for the valuation of assets and liabilities
and determination of the result are unchanged, and as such are in
accordance with the annual financial statements. Amounts are
expressed in millions of euros.
Affiliated parties
Rorento N.V. is affiliated to the entities belonging to Robeco Groep
N.V. The affiliation with Robeco Groep N.V. is the result of the
possibility of having decisive control or a substantial influence on
the fund's business policy. Robeco Groep N.V. belongs to the Rabobank
Group. The management structure of Robeco Groep N.V., in which
significant authorities are 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, Rorento N.V. also
uses the services of one or more of these affiliated entities
including transactions relating to securities, treasury, derivatives,
custody, securities lending, and sale and purchase of its own shares,
as well as management activities. Transactions are executed at market
rates.
FINANCIAL INSTRUMENTS
Policy regarding the use of derivative investment instruments
Investing implies that positions are taken. As it is possible to use
various (derivative) instruments to construct an identical position,
the selection of derivatives is subordinate to the positioning of a
portfolio. Positions in
derivative financial instruments are presented off-balance sheet, but
are inextricably connected with existing on-balance sheet positions.
No further explanation is therefore given of individual results on
derivatives positions. In our published information, attention is
given primarily to the overall position, and secondarily to the
nature and volume of the financial instruments employed.
Forward exchange transactions, futures, interest-rate swaps and
forward purchases of mortgage-backed (TBA) securities
Liabilities and receivables ensuing from forward exchange
transactions, futures, interest-rate swaps and forward purchases of
mortgage-backed TBA securities are not included in the Balance sheet.
They are, however, explained in the Notes to the balance sheet under
the heading Commitments not shown in the balance sheet. Unrealized
results of forward exchange transactions, futures, interest-rate
swaps and forward purchases of mortgage-backed TBA securities are
accounted for in the Balance sheet under either Accounts receivable
or Accounts payable. The results are determined by valuing forward
exchange transactions, interest-rate swaps, futures and
mortgage-backed TBA securities at their real value. For forward
exchange transactions, this value is based on currency rates and
reference interest rates at closing date. The real value of futures,
interest-rate swaps and mortgage-backed TBA securities is determined
on the basis of market prices and other market quotations at closing
date.
NOTES TO THE BALANCE SHEET AND THE PROFIT AND LOSS ACCOUNT
Bonds
Repo transactions current at balance sheet date represent a value of
EUR 950 million (EUR 1,169 million at the end of last year). At
balance sheet date, bonds in an amount of EUR 1.7 billion were lent
(EUR 649 million at the end of last year). To cover the risk of
non-restitution, adequate collateral was demanded and obtained; this
collateral is not included in the Balance sheet.
Deposits
EUR 605 million of this amount relates to repo transactions (EUR 953
million at the end of last year).
Other financial investments
Includes call money and CDs/CP. EUR 269 million of this amount
relates to repo transactions (EUR 403 million at the end of last
year).
Investments in Robeco Group mutual funds
Part of the portfolio is invested in funds offered by the Robeco
Group; these investments are reported under Bonds and other
fixed-income securities. A list of these investments is given below.
+----------------------------------------------------------------------------------------+
| |
|----------------------------------------------------------------------------------------|
|Investments in Robeco Group mutual funds |
|----------------------------------------------------------------------------------------|
| | | | | | | | |
|--------------+-------------------------------------------------------------------------|
| | Market|Interest in| Net asset| Return| Expense ratio2)|
| | value| fund| value1) in| in %| in %|
| | in EUR| in %| EUR| | |
|--------------+-----------+-----------+-------------+-----------------+-----------------|
| | | | | | | | | | | |
|--------------+-----+-----+-----+-----+------+------+--------+--------+--------+--------|
| |30/06|31/12|30/06|31/12| 30/06| 31/12| 01/01-| 01/01-| 01/01-| 01/01-|
| | 2004| 2003| 2004| 2003| 2004| 2003|30/06/04|30/06/03|30/06/04|30/06/03|
|--------------+-----+-----+-----+-----+------+------+--------+--------+--------+--------|
| | | | | | | | | | | |
|--------------+-----+-----+-----+-----+------+------+--------+--------+--------+--------|
|Robeco | | | | | | | | | | |
|Institutioneel| 116| 122| 28.6| 26.7|101.56|106.86| 2.2| 17.0| 0.25| 0.26|
|Global High | | | | | | | | | | |
|Yield | | | | | | | | | | |
|Vastrentende | | | | | | | | | | |
|Waarden Fonds | | | | | | | | | | |
|--------------+-----+-----+-----+-----+------+------+--------+--------+--------+--------|
|Robeco | | | | | | | | | | |
|Institutional | 60| 48| 64.1| 64.1|102.48|104.50| -1.4| 4.0| 0.51| 0.51|
|Global Money | | | | | | | | | | |
|Market | | | | | | | | | | |
|Opportunity | | | | | | | | | | |
|Fund3) | | | | | | | | | | |
|--------------+-----+-----+-----+-----+------+------+--------+--------+--------+--------|
| |_____|_____| | | | | | | | |
|--------------+-----+-----+-----+-----+------+------+--------+--------+--------+--------|
| | 176| 170| | | | | | | | |
|----------------------------------------------------------------------------------------|
| |
|----------------------------------------------------------------------------------------|
|1) Per 100 participating units. |
|----------------------------------------------------------------------------------------|
|2) Regarding management costs, agreements have been made with the managers of the funds |
|concerned for the restitution of management costs to Rorento N.V. |
|----------------------------------------------------------------------------------------|
|3) Net asset value and return in USD. |
|----------------------------------------------------------------------------------------|
| |
+----------------------------------------------------------------------------------------+
The annual reports of the abovementioned Robeco Group funds as of 31
December 2003 are available at the company's offices on request. The
funds are not regulated.
Shareholders' equity
Composition and development of shareholders' equity
01/01- 01/01-
30/06/2004 30/06/2003
Issued capital
Situation at opening date 283 345
Received on shares issued 6 2
Paid for shares repurchased -33 -36
_______ _______
Situation at closing date 256 311
Share premium reserve
Situation at opening date - 276
Received on shares issued - 17
Paid for shares repurchased - -293
_______ _______
Situation at closing date 0 0
Other reserves
Situation at opening date 3,332 3,605
Adjustment due to system change - 94
_______ _______
Starting situation after system change 3,332 3,699
Received on shares issued 80 5
Paid for shares repurchased -405 -133
Net result from previous financial year 60 101
_______ _______
Situation at closing date 3,067 3,672
Net result 47 113
_______ _______
Shareholders' equity 3,370 4,096
The company's authorized share capital amounts to EUR 900 million,
divided into 300,000,000 ordinary shares with a nominal value of EUR
3 each.
As of 30 June 2004 the number of shares outstanding was 85,297,382.
Net asset value per share amounted to EUR 39.51.
Shares outstanding
Development of number of shares outstanding
01/01- 01/01-
30/06/2004 30/06/2003
Situation at opening date 94,197,305 114,816,237
Shares issued in financial year 2,178,071 595,920
Shares repurchased in financial year 11,077,696 11,910,555
__________ ___________
Situation at closing date 85,297,382 103,500,602
Commitments not shown in the balance sheet
Forward exchange transactions current at balance sheet date concern
purchases of CAD 45 million, CHF 158 million, EUR 643 million, JPY
19,977 million and KRW 15,518 million against sales of AUD 289
million, DKK 53 million, GBP 46 million, NZD 281 million, SEK 582
million and USD 590 million. The effect of these transactions on the
currency position is shown in the survey Spread of net assets at the
end of this report. Futures contracts purchased at balance sheet date
represent an increase in assets invested of AUD 163 million, CAD 5
million and GBP 15 million; futures contracts sold represent a
decrease in assets invested of EUR 1,099 million, JPY 7,701 million
and USD 2,472 million. Interest-rate swaps current at closing date
concern contracts to a value of AUD 10 million,
GBP 10 million, SEK 92 million and USD 90 million. Forward purchases
of mortgage-backed TBA securities current at balance sheet date
represent a sum of USD 563 million. Unrealized results of these
transactions at closing date are included in the Profit and loss
account.
COSTS
Expense ratio
Expense ratio
01/01- 01/01-
30/06/2004 30/06/2003
in % in %
Cost item
Management costs 0.30 0.30
Other costs 0.00 0.02
_______ _______
Total 0.30 0.32
The expense ratio expresses the costs charged to the fund during the
reporting period as a percentage of the average assets1) entrusted
during the reporting period. The expense ratio as shown does not
include brokerage costs and exchange fees relating to investment
transactions. These have been discounted in the cost price or the
sales value of the investments, as is normal practice in the
securities industry. The expense ratio was 0.30% during the reporting
period2). In addition to the costs of the fund's asset management
such as administration, the management costs in the expense ratio
also include 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 mainly relate to the custody
fee charged by third parties for the custody of the fund's securities
portfolio.
Management costs and service fee
With effect from 1 October 2004, the management fee on the average
assets entrusted will be raised from 0.60% to 0.70% a year.
Furthermore, a service fee will be introduced to cover formal and
operational costs such as the production of annual reports and the
fund's administration. The service fee for Rorento N.V. will be 0.08%
a year. A discount of 0.02% will apply for the service fee on the
assets in excess of EUR 1 billion, with a further discount of 0.02%
on the assets in excess of EUR 5 billion.
Philipsburg, 3 August 2004
The management board
OTHER DATA
Interests of major investors
Statement in conformity with article 21, paragraph 2, sections b and
c, of the Dutch Investment Institutions Supervision Decree (Btb,
Besluit toezicht beleggingsinstellingen).
The company knows of only one party to be considered a major investor
within the meaning of the Btb, namely Stichting Aandelen-Rekeningen
Robeco-Groep. During the period under review, no transactions as
referred to in article 21, paragraph 2, section c, of the Btb took
place.
Auditors
No external audit has been conducted.
SPREAD OF NET ASSETS
Across countries Across currencies
_______________________________________________ _______________________________
30/06/2004 30/06/2004 31/12/2003 30/06/2004 31/12/2003
EUR x million in % in % in % in %
Long-term
investments
North
America
(31.6%)
US dollar 1,033 30.6 32.2 12.0 13.7
Canadian 32 1.0 0.9 1.9 1.9
dollar
Europe
(44.9%)
Euro 1,365 40.5 38.0 70.9 73.5
British 141 4.2 3.4 2.2 1.7
pound
Swedish 8 0.2 0.2 0.2 0.2
krona
Danish - - - 0.3 0.3
krone
Swiss franc - - - 3.1 -
Asia (4.5%)
Japanese 152 4.5 5.2 9.2 7.8
yen
Korean won - - - 0.3 0.3
Australia
(9.1%)
New Zealand 140 4.2 4.8 -0.1 -
dollar
Australian 166 4.9 5.8 - 0.3
dollar
South
Africa
(0.0%)
South - - 3.9 - 0.3
African
rand
Short-term 333 9.9 5.6 - -
investments
(9.9%)
________ ________ ________ ________ ________
Total 3,370 100.0 100.0 100.0 100.0
1) Robeco (Schweiz) AG, Uraniastrasse 12, CH-8001 Zurich, is the
fund's appointed representative in Switzerland. Copies of the
prospectus, Articles of Association, (semi)annual 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) Modified duration is a measure of the interest-rate sensitivity
and interest-rate risk of a portfolio, and represents the approximate
percentage change in the value of the portfolio as a result of a 1
percent increase or decrease in interest rates. The use of derivative
instruments allows the amount of the portfolio's modified duration to
be managed separately from the direct bond investments. The
application of derivatives therefore allows the fund to adopt an
optimal yield-curve positioning. The use of derivative instruments is
limited to the setting of limits for the total modified duration of
the portfolio.
2) Messrs. Van Duijn, Vliegenthart and Smith stepped down as members
of the management board as of 5 May 2004.
1) The average assets entrusted used in this calculation is based on
7 observations. DNB circular 8022 recommends using 3 observations.
The calculation method used in this semiannual report gives a more
accurate picture of the average assets entrusted.
2) Based on the calculation principles of the Swiss Funds Association
the TER was 0.31%.
Ronald Florisson, Corporate Communications Robeco
Office +31 - 10 - 224 28 10
Mobile +31 - 653 - 831 586
E-mail: ronald.florisson@robeco.nl
- ---END OF MESSAGE---
Copyright � Hugin ASA 2004. All rights reserved.
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