Act or RegulationRequirement
Public Trustee Act 1995Section 30

(3)     The Public Trustee must include in the Public Trustee’s annual report to the Minister for each financial year—

(a) the audited statement of accounts in respect of each common fund for that financial year; and

(b)   the Auditor-General’s report on those accounts; and

(c)   the following investor information in respect of each common fund:

(i)     the nature and amount or rate of any fee that the Public Trustee charges in respect of investment in the fund; and

(ii)       the class of investments in which the fund may be invested; and

(iii)     the extent (if any) to which a capital sum invested may be reduced to defray losses from investment of the fund; and

(iv)     the rights of an investor in the fund to withdraw all or part of the person’s investment in the fund and the period of notice (if any) that the investor is required to give the Public Trustee in respect of such withdrawal; and

(v)  the terms governing distribution of income and profit or loss of a capital nature attributable to each investment in the fund.

Audited Statement of Accounts in respect of each Common Fund

Refer to the Annual Financial Statements section of this report.

The Auditor-General’s Report upon the Statements of Account

Refer to the Annual Financial Statements section of this report.

The nature and amount of any fee the Public Trustee charges in respect of investment in the common funds

A management fee is charged against money invested in each common fund at the rate of one-twelfth of 1.025% (inc. of GST) of the value of the fund as at the first business day of each month.

Management fees attract GST at a reduced rate as there is an entitlement to claim a reduced input tax credit.

An investment in the Public Trustee’s common funds is classified as an input-taxed financial supply and no GST is charged on such supplies.

Investments made in common funds and investor withdrawals from those funds are not subject to GST; nor are entry fees subject to GST.

If a supply is input-taxed, the supplier will not usually receive a tax credit for any GST incurred in connection with the supplier’s expenses.

For financial supplies, the supplier is able to claim a tax credit for three quarters of the liability incurred in respect of certain expenses (this is called a reduced input tax credit).

The majority of expenses incurred by the Public Trustee’s common funds, including the Public Trustee management fees, are eligible for the reduced input tax credit. The net impact of the GST on expenses incurred by the common funds is therefore approximately 2.5% rather than the full 10% rate.

The total funds management costs for common funds and standard investment strategies, as represented by Indirect Cost Ratios (ICR), are shown in the following table.

StrategyICR 2018-19ICR 2017-18
Cash1.09%1.09%
Capital Stable1.29%1.27%
Balanced1.46%1.42%
Growth

Equities

1.55%

1.69%

1.50%

1.60%

Common FundICR 2018-19ICR 2017-18
Cash1.09%1.09%
Long Term Fixed Interest1.08%1.08%
Short Term Fixed Interest1.09%1.09%
Overseas Fixed Interest1.30%1.31%
Australian Shares1.56%1.59%
Property1.73%1.71%
Overseas Shares1.85%1.62%

Investors pay the following fees when investing in common funds (note: no fees are charged on entry or exit from the Cash Common Fund):

For beneficiaries of estates administered by the Public Trustee, where there is a change of ownership of the assets and when funds would otherwise be distributed:

Amounts up to $500 0000.5%
Additional amounts from $500 000 to $2 million0.375%
Additional amounts from $2 million to $5 million0.25%
Additional amounts above $5 million0.0%

For beneficiaries of estates administered by the Public Trustee where there is no change of ownership of the assets and when funds would otherwise be distributed no entry fee will apply except to additional funds invested, in which case the above scale for the beneficiary investors will apply.

For all other investors:

Amounts up to $500 0001.0%
Additional amounts from $500 000 to $2 million0.75%
Additional amounts from $2 million to $5 million0.5%
Additional amounts above $5 million0.0%

The above fees will also apply to distributed income and realised capital gains when they are reinvested in a strategy other than cash.

No exit fees are charged.

No switching fees will be charged except when moving monies from the cash investment strategy to another investment strategy. The entry fees as disclosed above will then apply.

The Public Trustee does not accept cash deposits. Investments in strategies may be made either by cheque, direct credit or by transfer of funds from an existing estate being administered by the Public Trustee.

The extent to which a capital sum invested may be reduced to defray losses from investment of a common fund

Realised or unrealised losses of a capital nature of an investment of a common fund shall be received or borne by investors, in proportion to the capital sums invested in the fund.

Rights of an investor in a common fund to withdraw all or part of a person’s investment in the fund

Investors may withdraw all or part of their investment in a fund at any time.

Partial withdrawals must be in amounts of $1 000 or greater, or the balance of the funds being managed.

Proceeds of withdrawals from the Cash Common Fund of amounts less than $1 million will be available on the next business day (subject to the request being received by 12 noon).

Proceeds of withdrawals of amounts greater than $1 million may not be available for 30 business days.

Proceeds of withdrawals from investment strategies, other than the cash investment strategy fund of amounts less than $1 million, will not be available until 15 business days after the next exit day (currently the first day of each month).

Proceeds of withdrawals of amounts greater than $1 million from these investment strategies may not be available until 30 business days after the next exit day.

Terms governing distribution of income and profit or loss of a capital nature attributable to each investment in a common fund:

The net income and realised capital gains of each fund are calculated to 30 June and 31 December and will be distributed to the investor in July and January of each year, unless the investor has given instructions to reinvest the money.

Classes of investment in which common funds may invest:

Section 29 of the Public Trustee Act 1995 requires the Public Trustee to determine the classes of investments in which a common fund may be invested, and provides for these classes to be varied from time to time. The Act does not define classes of investment.

Determination of the classes of investment in which the Public Trustee common funds may invest:

Cash Common Fund

The permitted classes of investment are:

a. Cash

b. Australian Fixed Interest

Qualifications on these investment classes:

i. All investments shall be denominated in Australian dollars.

ii. Fixed rate securities shall not exceed three years to maturity.

iii. Floating rate securities shall not exceed 10 years to maturity.

The following class of investment is explicitly excluded:

iv. Derivatives.

The permitted classes of investment are:

Short Term Fixed Interest Common Fund

a. Cash

b. Australian Fixed Interest

Qualifications on these investment classes:

i. All investments shall be denominated in Australian dollars. The fund’s liquidity requirements will be managed by an investment in the Cash Common Fund.

ii. Fixed rate securities shall not exceed five years to maturity.

iii. Floating rate securities shall not exceed 10 years to maturity.

iv. Security lending arrangements in relation to authorised investments are permitted.

The following class of investment is explicitly excluded:

v. Derivatives.

The permitted classes of investment are:

Long Term Fixed Interest Common Fund

a. Cash

b. Australian Fixed Interest

c. Inflation-linked Securities

Qualifications on these investment classes:

i. All investments shall be denominated in Australian dollars.

ii. The fund’s liquidity requirements will be met by investment in the Cash Common Fund.

iii. Fixed rate securities and inflation-linked securities shall not exceed 15 years and 25 years to maturity, respectively.

iv. Inflation-linked securities shall be restricted to consumer inflation or average weekly earnings-linked securities issued by the Commonwealth Government, State Governments or the Government of the Northern Territory, and securities issued by other parties where the payments to holders of the securities are guaranteed by these governments.

v. Security lending arrangements in relation to authorised investments are permitted.

The following class of investment is explicitly excluded:

vi. Derivatives.

The classes of investment are:

Australian Shares Common Fund

a. Cash

b. Australian Equities

c. Derivatives

Qualifications on these investment classes:

i. Fund liquidity requirements shall be met by investment in the Cash Common Fund.

ii. Investments in Australian Equities shall be limited to securities of companies and trusts listed on the Australian Stock Exchange, and to unlisted securities in companies and trusts where the intention is for these securities to be listed within six months of investment.

iii. Small capitalisation companies, defined as those outside the Top 100 Sector of the Australian Stock Exchange’s All Ordinaries Index, shall not exceed 20% of the fund’s assets.

iv. Underwriting is permitted only where the Public Trustee has made a firm subscription to a new issue and the amount underwritten does not exceed the subscription amount.

v. Underwriting as an investment instrument is prohibited.

vi. Security lending arrangements in relation to authorised investments is permitted.

vii. Investments in financial derivatives specifically relating to the investments of the fund are permitted for the purpose of:

  • investment of funds; or
  • hedging or otherwise managing the risk of the fund.

Property Common Fund

The classes of investment are:

a. Cash

b. Property

c. Infrastructure

Qualifications on these investment classes:

i. Fund liquidity requirements shall be met by investment in the Cash Common Fund.

ii. Investments in property comprise securities of companies and trusts that are either listed or unlisted.

iii. Investments in listed and unlisted infrastructure trusts are permitted in the fund.

iv. Underwriting is permitted only where the Public Trustee has made a firm subscription to a new issue and the amount underwritten does not exceed the subscription amount.

v. Security lending arrangements in relation to authorised investments are permitted.

vi. Investments in financial derivatives specifically relating to the investments of the fund are permitted for the purpose of:

  • investment of funds; or
  • hedging or otherwise managing the risk of the fund.

Overseas Shares Common Fund

The classes of investment are:

a. Cash

b. International Equities

c. Derivatives

Qualifications on these investment classes:

i. Fund liquidity requirements shall be met by investment in the Cash Common Fund.

ii. Cash, where held other than by investment in the Cash Common Fund, shall be held as bank deposits, bank-guaranteed securities or short term sovereign debt instruments.

iii. Trading in inter-bank or over-the-counter markets shall occur only in those markets which have been approved by the relevant government agencies of the country in which the market is conducted.

iv. Investments in collective investment schemes, the primary mandates of which are the holdings of smaller companies and emerging markets securities, shall not exceed 25% and 15% of the assets of this common fund, respectively.

v. Underwriting is permitted only where the Public Trustee (either directly or via an appointed custodian) has made a firm subscription to a new issue and the amount underwritten does not exceed the subscription amount.

vi. Security lending arrangements in relation to authorised investments are permitted.

The permitted classes of investment are:

Overseas Fixed Interest Common Fund

a. Cash

b. International Fixed Interest and inflation linked securities

c. Derivatives

Qualifications on these investment classes:

i. The fund’s liquidity requirements shall be met by investment in the Cash Common Fund.

ii. Cash, where held other than by investment in the Cash Common Fund, shall be held as bank deposits, bank-guaranteed securities or short term sovereign debt instruments.

iii. All fixed income securities must be rated by recognised rating agencies and at least 90% of the fund shall comprise investment-grade securities.

iv. Investments in financial derivatives specifically relating to the investments of the fund are permitted for the purpose of:

  • investment of funds; or
  • hedging or otherwise managing the risk of the fund.

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