Public Trustee · Executive Officer and Mr Abdul Kamil, ... PT established a panel contract for funeral service providers in the metropolitan area. We

Public Trustee Common Funds Annual Report 2015–16

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Public Trustee Common Funds

Annual Report 2015–16

P U B L I C T RU S TE EGPO Box 1338 Adelaide South Australia 5001 | T 08 8226 9200 | F 08 8226 9350

Country freecall 1800 673 119 | www.publictrustee.sa.gov.au


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Prepared by Public Trustee Corporate Services. Public Trustee 211 Victoria Square Adelaide SA 5000 www.publictrustee.sa.gov.au Email: [email protected] Tel: 08-8226 9200 Fax: 08-8226 9350 ABN: 72-906-921-697 ISSN: 1441-2799 (Print) ISSN: 1836-263X (Online)


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Contents The Year in Review ................................................................................................................. 4

Role and Governance ............................................................................................................ 7

Function ............................................................................................................................ 7

Legislative Responsibilities ............................................................................................... 7

Charter .............................................................................................................................. 7

Organisational Structure ................................................................................................... 8

Services ............................................................................................................................ 9

Committees ..................................................................................................................... 11

Strategic Plan ....................................................................................................................... 12

Strategic Plan 2014–17 ................................................................................................... 12

Relationship with South Australian Government Objectives ........................................... 13

Financial Performance ......................................................................................................... 15

Customer Investments .................................................................................................... 15

Appendices ........................................................................................................................... 19

Committees – roles and memberships ............................................................................ 19

Common Funds - statutory information ........................................................................... 21

Customer Financial Information ......................................................................................... 27


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The Year in Review It has been another busy year for Public Trustee (PT). There has been a continued focus on customer service, in particular improving communication. In October 2015 we launched a new website. Content was revised to ensure currency of information and the use of plain English. The new site has improved accessibility, including compatibility with mobile devices, and has an excellent search function. Since the launch, we have had more than 37 000 visitors to our website. This year PT released a new customer newsletter PT Now to provide customers with information about news, important facts and upcoming events. The newsletter is distributed in customer welcome packs and at community engagement events.

We also introduced a new-look email newsletter for key stakeholders. The e-newsletter includes articles about key activities, initiatives and staffing changes to ensure we communicate well with our business partners, other industry and government contacts. We have received positive feedback from customers and business partners about the newsletters. In late 2015, we were delighted to host a visit by officers from the Public Trustee Fiji (sponsored by the Department of Foreign Affairs and Trade). Mr Atonio Takala, Chief Executive Officer and Mr Abdul Kamil, Manager Estates and Trusts spent time with us to learn more about our systems and processes. The visitors greatly appreciated the information shared and we will work to foster a strong working relationship going forward. In 2016, Public Trustee undertook its sixth customer satisfaction survey which found that satisfaction with services remained high and had improved in most areas. It was pleasing to learn that for all our services, most respondents indicated they were receiving a high level of service and on average, 87 per cent of our customers would recommend PT to others. The excellent survey results reflect the pride taken by staff in the professional services provided on a daily basis. We continued to reform and improve our business during the year. A highlight of this work was the development of new software for managing documentation. The new software system, Electronic Document Generation for Estates (EDGE), captures and saves all relevant estate details which avoids duplicated data entry. Relevant documents are then produced as needed, resulting in considerable efficiencies. From time to time in our role as trustee, PT is required to arrange funerals on behalf of our customers. In order to improve our contract arrangements and obtain good value for money, PT established a panel contract for funeral service providers in the metropolitan area. We aim to develop further panels for key customer requirements in the coming year. In 2015–16, PT’s profit (before income tax equivalent payments) was $14,000. This was less than budgeted mainly due to lower than expected income from commissions and charges. The returns on PT’s investments this year were sound. Four of our five investment strategies outperformed their standard industry benchmarks. Global markets continued to be volatile but PT’s defensive strategies performed well for customer funds. At 30 June, we had more than $1 billion (including superannuation) invested.

Debra Contala The Public Trustee


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A staff recognition program was introduced this year. All staff are eligible to be nominated for providing excellent customer service. Our workplace wellbeing committee also established a program of initiatives to promote health and wellbeing for PT staff. After undertaking extensive market research a marketing campaign was developed in 2015–16. A new creative approach was taken with a view to engaging the 30–49 age group while still maintaining broader appeal. The campaign message of Good to Go aims to prompt people to think about whether their affairs are in order if something unexpected should happen. Unfortunately a former employee of the deceased estates section was charged with dishonesty offences late in 2015–16. The allegations do not relate to PT’s Will-writing, Tax, Trusts, Personal Estates or Regulatory branches. PT cooperated fully with investigators and an external review of the staff member’s previous files is underway. In the year ahead, we will build on the work we have done this year. We are excited by our new marketing campaign and the increased awareness of our services. Financial sustainability is a priority for all organisations and we continue to seek to maximise returns for our investment customers. As 2015–16 concludes, I would like to extend my thanks to all staff for their continued dedication, commitment and hard work.

Debra Contala Public Trustee


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Role and Governance

Function Public Trustee (PT) is a multi-disciplinary Government Business Enterprise offering a range of services in Will-making, estate management and financial administration to the South Australian community. As a Public Non-Financial Corporation (under the Public Corporations Act 1993), PT also has the powers of a natural person – as opposed to a legal person. ‘The Public Trustee’ is a statutory officer role appointed under the Public Trustee Act 1995 and leads the organisation. PT generates its own income, makes tax-equivalent payments annually, and pays a dividend to government out of its after-tax profits as agreed by the South Australian Attorney-General and the Treasurer.

Legislative Responsibilities PT has administrative responsibility, through the Attorney-General, for the following legislation:

Public Trustee Act 1995.

Other Acts that form the basis of how, and which, PT services are delivered to customers are as follows:

Administration and Probate Act 1919; Aged and Infirm Persons’ Property Act 1940; Family Relationships Act 1975; Guardianship and Administration Act 1993; Inheritance (Family Provision) Act 1972; Legal Practitioners Act 1981 Powers of Attorney and Agency Act 1984; South Australian Civil and Administrative Act 2013 Trustee Act 1936; and Wills Act 1936.

Under the provisions of Section 5(2) of the Public Trustee Act 1995, PT may act as: a trustee, executor of a Will, administrator of an estate (whether or not of a deceased person), manager, receiver, committee, curator, guardian, next friend, agent, attorney, or stakeholder.

Charter Under the Public Corporations Act 1993, a Charter must be prepared for a public corporation by its Minister and the Treasurer. The Charter, agreed by the Attorney-General, the Treasurer and the Public Trustee, describes the reporting and accountability requirements and sets out the responsibilities and the expectations of both PT and the Government. The Charter is reviewed annually. The Charter also requires an agreed annual performance statement that outlines PT’s objectives for invested customer funds, and financial and other performance targets.


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Organisational Structure

The Public Trustee

Investment Advisory

Committee

Audit & Risk Management Committee

Business & Client Financial Services

Customer Services

Information and Communications

Technology

Corporate Services

Regulation of Private Financial Administrators

Personal Estates

Estate Services

Wills & Related Services

Customer Relationships

Team

Investment Services

Trusts

Taxation Services

Deceased Estates

Client Financial Services

Legal


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Services PT’s services are varied and specialised in nature. The following summary highlights the activities undertaken by the organisation in 2015–16. Wills and Powers of Attorney Free Will and Power of Attorney drafting services are provided for all South Australians who nominate PT as their executor, attorney or substitute attorney. Wills and Powers of Attorney are complex legal documents which should be professionally drafted to ensure they are valid and legally binding. PT staff have extensive knowledge and skills pertaining to Wills and Powers of Attorney and provide these professional services from the Adelaide Office, eight suburban and fourteen regional locations.

A visitation service is provided for those customers who are infirm, in hospitals or nursing homes and are non-ambulant. This ensures that all potential customers have access to services that may not otherwise be available to them. Deceased Estates Administration As executor of an estate, PT acts independently in carrying out the instructions contained in a Will, carrying out the deceased person’s wishes with sympathetic concern for their family and beneficiaries. PT is often selected by beneficiaries as the trustee of choice for estates when a person dies intestate – that is, when a person dies without a Will. Where beneficiaries are not known, the law stipulates PT must assume the role of administrator. PT is also selected as the trustee for many estates when the executor named in the Will renounces or is unable to fulfil their role. The consent of the beneficiaries is obtained before any administration of the estate commences. PT may also be appointed to administer an estate by an order of the Supreme Court.

Unclaimed Money It is not always possible to identify or locate some or all of the beneficiaries of an estate. Under these circumstances, the realised assets of the estate are held in an interest-bearing PT account for a statutory period of six years. After that, the funds must then be paid to the South Australian Department of Treasury and Finance (DTF). Where a beneficiary of any unclaimed money can provide evidence of their entitlement to the funds, these can be reclaimed from DTF. Taxation PT offers a range of taxation services for customers, specifically around tax compliance, deceased estates, trusts, personal estates, income tax and other related matters. PT is responsible for preparing statutory reports for the Australian Taxation Office (ATO), Australian Charities and Not-for-Profits Commission. In addition, assistance is provided in relation to customer wages, WorkCover, superannuation and Centrelink matters. Where possible, all taxation returns during 2015–16 were lodged within timeframes set by the ATO.


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Investments PT is responsible for the management of customers’ funds and assets. The majority of investments are managed through five Standard Investment Strategies (Cash, Capital Stable, Balanced, Growth and Equities) with a combination of in-house expertise and the appointment of carefully selected external investment fund managers. Regular expert advice is also received from an external investment adviser. Personal Estates In accordance with the legislation, PT provides personal estate administration services for living customers who have an order issued by the South Australian Civil Administrative Tribunal (SACAT), South Australian courts, and for customers under an activated Enduring Power of Attorney. PT can be appointed to be legally responsible for making all, or some, of a person’s financial and legal decisions. Where PT is appointed to manage a person’s financial affairs, the service includes payment of accounts. Trusts PT manages court-awarded trusts, trusts established by a Will and trusts under deed for minors, as well as perpetual charitable trusts and scholarship trusts. The other major type of trust administered is a life interest trust, where the nominated beneficiary (the life tenant) receives a benefit during their life or for a specified time. The life tenant may have the right to live in a property or may receive the income from the investment of trust funds. In such cases the capital of the trust is preserved for the ultimate beneficiaries (the remaindermen). Litigation Guardian PT may also be appointed by a court to act as ‘next friend, litigation guardian’ for some customers unable to conduct their own legal proceedings. A litigation guardian is someone who is appointed by the court in a particular matter. They represent the interests of a minor or a person who has a disability and is consequently not able to manage their own affairs or make decisions about the proper conduct of legal proceedings. Monitoring Private Administrators and Managers Under the Guardianship and Administration Act 1993 and the Aged and Infirm Persons Property Act 1940, PT is required annually to examine and report on activities of private financial administrators and managers appointed by SACAT and the courts. This also includes examination of financial accounts submitted by private administrators who have been appointed by the Supreme Court to administer intestacies or estates where an executor is unwilling or unable to complete an administration. During 2015–16 PT continued to provide monthly briefing sessions for newly appointed administrators, offering information about their responsibilities. Managing Customer Funds and Assets Managing customer finances involves accounting, funds administration, asset management and customer accounts payable and receivable activities. Where customers are unable to manage their own financial affairs, PT will make regular payments to customers for food, accommodation and other critical living expenses. The administration of funds involves accounting and reporting on the management and performance of PT’s Standard Investment Strategies and Common Funds.


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Committees Five committees provided advice to the PT in 2015–16. These were:

Investment Advisory Committee; Funds Management Forum; Corporate Investment Committee; Audit and Risk Management Committee; and Information and Communications Technology (ICT) Committee.

Refer to the Appendices for further information about each committee.


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Strategic Plan

Strategic Plan 2014–17 Public Trustee’s (PT) 2014–17 Strategic Plan details the organisation’s vision, mission, core values, objectives and strategies. Vision To be trusted and respected for providing caring and professional services. Mission To support South Australians, including the most vulnerable, by providing excellent service in Will making, estate management and financial administration. Core Values Service; Professionalism; Trust; Respect; Collaboration and Engagement; Honesty and Integrity; Courage and Tenacity; Sustainability. Objectives Strategies 1. Customer Service

We are committed to achieving service excellence by delivering services in a professional, consistent, coordinated and timely manner.

Ensure service standards remain current and effective

Develop a streamlined customer-centric model of customer service

Improve communication to customers Improve services to Aboriginal customers

and customers from other cultures

2. Governance and Leadership We will deliver our objectives through good governance, strong leadership, and sound risk management.

Ensure leaders are empowered to act and work as a team

Build and maintain the confidence of key stakeholders

Build internal capabilities in risk management

Ensure future leaders are well supported to continue developing

3. Business Improvement We will identify opportunities to improve and enhance all areas of our business processes.

Continue to upgrade ICT systems to ensure they are modern and support business processes

Transform and simplify business processes to cut red tape

Improve records management to ensure customer information is easy to access

4. People and Culture We will invest in our people and create a rewarding environment in which to work.

Ensure all staff are well inducted and trained Encourage staff to engage more actively in

the communities PT serves Build a culture based on mutual respect,

personal accountability and support Continually improve workplace health and

safety

5. Financial Stability We will ensure the organisation remains profitable and meets agreed fiscal targets.

Continually promote PT services Develop new business initiatives Improve the transparency of PT’s financial

framework Review perpetual trusts



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Relationship with South Australian Government Objectives PT aligns its business objectives and customer-focused services with the Attorney-General’s Department’s (AGD) Strategic Plan and South Australia’s Strategic Plan (SASP). Specifically:

AGD’s goals, ‘protecting rights and enforcing obligations’ and ‘working together’; and

SASP’s targets, ‘customer and client satisfaction with government services’ (target 32), and ’people with a disability’ (target 50).

PT supports AGD in achieving the following goals and strategies:

AGD Goal 2 Protecting rights and enforcing obligations

Strategy 2.2 Provide the information people need to protect their rights and understand their obligations

PT contributes to this by:

Maintaining a comprehensive website which provides relevant information to the South Australian community about our services, including: Wills and Powers of Attorney and the importance of preparing

and regularly reviewing these important documents; Personal financial management services for those who have

lost capacity to manage their own affairs; and Deceased estate administration.

Distributing to the community a range of current printed materials to promote the various services PT provides and the importance of having a current and valid Will.

Offering a witnessing service for Advance Care Directives. Undertaking a range of public speaking engagements to educate

the community about Wills and other relevant information.

Strategy 2.6 Safeguard vulnerable people through appropriate service environments and settings


Providing a range of services for vulnerable people. These include: Litigation guardian services – managing legal matters in the

courts for those who are unable to give instructions to solicitors; Regulatory services – reviewing the financial statements of

private administrators appointed by the South Australian Civil and Administrative Tribunal (SACAT) or the courts;

Managing small trusts and intestacies for the benefit of individuals with limited means;

Managing minors’ trusts for people under the age of 18 years; and

Providing personal financial management services when appointed by SACAT or the courts for those who have lost capacity to manage their own affairs.


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AGD Goal 4 Working Together

Strategy 4.1 Measure what we do and be held accountable for our performance


Meeting requirements of the Charter under the Public Corporations Act 1993, which is agreed between the Attorney-General and the Treasurer.

Obtaining regular feedback from customers by way of annual customer satisfaction surveys.

Undertaking staff performance development reviews and surveys. Maintaining a database for customer feedback and using lessons

learned to make continuous improvements in customer service.

Strategy 4.4 Give our people the skills and tools they need to do their best work and get results


Actively pursuing training and development opportunities for all staff, linked to their individual performance plans.

Conducting programs of awareness training for staff in relevant disciplines such as mental health, disability, cultural awareness, and tax and legal reforms.

Strategy 4.6 Commit to service excellence for all of our customers


Striving to deliver services to our customers in a professional, consistent, coordinated and timely manner.

Surveying customers annually to support continuous improvement in service levels.

Publishing and implementing standards of service and providing feedback to staff about their customer service delivery against those standards on an annual basis through their individual performance management discussions.


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Financial Performance

Customer Investments For the year ended 30 June 2016, PT’s investment strategies performed well against respective benchmarks. Investment returns were affected late in the financial year by the referendum decision of the United Kingdom (UK) to leave the European Union (EU); however, all of PT’s investment strategies still delivered positive returns. Overall, property and infrastructure were the best performing asset classes for the financial year. For the second year in a row Australian-listed property was the standout performer, returning 24%. Global interest rates continued to track lower and in May 2015, the Reserve Bank of Australia cut interest rates to an all-time low of 1.75%. The Australian dollar declined against most major currencies finishing at $0.74 US for the financial year. Pleasingly, all of PT’s investment strategies outperformed their respective benchmarks, with returns ranging from 1.19% for equities to 4.27% for the balanced strategy (net of fees). The investment returns for five years demonstrate that the long-term performance is strong, stable and continues to exceed benchmarks.

2015–16 Investment Strategies For the year ended 30 June 2016, PT’s investment strategies performed well. Table 1: 2015–16 Standard Investment Strategies’ five-year performance

2015–16 Performance

Last 12 Months Annualised

%

3 Years Annualised

%

5 Years Annualised

%

Cash 2.19% 2.67% 3.40%

benchmark 1.23% 1.51% 2.10%

variance 0.96% 1.16% 1.30%

Capital Stable 3.35% 5.31% 5.64% benchmark 3.32% 4.89% 5.28%

variance 0.03% 0.42% 0.36% Balanced 4.27% 7.58% 7.70%

benchmark 3.56% 7.11% 7.36% variance 0.71% 0.47% 0.34%

Growth 3.82% 8.75% 8.81% benchmark 2.35% 7.96% 8.09% variance 1.47% 0.79% 0.72%

Equities 1.19% 9.94% 9.78% benchmark -0.62% 9.07% 8.77% variance 1.81% 0.87% 1.01%


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Table 2: 2015–16 SIS Performance versus CPI Objectives (as at 30 June 2016)

Investment Strategy

CPI Objective Investment

Horizon

Target Return

% pa

Actual Return

% pa

Over (+) /Under(-)

Outperformance % pa

Capital Stable CPI + 2.0% pa 3 Years 3.8% 5.3% + 1.5%

Balanced CPI + 3.0% pa 5 Years 4.8% 7.7% + 2.9%

Growth CPI + 3.5% pa 7 Years 5.8% 9.3% + 3.5%

Equities CPI + 4.0% pa 10 Years 6.4% 5.5% - -0.9%

2015–16 Asset Allocation

Table 3: 2015–16 Capital Stable Standard Investment Strategy Common Fund Allocation (%) - 2016 Allocation (%) - 2015

Neutral Period

End $m Neutral Period

End $m

Australian Shares 11.0% 11.1% $8.15 12.0% 11.3% $8.07

Overseas Shares 8.0% 6.3% $4.62 8.0% 9.4% $6.68

Listed Property Securities 7.5% 7.8% $5.70 5.0% 5.0% $3.55

Long-term Fixed Interest 15.0% 15.4% $11.28 15.0% 15.0% $10.68

Short-term Fixed Interest 28.2% 28.5% $20.94 30.0% 29.5% $20.99

Overseas Fixed Interest 11.3% 11.6% $8.55 10.0% 10.2% $7.25

Cash 19.0% 19.3% $14.19 20.0% 19.7% $14.03

100.0% 100.0% $73.44 100.0% 100.0% $71.24

Table 4: 2015–16 Balanced Standard Investment Strategy

Common Fund Allocation (%) - 2016 Allocation (%) - 2015

Neutral Period


End $m


Overseas Shares 16.0% 12.8% $26.23 16.0% 18.5% $38.60





Cash 4.5% 4.7% $9.53 5.0% 4.9% $10.15

100.0% 100.0% $204.91 100.0% 100.0% $208.78


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Table 5: 2015–16 Growth Standard Investment Strategy Common Fund Allocation (%) - 2016 Allocation (%) - 2015

Neutral Period


End $m


Overseas Shares 24.5% 20.0% $39.79 25.0% 28.6% $59.86





Cash 4.5% 4.8% $9.44 5.0% 4.8% $10.07

100.0% 100.0% $198.58 100.0% 100.0% $209.21

Table 6: 2015–16 Equities Standard Investment Strategy

Common Fund Allocation (%) - 2016 Allocation (%) - 2015

Neutral Period


End $m


Overseas Shares 45.0% 39.0% $27.66 45.0% 50.3% $40.19

100.0% 100.0% $70.98 100.0% 100.0% $79.86

Manager of Funds During 2015–16, PT continued its policy of engaging external fund managers for all funds except for cash and Australian fixed interest. Investment assessment of external fund managers requires ongoing monitoring and performance review. This process provides PT with access to expert advice, without sacrificing control over the style and balance of the common funds. Peer Group Comparisons Comparative returns to 30 June 2016 (after fees). Table 7: 2015–16 Peer Group Comparisons

1 YR % 3 YR % 5 YR %

Public Trustee Peer Group Public Trustee Peer Group Public Trustee Peer Group

Cash 2.19% 1.90% 2.67% 2.30% 3.40% 2.50%

Capital Stable 3.35% 2.85% 5.31% 5.45% 5.64% 5.55%

Balanced 4.27% 2.60% 7.58% 6.55% 7.70% 6.70%

Growth 3.82% 2.05% 8.75% 7.85% 8.81% 7.65%

Equities 1.19% 0.15% 9.94% 9.30% 9.78% 8.50%

*Note: the peer group returns are based on a survey of multi-sector unit trusts that have similar asset allocations to Public Trustee strategies.


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Appendices Committees – roles and memberships Audit and Risk Management Committee The Audit and Risk Management Committee is responsible for providing independent scrutiny of PT’s risk, control and compliance framework, and its internal and external accountability responsibilities. The committee has a broad skill base, and comprises four independent members (including an independent Chair) and one senior member of PT’s staff. All members are appointed by the Public Trustee following consultation with the Chief Executive of the Attorney-General’s Department (AGD). The Public Trustee, the General Manager Business and Client Financial Services and representatives of the Auditor-General also attend meetings of the committee. A representative from the Department of Treasury and Finance (DTF) is provided the meeting papers and is invited to attend. As at 30 June 2016, the committee comprised: Virginia Hickey, Director, @ the Board Table (Chair); Tanya Brooks, Principal Accountant, Treasury and Parliamentary Reporting, AGD; Chris Oerman, Independent Member; Steven Woolhouse, Chief Finance Officer, Department of the Premier and Cabinet; and Frankie Anderson, General Manager Customer Services, PT.

The committee meets at least five times per year and reports annually to the Public Trustee, on its operation and activities. A copy of the report is provided to the Chief Executive of AGD by the Public Trustee. The report includes: A summary of PT’s progress in addressing the findings and recommendations made in

internal and external audit reports; An overall assessment of PT’s risk, control and compliance framework, including details

of any significant emerging risks or legislative changes that may have an impact on PT; and

The number of meetings held during the relevant period and the number of meetings attended by each member.

During 2015–16, the committee considered a number of internal audit reports. The internal audit program was based on a comprehensive assessment of the organisation’s key risks. Information and Communications Technology Committee The Information Communications Technology (ICT) Committee advises on the priorities, planning and management of ICT within the context of PT’s Strategic Plan. The committee meets at least four times a year. The committee consists of: Debra Contala, the Public Trustee (Chair); Tony Brumfield, General Manager Business and Client Financial Services; Frankie Anderson, General Manager Customer Services; David Martino, Manager ICT; and Scott Bayliss, Executive Director, Projects and Technology, AGD.


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Investment Advisory Committee PT’s Investment Advisory Committee ensures that a sound and efficient system for customer investments is maintained. Chaired by the Public Trustee, the committee meets quarterly to provide appropriate advice, review the performance of PT’s investments, and make recommendations on investment matters. PT’s investment guidelines and procedures clearly define investment processes for internally managed portfolios, sub-portfolio allocation, asset allocation for Standard Investment Strategies (SIS) and the process for engaging external fund managers. The guidelines are regularly reviewed by the committee. PT engages an expert investment adviser to: Review the appropriateness of strategic asset allocation for all PT Standard Investment

Strategies; Provide portfolio structuring advice; Assist in selecting fund managers and monitoring performance, and provide ongoing

research into new managers; Provide quarterly reporting, ad hoc special reports, and dynamic asset allocation advice; Attend meetings of the committee and provide advice associated with PT investment

activity; and Provide other specialist advice.

Members of the committee during 2015–16 were: Debra Contala, the Public Trustee; Frankie Anderson, General Manager Customer Services; Tony Brumfield, General Manager Business and Client Financial Services; Nick Wiseman, Manager Investment Services; and Steven Gregor, Manager Client Financial Services.

PT’s investment advisers, Mercer (Marsh & McLennan Companies), also attends all meetings of the committee. A representative of DTF is provided with a copy of the formal meeting papers and is also invited to attend meetings of the committee.


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Common Funds - statutory information Section 30(3) of the Public Trustee Act 1995 requires certain information about each common fund operated by Public Trustee (PT) to be included within the Annual Report. 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 that PT charges in respect of investment in the common funds:

Management Fee 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. Goods and Services Tax An investment in PT’s common funds is classified as an input-taxed financial supply and no GST is charged on such supplies. Simply put, 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. However, 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 PT’s common funds, including PT 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. Indirect Cost Ratios (formerly Management Expense Ratio) 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.

Strategy ICR 2015-16 ICR 2014–15 Cash 1.08% 1.08% Capital Stable 1.27% 1.26% Balanced 1.42% 1.41% Growth 1.52% 1.52% Equities 1.67% 1.69%

Common Fund ICR 2015-16 ICR 2014–15 Cash 1.08% 1.08% Long term fixed interest 1.08% 1.08% Short term fixed interest 1.09% 1.09% Overseas fixed interest 1.35% 1.29% Australian shares 1.62% 1.67% Property 1.75% 1.62% Overseas shares 1.73% 1.72%

Entry Fees Investors pay the following fees when investing in common funds (NB: no fees are charged on entry or exit from the cash common fund):


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All other standard investment strategies;

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

Amounts up to $500 000 0.5% Additional amounts from $500 000 to $2 million 0.375% Additional amounts from $2 million to $5 million 0.25% Additional amounts above $5 million 0.0%

For beneficiaries of estates administered by PT 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 reduced scale for the beneficiary investors will apply.

For all other investors:

Amounts up to $500 000

1.0%

Additional amounts from $500 000 to $2 million 0.75% Additional amounts from $2 million to $5 million 0.5% Additional amounts above $5 million 0.0%

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 strategy. The entry fees as disclosed above will then apply. Deposits PT does not accept cash deposits. Investments in investment strategies may be made either by cheque, direct credit or by transfer of funds from an existing estate being administered by PT. Identification When establishing an investment account with PT, customers will be required to provide satisfactory proof of identity. A PT contact officer will explain identification requirements. 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. Part withdrawals must be in amounts of $1 000 or greater, or the balance of the funds being managed, if the amount to be withdrawn reduces the remaining balance to less than $5 000 for beneficiary investors or $20 000 for other investors. All withdrawal requests must be made in writing.


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Cash Common Fund 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 12pm). Proceeds of withdrawals of amounts greater than $1 million may not be available for up to thirty business days. Other Investment Strategies Proceeds of withdrawals from investment strategies, other than the cash investment strategy fund, 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 the thirtieth business day 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 (the Act) requires PT 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 PT 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:

Derivatives. The fund may invest in collective investment schemes operated by organisations approved by the relevant government agencies, provided that the rules of the collective investment schemes restrict the schemes’ investments to the permitted classes of investment of the common fund. Short-term Fixed Interest Common Fund The permitted classes of investment are:

a. Cash b. Australian Fixed Interest


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.


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

Security lending arrangements in relation to authorised investments are permitted. The following class of investment is explicitly excluded:

Derivatives. The fund may invest in collective investment schemes operated by organisations approved by the relevant government agencies, provided that the rules of the collective investment schemes restrict the schemes' investments to the permitted classes of investment of the common fund. Long-term Fixed Interest Common Fund The permitted classes of investment are:

a. Cash b. Australian Fixed Interest c. Inflation-linked Securities


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:

Derivatives. The fund may invest in collective investment schemes operated by organisations approved by the relevant government agencies, provided that the rules or the collective investment schemes restrict the schemes' investments to the permitted classes of investment of the common fund. Australian Shares Common Fund The classes of investment are:

a. Cash b. Australian equities c. Derivatives


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.


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iv. Underwriting is permitted only where PT 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.

The fund may invest in collective investment schemes operated by organisations approved by the relevant government agencies, provided that the rules of the collective investment schemes restrict the schemes' investments to the permitted classes of investment of the common fund. Property Common Fund The classes of investment are:

a. Cash b. Property c. Infrastructure


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 PT 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


The fund may invest in collective investment schemes operated by organisations approved by the relevant government agencies, provided that the rules of the collective investment schemes restrict the schemes' investments to the permitted classes of investment of the common 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.


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v. Underwriting is permitted only where PT (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 fund may invest in collective investment schemes operated by organisations approved by the relevant government agencies, provided that the rules of the collective investment schemes restrict the schemes' investments to the permitted classes of investment of the common fund. Overseas Fixed Interest Common Fund The permitted classes of investment are:

a. Cash b. International Fixed Interest and inflation linked securities c. Derivatives


i. The fund's liquidity requirements shall be met by investment in the cash common 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


The fund may invest in collective investment schemes operated by organisations approved by the relevant government agencies, provided that the rules of the collective investment schemes restrict the schemes' investments to the permitted classes of investment of the common fund.


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Customer Financial Information

Documents

Public Trustee · Executive Officer and Mr Abdul Kamil, ... PT established a panel contract for funeral service providers in the metropolitan area. We