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Public Trustee Annual Report 2014–15

Public TrusteeCommon Funds

Annual Report 2014–15

of 72 PUBL IC TRUSTEEGPO Box 1338 Adelaide South Australia 5001 | T 08 8226 9200 | F 08 8226 9350

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

Public Trustee Common Funds Annual Report 2014–15

Table of contentsThe Year in Review...................................................................................................................3Our Commitment to South Australia.........................................................................................5

Public Trustee Strategic Plan 2014–17.................................................................................7Relationship to the Attorney-General's Department (AGD) Strategic Directions......................9Governance and Leadership...................................................................................................11

Governance.........................................................................................................................11Boards and Committees......................................................................................................13

People and Culture.................................................................................................................17Executive Team...................................................................................................................17Organisation Chart..............................................................................................................18

Financial Performance............................................................................................................19Customer Investment Performance....................................................................................192014–15 Asset Allocation....................................................................................................21Manager of Funds...............................................................................................................22Peer Group Comparisons...................................................................................................22

Customer Financial Information..............................................................................................23Public Trustee Certification of Financial Statements...........................................................24Independent Audit Report...................................................................................................25Common Funds Financial Statements 2014–15.................................................................27

Appendix 1: Common Funds Statutory Information................................................................63The Nature and Amount of Any Fee that Public Trustee Charges in Respect of Investment in the Common Funds.........................................................................................................63Indirect Cost Ratios.............................................................................................................63Classes of Investment in which Common Funds May Invest..............................................66

Prepared by Public Trustee Corporate Services - Communications

Public Trustee211 Victoria SquareAdelaide SA 5000www.publictrustee.sa.gov.au

Email: [email protected]

Tel: 08-8226 9200Fax: 08-8226 9350

ABN: 72-906-921-697

ISSN: 1441-2799 (Print)

ISSN: 1836-263X (Online)

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mailto:[email protected]

http://www.publictrustee.sa.gov.au/


The Year in ReviewThis year has been significant for Public Trustee as we continued to reform our business while maintaining focus on customer service. It was also the first year of Public Trustee’s 2014–17 Strategic Plan.

Under the Plan we committed to reviewing our standards of service to ensure they are relevant and useful for both our customers and staff. This work involved staff and used the valuable customer feedback we receive through our annual customer survey.

The review found that, by and large, our current customer service standards were relevant and achievable. There is a culture of wanting to meet our customer’s needs and deliver a high-quality service at Public Trustee. Areas for improvement were identified and the Senior Management Group of Public Trustee worked on these.

We continued to reform our business and improved it by undertaking a range of projects. These include changes to the way we complete estates and strengthening our cyber security. We also developed more formal contracts for some of the key services we purchase on behalf of customers.

In 2014–15, Public Trustee’s profit before income tax equivalent payments was $1.156 million. This was an excellent result as we continue to meet the expenditure reduction targets set by government.

There were good returns on Public Trustee’s investments this year. All five of Public Trustee’s investment strategies outperformed their benchmarks. Global markets continue to be volatile but Public Trustee’s defensive strategies are performing well for customer funds. At 30 June, we had more than $1 billion (including superannuation) invested.

Financial sustainability is a priority for any organisation and we will continue to work closely with our investment adviser to maximise returns for our customers. We also plan to focus on an upgrade to our business systems this year in order to maximise efficiency and reduce red tape. We have gained from the input of staff providing innovation to projects; this will improve accuracy and efficiency.

I would like to take this opportunity to thank all staff of Public Trustee for their continued commitment, hard work and support.

Original signed 30 October 2015

Debra ContalaPublic Trustee30 October 2015

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Our Commitment to South Australia‘The Public Trustee’ is a statutory officer pursuant to the Public Trustee Act 1995. ‘Public Trustee’ is a body corporate and has the powers of a natural person. Public Trustee is also a separate agency within the broader departmental organisation of the Attorney-General’s Department (AGD) and reports in the context of the Strategic Plan of the AGD.

Our Vision

To be trusted and respected for providing caring and professional services.

Our Mission

To support South Australians, including the most vulnerable, by providing excellent service in Will making, estate management and financial administration.

Our Services

Our services include a range of estate planning, administration and trustee services, Will making, estate administration, Enduring Power of Attorney, personal financial management, taxation and funds management services.

Our Customers and Stakeholders

Customers whose financial affairs we manage and beneficiaries in deceased estates;Family members, carers, liaison persons and health professionals involved with customers under our management; Guardians of customers;Private financial administrators and managers;Courts, tribunals and regulatory agencies;Peak disability, mental health and aged care advocacy groups; The Attorney-General and the Treasurer on behalf of the South Australian Government; andStaff of Public Trustee.

Our Principles and Values

Public Trustee is committed to the Public Sector values of service, professionalism, trust, respect, collaboration and engagement, honesty and integrity, courage and tenacity, and sustainability.

We treat all our customers with dignity and respect;We care about our customers and administer their financial and legal affairs courteously, promptly and professionally;We encourage feedback and act on it promptly, be it a complaint or compliment; andWe always act in the best interests of our customers.

Our Strategic Objectives for 2014–17

A commitment to achieving service excellence by delivering services in a professional, consistent, coordinated and timely manner; Delivery of our objectives through good governance, strong leadership, and sound risk management;Identify opportunities to improve and enhance all areas of our business processes;Invest in our people and create a rewarding environment in which to work; and

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Ensure the organisation remains profitable and meets agreed fiscal targets.

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Public Trustee Strategic Plan 2014–17

VisionTo be trusted and

respected for providing caring and professional services

MissionTo support South

Australians, including the most vulnerable, by providing excellent service in Will

making, estate management and financial administration

Core ValuesService, Professionalism,

Trust, Respect, Collaboration and Engagement, Honesty and Integrity, Courage and

Tenacity, Sustainability

Objectives Strategies

Customer ServiceWe are committed to achievingservice excellence by delivering

services in a professional,consistent, coordinated and

timely manner

• Ensure Public Trustee’s Service Standards remain current and effective

• Develop a streamlined customer-centric model of customer service

• Improve our communication to customers• Improve services to Aboriginal customers and

customers from other cultures

Governance and LeadershipWe will deliver our objectives through good

governance, strong leadership, and sound risk management

• Ensure our leaders are empowered to act and work as a team

• Build and maintain the confidence of key stakeholders

• Build our internal capabilities in risk management

• Ensure our future leaders are well-supported to continue their development

Business ImprovementWe will identify opportunities to improve and enhance all areas of our business processes

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

• Transform and simplify our business processes to cut red tape

• Improve records management to ensure customer information is easy to access

• Implement e-commerce improvements• Continue to improve our contract management• Write ‘plain English’ Wills

People and CultureWe will invest in our people andcreate a rewarding environment

in which to work

• Ensure all staff are well inducted and trained• Ensure that the organisation has the capability

to succeed in a major ICT upgrade project• Encourage staff to engage more actively in the

communities we serve• Build a culture based on mutual respect,

personal accountability and support• Continually improve Workplace Health and

Safety

Financial StabilityWe will ensure the organisation remains profitable

and meets agreed fiscal targets

• Continually promote Public Trustee services• Develop new business initiatives• Improve the transparency of our financial

framework• Review perpetual trusts

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Relationship to the Attorney-General’s Department (AGD) Strategic Directions Public Trustee aligns its business objectives and customer-focused services with the AGD Strategic Directions and with South Australia’s Strategic Plan (SSP), in particular the second strategic priority of ‘keeping our communities safe and citizens healthy’. The two relevant targets for Public Trustee are: SSP Target 32 – Customer and client satisfaction with government services; and SSP Target 50 – People with a disability.

A particular focus is protecting and supporting vulnerable people by providing personal financial administration services for those who are unable, through age or disability, to manage their own affairs.

Public Trustee supports the AGD in achieving the following strategies:

AGD Goal 2: Protecting rights and enforcing obligations

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

Public Trustee contributes to this by:Maintaining a comprehensive website which provides relevant information to the South Australian community, and informs it about and assists it with:

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; andDeceased estate administration.

Maintaining a range of information brochures to promote the various services Public Trustee provides and the importance of having a current 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.

AGD Goal 2: Protecting rights and enforcing obligations

AGD Strategy 2.6: Safeguard vulnerable people through appropriate service environments and settings

Public Trustee contributes to this by: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 SACAT or the courts;Managing small trusts and intestacies for the benefit of individuals with limited means.Managing Minor’s Trusts for people under the age of 18 years of age; andThe provision of personal financial management services for those who have lost capacity to manage their own affairs.

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AGD Goal 4: Working Together

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

Public Trustee contributes to this by:Meeting the requirements of our 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; and

Maintaining a database feedback system and using lessons learnt to make continuous improvements in customer service.

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

Public Trustee contributes to this by: Actively pursuing development opportunities for all staff, linked to their individual Performance Reviews; and

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

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Governance and Leadership

Governance

Public Trustee’s Function

Under the provisions of Section 5(2) of the Public Trustee Act 1995, Public Trustee 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.

Under the Legal Practitioners Act 1981, Public Trustee is also able to prepare Wills.

Public Trustee is a Public Non-Financial Corporation under the Public Corporations Act 1993. It 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.

Basis of Authority

In performing its duties, the following legislation forms the basis of how and which Public Trustee services are delivered to customers:

Public Trustee Act 1995;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;Powers of Attorney and Agency Act 1984;Trustee Act 1936; andWills Act 1936.

Public Trustee 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 Public Trustee and the Government. The Charter is reviewed annually.

The Charter also requires an agreed Annual Performance Statement that outlines Public Trustee’s objectives for invested customer funds, and financial and other performance targets.

Responsibility

As detailed earlier, ‘the Public Trustee’ is a statutory officer pursuant to the Public Trustee Act 1995. ‘Public Trustee’ is a body corporate and has the powers of a natural person. Public Trustee is also a separate agency within the broader departmental organisation of the AGD and reports in the context of the Strategic Plan of the AGD.

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The Public Trustee has the full responsibilities of a trustee in accordance with the Public Trustee Act 1995 in carrying out the roles and functions of the office. The Public Trustee is responsible for the strategic direction of the office and the management of service delivery.

Internal Service Level Agreements

Internal service standards between branches are important to ensure our business runs smoothly. Service Level Agreements have been formalised between branches they establish a clear commitment to work in partnership to provide reliable and timely services to each other.

Covering the various interrelating functions between branches, the agreements are reviewed annually to ensure relevance and currency.

Risk Management

Public Trustee has a risk management framework that assists with the management of both strategic and business risk. This occurs through stringent risk assessment by senior management and the adoption of controls to manage identified risk.

The framework covers reviews of all of Public Trustee’s investment, financial, operational and administrative responsibilities, at both customer and corporate level.

Supporting this framework is an extensive system of control self-assessment; this requires managers to report six-monthly to Public Trustee's Audit and Risk Management Committee on individual branch compliance with internal controls, instances of failure to comply, and proposed corrective action. The control self-assessment is a structured process to review the effectiveness of internal controls across our key functions that includes two levels of assessment: initial assessor and secondary reviewer. The ratings of these assessments provide insight into whether remedial actions are required. This is a comprehensive assessment process ensuring each control is assessed on the adequacy of its design and its effectiveness in managing that particular risk.

The cycle of ongoing risk assessment helps in the development of Public Trustee’s annual internal audit plan.

Public Trustee is a member of the Financial Services Council (FSC). The council represents organisations undertaking funds management, superannuation, life insurance, financial advice, trustee and public trustee services, and has more than 130 members.

Control Self-Assessment Training

During 2014–15, Public Trustee conducted refresher training for staff in the Control Self-Assessment system.

This training focused on how risk management is applied in the workplace. Through a better understanding of our internal controls, and the need to regularly assess the effectiveness of controls, staff are able to be more effective when performing the half-yearly control self-assessment process.

The training also covered the relationship between procedures, process maps and the controls assessed using the ControlTrack System.

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Fraud and Corruption

In 2014–15, Public Trustee collaborated with interstate counterparts to strengthen fraud risk management and control. This has coincided with a fraud and corruption risk assessment, delivery of mandatory fraud and corruption awareness training to all staff, and development of a fraud control plan.

Improved Controls over Financial Statements

During the 2014–15 reporting period, Public Trustee continued to improve financial reporting to customers. Additional system reconciliations were introduced to improve quality assurance.

External Audit

The Auditor-General audits the operations and finances of Public Trustee annually. The Audit and Risk Management Committee receives and reviews all the Auditor-General’s findings, plus management’s response and the corrective actions taken.

Internal Audit

The Audit and Risk Management Committee oversees the preparation of an annual internal audit work plan. Public Trustee has engaged an external firm to undertake internal audits, consistent with the approved work plan. All internal audit reports and management responses are presented to the committee for consideration.

Indemnity of Officers

Pursuant to Section 49 of the Public Trustee Act 1995, any liability incurred by Public Trustee may be enforced against the Crown. Notwithstanding this, Public Trustee has comprehensive professional indemnity insurance through the South Australian Government Captive Insurance Corporation (SAICORP), covering all Public Trustee officers in the performance of their required duties.

Boards and Committees

Investment Advisory Committee

The Investment Advisory Committee ensures that a sound and efficient system of customer investment is maintained.

Chaired by the Public Trustee, the committee meets quarterly to provide appropriate advice, review the performance of Public Trustee’s investments, and make recommendations on investment matters.

Public Trustee’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.

Public Trustee engages an expert investment adviser to:

Review the appropriateness of strategic asset allocation for all Public Trustee Standard Investment Strategies;Provide portfolio structuring advice;

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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 Public Trustee investment activity to that committee and senior management; andProvide other specialist advice.

Members of the committee during 2014–15 were:

Debra Contala, the Public Trustee; Frankie Anderson, General Manager, Customer Services, Public Trustee;Tony Brumfield, General Manager, Business and Client Financial Services, Public Trustee;Nick Wiseman, Manager, Investment Services, Public Trustee; andSteven Gregor, Manager, Client Financial Services, Public Trustee.

A representative of the Department of Treasury and Finance is provided with a copy of the formal meeting papers and is invited to attend meetings of the committee.

Funds Management Forum

A sub-group of members of the Investment Advisory Committee and staff of the Funds Administration team meet monthly in the Funds Management Forum to review and provide advice on:

Accounting, taxation and system operations;Common Fund operations, performance and investment management issues;Standard Investment Strategy operations, performance and investment management issues; andCommon Fund and Standard Investment Strategy compliance and asset allocation issues.

Corporate Investment Committee

The Corporate Investment Committee meets quarterly to review the performance of invested corporate funds and the associated asset allocation strategies.

The committee provides assurance and assistance to Public Trustee to ensure a sound, efficient and prudent system for the investment of corporate funds.

Audit and Risk Management Committee

The Audit and Risk Management Committee is responsible for providing independent scrutiny of Public Trustee’s risk, control and compliance framework, and its internal and external accountability responsibilities.

The committee has a broad skill base, with an independent Chair, four independent members and one senior member of Public Trustee’s staff. All members are appointed by the Public Trustee following consultation with the Chief Executive of the Attorney-General’s Department.

The Public Trustee, the General Manager, Business and Client Financial Services, representatives of the Auditor-General, and a representative from the Department of Treasury and Finance also attend meetings of the committee.

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As at 30 June 2015, the committee comprised:

Virginia Hickey, Director, @ the Board Table (Chair);Maddie Turner, Director Business Services, Office of the Director Public Prosecutions, Attorney-General’s Department; Christine Locher, Principal, Solutions@Locher Pty Ltd;Steven Woolhouse, Chief Finance Officer, Department of the Premier and Cabinet; andFrankie Anderson, General Manager Customer Services, Public Trustee.

The committee meets at least five times per year and reports annually to the Public Trustee and the Chief Executive, AGD, on its operations and activities. The report includes:

A summary of Public Trustee’s progress in addressing the findings and recommendations made in internal and external audit reports;An overall assessment of Public Trustee’s risk, control and compliance framework, including details of any significant emerging risks or legislative changes that may have an impact on Public Trustee; andThe number of meetings held during the relevant period and the number of meetings attended by each member.

During 2014–15, the committee considered a number of internal audit and management reports. The internal audit program was based on a comprehensive assessment of the organisation’s key risks.

The committee also conducted an annual self-assessment and used that collective feedback to determine areas where it might improve.

Public Trustees’ National Meeting and the Australian Guardianship and Administration Council (AGAC) Meeting

In October 2014, Public Trustee hosted a meeting of the Public Trustees from around Australia, and they then attended the Australian Guardianship and Administration Council (AGAC) meeting along with the Public Advocates/Guardians and Heads of Tribunals from around Australia.

Review of Public Trustee’s Charter and Performance Statement with the Treasurer and Attorney-General

On an annual basis as a Government Business Enterprise, Public Trustee is required to enter into a Charter and Performance Statement. Under the terms of the Charter, Public Trustee, in consultation with the Attorney-General and the Treasurer, must review the Charter and prepare a Performance Statement setting out the targets for the coming year.

Public Trustee’s Charter and Performance Statement for 2015-16 was agreed and signed by the Attorney-General and Treasurer in June 2015.

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People and Culture

Executive Team

Debra Contala BA (Acc) FCPAPublic Trustee

The Public Trustee is a Statutory Officer within the Attorney-General’s Department (AGD).

Debra Contala was appointed as the Public Trustee in November 2010. Ms Contala had previously worked in the AGD for 10 years in a variety of finance and corporate roles, and was most recently the Executive Director of the Finance and Business Services Division.

Ms Contala has extensive experience in State Government, including in the Department of Treasury and Finance and Arts SA. She has strong business credentials and expertise in a wide range of areas within government, including finance, project management, procurement and human resources.

Ms Contala has also been a member of a range of government boards including the Superannuation Board and the Board of the SA Fire and Emergency Services Commission. She is a member of the State Procurement Board.

Frankie Anderson BSocScGeneral Manager Customer Services

Frankie Anderson joined Public Trustee in August 2011 as General Manager, Customer Services. Ms Anderson had previously held the role of Director, Human Resources in the AGD.

Ms Anderson has brought experience in customer service to Public Trustee. Her varied professional background has given her the opportunity to work closely with many areas of the community, including vulnerable people.

Tony Brumfield BEc (Acc)General Manager Business and Client Financial Services

Tony Brumfield joined Public Trustee in March 2012. He is an accountant with a Bachelor of Economics (Accounting) from Flinders University and a Graduate Certificate of Management from the University of South Australia.

Mr Brumfield has experience in a range of executive positions within the South Australian Government and has a strong background in managing corporate and finance functions. He has held the roles of Director, Financial Services at the Department of Treasury and Finance, Director, Finance and Asset Management in the Department of Primary Industries and Resources, and General Manager, Corporate Services at Defence SA.

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Nick Wiseman, BEc, MPA, CIMA Manager Investment Services (non-Executive)

Nick Wiseman joined Public Trustee in 2006. As Manager Investment Services, he is responsible for overseeing the development, implementation and monitoring of investment strategies for the funds Public Trustee manages.

Before joining Public Trustee, Mr Wiseman worked at Elders and JP Morgan. He has more than 16 years’ experience in financial markets, ranging from money market dealing to institutional funds management.

Public Trustee Organisation Chart

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Financial Performance

Customer Investment Performance

For the year ended 30 June 2015, Public Trustee’s investment strategies performed well.

Overseas shares were the best-performing asset class delivering 25.2% on an unhedged basis. The Australian share market delivered a respectable return of 5.6% for the year, despite a poor month in June. Australian-listed property was a standout for the year, returning 20.2%.

During the financial year, the Australian dollar depreciated notably against most major currencies finishing the financial year at $0.77 US, 18% lower than a year earlier. In May 2015, the Reserve Bank of Australia cut interest rates to an all-time low of 2%, whilst over the course of the financial year global interest rates generally declined.

All of Public Trustee’s investment strategies outperformed their respective benchmarks, with returns ranging from between 2.72% for cash to 10.99% for the equities strategy (net of fees). The investment returns for five years demonstrate that our long-term performance is strong and stable and continues to exceed benchmarks.

Table 1: 2014–15 Standard Investment Strategies’ 5-year performance

2014–15Performance

Last 12 MonthsAnnualised

%

3 YearsAnnualised

%

5 YearsAnnualised

%

Cash 2.7 3.3 4.1benchmark 1.6 1.9 2.7variance 1.1 1.4 1.4

Capital Stable 4.9 6.9 6.6benchmark 4.5 6.1 5.9variance 0.4 0.8 0.7

Balanced 7.0 10.5 9.0benchmark 6.9 9.9 8.4variance 0.1 0.6 0.6

Growth 8.5 13.3 10.5benchmark 8.1 12.7 9.7variance 0.4 0.6 0.8

Equities 11.0 17.8 12.3benchmark 10.1 17.3 11.3variance 0. 9 0.5 1.0

Public Trustee takes a highly active role in managing customer funds. We regularly engage with our fund managers, consultants and industry professionals to ensure customer portfolios are managed prudently. We continue to monitor developments in Australia and global trends to ensure adequate protection is in place for our investors.

During the financial year, Public Trustee made some enhancements to our suite of investment managers. A new specialist infrastructure manager was appointed, whose investments comprise a quality, diversified portfolio, including airports, toll roads, utilities and seaports. Another appointment was a specialist fixed-income manager, whose aim is to seek

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out the best return potential in the current market environment. Their investment style is very well aligned with Public Trustee’s objective, which is to deliver consistent positive absolute returns, capital stability and an income stream for our customers. Public Trustee believes this manager is well placed to navigate the challenging low interest rate environment coupled with the possibility of potential interest rate rises in the United States.

Public Trustee continues to closely monitor global economic conditions and asset class valuations to ensure customer funds are managed prudently. Wherever possible we seek to add value for customers through sound asset allocation decisions and responsible risk management.

A disciplined investment process continues to emphasise value, quality and effective risk management. It is a philosophy that has come from our long investment experience in understanding the financial needs of our customers and the opportunities and risks of financial markets.

Overall, the performance of the funds has been more than satisfactory this financial year. Our bias towards quality investments and long-term focus continues to be beneficial. Set out below is the performance of Public Trustee’s Standard Investment Strategies (SIS) versus their targets.

Table 2: 2014–15 SIS Performance versus CPI Objectives (as at 30 June 2015)

Investment Strategy CPI Objective Investment

HorizonTarget

Return % paActual

Return % paOver

(+)/Under(-)Outperformance

% pa

Capital Stable CPI + 2% pa 3 Years 4.3% 6.9% + 2.6%Balanced CPI + 3% pa 5 Years 5.3% 9.0% + 3.6%Growth CPI + 3.5% pa 7 Years 5.8% 7.3% + 1.5%Equities CPI + 4% pa 10 Years 6. 7% 7.3% + 0.7%

The Corporate and Financial Information section of this report contains details of the 2014-15 Asset Allocation, Manager of Funds Statement, the Peer Group Comparisons, the Common Funds Statutory Information of Indirect Cost Ratios, Fees and the Classes of Investment in which the Common Funds may invest.

The Public Trustee certification of the Financial Statements, the independent Auditor-General’s report of the financial statements, the Statement of Trusts being administered as at 30 June 2015 and the Common Funds Financial Report are also contained in the Corporate and Financial Information section of this report.

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2014–15 Asset Allocation Table 3: 2014–15 Asset AllocationCapital Stable Standard Investment Strategy

Common Fund Allocation (%) - 2015 Allocation (%) - 2014

NeutralPeriod

End $m NeutralPeriod

End $m

Australian Shares 12.0% 11.3% $8.07 12.0% 11.6% $7.99Overseas Shares 8.0% 9.4% $6.68 8.0% 8.1% $5.61Listed Property Securities 5.0% 5.0% $3.55 5.0% 5.3% $3.63Long Term Fixed Interest 15.0% 15.0% $10.68 15.0% 14.9% $10.29Short Term Fixed Interest 30.0% 29.5% $20.99 30.0% 30.0% $20.70Overseas Fixed Interest 10.0% 10.2% $7.25 10.0% 10.1% $7.00Cash 20.0% 19.7% $14.03 20.0% 20.0% $13.81

100.0%100.0

% $71.24 100.0% 100.0% $69.01

Balanced Standard Investment StrategyCommon Fund Allocation (%) - 2015 Allocation (%) - 2014

NeutralPeriod


End $m


100.0%100.0

% $208.78 100.0% 100.0% $206.05

Growth Standard Investment StrategyCommon Fund Allocation (%) - 2015 Allocation (%) - 2014

NeutralPeriod


End $m


100.0% 100.0%$209.2

1 100.0% 100.0% $202.91

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Equities Standard Investment StrategyCommon Fund Allocation (%) - 2015 Allocation (%) - 2014

NeutralPeriod


End $m

Australian Shares 55.0% 49.7% $39.67 55.0% 53.8% $42.36Overseas Shares 45.0% 50.3% $40.19 45.0% 46.2% $36.44

100.0% 100.0% $79.86 100.0% 100.0% $78.80

Manager of Funds

During 2014–15, Public Trustee 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 Public Trustee 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 2015 (after fees)

Table 4: 2014–15 Peer Group Comparisons 1 YR % 3 YR % 5 YR %

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

Cash 2.7 2.4 3.3 2.9 4.1 3.0Capital Stable 5.0 5.8 6.9 7.8 6.6 6.9Balanced 7.0 8.1 10.5 10.8 9.0 8.5Growth 8.5 9.0 13.3 13.2 10.5 9.6Equities 11.0 10.5 17.8 15.3 12.3 10.2

* 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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Customer Financial Information

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Public Trustee Certification of Financial Statements

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Original signed 9 September 2015 Original signed 9 September 2015


Independent Audit Report

Page 1

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Page 2

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Original signed 16 September 2015

Public Trustee

COMMON FUNDS

Common Funds Financial Statements 2014–15

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Public Trustee

COMMON FUNDS

Note 2015 2014$'000 $'000

Investment income

Interest 2(e) 15 826 16 358 Net (loss) on financial assets held at fair value through profit or loss 2(b),3(d) ( 987) ( 333)

Total investment income 14 839 16 025

Expenses

Public Trustee management fees 2(f) 4 407 4 119 Legal and advisory expenses 105 98 Other expenses 29 26

Total expenses 4 541 4 243

Net operating profit 10 298 11 782

Financing costs attributable to unitholders

Undistributed income brought forward 1 243 1 497 Distributions to unitholders 2(h),4 (11 501) (12 369) Transfers from net assets to determine distributable income 2(i) 987 333

Total financing costs attributable to unitholders (9 271) (10 539)

(Increase) in net assets attributable to unitholders (1 027) (1 243)

Total comprehensive income for the year - -

The above Statement of Comprehensive Income should be read in conjunction with the accompanying notes

Cash Common FundStatement of Comprehensive Income

for the year ended 30 June 2015

Note 2015 2014$'000 $'000

Assets:

Cash and cash equivalents 5 13 014 5 000 Advances to estates 4 626 4 894 Financial assets held at fair value through profit or loss 6 408 132 403 930 Other assets 3 316 3 742

Total assets 429 088 417 566

Liabilities:

Income distribution payable 1 027 1 243 Bank overdraft 5 109 64 Funds deposited by other Common Funds 61 681 62 655 Other liabilities 45 40

Total liabilities (excluding net assets attributable to unitholders) 62 862 64 002

Net assets attributable to unitholders - liability 3 366 226 353 564

Represented by:

Fair value of outstanding units based on net asset value 366 226 353 564

The above Statement of Financial Position should be read in conjunction with the accompanying notes

Cash Common FundStatement of Financial Position

as at 30 June 2015

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Public Trustee

COMMON FUNDS

Note 2015 2014Inflows Inflows

(Outflows) (Outflows)$'000 $'000

Cash flows from operating activities:

Cash inflowsInterest received 16 393 17 087

Cash generated from operations 16 393 17 087 Cash outflowsPayments for expenses (4 536) (4 251)

Cash used in operations (4 536) (4 251)

Net cash provided by operating activities 10(b) 11 857 12 836

Cash flows from investing activities:

Cash inflows171 059 161 367

Net repayments of advances to estates 268 470 Cash generated from investing activities 171 327 161 837

Cash outflowsPurchase of financial assets held at fair value through profit or loss (176 396) (177 499)

Cash used in investing activities (176 396) (177 499)

Net cash (used in) investing activities (5 069) (15 662)

Cash flows from financing activities:


( 972) 7 507 Cash generated from financing activities 12 682 15 021

Cash outflowsDistributions paid (11 501) (12 369)

Cash used in financing activities (11 501) (12 369)

Net cash provided by financing activities 1 181 2 652

Net increase / (decrease) in cash and cash equivalents 7 969 ( 174)

Cash and cash equivalents at 1 July 4 936 5 110

Cash and cash equivalents at 30 June 5 12 905 4 936

The above Statement of Cash Flows should be read in conjunction with the accompanying notes

Cash Common Fund


Net proceeds/payments from applications/redemptions from/(to) other Common Funds

Proceeds from the sale of financial assets held at fair value through profit or loss

Net proceeds/payments from applications/redemptions from/(to) unitholders

Statement of Cash Flows

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Note 2015 2014$'000 $'000

Investment income

Interest 2(e) 1 816 1 879 Net (loss) gain on financial assets held at fair value through profit or loss 2(b),3(d) ( 72) 57


Expenses

Public Trustee management fees 2(f) 345 336 Legal and advisory expenses 8 8

Total expenses 353 344



Undistributed Income brought forward 748 892 Distributions to unitholders 2(h),4 (1 524) (1 679) Transfers from (to) net assets to determine distributable income 2(i) 72 ( 57)

Total financing costs attributable to unitholders ( 704) ( 844)

(Increase) in net assets attributable to unitholders ( 687) ( 748)



Short Term Fixed Interest Common FundStatement of Comprehensive Income


Note 2015 2014$'000 $'000

Assets:

Cash and cash equivalents 5 19 484 18 649 Financial assets held at fair value through profit or loss 6 32 250 33 178 Other assets 312 359

Total assets 52 046 52 186

Liabilities:

Income distribution payable 687 748 Other liabilities 1 1

Total liabilities (excluding net assets attributable to unitholders) 688 749


Represented by:



Short Term Fixed Interest Common FundStatement of Financial Position

as at 30 June 2015

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Cash generated from operations 1 985 2 020 Cash outflowsPayments for expenses ( 353) ( 345)

Cash used in operations ( 353) ( 345)

Net cash provided by operating activities 10(b) 1 632 1 675



Cash generated from investing activities 16 234 18 506 Cash outflowsPurchase of financial assets held at fair value through profit or loss (15 500) (24 117)


Net cash provided by (used in) investing activities 734 (5 611)


Cash inflowsProceeds from applications by unitholders 4 024 8 795

Cash generated from financing activities 4 024 8 795 Cash outflowsPayments for redemptions by unitholders (4 031) (6 010) Distributions paid (1 524) (1 678)


Net cash (used in) provided by financing activities (1 531) 1 107

Net increase / (decrease) in cash and cash equivalents 835 (2 829)





Statement of Cash FlowsShort Term Fixed Interest Common Fund


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Note 2015 2014$'000 $'000

Investment income

Interest 2(e) 3 708 3 896 2(b),3(d) 727 1 545


Expenses





Undistributed Income brought forward 1 722 1 739 Distributions to unitholders 2(h),4 (3 503) (3 328) Transfers (to) net assets to determine distributable income 2(i) ( 431) (1 308)





Net gain on financial assets held at fair value through profit or loss

Long Term Fixed Interest Common FundStatement of Comprehensive Income


Note 2015 2014$'000 $'000

Assets:



Liabilities:

Income Distribution Payable 1 459 1 722



Represented by:



Long Term Fixed Interest Common FundStatement of Financial Position

as at 30 June 2015

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Cash used in operations ( 764) ( 823) Net cash provided by operating activities 10(b) 3 290 3 269



Cash generated from investing activities 21 271 25 394 Cash outflowsPurchase of financial assets held at fair value through profit or loss (10 000) (21 952)


Net cash provided by investing activities 11 271 3 442





Net cash (used in) financing activities (4 222) ( 321)

Net increase in cash and cash equivalents 10 339 6 390





Long Term Fixed Interest Common FundStatement of Cash Flows


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Note 2015 2014$'000 $'000

Investment income

Trust Distributions 559 644 Interest 2(e) 176 300

2(b),3(d) 732 959 Other Income 102 150


Expenses





Undistributed Income brought forward 275 839 Distributions to unitholders 2(h),4 ( 461) (1 397) Transfers (to) net assets to determine distributable income 2(i) ( 732) ( 959)

Total Financing costs attributable to unitholders ( 918) (1 517)





Overseas Fixed Interest Common FundStatement of Comprehensive Income


Note 2015 2014$'000 $'000

Assets:



Liabilities:

Income distribution payable 308 275 Other liabilities 1 2



Represented by:



Overseas Fixed Interest Common FundStatement of Financial Position

as at 30 June 2015

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Cash inflowsTrust distributions received 217 1 222 Interest received 202 297

Cash generated from operations 419 1 519 Cash outflowsPayments for expenses ( 344) ( 262)

Cash used in operations ( 344) ( 262) Net cash provided by operating activities 10(b) 75 1 257


Cash inflows13 698 -

Cash generated from investing activities 13 698 - Cash outflowsPurchase of financial assets held at fair value through profit or loss (23 000) -

Cash used in investing activities (23 000) - Net cash (used in) investing activities (9 302) -



Cash generated from financing activities 3 270 8 125 Cash outflowsPayments for redemptions by unitholders (3 492) (4 805) Distributions paid ( 461) (1 397)

Cash (used in) financing activities (3 953) (6 202)

Net cash (used in) / provided by financing activities ( 683) 1 923

Net (decrease) / increase in cash and cash equivalents (9 910) 3 180





Overseas Fixed Interest Common FundStatement of Cash Flows


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Note 2015 2014$'000 $'000

Investment income

Trust Distributions 8 593 8 410 Interest 2(e) 143 144

2(b),3(d) 229 21 150 Other Income 535 508


Expenses

Public Trustee management fees 2(f) 1 717 1 713 Legal and advisory expenses 41 41 Other expenses - -

Total expenses 1 758 1 754

Net operating profit (loss) 7 742 28 458


Undistributed Income brought forward 6 307 3 283 Distributions to unitholders 2(h),4 (8 675) (6 124) Transfers (to) net assets to determine distributable income 2(i) ( 229) (19 310)






Australian Shares Common FundStatement of Comprehensive Income


Note 2015 2014$'000 $'000

Assets:

Cash and cash equivalents 5 3 717 8 936 Financial assets held at fair value through profit or loss 6 158 450 157 686 Other assets 5 655 5 598

Total assets 167 822 172 220

Liabilities:

Income Distribution Payable 5 145 6 307



Represented by:



Australian Shares Common FundStatement of Financial Position

as at 30 June 2015

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Cash inflowsTrust distributions received 8 522 5 670 Interest received 157 142


Cash used in operations (1 758) (1 755) Net cash provided by operating activities 10(b) 6 921 4 057

Cash flows from investing activities:Cash inflows

- 21 000 Cash generated from investing activities - 21 000

Cash outflowsPurchase of financial assets held at fair value through profit or loss - -

Cash used in investing activities - - Net cash provided by investing activities - 21 000




Cash used in financing activities (24 680) (38 944) Net cash (used in) financing activities (12 140) (22 575)

Net (decrease) / increase in cash and cash equivalents (5 219) 2 482





Australian Shares Common FundStatement of Cash Flows


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COMMON FUNDS

Note 2015 2014$'000 $'000

Investment income

Trust Distributions 17 406 3 836 Interest 2(e) 87 66

2(b),3(d) 5 707 19 474 Other Income 509 381


Expenses

Public Trustee management fees 2(f) 1 379 1 376 Legal and advisory expenses 33 33

Total Expenses 1 412 1 409



Undistributed Income brought forward 205 662 Distributions to unitholders 2(h),4 ( 205) ( 662) Transfers (to) net assets to determine distributable income 2(i) (21 514) (22 143)






Overseas Shares Common FundStatement of Comprehensive Income


Note 2015 2014$'000 $'000

Assets:


Total assets 146 377 127 289

Liabilities:

Income distribution payable 783 205



Represented by:



Overseas Shares Common FundStatement of Financial Position

as at 30 June 2015

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Cash used in operations (1 412) (1 409)

Net cash provided by operating activities 10(b) 4 578 848


Cash inflows- 28 500

Cash generated from investing activities - 28 500 Cash outflowsPurchase of financial assets held at fair value through profit or loss - -

Cash used in investing activities - -

Net cash provided by investing activities - 28 500



Cash generated from financing activities 9 832 10 249 Cash outflowsPayments for redemptions by unitholders (12 836) (40 515) Distributions paid ( 205) ( 662)


Net cash (used in) financing activities (3 209) (30 928)

Net increase / (decrease) in cash and cash equivalents 1 369 (1 580)





Overseas Shares Common FundStatement of Cash Flows


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COMMON FUNDS

Note 2015 2014$'000 $'000

Investment income

Trust Distributions 4 304 4 360 Interest 2(e) 50 33 Net gain on financial assets held at fair value through profit or loss 2(b),3(d) 940 3 382 Other Income 112 128


Expenses





Undistributed Income brought forward 2 078 637 Distributions to unitholders 2(h),4 (2 725) ( 956) Transfers from (to) net assets to determine distributable income 2(i) 259 (5 000)

Total Financing costs attributable to unitholders ( 388) (5 319)




Property Common FundStatement of Comprehensive Income


Note 2015 2014$'000 $'000

Assets:



Liabilities:

Income distribution payable 4 520 2 078



Represented by:



Property Common FundStatement of Financial Position

as at 30 June 2015

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Cash used in operations ( 498) ( 506) Net cash provided by operating activities 10(b) 3 677 1 117



Cash generated from investing activities 4 500 10 000 Cash outflowsPurchase of financial assets held at fair value through profit or loss (3 500) -

Cash used in investing activities (3 500) -

Net cash provided by investing activities 1 000 10 000



Cash generated from financing activities 4 100 3 364 Cash outflowsPayments for redemptions by unitholders (4 440) (13 659) Distributions paid (2 725) ( 956)


Net cash (used in) financing activities (3 065) (11 251)

Net increase / (decrease) in cash and cash equivalents 1 612 ( 134)





Property Common FundStatement of Cash Flows


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Public Trustee Common FundsNotes to and forming part of the financial statements

1. General information

The Common Funds have been established pursuant to the Public Trustee Act 1995 or its predecessor legislation. The following Common Funds were active for the whole of the current and comparative reporting periods:

Cash Common Fund; Short Term Fixed Interest Common Fund; Long Term Fixed Interest Common Fund; Australian Shares Common Fund; Overseas Fixed Interest Common Fund; Overseas Shares Common Fund; and Property Common Fund.

The Inflation Linked Investments Common Fund was dormant throughout 2014-15, has nil assets and liabilities and has not been reported.

Investment in Common Funds (with the exception of direct investment in the Cash Common Fund) is by way of notional unit holdings in the Common Funds. Unitholders may invest in the Cash Common Fund or alternately invest in a selection of Common Funds in proportions determined by one or more of the following standard investment strategies provided by Public Trustee:

Capital Stable Growth Balanced Equities

Management of Common Fund investments is undertaken by Public Trustee. An Investment Advisory Committee consisting of senior Public Trustee personnel, with attendance by external investment advisors, assists the Public Trustee in ensuring a sound and prudent system for investing client funds.

Australian and International Equity investments, Property investments together with Overseas Fixed Interest investments are made using Australian domiciled pooled funds.

During the reporting period the Property Common Fund initiated an investment in unlisted infrastructure.

2. Summary of significant accounting policies

The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated.

(a) Basis of accounting

Comparative InformationThe presentation and classification of items in the financial statements are consistent with prior periods except where specific accounting standards and/or accounting policy statements have required a change.

Where presentation or classification of items in the financial statements has been amended comparative amounts have been reclassified unless reclassification is impracticable. The restated comparative amounts do not replace the original financial statements for the preceding period.

Statement of ComplianceThe Public Trustee Common Funds financial statements are general purpose financial statements and have been prepared in accordance with relevant Australian Accounting Standards and comply with Treasurer’s Instructions issued pursuant to the provisions of the Public Finance and Audit Act 1987.

Basis of PreparationThe Public Trustee Common Funds financial statements have been prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated. The statements have also been prepared on the basis that all funds are distributable to unitholders resulting in zero residual equity. On this basis, the Statement of Changes in Equity has not been included for reporting purposes as the changes in equity are zero.

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2. Summary of significant accounting policies (continued)

(b) Financial instruments

(i) Classification

The Funds’ investments are classified as at fair value through profit or loss.

These include financial assets that are not held for trading purposes and which may be sold. These are investments in exchange traded debt and equity instruments, unlisted trusts, unlisted equity instruments and commercial paper. Loans and receivables/payables comprise amounts due to or from the Common Funds.

(ii) Recognition

The Funds recognise financial assets and financial liabilities on the date it becomes party to the contractual agreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date.

(iii) Measurement

(a) Financial Assets held at fair value through the profit or loss

Financial assets and liabilities are held at fair value through the profit or loss. Investments in pooled funds are recorded at fair value as reported by the managers of such funds. Public Trustee has determined the fair value of financial assets to be the market value of these investments at balance date. Accounting Standard AASB 7 Financial Instruments: Disclosures requires disclosure of the measurement methodology used to value financial instruments. Public Trustee invests though fund managers and utilises pricing data provided by those managers which is indirectly derived from the pricing of the underlying securities. Consistent with the definitions in AASB 7 this methodology is classified as level 2 of the fair value hierarchy.

(b) Loans and receivables

Loan assets are measured initially at fair value and subsequently amortised using the effective interest rate method, less impairment losses if any. Such assets are reviewed at each Statement of Financial Position date to determine whether there is objective evidence of impairment for example when there has been a significant or prolonged decline in the fair value below cost.

If any such indication of impairment exists, an impairment loss is recognised in the Statement of Comprehensive Income as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate.

If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through the Statement of Comprehensive Income.

(c) Net assets attributable to unitholders

Units are redeemable at the unitholders' option and are therefore classified as financial liabilities. The units can be returned into the Common Funds at any time for cash equal to a proportionate share of the Common Funds’ net asset values. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unit price) at the Statement of Financial Position date if unitholders exercise their right to return the units back to the Common Funds. For financial reporting purposes and compliance with Australian Accounting Standards assets are recorded at net asset value.

(d) Cash and cash equivalents

For Statement of Cash Flows presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts, where applicable, are shown within liabilities on the Statement of Financial Position.

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For all Common Funds (other than Cash Common Fund) cash equivalents include the Funds’ investments in and borrowings from the Cash Common Fund.

Payments and receipts relating to the purchase and sale of investment securities are classified as investing cash flows because the core activity of the Public Trustee is the administration of Trustee Services.

(e) Investment income

Interest income and expenses are recognised in the Statement of Comprehensive Income for all debt instruments using the effective interest method. Other changes in fair value for such instruments are recorded in accordance with the policies described in note 2(b).

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts throughout the expected life of the financial instrument, or a shorter period where appropriate, to the net carrying amount of the financial asset or liability. When calculating the effective interest rate, the Fund estimates cash flows considering all contractual terms of the financial instrument (for example, prepayment options) but does not consider future credit losses. The calculation includes all fees between the parties to the contract that are an integral part of the effective interest rate, transaction costs and all other premiums or discounts.

Dividend income is recognised on the ex-dividend date with any related foreign withholding tax recorded as an expense. Dividends declared on securities sold short are recorded as a dividend expense on the ex-dividend date.

Trust distributions are recognised when the right to receive payment is established.

(f) Expenses

All expenses, including management fees, are recognised in the Statement of Comprehensive Income on an accrual basis.

Management fees are charged against each Common Fund at a rate of one-twelfth of one percent of the value of the fund as at the first business day of each month as authorised by the Public Trustee Act 1995.

(g) Income tax

Under current legislation, the Common Funds are not subject to income tax provided the taxable income of the Fund is fully distributed either by way of cash or reinvestment (i.e. unitholders are presently entitled to the income of the Fund).

Financial instruments held at fair value may include unrealised capital gains. Should such a gain be realised, the portion of the gain that is subject to capital gains tax will be distributed so that the Fund is not subject to capital gains tax.

Realised capital losses are not distributed to unitholders but are retained in the Fund to be offset against any realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to unitholders.

The benefits of imputation credits and foreign tax paid are passed on to unitholders.

The Fund currently incurs withholding tax imposed by certain countries on investment income. Such income is recorded net of withholding tax in the Statement of Comprehensive Income.

(h) Distributions

Public Trustee distributes Common Fund income and capital based on the financial results at 31 December and 30 June.

Public Trustee recognises Common Fund distributions to client accounts on the date they are paid by Public Trustee. Public Trustee charges clients with income and capital commission on the date the common funds makes a distribution to client accounts and interest earned is credited when received.


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The items above are accrued as appropriate in the statutory accounts under Australian Accounting Standards and the distributions are recognised in the Statement of Comprehensive Income as finance costs attributable to unitholders.

(i) Transfers (to)/from net assets to determine distributable income

Non-distributable income is included in net assets attributable to unitholders and may consist of unrealised changes in the net fair value of financial instruments held at fair value through profit or loss, accrued income not yet assessable, expenses provided or accrued for which are not yet deductible, and net capital losses. Net capital gains on the realisation of any financial instruments and accrued income not yet assessable will be included in the determination of distributable income in the same year in which it becomes assessable for tax. Movements in net assets attributable to unitholders are recognised in the Statement of Comprehensive Income as financing costs.

(j) Foreign currency translation

i) Functional and presentation currencyItems included in the Common Funds’ financial statements are measured using the currency of the primary economic environment in which it operates (the “functional currency”). This is the Australian dollar, which reflects the currency of the economy in which the Common Funds compete for funds and is regulated. The Australian dollar is also the Fund’s presentation currency.

ii) Transactions and balancesForeign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translations at year-end exchange rates, of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income.

The Funds do not isolate that portion of gains or losses on financial instruments which is due to changes in foreign exchange rates from that which is due to changes in the market price of securities. Such fluctuations are included with the net gains or losses on financial instruments at fair value through profit or loss.

(k) Receivables

Receivables may include amounts for dividends, interest and trust distributions. Dividends and trust distributions are accrued when the right to receive payment is established. Interest is accrued at the end of each reporting period from the time of last payment using the effective interest rate method. Amounts are generally received within 30 days of being recorded as receivables.

(l) Payables

Payables include liabilities and accrued expenses owing by the Funds which are unpaid as at balance date.

The distribution amount payable to unitholders as at the end of each reporting period is recognised separately on the Statement of Financial Position as unitholders are presently entitled to the distributable income as at 30 June 2015 under the Trust Deed.

(m) Applications and redemptions

Applications received for units in the Common Funds are recorded net of any entry fees payable prior to the issue of units in the Fund. Redemptions from the Fund are recorded gross of any exit fees payable after the cancellation of units redeemed.

(n) Goods and services tax (GST)

The Common Funds are registered entities under the Goods and Services Tax (GST) legislation. Investments in Public Trustee Common Funds are classified as input taxed financial supplies and no GST is charged on such supplies. The GST incurred on the costs of various services provided to the Common Funds by third parties such as management fees have been passed onto the Common Funds. The Common Funds qualify for Reduced Input Tax Credits (RITC) at a rate of 75% hence investment management fees and other expenses have been recognised in the Statement of Comprehensive Income net of the amount of GST recoverable from the Australian Taxation Office (ATO). Accounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included in receivables in the Statement of Financial Position.

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(o) Use of estimates

The Common Funds financial statements include estimates and assumptions that affect the reported amounts of assets and liabilities within the financial year. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

(p) New accounting standards and interpretations

There are no new accounting standards and interpretations that have been identified that will have a material impact on the Common Funds’ financial statements for the 30 June 2015 reporting period.

(q) Rounding of amounts

All the amounts in the financial statements have been rounded to the nearest thousand dollars (‘000).

3. Net assets attributable to unitholders

Movements in number of units and net assets attributable to unitholders during the year were as follows:

Each unit represents a right to an individual share in the Fund and does not extend to a right to the underlying assets of the Fund. There are no separate classes of units and each unit has the same rights attaching to it as all other units of the Fund.

(a) Common Fund unit prices2015 2014

Common Fund unit prices Purchase Redemption Purchase Redemption at 30 June Price Price Price Price

Short Term Fixed Interest $1.0125 $1.0095 $1.0137 $1.0107Long Term Fixed Interest $1.0667 $1.0635 $1.0614 $1.0582Overseas Fixed Interest $0.8854 $0.8833 $0.8680 $0.8659Australian Shares $1.6916 $1.6822 $1.6871 $1.6777Overseas Shares $1.4711 $1.4632 $1.2537 $1.2470Property $1.0282 $1.0221 $1.0330 $1.0268

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3. Net assets attributable to unitholders (continued)

(b) Movements in units

Common Fund

2015 2014 2015 2014 2015 2014No. of No. of No. of No. of No. of No. ofunits units units units units units000's 000's 000's 000's 000's 000's

Opening balance 50 816 48 081 87 977 85 159 44 023 40 181 Applications 3 967 8 690 7 446 15 205 3 683 9 516 Redemptions (3 986) (5 955) (8 154) (12 387) (3 959) (5 674) Closing balance 50 797 50 816 87 269 87 977 43 747 44 023

Common Fund

2015 2014 2015 2014 2015 2014No. of No. of No. of No. of No. of No. ofunits units units units units units000's 000's 000's 000's 000's 000's

Opening balance 98 622 108 764 101 718 127 756 43 900 54 514 Applications 7 020 9 546 7 085 8 552 3 642 3 407 Redemptions (9 173) (19 688) (9 477) (34 590) (4 021) (14 021) Closing balance 96 469 98 622 99 326 101 718 43 521 43 900

Property

Overseas Fixed InterestLong Term Fixed InterestShort Term Fixed Interest

Australian Shares Overseas Shares

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3. Net assets attributable to unitholders (continued)

(c) Movements in funds employed

Common Fund

2015 2014 2015 2014 2015 2014 2015 2014$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000

Opening balance 353 564 346 405 51 437 48 595 93 238 88 923 38 150 33 872 Applications 2 608 6 302 4 024 8 795 7 991 15 937 3 270 8 124 Redemptions (2 600) (3 915) (4 031) (6 010) (8 710) (12 930) (3 492) (4 805) Increase/(decrease) in net assets attributable to unitholders 1 12 654 4 772 ( 72) 57 431 1 308 732 959 Closing balance 366 226 353 564 51 358 51 437 92 950 93 238 38 660 38 150

Common Fund

2015 2014 2015 2014 2015 2014$'000 $'000 $'000 $'000 $'000 $'000

Opening balance 165 913 163 053 127 084 135 207 45 168 50 463 Applications 12 540 16 369 9 832 10 249 4 100 3 364 Redemptions (16 005) (32 819) (12 836) (40 515) (4 440) (13 659) Increase/(decrease) in net assets attributable to unitholders 229 19 310 21 514 22 143 ( 259) 5 000 Closing balance 162 677 165 913 145 594 127 084 44 569 45 168

Overseas Fixed Interest

Australian Shares Overseas Shares Property

CashShort Term Fixed

InterestLong Term Fixed

Interest

1 The Cash Common Fund is the primary working account for trust administration operations. Movements in net assets attributable to unitholders are typically high volume, low value transactions.

(d) Net realised and unrealised gains (losses) on financial assets

Common Fund 2015 2014 2015 2014 2015 2014$'000 $'000 $'000 $'000 $'000 $'000

Cash ( 798) ( 285) (189) (48) (987) (333) Short Term Fixed Interest ( 70) 92 (2) (35) (72) 57 Long Term Fixed Interest 793 1 616 (66) (71) 727 1,545 Overseas Fixed Interest 478 959 254 - 732 959 Australian Shares 229 18 759 - 2,391 229 21,150 Overseas Shares 5 707 16 720 - 2,754 5,707 19,474 Property 605 2 808 335 574 940 3,382 6 944 40 669 332 5 565 7 276 46 234

Net Unrealised Gains (Losses)

Net Realised Gains (Losses) Total Gains (Losses)

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4. Distributions to unitholders

The distributions, including cents per unit (CPU), were paid/payable as follows:

Cash Common Fund2015 2015 2014 2014$'000 CPU $'000 CPU

Distributions paid 11 501 0.0319 12 369 0.0352 Undistributable income brought forward (1 243) - (1 497) - Distributions payable 1 027 - 1 243 -

11 285 12 115

Short Term Fixed Interest Common Fund2015 2015 2014 2014$'000 CPU $'000 CPU

Distributions paid 1 524 0.0300 1 679 0.0330 Undistributable income brought forward ( 748) - ( 892) - Distributions payable 687 - 748 -

1 463 1 535

Long Term Fixed Interest Common Fund2015 2015 2014 2014$'000 CPU $'000 CPU


3 240 3 311

Overseas Fixed Interest Common Fund2015 2015 2014 2014$'000 CPU $'000 CPU

Distributions paid 461 0.0105 1 397 0.0317 Undistributable income brought forward ( 275) - ( 839) - Distributions payable 308 - 275 -

494 833

Australian Shares Common Fund2015 2015 2014 2014$'000 CPU $'000 CPU


7 513 9 148

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4. Distributions to unitholders (continued)

Overseas Shares Common Fund2015 2015 2014 2014$'000 CPU $'000 CPU

Distributions paid 205 0.0021 662 0.0065 Undistributable income brought forward ( 205) - ( 662) - Distributions payable 783 - 205 -

783 205

Property Common Fund2015 2015 2014 2014$'000 CPU $'000 CPU

Distributions paid 2 725 0.0626 956 0.0218 Undistributable income brought forward (2 078) - ( 637) - Distributions payable 4 520 - 2 078 -

5 167 2 397

In accordance with the Public Trustee Act 1995, investors received a proportionate distribution of net income depending on the number of days units were held.

Included in the distributions at 30 June 2015 were the following net realised capital gains which were distributed to unitholders based on the number of units held as at 30 June 2015:

Common Fund Capital Distributions Paid2015 2015 2014 2014$'000 CPU $'000 CPU

Long Term Fixed Interest 742 0.0085 210 0.0024 Australian Shares 4 001 0.0415 5 913 0.0600 Property 4 628 0.1063 1 466 0.0334

9 371 7 589

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5. Cash and cash equivalents

Cash Common Fund 2015 2014$'000 $'000

Cash at bank 14 - Money market instruments 13 000 5 000 Bank overdraft ( 109) ( 64)

12 905 4 936

Short Term Fixed Interest Common Fund 2015 2014$'000 $'000

Deposits in Cash Common Fund 19 484 18 649 19 484 18 649

Long Term Fixed Interest Common Fund 2015 2014$'000 $'000


Overseas Fixed Interest Common Fund 2015 2014$'000 $'000


Australian Shares Common Fund 2015 2014$'000 $'000


Overseas Shares Common Fund 2015 2014$'000 $'000


Property Common Fund 2015 2014$'000 $'000


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5. Cash and Cash Equivalents (continued)

(a) Cash at bank and on hand

The cash deposit is held with a financial institution and is interest bearing at 2.20% (2014: 2.70%) per annum as at 30 June 2015 available at call. During 2014-15 Public Trustees customer banking operations were provided by the Commonwealth Bank of Australia (CBA) as part of the whole of Government banking strategy, implemented in the previous reporting period. Public Trustee also continued to manage a Westpac Banking Corporation (WBC) account during 2014-15 where a small number of deposits continue to be received. The CBA cash rate is the Reserve Bank target rate plus 20 basis points.

(b) Bank overdraft

The reported bank overdraft held as at 30 June 2015 was $0.109 million (2014: $0.064 million) being a total of Public Trustees CBA Cash Common Fund banking account balance of $1.724 million less unpresented cheques of $1.751 million and deposits to the CBA Cash Common Fund banking account that cannot be attributed to specific customers as at 30 June 2015 of $0.082 million.

(c) Money market instruments

These investments bear floating interest rates between 2.85% and 6.40% (2014: 3.50% and 7.00%). These investments are available at call.

(d) Deposits in Cash Common Fund

Deposits in the Cash Common Fund act as operating cash accounts for the other Common Funds, and are interest bearing. These investments are available at call.

(e) Advances to other Common Funds / borrowings from Cash Common Fund

There were no advances from the Cash Common Fund to other Common Funds for the period to 30 June 2015.

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6. Financial assets held at fair value through profit and loss

2015 2014 2015 2014Fair Value Fair Value Fair Value Fair Value

$'000 $'000 $'000 $'000

Designated as at fair value through profit or lossFixed interest securities 1 408 132 403 930 32 250 33 178 Total designated as at fair value through profit or loss 408 132 403 930 32 250 33 178


$'000 $'000 $'000 $'000

Designated as at fair value through profit or lossFixed interest securities 66 107 76 834 - - Unlisted unit trusts - - 34 862 24 726 Total designated as at fair value through profit or loss 66 107 76 834 34 862 24 726


$'000 $'000 $'000 $'000

Designated as at fair value through profit or lossUnlisted unit trusts 158 450 157 686 127 229 121 013 Total designated as at fair value through profit or loss 158 450 157 686 127 229 121 013

2015 2014Fair Value Fair Value

$'000 $'000

Designated as at fair value through profit or lossUnlisted unit trusts 42 131 42 079 Total designated as at fair value through profit or loss 42 131 42 079

An overview of the risk exposures relating to financial assets at fair value through profit or loss is included in note 9.

Common FundsCash Short Term Fixed Interest

Property

Long Term Fixed Interest

Australian Shares Overseas Shares

Overseas Fixed Interest

1 Includes other common funds deposits in the Cash Common Fund of $61 681 (2014: $62 655).

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7. Revenue and assets for entities within the SA Government

2015 2014$'000 $'000

Public Trustee Common Fund Distributions 8 004 7 719 Refunds & Reimbursements 695 650 Gain / (Loss) on Public Trustee Common Funds - ( 484) Total revenue for entities within SA Government 8 699 7 885

Public Trustee Common Funds 262 155 241 942 Total assets for entities within SA Government 262 155 241 942

Public Trustee administers funds on behalf of a number of government entities that invest in the Common Funds.

8. Derivative financial instruments

Public Trustee did not invest in derivative investments for the year ended 30 June 2015.

9. Financial risk management

Public Trustee’s Common Fund activities expose it to a variety of financial risks: market risk (including interest rate risk and price risk), credit risk and liquidity risk. The overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on financial performance. Only Australian domiciled pooled funds are used for overseas asset purchases. In terms of currency exposure, the Overseas Fixed Interest Common Fund is 100% hedged and the Overseas Shares Common Fund maintains a 50% hedged benchmark position which reduces currency volatility. Overseas currency exposure in the Property Common Fund is 100% hedged.

The Manager, Investment Services is responsible for ensuring that all investments are within the guidelines specified by Public Trustee’s Investment Guidelines and Procedures Manual. The Manager, Investment Services may recommend to the Public Trustee and the Public Trustee may, after consultation with the Investment Advisory Committee, approve investments outside of Public Trustee’s Investment Guidelines.

(a) Credit risk

Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to outstanding receivables and committed transactions.

Short-term money market instruments must have a short-term Standard and Poors (S&P) rating of A1 or in the case of the issuer being a bank under the Banking Act 1959 a rating of A2 is accepted. Floating rate instruments must have a long-term S&P credit rating of A+ or better or where the counter party is a bank under the Banking Act 1959, a rating of BBB or better is accepted. Long-term investments must have long-term S&P credit ratings of A+ or better or be an investment in a Commonwealth or Semi-government bond. If there is no independent rating, Public Trustee assesses the credit quality of the provider, taking into account its financial position and past experience.

Credit risk arises primarily with the following classes of instruments and counterparties:

Sovereign debt of the Australian Commonwealth and State Governments Sovereign debt of the foreign governments Banking corporations Corporate debt of investment grade Pooled Investment Funds

The maximum exposure to credit risk at the end of each reporting period is the carrying amount of the financial assets.

The credit quality of financial assets that are neither past due nor impaired are assessed by reference to external credit ratings (if available) or to historical information about counterparty default rates.

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9. Financial risk management (continued)

Pooled Fund Investments are not rated, however, Public Trustee makes a thorough assessment of all Pooled Fund Managers in regard to credit and other risks prior to the investment of funds with each manager. The credit risk lies with the Pooled Fund Manager responsible for the management of the underlying investments. Public Trustee continually monitors these assessments.

Credit Risk Analysis2015 2014

$'000 $'000Cash Common FundCash and short term investmentsA+ 5 025 - A1+ 139 053 126 617 A1 95 000 78 500 A2 65 017 76 567 Cash at bank 13 014 5 000

317 109 286 684 Long term investmentsAA 4 535 - AA- 76 740 105 042 A- 5 523 6 172 A 6 000 - A+ 11 239 11 032

104 037 122 246

Short Term Fixed Interest Common FundCash and short term investmentsA1+ 2 500 2 000 A2 7 031 7 000 Cash 19 484 18 649

29 015 27 649 Long term investments

AA+ 2 116 2 125 AA 5 375 5 429 AA- - 11 538 A- 1 510 5 086 A1 3 000 - A1+ 9 715 - A2 1 003 -

22 719 24 178

Long Term Fixed Interest Common FundCash and short term investmentsA1+ 1 000 6 043 A2 2 000 2 021 Cash 27 578 17 239

30 578 25 303 Long term investmentsAAA 7 219 9 335 AA+ 24 210 34 598 AA 11 989 13 938 AA- 14 364 10 899 A1+ 5 325 -

63 107 68 770

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9. Financial risk management (continued)

(b) Market risk

(i) Price risk

The Australian Shares Common Fund, Overseas Shares Common Fund, Property Common Fund and the Overseas Fixed Interest Common Fund are exposed to price risk. Public Trustee is not directly exposed to commodity price risk.

To manage its price risk arising from investments in equity securities, Public Trustee diversifies its portfolio. Diversification of the portfolio is in accordance with Public Trustee’s Investment Guidelines. Irrespective of what type of investment vehicle is used, the primary focus is to ensure the risk/reward objectives of Public Trustee’s investment approach are met. The Common Funds comprise a number of sub-portfolios which invest in different sectors of the equity market.

The Australian Shares Common Fund invests primarily in ASX 300 Companies. The Australian Shares Common Fund portfolio consists of listed shares, convertible notes, instalment receipts, preference shares and options. No derivative products are permitted under Public Trustee’s Investment Guidelines.

Equities in the Overseas Shares Common Fund consist of investments through Australian domiciled-pooled funds that obviate exposure to currency price risk. An “active” approach is used by the fund utilising a variety of fund managers with different investment styles. This provides diversification benefits and reduces the overall level of risk.

The Property Common Fund primarily invests in listed securities including exchange traded options from the Property Trust sector of any Australian or overseas stock exchange or any listed company whose major activity is in real properties. Investments in this class also comprise un-listed unit trusts where the holding of property or infrastructure is the primary business activity of the issuer.

(ii) Cash flow and interest rate risk

Public Trustee is exposed to interest rate risk arising from cash investments, short term investments and Australian fixed interest investments. Instruments issued at fixed interest rates expose Public Trustee to fair value interest rate risk and variable rate instruments expose Public Trustee to cash flow interest rate risk.

The Cash Common Fund can invest in short term money market instruments with up to one year maturity, floating rate investment instruments with maturity terms up to 10 years if the counterparty is a bank with a credit rating of A- or better or fixed interest instruments with maturity terms up to 3 years. Securities with greater than one year maturity are restricted to make up less than 20% of the overall fund.

The Short Term Fixed Interest Common Fund can invest in fixed interest securities with maturity terms of three years if the credit rating is A+ or better, or a maturity term of up to 6 years for Commonwealth bonds, Semi-government bonds. The Long Term Fixed Interest Common Fund invests in securities with maturities ranging from 5 years to 25 years.

(iii) Foreign exchange risk

The Overseas Fixed Interest Common Fund and the Overseas Shares Common Fund are indirectly exposed to foreign exchange risk as a result of their investments in other unit trusts which in turn invest in financial instruments that are denominated in foreign currencies. A sensitivity analysis is provided below, outlining the exposure to each type of market risk at the end of each reporting period, showing how profit or loss and equity would have been affected by the changes in the relevant risk variable that was reasonably possible at that date. All instruments are designated as financial assets at fair value through the profit or loss; resulting in no impact on equity.

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9. Financial risk management (continued) - sensitivity analysis

Cash Common Fund

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss

$'000 $'000 $'000 $'000 $'000Financial assetsCash & cash equivalents 13 014 ( 130) 130 - - Financial assets held at fair value through profit or loss 408 132 (4 081) 4 081 - -

Financial liabilitiesBank overdraft ( 109) ( 1) 1 - - Total (decrease) increase (4 212) 4 212 - -

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss

$'000 $'000 $'000 $'000 $'000Financial assetsCash & cash equivalents 5 000 ( 50) 50 - - Financial assets held at fair value through profit or loss 403 930 (4 039) 4 039 - -

Financial liabilitiesBank overdraft ( 64) ( 1) 1 - - Total (decrease) increase (4 090) 4 090 - -

Short Term Fixed Interest Common Fund

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss

$'000 $'000 $'000 $'000 $'000Financial assetsDeposits with Cash Common Fund 19 484 ( 195) 195 - - Financial assets held at fair value through profit or loss 32 250 ( 323) 323 - - Total (decrease) increase ( 518) 518 - -

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss


Interest rate risk Price risk

2015

2014

2015

2014


Interest rate risk


Price risk

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Long Term Fixed Interest Common Fund

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss


- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss


Overseas Fixed Interest Common Fund

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss

$'000 $'000 $'000 $'000 $'000Financial assetsDeposits with Cash Common Fund 3 758 ( 38) 38 - - Financial assets held at fair value through profit or loss 34 862 - - (6 972) 3 486 Total (decrease) increase ( 38) 38 (6 972) 3 486

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss



Interest rate risk Price risk2015

2014


2015Interest rate risk Price risk

2014

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Australian Shares Common Fund

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss


- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss


Overseas Shares Common Fund

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss


- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss



2015

Interest rate risk Price risk2015



2014

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Property Common Fund

- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss


- + - +1% 1% 20% 10%

Carrying Amount

Profit & Loss

Profit & Loss

Profit & Loss

Profit & Loss




2014

(c) Liquidity risk

Public Trustee has working capital policies in place in order to maintain liquidity for clients. Short-term investment analysis assists in determining the amount, if any, to be invested or reinvested in order to maintain working capital. Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the ability to close out market positions. Public Trustee manages the liquidity risk by continuously monitoring forecast and actual cash flows and matching maturity profiles of financial assets and liabilities.

(d) Fair value estimation

The fair value of financial assets and financial liabilities are estimated for recognition and measurement or for disclosure purposes. The fair value of these assets and liabilities is equal to their carrying amount.

Cash and cash equivalents are valued at nominal amounts. This asset consists of cash at bank, on hand and short-term money market deposits with maturities of three months or less that is readily converted to cash and which are subject to insignificant risk of changes in value.

Financial assets and liabilities are held at fair value through the profit or loss. Investments in pooled funds are recorded at fair value as reported by the managers of such funds. Public Trustee has determined the fair value of financial assets to be market value of these investments at balance date. Accounting Standard AASB 7 Financial Instruments: Disclosures requires disclosure of the measurement methodology used to value financial instruments. Public Trustee invests though fund managers and utilises pricing data provided by those managers which is indirectly derived from the pricing of the underlying securities. Consistent with the definitions in AASB 7 this methodology is classified as level 2 of the fair value hierarchy.

Receivables and payables are valued on a historical cost basis and Public Trustee considers that the carrying value approximates market value.

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10. Cash flow reconciliation

Cash Common Fund 2015 2014$'000 $'000

(a) Reconciliation of cash and cash equivalentsStatement of Cash Flows 12 905 4 936 Statement of Financial Position 12 905 4 936

(b) Reconciliation of profit/loss to net cash provided by (used in) operating activities:Net operating profit for the year 10 298 11 782 Non-cash operating activitiesNet losses/(gains) on financial instruments held at fair value through profit or loss 987 333 Amortisation of discounts and premiums 146 ( 40) Movement in assets and liabilitiesDecrease in receivables and other assets 426 709 (Decrease)/increase in payables and other liabilities 5 ( 9) Adjustment for balance day transactions ( 5) 61 Net cash provided by operating activities 11 857 12 836

Short Term Fixed Interest Common Fund 2015 2014$'000 $'000


(b) Reconciliation of profit/loss to net cash provided by (used in) operating activities:Net operating profit for the year 1 391 1 592 Non-cash operating activitiesNet (gains) on financial instruments held at fair value through profit or loss 72 ( 57) Amortisation of discounts and premiums 122 91 Movement in assets and liabilitiesDecrease in receivables and other assets 47 50 (Decrease)/increase in payables and other liabilities - ( 1) Net cash provided by operating activities 1 632 1 675

Long Term Fixed Interest Common Fund 2015 2014$'000 $'000


(b) Reconciliation of profit/loss to net cash provided by (used in) operating activities:Net operating profit for the year 3 671 4 619 Non-cash operating activitiesNet (gains)/losses on financial instruments held at fair value through profit or loss ( 727) (1 545) Amortisation of discounts and premiums 183 149 Movement in assets and liabilitiesDecrease/(increase) in receivables and other assets 163 51 (Decrease)/increase in payables and other liabilities - ( 5) Net cash provided by operating activities 3 290 3 269

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10. Cash flow reconciliation (continued)

Overseas Fixed Interest Common Fund 2015 2014$'000 $'000


(b) Reconciliation of profit/loss to net cash provided by (used in) operating activities:Net operating profit for the year 1 226 1 792 Non-cash operating activitiesNet (gains)/losses on financial instruments held at fair value through profit or loss ( 732) ( 959) Income reinvested and not received in cash ( 102) ( 151) Movement in assets and liabilitiesDecrease in receivables and other assets ( 316) 576 (Decrease)/increase in payables and other liabilities ( 1) ( 1) Net cash provided by operating activities 75 1 257

Australian Shares Common Fund 2015 2014$'000 $'000


(b) Reconciliation of profit/loss to net cash provided by (used in) operating activities:Net operating profit for the year 7 742 28 458 Non-cash operating activitiesNet (gains) on financial instruments held at fair value through profit or loss ( 229) (21 150) Income reinvested and not received in cash ( 535) ( 507) Movement in assets and liabilities(Increase) in receivables and other assets ( 57) (2 734) (Decrease)/increase in payables and other liabilities - ( 10) Net cash provided by operating activities 6 921 4 057

Overseas Shares Common Fund 2015 2014$'000 $'000


(b) Reconciliation of profit/loss to net cash provided by (used in) operating activities:Net operating profit for the year 22 297 22 348 Non-cash operating activitiesNet (gains) on financial instruments held at fair value through profit or loss (5 707) (19 474) Income reinvested and not received in cash ( 509) ( 381) Movement in assets and liabilities(Increase)/decrease in receivables and other assets (11 503) (1 638) (Decrease)/increase in payables and other liabilities - ( 7) Net cash provided by operating activities 4 578 848

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Property Common Fund 2015 2014$'000 $'000


(b) Reconciliation of profit/loss to net cash provided by (used in) operating activities:Net operating profit for the year 4 908 7 397 Non-cash operating activitiesNet (gains) on financial instruments held at fair value through profit or loss ( 940) (3 382) Income reinvested and not received in cash ( 112) ( 128) Movement in assets and liabilities(Increase) in receivables and other assets ( 179) (2 767) (Decrease)/increase in payables and other liabilities - ( 3) Net cash provided by operating activities 3 677 1 117

11. Events occurring after balance date

Nil

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Appendix 1: Common Funds Statutory Information

Section 30(3) of the Public Trustee Act 1995 requires certain information about each Common Fund operated by the Public Trustee to be included within the Annual Report. Below are the locations of the required information (where the information is not included in this Appendix):

Audited Statement of Accounts in respect of each Common Fund

Refer to the Corporate and Customer Financial Information section of this report.

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

Refer to the Corporate and Customer Financial Information section of this report.

The Nature and Amount of Any Fee that Public Trustee 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 Public Trustee’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 Public Trustee’s common funds, including Public Trustee management fees, brokerage charges and custody 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, are shown in the following table.

These following figures are inclusive of the net impact of GST.

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Table 5: Indirect Cost Ratios2014–15 Standard Investment Strategies

Indirect Cost Ratios (ICR)

Standard Investment Strategies ICRs

Strategy ICR 2014–15 ICR 2013–14

Cash 1.08% 1.08%

Capital Stable 1.26% 1.26%

Balanced 1.41% 1.42%

Growth 1.52% 1.55%

Equities 1.69% 1.73%

Common Fund ICR 2014–15 ICR 2013–14

Cash 1.08% 1.08%

Long-term Fixed Interest 1.08% 1.09%

Short Term Fixed Interest 1.09% 1.08%

Long Term Fixed Interest 1.08% 1.15%

Australian Shares 1.67% 1.68%

Property 1.62% 1.64%

Overseas Shares 1.72% 1.78%

Entry Fees

In accordance with Section 29 of the Public Trustee Act 1995, investors pay the following fees when investing in Common Funds (NB no fees are charged on entry or exit from the Cash Common Fund):

All other standard investment strategies

For beneficiaries of estates administered by Public Trustee, 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%

For beneficiaries of estates administered by 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 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%

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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

Public Trustee 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 Public Trustee.

Identification

When establishing an investment account with Public Trustee, customers will be required to provide satisfactory proof of identity. A Public Trustee 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.

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.

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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

IntroductionSection 29 of the Public Trustee Act 1995 (‘the Act') 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 Public Trustee Common Funds May Invest

Cash Common FundThe permitted classes of investment are:a. Cashb. Australian Fixed InterestQualifications 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 FundThe permitted classes of investment are:a. Cashb. Australian Fixed InterestQualifications 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.

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.

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Long-term Fixed Interest Common FundThe permitted classes of investment are:a. Cashb. Australian Fixed Interestc. Inflation-linked SecuritiesQualifications 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: 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 FundThe classes of investment are:a. Cashb. Australian equitiesc. DerivativesQualifications 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 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.


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Property Common FundThe classes of investment are:a. Cashb. Propertyc. InfrastructureQualifications 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 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.

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. Cashb. International Equitiesc. 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 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.


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Overseas Fixed Interest Common Fund The permitted classes of investment are:a. Cashb. International Fixed Interest and inflation linked securitiesc. DerivativesQualifications 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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