31 JULY NEW ZEALAND GAZETTE 1953

Trust Bank Otago Community Trust Inc.

Trustee Banks Restructuring Act 1988

Directory for the Year Ended 31 March 1997

Trustees:
Dr C. Matthewson (Chairperson), Mr R. Allan, Mrs N. Bamford, Mr G. Bell, Mr P. Gibson, Sir Robin Gray, Mr R. McKnight, Dr J. Ng, Mr D. Pasley, Mr D. Polson and Mr R. Walls.

Executive Director:
Mr K. Ellwood.

Registered Office:
Skeggs House, 60–66 Tennyson Street, Dunedin.

Auditor:
Taylor McLachlan, Dunedin.

Solicitor:
Anderson Lloyd, Dunedin.

Investment Advisors:
Frank Russell Limited, Auckland.

Chairperson’s Report for the Year Ended 31 March 1997

It gives me much pleasure to present the ninth annual report of the Trust Bank Otago Community Trust.

The trust is in an exciting period of growth and change, almost a metamorphosis. Nine years ago the trust was a worthy supporter of worthy activity, distributing the dividends arising from our ownership interest in Trust Bank New Zealand. Now we are an independently wealthy philanthropic trust, just starting to be able to make a real difference in the communities of Otago. What we donated in our first year would not represent our income from a reasonably good week.

For most of the year under review Carol Melville was chairperson, as she had been since the trust’s inception in 1988. While guiding the trust through the changes mentioned, I believe Carol presided over the development of sound precedents, good policies and effective operation. I express the thanks of trustees and the community.

The trust has 2 activities; it manages the money that it holds and make distributions. I will comment on each activity and look briefly to the future.

Investments

As anticipated in last year’s report, the trust sold its remaining shares in Trust Bank New Zealand to Westpac. This allowed us to take advantage of what we regarded as an attractive offer. At the same time, it allowed us to fully diversify our total investment so as to pursue our objective of obtaining maximum return at an acceptable level of risk. The trust reassessed its risk/return profile and its reserving policy. Our benchmark asset allocations are now:

• New Zealand cash ... 15.0 percent
• New Zealand fixed interest ... 27.5 percent
• New Zealand equities ... 7.5 percent
• Global fixed interest ... 22.5 percent
• Global equities ... 27.5 percent

Our global fixed interest portfolio is 100 percent hedged to the New Zealand dollar, and our global equities are 70 percent hedged.

We will be keeping our investment policies under constant review to ensure our objectives are met.

The trust also reviewed its fund managers. This has resulted in recent decisions, after an appropriate interview process, to engage Fischer Francis Trees & Watts as our global fixed interest managers and Lazard Freres to manage our global equities. Our New Zealand held funds are managed by AMP.

Trustees are responsible for these decisions and make them. However, they do so only after discussion with and analysis by our financial advisers, Frank Russell Co. For example, Russells provide the statistical analyses that guide our asset allocations and our reserving policy and provide also the shortlists of fund managers. These also recognise our overall conservative philosophy.

Because the Trust Bank New Zealand share sale occurred during the year, and because of the delay in transferring funds to our new managers occasioned by the selection process, it is difficult to produce one single meaningful figure which described our return for the year. However, those funds that were under management for the full year produced a nominal return of 11.0 percent. This is good in terms of the trust’s long term statistical expectation of 6.2 percent real, but could have been slightly better in terms of the potential offered by overseas markets in 1996–97.

The trust has not paid any tax. However, we are required to carefully structure our activities in order for this to be the case. This represents wasted effort and expense.