13

R—9

Sinking Funds. 26. In last year's report reference was made to the popularity of the Common Fund of the Public Trust Office as a convenient and safe and profitable medium for the investment of local bodies' sinking funds. The rate of interest allowed at present is 5 per cent, on the full amount at credit of each sinking fund. Interest is capitalized annually. The rate was raised from 4| per cent, to 5 per cent, as from the Ist April, 1920. In considering the rate of interest allowed, the special advantages accruing from investments in the Common Fund must not be overlooked. (1.) The investment is State-guaranteed both as regards principal and interest, and in view of the serious depreciation of securities in the past few years and the difficulty of collecting interest —in many cases the impossibility of collecting it—this is a very important point. (2.) The investment is a liquid one —that is to say, whenever the funds are required to repay debentures at the maturity date of the relative loans they are immediately available, and the liquidation of securities possibly at an, inopportune time and on disadvantageous terms is avoided. (3.) Moneys lodged on account of sinking-fund instalments bear interest from the da*te of receipt to the date of the maturity of the loan, and accrued interest at the 31st March each year is capitalized and becomes interestbearing from that date. (4.) Interest is allowed on the full balance at credit, so that there are no broken amounts to invest as would be the case if special investments were required for each sum as it became available. (5.) Interest from the Common Fund is credited on fixed dates free of all charges and deductions. It is practically impossible to find securities for the comparatively small amounts which become available by way of annual instalments and accrued interest on each fund, whereas in the Common Fund such moneys become interest-bearing immediately. Interest is thus continuous. The steady growth in this section of the work of the Office is shown by the increase from 1,212, valued at £726,960, on the 31st March, 1923, to 1,402, valued at £968,063, on the 31st March, 1924. In addition to the above sinking funds the sum of £7,828,533 was held on behalf of twelve Government sinking funds. Investment Agencies. 27. The facilities which the Office presents to the public for the profitable investment of money have been brought into prominence throughout the year, and the volume of business transacted in this connection is rapidly increasing, and there is every indication that it will tend to increase still more rapidly as the favourable terms upon which the Public Trustee undertakes to act as agent for the investment of money becomes more widely known. Moneys may be invested in the Common Fund of the Public Trust Office for fixed terms, no charge whatever being made for the Public Trustee's services. Interest is payable, at the option, of the principal, either quarterly, half-yearly, or yearly, or, if the principal so desires, it may be capitalized, yearly. As an alternative, moneys may be invested for a fixed term in mortgages or in local bodies' debentures ; but for the Public Trustee's services in the collection of interest commission is charged at the rate of 5 per cent, in the case of mortgage interest and at the rate of 2\ per cent, on debenture interest. Moneys so invested, however, are not guaranteed by the State, but every care is exercised in selecting the investments, which in every case are gilt-edged. On the 31st March, 1924, the sum of £1,050,572 was invested under investment agency, the sum of £914,943, representing 764 agencies, being invested in the Common Fund, and the sum of £135,629, representing 133 agencies, being specially invested in local bodies' debentures or in mortgages. The net increase for the year in the amount invested was £220,187.