8.—9.

handling of the trust funds is greatly facilitated and at the same time the rights and requirements of the individual beneficiaries and legatees can most conveniently be provided for through investment in the Common Fund with the ability to draw from time to time the exact sums required for payment or distribution. A class of estate commonly encountered where the benefits of the Common Fund system are often more apparent is that where the whole estate or a designated portion of it is held on trusts providing for the capital, in addition to the income, being applied as needed for the benefit of the persons beneficially entitled. Typical of these are trusts for the benefit of widows and other dependants, including those for the maintenance, education, and benefit of minors. In a wider sphere there are benefit funds for the relief of distress and trusts for public and charitable purposes where the special circumstances necessitate the gradual application of the capital moneys in the fulfilment of the purposes of the trust. With provision for investment in separate securities there are the conflicting requirements of keeping the trust funds invested so that they will return a satisfactory rate of interest and yet of having the capital sums likely to be required available immediately they are needed. The latter frequently involves the retention of portion of the capital moneys either uninvested or else placed in short-term securities at low rates of interest. The result is that at times one of these considerations must inevitably be subordinated to the other. A reference to the special features of the Common Fund system, as already explained, will indicate that this system of investment is particularly suited to these classes of trust estates in view of the complete and continuous investment of the capital sums at favourable rates of interest with, at the same time, the ability to draw upon the capital for the proper purposes of the trusts. These typical examples of trust estates with their special requirements do not by any means exhaust the list of cases where the Common Fund provides special advantages and facilities for the handling of trust funds, but, in combination with the guarantee of absolute security and the other attributes of the system, sufficiently illustrate and explain the wide appeal which the system has made to the persons having recourse to the services of the Public Trustee. 32. It is perhaps inevitable that some misconceptions should be encountered among those who have no personal knowledge of the working of the system. It has, indeed, been my experience that such criticism as has been directed at the Public Trust Office has principally centred around the Common Fund system and the return provided from it for the persons beneficially interested in the trust funds forming part of it. It is significant that criticism of this nature has not originated from the persons directly concerned, but as it recurs from time to time and was repeated in certain quarters during the past year, I have thought it advisable to refer in this report to the more important points of such attacks. 33. The' principal of these is in relation to the return provided from the fund. As I have mentioned previously, this return necessarily varies according to the return derived from the investments made for the Office as a whole after suitable provision has been made for working-expenses and the risks assumed by the Public Trustee as investor. It must necessarily be affected by important legislative programmes for interest reductions such as those adopted during the past two years, by relief measures affecting mortgage investments such as the Mortgagors and Tenants Relief Acts, and by the economic conditions which have resulted in many mortgagors experiencing grave difficulties in meeting their commitments to lenders for interest. A very material factor, which it must be assumed is lost sight of by those who criticize the Common Fund system, is that the rate of interest credited to the individual accounts is a net return for the individual accounts, and for comparative purposes there must be taken into account with it the special attributes of guaranteed security of capital, immediate, continuous, and unbroken investment, regularity of payment or crediting of income, the availability of the capital sums when required for the purposes of the individual trusts, and the other features of the Common Fund system. The moneys invested by private trustees for trust estates have, of course, been subject to the interest reductions imposed by recent legislation and to the restrictions and disabilities imposed by the mortgagors relief legislation, including the remissions

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