Public Trust Offers Wired® Index Trust - With FAQs

Public Trust Offers Wired® Index Trust

Wired® Index Trust, a leading international "new economy" investment vehicle, is to be distributed in New Zealand by Investec Guinness Flight through Public Trust.

Investors with a minimum of $5,000 will be able to buy a stake in the United Kingdom version of the Trust, which has attracted $US36 million since its launch in January. The fund tracks the movements of 40 stocks in an index created by Wired® magazine, a top US publication targeting readers who follow digital industry developments.

Investec Guinness Flight is a large international specialist banker and funds manager with $NZ2.6 billion in total shareholders' funds and $NZ109.8 billion in assets under management.

Public Trustee David Hutton said Public Trust recognised the growing strength of the new economy and is assisting Investec Guinness Flight to give New Zealand investors easy access to a proven investment vehicle in this area.

He said Wired® established the Index on 1 June, 1998. Since then it has shown a return of 193.7 per cent to 31 March, 2000 (source: Bloomberg), far outstripping any other broad-based US index.

"Public Trust will act as agent for this investment opportunity, which complements the more traditional investment funds we run ourselves.

"It offers a stake in the success of top companies involved in a variety of sectors ranging from data mining to cars to agribusiness to networked media. What they all have in common is that they are using technology, networks and information to reshape their businesses and ultimately the global economy".

Mr Hutton said Public Trust will remit investments with cleared funds on a daily basis, undertaking that the exchange rate at the time the investment is made will be the rate at which the investment is received into the UK Trust.

Investors are being offered long-term growth potential rather than an income stream: there are no exit fees if a need arises for redemption in the shorter term.

According to Mr Hutton, the Wired® Index Trust is much more than a vehicle for tracking technology stocks such as America Online, Cisco Systems and Yahoo, which are included in the index.

"Most new economy companies are simply using new technology to do old things better: for example, Charles Schwab has shaken the cosy world of US stockbroking with his online dealing system while Dell Computer has developed a stock management system that has dramatically reduced its inventories of computer parts. These companies are also part of the index".

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For more information: Chris Galloway Corporate Communications Manager Ph: 04 474 3867 Mob. 025 503 548 Email: Chris.Galloway@PublicTrust.co.nz

WIRED® Disclosure statement

WIRED® is a registered trademark, and WIRED INDEX(tm) a service mark, of Advance Magazine Publishers, Inc., and are used with permission of Advance Magazine Publishers, Inc.

Advance Magazine Publishers, Inc. makes no warranty, express or implied, including no warranties of merchantability or fitness for a particular purpose or otherwise, to any person or entity as to the results to be obtained from or any data included in, or any other matters concerning, the Wired Index(tm) or the trademarks.

Public Trust and Wired® Index Trust FAQs

1. Why is Public Trust involved?

Public Trust recognises the strength of the "new economy" companies making smart use of technology and communications to improve their business. Investec Guinness Flight working through Public Trust want to provide an opportunity for New Zealand investors to access a proven vehicle for investment in these companies, in what is a very complex and quite difficult market for New Zealand investors to assess in terms of investment selection. We think it will appeal to a rather different audience from those who support our existing investment funds. We therefore expect little if any "cannibalising" of the Public Trust Investment Funds.

2. Why are you launching when there has been so much market turmoil?

We believe this is a good time for Investec Guinness Flight to launch because the vulnerability of many of the dot.coms who do not yet have established revenue streams and profitability profiles highlights the quality of the 40 proven stocks in the Wired Index (tm). Commentators have been pointing to investors' "flight to quality". We believe the Wired® stocks represent the quality investors are looking for - and their strength is shown by the performance of the Wired Index(tm) in recent weeks when compared to other indices like the NASDAQ.

3. Why is there such a high entry fee?

The 5 per cent entry fee recognises both the costs involved in arranging access for New Zealanders to an offshore fund and the value available to investors from the Trust's outstanding performance to date. As Wired® Index Trust is a long-term investment opportunity, the entry cost should be seen against the benefits of a longer term involvement.

4. Why are you using public money, in effect, to distribute a somewhat risky investment? Isn't it at some remove from your "safe and secure" approach of the past?

Although owned by the Government, Public Trust receives no taxpayer funds to support its operations. We must make our own way in the marketplace, and do. As mentioned above, Wired® Index Trust represents a "new economy" rather than a "dot.com" or e-commerce index. We believe it represents an outstanding opportunity to participate in the growth of well-managed and proven organisations. The marketplace in which they operate is rather more volatile than our own, offering more extreme movements in share prices than typify our own market. Both the risks and the rewards are potentially greater. It is not our function to counsel investors on the advisability or otherwise of investing in Wired® Index Trust. Our role is to make the opportunity available in a way that is reliable for those wishing to invest. Our own investment funds, which we manage, have a more conservative profile.

5. What is the return to Public Trust from its involvement?

Public Trust will receive a fee from Investec Guinness Flight, the fund manager, for New Zealand-originating investments. The amount of the fee is subject to a confidential agreement between Investec Guinness Flight and Public Trust.

6. Does this move signal a change in direction for Public Trust to a more entrepreneurial, riskier approach to business?

We are examining some exciting business opportunities but our trustee values of prudence and putting the customer's interests first will remain at the heart of all we do.

7. What has been the performance of your own existing funds?

To take two examples, our Balanced Fund has returned 6.65 per cent over a one-year period and 7.54 per cent for three years. The Capital Growth Fund has returned 9.25 per cent for one year and 9.17 per cent over three years. These returns are annualised, to 31 March, 2000 and are calculated net of fees and tax and assume reinvestment of all income.

8. How much do you expect Investec Guinness Flight to raise in New Zealand?

We have no fixed amount in mind and have taken a conservative approach to our budgeting. But we are aware that when launched overseas, the Wired® Index Trust quickly attracted support and naturally, we hope that that will be the case here. We believe there is a demand for access to a broader pool of new economy stocks than is available here or in Australia and that Wired® Index Trust will be attractive to people looking for such an opportunity.

9. Why can't New Zealand investors go directly, via the Web?

Investec Guinness Flight works through an international network of agents who are "on the ground" in the countries where the Wired Index(tm) investment is offered. It has found this approach best meets the needs of local investors.

10. Does the fund have any link with Wired® magazine?

Not directly: the Trust tracks the index established by Wired® Magazine but this is the only link - other than a shared belief that the "new economy" holds tremendous potential for reshaping both the global and local economies and that savvy investors can benefit from participation in this unique fund and easier than normal access to US-based investments.

11. Who do you envisage investing in the Wired® Fund?

We think this will appeal in particular to established investors looking to diversify their holdings. We believe Wired® Index Trust provides New Zealand investors with a modern, well-diversified global equity fund.

12. What are the respective roles of the Public Trust and Investec Guinness Flight?

Our role is to act as agent for New Zealand investors. Investec Guinness Flight operates and manages the Wired® Index Trust.

13. Does the Guinness Flight Wired Index(tm) mirror the Wired® Magazine Index?

The Wired® Index Trust mirrors the market performance of the Wired Index(tm).

14. Who manages the other Wired Index(tm) Funds - the US, UK, and Guernsey offshore versions? And why are there multiple Wired® funds?

Investec Guinness Flight has an exclusive agreement with Wired® magazine to launch and manage funds that replicate the Wired Index(tm). They established these funds in different jurisdictions to allow investors to participate in the Wired® opportunity in a way that is appropriate for their differing local legal requirements.

15. How do investors redeem/cash in their investment in this Trust?

A simple written request directed to Public Trust will be sufficient. Normally funds will be available five working days after receipt of the request.

16. In the light of the recent market correction, what predictions are you prepared to make for the Trust's future gains/earnings?

We don't think it appropriate to make predictions. You'll note that most if not all investment offers stress that past performance is no guarantee of future performance. We do believe, however, that the recent performance of Wired® Index Trust is something potential investors will find attractive.

17. Is this Wired Index(tm) not leading traditional, low-risk Public Trust investors into higher risk grounds?

We are simply providing an opportunity: we will not be "leading". Our role is to act as agent for those who wish to access the Trust, not to offer advice on the advisability of doing so in particular individual circumstances.

18. But Public Trust is effectively providing endorsement of this fund?

We will be careful to ensure that only those investors who understand and accept the risk profile go in to the Wired® Index Trust.

WIRED® Disclosure statement

WIRED® is a registered trademark, and WIRED INDEX(tm) a service mark, of Advance Magazine Publishers, Inc., and are used with permission of Advance Magazine Publishers, Inc.

Advance Magazine Publishers, Inc. makes no warranty, express or implied, including no warranties of merchantability or fitness for a particular purpose or otherwise, to any person or entity as to the results to be obtained from or any data included in, or any other matters concerning, the Wired Index(tm) or the trademarks.

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