HONG KONG LEGISLATIVE COUNCIL-8 March 1989
香港立法局 一九八九年三月八日
Investment of charitable fund
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10. MRS. TAM asked: Will Government inform this Council how investment decisions are made in respect of charitable funds vested in the trusteeship of and/ or serviced by the Secretary for District Administration, and what safeguards exist against unduly speculative investment decisions being taken so that the real value of the capital is well preserved for perpetual use?
SECRETARY FOR DISTRICT ADMINISTRATION: Sir, there are eight statutory trust funds under the trusteeship of the Secretary for District Administration Incorporated. The operation of these trust funds is over-seen by statutory committees which, amongst their other functions, make decisions on investment matter. Members of the statutory committees are appointed by the Governor.
The investments of two of these funds, that is, the Sir Murray MacLehose Trust Fund and the Sir Edward Youde Memorial Fund, are handled by financial institutions under the guidance of the statutory committees concerned. The performance of the financial institutions is monitored closely by the committees which issue instructions to them from time to time. As for the other trust funds, the investment portfolios are administered by the Secretary for District Administration Incorporated in accordance with the advice of the statutory committees and changes are made when necessary upon periodical reviews.
All the trust funds operate on the basis that only their recurrent income is used for their respective purposes in order to preserve their capital for posterity. Each fund maintains a balanced investment portfolio comprising equities, bonds and bank deposits. Whilst bonds and bank deposits are less susceptible to market price fluctuations, they generally do not appreciate in capital value. Income from these investments remain broadly the same in monetary terms year after year and its purchasing power is likely to be eroded by inflation. A suitable proportion of each portfolio is thus invested in quality equities of proven track records and good prospects to achieve long-term growth in both capital and income.
All forms of investments involve some degree of risk-taking. However, the investment policy described above and its judicious administration by the statutory committees provide the best safeguard against undue speculation and improper investment. The success of the policy is borne out by the remarkable growth of the trust funds over the years as shown in the Annex, despite the stock market falls in 1967, 1974, 1982 and 1987.