A Remarkable Growth Story

“Compound interest is the eighth wonder of the world” – Albert Einstein


From an original bequest of £275,000 ($550,000), $162m income has been generated and a $126m corpus invested for the future.

On her death in 1951, the late Helen Macpherson Schutt (née Smith) left a bequest of £275,000 ($550,000) for the establishment of a charitable trust in perpetuity to benefit all Victorians.

Remarkably, the invested assets of HMSTrust’s corpus have grown from the initial benefaction of $550,000 in 1951 to $126m as at 30 June 2019. This exceptional investment performance did not happen by chance.

Firstly, Helen wisely instructed her trustees to re-invest two thirds of the income generated over the first 21 years of the Trust. One of the features of compounding is the substantial benefit gained from strong growth early in the life of a fund. This income from the first 21 years of the Trust now accounts for $60m (or 48%) of the $126m corpus.  In 2009 the Supreme Court of Victoria approved an Administrative Scheme which again gave the Trustees limited power to accumulate income to corpus. This power of accumulation, activated by the Trustees from FY10, now accounts for $9m (or 7%) of the $126m corpus.

Secondly, the Trustees made a decision to invest primarily in growth assets (such as Australian equities), and have invested astutely in the high quality performing investments which have generated good capital growth (7.2% compound annual growth rate) over the last 68 years.  If the original $550,000 had only matched inflation over the 68 years it would be worth as little as $10m today; and if it had simply matched the growth of the All Ordinaries Index over the 68 years, the original bequest of $550,000 would only be worth $38m, instead of the $57m it is today.

At the same time, the corpus has generated income of $162m (or $255m adjusted for inflation) over the past 68 years which has been allocated as follows: $126m ($192m) in approved grants, operating expenses of $24m ($35m), transfers to corpus of $8m ($24m) with the remaining $4m available for future granting.

It is truly a commendable achievement that the original $550,000 bequest 68 years ago is now a $126m corpus which has generated $162m of income, used to benefit the state of Victoria.

The impact of this lasting legacy from Helen to the people of Victoria is exemplified in a summary of capital growth over the now 68 years of HMSTrust’s operations:

$126,132,254 invested for the future

$ 000’s
1952  550*
1965 1,629*
1975 3,181
1985 10,932
1995 29,796
2000 49,645
2005 78,263
2010 83,889
2015 104,535
2016 99,609
2017 109,645
2018 116,502
2019 126,132
* Figure represents book value (market value unknown)