Trustee closes mortgage fund

Tuesday 29th July 2008

Guardian Trust has decided to suspend new investments and withdrawals in its $249 million mortgage fund to protect investors.

The move is driven by liquidity issues. Currently the fund is �operating below its target liquidity rate of 5%.�

�In such conditions this is not considered appropriate,� the company says in a statement. �In the interest of fairness among unit holders, the directors feel a cautious approach is necessary.�

While a freeze has been imposed the fund is planning to continue distributions to its 3,700 investors.

This fund, established in May 1986, is a very conservative vehicle. It invests only in first mortgages, where advances are restricted to a maximum of 60% of valuations across the commercial, retail, industrial, farming and residential sectors.

The fund has performed well, over the years, in managed fund surveys and awards.

Managing Director Sean Carroll said, �Poor liquidity is a feature of today�s markets. We need to manage liquidity requirements very closely in funds such as these, where the assets (primarily mortgages) cannot be converted to cash quickly.

�As is usual for Guardian Trust, we are taking a cautious and prudent approach. We will review the situation regularly and will update investors and the market as appropriate.�

COMMENT: We've seen it all before but it still hurts

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