2892 NEW ZEALAND GAZETTE, No. 125 21 AUGUST 2009

The Trust’s income is generated from its financial assets. Liabilities which arise from its operations are met from cash flows provided by these assets.

Information regarding the fair value of assets and liabilities exposed to risk is regularly reported to the Trust’s management, the Trust’s Finance and Investment Committee and ultimately to the Board of Trustees. Under normal circumstances the Investment Portfolio is regularly rebalanced to ensure that asset classes remain within the Strategic Asset Allocation set out in the Trust’s Statement of Investment Policy and Objectives (SIPO). The portfolio has not been rebalanced since September 2008 in order to de-risk the portfolio. Trustees will authorise the rebalancing of the portfolio once an appropriate level of stability has returned to the financial markets.

The SIPO sets out the Trust’s investment objectives. These can be summarised as to:

• maintain the real value of the Trust’s capital with regard to inflation
• maintain equity between present and future generations in terms of the amounts available for grants
• ensure a stable level of grants over time by maximising the total return that can be provided by the investments of the Trust, subject to a prudent level of portfolio risk.

As a responsible member of the world community, the Trust aims to demonstrate leadership by advancing universal principles and responsible corporate citizenship to make the global economy more sustainable and inclusive. The Trust supports the United Nations Global Compact and is a signatory to the United Nations Principles for Responsible Investment. The Investment Portfolio is screened against the principles set out in the United Nations Global Compact and the Trust contracts an external service provider to engage with companies where there have been allegations of practices contrary to the Global Compact principles. The Trust encourages dialogue and discussion in this process of engagement.

The Investment Portfolio

The Trust manages its Investment Portfolio in terms of its SIPO. The SIPO is monitored on a regular basis by the Board of Trustees and, as required, amended to reflect international best investment practice. The Portfolio’s strategic asset allocation is reviewed at three yearly intervals. The strategic asset allocation was last reviewed in 2008. Russell Investment Group Limited assists both management and Trustees with international strategic and best practice investment advice and portfolio monitoring. The pricing of financial assets is undertaken by JP Morgan Chase Inc, the Trust’s Custodian.

Portfolio Characteristics

The Trust is not directly involved with the analysis, sale or purchase of individual asset securities. Investments are made into either pooled funds or segregated accounts with Fund Managers. The performance of each asset class is measured against an appropriate internationally accepted standard benchmark or index for each asset class.

Global Equities:

The Global Equities portfolio is made up of three pooled funds with eight underlying product Fund Managers. This spread of Fund Managers enables the Trust to access a wide range of segments within the global equity markets. This portfolio is measured against the MSCI World Index, and is fully hedged back to New Zealand Dollars.