2896 NEW ZEALAND GAZETTE, No. 125 21 AUGUST 2009

Pricing Risk

Pricing Risk is the risk that the fair value of financial assets will increase or decrease as a result of changes in market prices, whether these changes are caused by factors specific to individual stocks or factors affecting all financial assets in the market. Pricing risks arise from the Trust’s investment portfolio.

The Trust’s financial assets are priced at fair value by the Trust’s custodian. The effect on the Trust’s Statement of Financial Performance and Statement of Financial Position at 31 March 2009, due to a reasonably possible change in market factors is represented in the following table:

| | Sensitivity Range
| (-1 to +1 standard deviation
| from the expected annual
| return) | Sensitivity Impact
| (from the expected
| annual return)
| $000 |
|--------------------------|-----------------------------------------------|---------------------------------------------|
| NZ Equities | -7.8% to +26.3% | -6,584 to +22,117 |
| Global Equities | -6.6% to +23.8% | -17,730 to +63,935 |
| NZ Bonds | +3.0% to +9.6% | +3,925 to +12,560 |
| Global Bonds | +3.0% to +9.6% | +7,848 to +25,113 |
| NZ Cash | +4.2% to +7.2% | +1,818 to +3,116 |
| CCF’s | -10.2% to +25.8% | -2,424 to +6,131 |
| Global Property | -3.9% to +20.1% | -412 to +2,123 |
| Total Portfolio | +0.8% to +14.1% | +5,585 to +116,056 |

There is a 68% probability that the return in any one year will be within the range of 0.87% to 14.1%.

The effect on the Trust’s Statement of Financial Performance and Statement of Financial Position as at 31 March 2008, due to a possible change in market factors is represented in the following table:

| | Sensitivity Range
| (-1 to +1 standard deviation
| from the expected annual
| return) | Sensitivity Impact
| (from the expected
| annual return)
| $000 |
|--------------------------|-----------------------------------------------|---------------------------------------------|
| NZ Equities | -7.9% to +26.1% | -8,536 to +28,201 |
| Global Equities | -6.3% to +23.4% | -23,113 to +85,486 |
| NZ Bonds | +2.9% to +9.4% | +6,224 to +20,176 |
| Global Bonds | +2.9% to +9.4% | +7,376 to +23,190 |
| NZ Cash | +4.1% to +7.1% | +2,441 to +4,228 |
| CCF’s | -10.3% to +25.7% | -7,387 to +18,432 |
| Global Property | -4.0% to +20.0% | -938 to +4,694 |
| Total Portfolio | +1.1% to +13.6% | +12,085 to +149,421 |

There is a 68% probability that the return in any one year will be within the range of 1.1% to 13.6%.

These sensitivity analyses are based on the volatility of each asset class and the portfolio as a whole, as measured by plus or minus one standard deviation. The overall effect of the Trust’s diversified portfolio of uncorrelated financial assets is to reduce volatility and stabilise investment returns over time.