The Investment Portfolio

The Trust manages its Investment Portfolio in terms of its SIPO. The SIPO is monitored and amended on a regular basis by the Board of Trustees. The Portfolio’s strategic asset allocation is reviewed annually. The strategic asset allocation was last reviewed in November 2008. MCA NZ Limited assists both management and the Trustees with investment advice and the portfolio management.

Portfolio Characteristics

The Trust has its investments in six different portfolios and the performance of each asset is measured against an appropriate index.

NZ Equities

The NZ Equity portfolio is managed by Forsyth Barr. The Investment mandate allows the Fund Manager to invest up to twenty five percent of the portfolio in companies listed on the NZ Stock Exchange. This portfolio is measured against the NZSX40 (net Dividend) Index.

NZ Listed Property

The NZ Listed Property portfolio is managed by Forsyth Barr. The Investment mandate allows the Fund Manager to invest up to five percent of the portfolio in property companies listed on the NZ Stock Exchange. This portfolio is measured against the NZX Property Sector (net Dividend) Index.

NZ Bonds

The NZ Bond portfolio is managed by Esam Cushing Limited. The investment mandate allows the Fund Manager to invest up to seventy percent of the portfolio in bonds. The mandate places limits on the underlying investment categories, along with credit and duration restrictions. This portfolio is measured against the NZX Corporate A Grade Index.

Off Shore Equities

The Off Shore portfolio is managed by State Street Global Advisors. The investment is in a pooled fund. The investment mandate allows the Fund Manager to invest up to fifty-five percent of the portfolio in off shore equities. This portfolio is measured against the MSCI Gross ($NZ) Index and the strategic policy is to be fifty percent hedged back to NZ dollars. However, due to high levels of currency volatility over recent years the level of hedging has varied between zero and one hundred percent.

Australian Listed Property

The Australian Listed Property portfolio is managed by State Street Global Advisors. The investment is in a pooled index trust. The investment mandate allows the Fund Manager to invest up to five percent of the portfolio in Australian listed property equities. This portfolio is measured against the S&P/ASX200 Property Accumulation index and the strategic policy is to be fifty percent hedged back to NZ dollars. However, due to high levels of currency volatility over recent years the level of hedging has varied between zero and one hundred percent.

Cash

The Cash Portfolio is managed by the Trust Manager. The mandate places limits on the underlying investment categories, along with credit and duration restrictions. The portfolio is measured against the NZX 90 day bank bill index.

Credit Risk

Credit Risk represents the risk that a counterparty to a financial asset fails to discharge an obligation which will cause the Trust to incur a financial loss.

With regard to the credit risk arising for financial assets, the Trust’s credit risk arises from any default by a counterparty. The current exposure at balance date is the fair value of those assets as disclosed in the income statement.