New Zealand Gazette – 2010 – No. 103

Page 2767

✨ Financial Statements Notes

17 AUGUST 2010 NEW ZEALAND GAZETTE, No. 103 2767

Notes to the financial statements

in New Zealand Dollars ($000’s)

18 Financial instruments (continued)
Trustees regard risk as the likelihood that the Trust fails to achieve these objectives and have adopted a series of strategies to mitigate all risks. The principle strategies include:

ensuring the Fund is well diversified,
maintaining an appropriate level of liquidity;
avoiding purely speculative investments;
retaining an investment consultant for investment advice;
using only fund managers which are researched and recommended by the investment consultant;
maintaining adequate reserves;
regularly reviewing investment performance.

Credit Risk
Credit risk represents the risk that a counter-party to a financial asset fails to discharge an obligation which will cause the Trust to incur a financial loss. The current exposure at balance date is the fair value of these assets as disclosed in the Statement of Financial Position. Concentrations of risk arise when a number of financial instruments or contracts are entered into with the same counterparty or where a number of counterparties are engaged in similar business activities, geographic regions or similar economic features that would influence their ability to meet their contractual obligations by reason of changes in economic, political or other considerations.

The Trust manages credit concentration risks through:

a diversified and non-correlated basket of investments across traditional and alternative asset classes
ensuring compliance with the mandate requirements of each fund manager

The credit quality of the Trust’s New Zealand and global fixed interest portfolios is managed using the Standard and Poors rating categories. In addition, exposure to global bonds is fully hedged against foreign currency movements. The following is an analysis of the Trust’s fixed interest portfolios, based on information supplied by the Fixed Interest managers.

Analysis of Fixed Interest Portfolios

Credit Rating	2010 Global	2010 NZ	2009 Global	2009 NZ
AAA	66,580	11,123	43,483	28,419
AA	4,856	5,005	10,704	11,677
A	10,393	1,411	8,028	4,379
BBB	5,242	940	3,345	581
Other	5,856	1,523	1,338	-
Totals	92,927	20,002	66,898	45,056

Sector Rating	2010 Global	2010 NZ	2009 Global	2009 NZ
Government	39,856	12,209	37,463	26,063
Corporate	18,018	7,877	22,745	17,547
Mortgages	14,671	-	11,373	-
Swaps	9,281	-	(16,055)	377
Other	11,101	(84)	1,372	1,069
Totals	92,927	20,002	66,898	45,056