✨ Trust Investment Portfolio
27 JUNE 2012
NEW ZEALAND GAZETTE, No. 72
EASTERN AND CENTRAL COMMUNITY TRUST INC
Variable Rate Instruments
| Cash Flow Sensitivity 31 March 2012 $ | Cash Flow Sensitivity 31 March 2011 $ | |
|---|---|---|
| 100 basis points increase | 61,563 | 60,393 |
| 100 basis points decrease | (61,563) | (66,393) |
c) Pricing Risk
Pricing risk is the risk that the value of the instrument will fluctuate as a result of changes in market price (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuers or all factors affecting all instruments traded in the market. As the majority of the funds’ financial instruments are carried at fair value with fair value changes recognised in the statement of comprehensive income, all changes in market conditions will directly affect investment income.
Price risk is managed by the Trust by constructing a diversified portfolio of instruments traded on various markets. The SIPO sets down the guidelines for this diversification.
The Trust’s financial assets are priced at fair value. The effect on the Trust’s statement of comprehensive income and balance sheet as at 31st March 2012, due to a possible change in market factors is represented in the following table:
| Financial Asset | Sensitivity Range (-1 to +1 Standard Deviations) | Sensitivity Impact $,000 |
|---|---|---|
| NZ/Australian Equities | -10.1% to 26.6% | -2,850 to 7,067 |
| NZ Bonds | 3.0% to 12.5% | 1,231 to 5,117 |
| NZ Cash | 4.6% to 6.9% | 370 to 562 |
| Overseas Equities | -9.3% to 26.3% | -4,367 to 12,350 |
| Overseas Bonds | 3.5% to 12.5% | 443 to 1,611 |
| Property | -9.4% to 25.4% | -336 to 905 |
| Total Portfolio | -3.8% to 19.9% | -1,353 to 6,681 |
There is a 68% probability that the return in any one year will be within the range -3.8% to 19.9%.
The effect on the Trust’s statement of comprehensive income and balance sheet as at 31st March 2011, due to a possible change in market factors is represented in the following table:
| Financial Asset | Sensitivity Range (-1 to +1 Standard Deviations) | Sensitivity Impact $,000 |
|---|---|---|
| NZ/Australian Equities | -11.0% to 27.5% | -3,007 to 7,616 |
| NZ Bonds | 2.7% to 12.8% | 1,385 to 6,658 |
| NZ Cash | 4.4% to 7.1% | 313 to 498 |
| Overseas Equities | -8.9% to 25.9% | -4,034 to 11,773 |
| Overseas Bonds | 3.4% to 12.6% | 422 to 1,588 |
| Property | -8.5% to 24.5% | -126 to 364 |
| Total Portfolio | -3.5% to 19.5% | 1,032 to 7,007 |
There is a 68% probability that the return in any one year will be within the range -3.5% to 19.5%.
These sensitivity analyses are based on the volatility of each asset class and the investment 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.
Fair Value Hierarchy
The table below analyses financial instruments carried at fair value, by valuation method. All assets are categorised as level 1, which are financial instruments with quoted prices (unadjusted) in active markets.
Next Page →
NZ Gazette 2012, No 72
✨ LLM interpretation of page content
💰
Eastern and Central Community Trust Investment Portfolio
(continued from previous page)
💰 Finance & RevenueInvestment Portfolio, Asset Allocation, Performance Measurement, Trust Management, Variable Rate Instruments, Cash Flow Sensitivity, Pricing Risk, Financial Assets, Fair Value Hierarchy