Notes to the financial statements (continued)

In New Zealand Dollars ($000's)

From table 1, it can been seen that the long term expected return for the Trust’s portfolio is currently 6.5% per annum and there is approximately a 68% probability that the return in any one year will be within the range of -2.1% and 15.1%.

Financial instruments (continued)

As at 31 March 2012 the Trust’s portfolio had NZ$145.1m under management. Assuming the short term return distribution approximates the long term return distribution there is approximately a 68% probability that the Trust’s revenue from investment activities will lie in the range of -$3.0m to $21.8m, with expected revenue of $9.4m for the year 1 April 2012 to 31 March 2013.

Table 2 shows the asset allocation for the Trust’s portfolio as at 31 March 2011 as well as the long term expected return for each asset class. The return one standard deviation above and below the expected return is also shown.

Table 2: Sensitivity analysis for the Trust’s portfolio 31 March 2011

| Asset Class | Asset allocation
| (31 March 2011) | Long term expected
| return p.a. | -1 Std deviation
| return p.a. | +1 Std deviation
| return p.a. |
|---------------------------|-------------------------------|-----------------|--------------------------|-----------------|
| NZ equities | 5.3% | 8.5% | -9.0% | 26.0% |
| Global equities | 31.5% | 9.1% | -6.4% | 24.6% |
| Global bonds | 48.9% | 6.5% | 3.5% | 9.5% |
| NZ fixed interest debt | — | — | — | — |
| securities | 10.6% | 5.1% | 3.1% | 7.1% |
| Global property | 3.7% | 8.6% | -12.4% | 29.5% |
| Total | 100.00% | 7.4% | 0.6% | 14.1% |

From table 2 the long term expected return for the Trust’s portfolio is 7.4% per annum and there is approximately a 68% probability that the return in any one year will be within the range of 0.6% and 14.1%.

As at 31 March 2011 the Trust’s portfolio had NZ$143m under management. Assuming the short term return distribution approximates the long term return distribution there is approximately a 68% probability that the Trust’s revenue from investment activities will lie in the range of $0.9m to $20.1m, with expected revenue of $10.5m for the year 1 April 2011 to 31 March 2012.

Estimation of fair values

The methods used in determining the fair values of financial instruments are discussed in note 4.

Fair value hierarchy

The fair value of financial assets and liabilities traded in active markets are based on quoted market prices at the end of the reporting period. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker or pricing service, and those prices represent actual and regularly occurring market transactions on an arm’s length basis. The fair value of financial assets and liabilities that are not traded in an active market is determined by using valuation techniques. The Trust’s investment managers use a variety of methods and make assumptions that are based on market conditions existing at each reporting date. Valuation techniques used for non-standard financial instruments such as over the counter derivatives include the use of comparable recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, options pricing models and other valuation techniques commonly used by market participants making the maximum use of market inputs and relying as little as possible on entity specific inputs.

The Trust is unlikely to invest in instruments where there is no active market.