NEW ZEALAND GAZETTE, No. 114

26 AUGUST 2013

ASB COMMUNITY TRUST

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2013

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 Group’s Investment Portfolio.

The Group’s financial assets are priced at fair value by the Trust’s Custodian. The effect on the Group’s Statement of Comprehensive Income and Statement of Financial Position at 31 March 2013, due to a reasonably possible change in market risk (including interest rate risk, currency risk and pricing risk) 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
|----------------------------|--------------------------------------------|------------------------------------------|
| Growth Assets | -5.6% to +26.4% | -27,222 to +128,334 |
| Diversified Assets | -0.9% to +17.3% | -1,861 to +35,770 |
| Inflation Proofing Assets | -3.8% to +20.4% | -3,970 to +21,314 |
| Deflation Proofing Assets | +0.4% to +10.8% | +1,210 to +32,664 |
| Total Portfolio | -1.0% to +18.0% | -10,998 to +197,964 |

There is a 68% probability that the return in any one year will be within the range of -1.0% to +18.0%.

The effect on the Group’s Statement of Comprehensive Income and Statement of Financial Position as at 31 March 2012, due to a possible change in market risk (including interest rate risk, currency risk and pricing risk) 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
|----------------------------|--------------------------------------------|------------------------------------------|
| Growth Assets | -6.0% to +26.8% | -27,393 to +122,357 |
| Diversified Assets | -0.9% to +17.3% | -1,503 to +28,888 |
| Inflation Proofing Assets | -4.8% to +21.4% | -5,428 to +24,200 |
| Deflation Proofing Assets | +0.6% to +10.6% | +1,921 to +33,944 |
| Total Portfolio | -1.1% to +17.8% | -11,625 to +187,061 |

There is a 68% probability that the return in any one year will be within the range of -1.1% to +17.8%.

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 Group’s diversified portfolio of uncorrelated financial assets is to reduce volatility and stabilise investment returns over time.