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Super Fund Announces Investment Performance

2 August 2005

New Zealand Superannuation Fund Announces Investment Performance for the Year Ended 30 June 2005 - Earnings of $726.1 million with a 14.13% Rate of Return - Auckland (2 August 2005) –

The New Zealand Superannuation Fund today announced its investment returns for the year ended 30 June 2005.

In the 12 months to 30 June 2005 the assets of the Fund grew from $3,985.4 million to $6,613.5 million. The growth consisted of $2,107 million in Government contributions and $726.1 million in investment income (after costs, but before tax).

The Fund's primary investment target is to exceed, before tax, the risk-free rate of return (measured as the yield on 90-day Treasury bills) by an average of at least 2.5% p.a. over rolling 20-year periods.

The Fund's rate of return for the 12 months to 30 June 2005 was 14.13% (after costs, but before tax). This was ahead of both the risk-free rate of return of 6.33%, and the risk-free rate of return plus 2.5%.

The 2004/5 year generated a higher rate of return than the previous year. In 2003/4, the return for the first nine months of the Fund's investment programme was 7.69% (equivalent to 10.4% for the full year). This means that since 30 September 2003, the Fund's return has averaged 12.5%, against the risk-free rate of 5.88%.

Chairman of the Guardians of New Zealand Superannuation, David May, said: "I am very pleased to be able to report such strong returns in our first full fiscal year. These returns were driven by both strong equity markets and good overall performance by the Fund's active managers. The Fund was also protected by its policy to hedge a large proportion of its overseas investments back to the New Zealand Dollar.

"Because markets can go down as well as up, too much should not be read into the strong results achieved in the first two years. The success of the investment strategy will be fully judged over the next 20 to 30 years. Nevertheless the Board is confident that a sound framework has been established and is very encouraged by the performance achieved to date."

The Fund's asset allocation as at 30 June 2005 was as follows:

Sector Value (NZD Million) % of Assets
New Zealand Equities $553.4 8.4%
New Zealand Fixed Interest $968.1 14.6%
New Zealand Property $78.6 1.2%
Global Equities (Large Cap) $2,856.4 43.2%
Global Equities (Small Cap) $615.7 9.3%
Global Equities (Emerging Markets) $239.4 3.6%
Global Listed Property $113.3 1.7%
Global Infrastructure $33.5 0.5%
Global Fixed Interest $1,065.8 16.1%
Cash $89.3 1.4%
TOTAL $6,613.5 100%
The external investment mandates as at 30 June 2005 were as follows:
Sector Manager Value (NZD Million)
New Zealand Equities AMP Capital Investors $201.8
Brook Asset Management $252.8
Fisher Funds $98.7

New Zealand Fixed Interest ING (Sovereign Debt) $844.7
ING (Credit) $123.4

New Zealand Property AMP Capital Investors $78.6

Global Equities (Large Cap) Alliance Capital $405.1
Bernstein $275.6
Barclays Global Investors $1,745.8
Grantham, Mayo & Van Otterloo $147.6
LSV Asset Management $282.3

Global Equities (Small Cap) AXA Rosenberg $154.7
Grantham, Mayo & Van Otterloo $154.8
Goldman Sachs Asset Management $40.8
Numeric Investors $111.9
Sterling Johnston $47.3
Thompson Siegel & Walmsley $106.3

Global Equities (Emerging Markets) Citigroup $118.1
LSV Asset Management $121.4

Global Listed Property Vanguard Investments $113.3

Infrastructure Capital Partners $33.5

Global Fixed Interest Vanguard Investments $1,065.8

Cash $89.3
TOTAL $6,613.5

The top 10 equity holdings as at 30 June 2005 were as follows:
Market Value (NZD) % of Fund

New Zealand
Telecom $70,996,364 1.07%
Contact Energy $50,051,802 0.76%
Fletcher Building $41,734,514 0.63%
Guinness Peat Group $24,210,370 0.37%
Carter Holt Harvey $22,947,942 0.35%
Auckland Int Airport $22,685,811 0.34%
Waste Management NZ Ltd $16,177,601 0.24%
Fisher & Paykel Healthcare $16,052,507 0.24%
Sky Network Television $15,187,097 0.23%
NGC Holdings Ltd $14,601,200 0.22%

International
Citigroup Inc $51,945,508 0.79%
Gen Electric Co $38,633,693 0.58%
Microsoft Corp $34,412,426 0.52%
Bank of America Corp $33,158,001 0.50%
Exxon Mobile Corp $31,161,344 0.47%
Johnson & Johnson $28,407,701 0.43%
BP Plc $25,854,413 0.39%
Intel Corp $25,059,040 0.38%
Macquarie Infrastructure $24,451,790 0.37%
Fannie Mae $23,268,664 0.35%

ENDS

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