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NZS Fund

Table 11 - NZS Fund net worth
Year ended 30 June
$ million 		Actual
2003 		Actual
2004 		Actual
2005 		Actual
2006 		Actual
2007 		Forecast
Original
Budget 		Forecast
Est
Actuals 		Actual
2008
Opening net worth 615 1,884 3,956 6,555 9,855 12,910 12,973 12,973
Revenue 69 131 191 359 436 447 381 385
Less current tax expense -  (77) (234) (468) (707) (349) (259) (237)
Less other expenses -  (7) (22) (52) 52 -  (51) (34)
Gains/(losses) -  146 557 1,130 1,313 866 (686) (995)
Operating balance 69 193 492 969 1,094 964 (615) (881)
Gross contribution from the Crown 1,200 1,879 2,107 2,337 2,048 2,103 2,103 2,104
Other movements in reserves -  -  -  (6) (24) -  -  16
Closing net worth 1,884 3,956 6,555 9,855 12,973 15,977 14,461 14,212

The NZS Fund (“the Fund”) is an important component of the Government's fiscal strategy. The Fund's assets provide the means for the Government to partially pre-fund future fiscal pressures, particularly those pressures arising from an ageing population.

The Government's contributions to the Fund are calculated over a 40 year rolling horizon to ensure that superannuation entitlements over the next 40 years can be met.

The Fund made an operating loss of $881 million for the year ended 30 June 2008. This compares to an operating profit of $1,094 million in the previous year and a forecast loss of $615 million for the current year. This loss results from the downturn in equity markets (particularly the United States). The Fund's full year return was -4.92% bringing its annualised return since inception to 10.34%. This return compares to the risk-free rate of return for the same period of 6.73%.

The Fund's net worth at 30 June 2008 was $14,212 million, an increase of $1,239 million since 30 June 2007. $2,104 million of this increase is from Government contributions which were offset by the Fund's investment performance.

Figure 15 - NZS Fund net worth
Figure 15 - NZS Fund net worth.
Source: The Treasury
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