FirstChoice Wholesale Investments - Colonial First State

COLONIAL FIRST STATE - FIRSTCHOICE WHOLESALE INVESTMENT FUNDS10. FINANCIAL RISK MANAGEMENT (continued)NOTES TO THE FINANCIAL STATEMENTSFOR THE PERIOD ENDED 30 JUNE 2011(a)(iii)Market Risk (continued)Interest rate riskThe Funds which have investments in interest bearing financial assets are exposed to the risks associated with theeffects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. TheFunds are exposed to cash flow interest rate risk on financial instruments with variable interest rates. Financialinstruments with fixed rates expose the Funds to fair value interest rate risk. The risk is measured using sensitivityanalysis.Certain Funds may also enter into derivative financial instruments to mitigate the risk of future interest rate changesin accordance with the risk policies and guidelines of the Investment Managers. These transactions are regularlymonitored by the Compliance Department of the Responsible Entity.The table below summarises the Funds' exposure to interest rate risks. It includes the Funds' assets and liabilities atfair values.FirstChoice Wholesale DefensiveFloating Fixed Non-interest Total30/06/2011 interest rate interest rate bearing$'000 $'000 $'000 $'000Financial assetsCash and cash equivalents 1,856 - - 1,856Receivables - - 324 324Financial assets held for trading - - 331,843 331,843Financial liabilitiesPayables - - (516) (516)Net exposure 1,856 - 331,651 333,507FirstChoice Wholesale DefensiveFloating Fixed Non-interest Total30/06/2010 interest rate interest rate bearing$'000 $'000 $'000 $'000Financial assetsCash and cash equivalents 1,714 - - 1,714Receivables - - 808 808Financial assets held for trading - - 299,448 299,448Financial liabilitiesPayables - - (315) (315)Net exposure 1,714 - 299,941 301,655Page 111