The fund had a disappointing surplus but a good cash flow at the end of the last financial year, and Mr Stephens said he was confident the spread and focus of the fund's investments meant it would be safe in future.
The $72.6 million fund was established in 1998 using the proceeds from the sale of the Waipori electricity generation scheme, and has been a valuable contributor to the council's finances.
Mr Stephens said the Waipori fund had invested in a variety of other funds, and it was "a question then, of what's in those funds".
An example was JP Morgan European funds, which contained "little bits of lots of companies".
There were few United States investments, and only a couple of investments that were "a little bit affected" by recent economic problems in the United StatesIn New Zealand, the Waipori fund had investments in Auckland Airport and Contact Energy, and in Australia, BHP, Macquarie Infrastructure, Telstra and the Commonwealth Bank.
The policy for the fund was "income focused", which was why many investments were in long or short-term bonds, and there was a stronger focus on bonds rather than equities.
"Bonds meet the council's needs for a continuous flow of good-quality earnings."
Asked whether he was comfortable with the economic situation in relation to the fund, Mr Stephens said while equity markets had taken a beating recently, underlying assets were still sound.
When the fund was investing in a company like Fletcher Building that built items such as roads and schools, it was not dealing with "exotic financial investment that doesn't have any value when put to the test".
"They're real companies that make real things that people need."
An example of the sort of investment the council had been offered and had turned down was collateralised debt obligations, a security backed by a pool of bonds, loans and other assets.
"We say explain them to us - they couldn't. If we don't understand it, we don't invest."
The companies invested in had to be substantial, and have a proven history.
"It's really basic stuff - I think it is."
The fund had increased in value from $56 million to $72 million, and had returned $26 million over nine years.
That had occurred in what Mr Stephens said was "a benign environment".
"We're having a pretty tough old go at the moment, but we're coming through it in pretty good shape."
