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AE KiwiSaver Plan

Strict Ethical Mandate

Trust Deed and Statement of Investment Policy and Objectives

Our Strict Ethical Mandate

Always-Ethical has a Strict Ethical Mandate.
This Mandate restricts the investing activities of the Manager to permitted investments, providing transparency for investors and enables you to take responsibility for how your investments impact society.

If we obtain income that is outside of the Strict Ethical Mandate, to remain compliant, we purify the same by donating to a charity for the poor selected by the Directors of the Manager, which is at their discretion. This is the operation of the Mandate and is not a breach.

About Our Strict Ethical Mandate

Investments in ordinary shares of US listed companies is permitted. Preference shares are prohibited. Ordinary share investments are required to meet the financial ratios below also investments are allowed to have up to 5% of the prohibited investments below. To keep the ordinary shares investments permitted any dividends are purified for non-permissible income by the donation of part of the dividend (less than 5% of the dividend) to a charity for the poor.

Equity investments to be in companies with strong balance sheets that meet certain financial ratios these financial ratios are:

Financial ratios:

  •  Interest-bearing debt less than 30%
  • Interest-bearing investments less than 30%
  • The assets of the company making or doing something for the good of humanity to exceed 67% of total assets

Any breach of these financial ratio’s results in the sale of the investment the next market day.

 Prohibited Investments: the fund does not invest in any of these activities, the equity investments may, provided the prohibited investment is under 5% of the business activity and is appropriately purified.

  •  Products whose return is based on receipt of interest, including money lending*

 *Explanation: this excludes all financial institutions, Banks, Money Lenders and Insurance Companies.

  •  Gambling and speculative investments*

*Explanation: this is not just a prohibition of gambling organisations like casinos, but also excludes investment products that rely on chance for success.

  •  Derivatives*

 

*Explanation: these are high-risk products that rely on chance for success, these are gambling.

  •  Alcohol
  • Tobacco
  • Weapons of war
  • Adult entertainment
  • Gold and Silver hedging these are gambling
  • Pork*

*Explanation: This limits the investment in meat-based businesses.

  •  Leverage (i.e. borrowing against investors’ (your) money, not assets).

*Explanation of leverage: Leverage is a practice of many fund managers. Leverage puts your investment at an unethical risk. Leverage is absolutely prohibited.

  •  Fossil fuel exploration

If an investment is suspected of not complying with the Strict Ethical Mandate, it is sold on the next trading day.

 Any cash held in the Scheme is held in US dollars or NZ dollars.

 The Manager uses IdealRatings to:

  • Daily monitor that each investment meets the Strict Ethical Mandate.
  • To calculate any “purification” required to meet the Strict Ethical Mandate.

 

 

 

 

AE Advisory Board

The AE Advisory Board is responsible for reviewing the Strict Ethical Mandate compliance of the AE Kiwi Saver Plan, AE Investor, and its investments. The AE Advisory Board reviews compliance with the Strict Ethical Mandate but does not undertake investment selection. 

Purification

Non-permissible income generated from non-compliant business operations or investments (both operations and non-operations) should not exceed 5% of the total income generated by the company invested in.

Each year the effect of the non-permissible income is “purified” by a donation to charity for the poor.

Purification is calculated annually by the Manager and AE Investor pays the sum calculated to registered charities.

 Any interest the fund cannot avoid receiving is not received into the fund account. The Registry diverts such payments into a purification account. The purification monies are covered in the notes to the audited financial statements each year. As the fund grows, so will the monies donated to charities for the poor, this way the fund benefits those who are poverty-stricken.

This deduction is not a fee, it is part of the Strict Ethical Mandate and benefits charities for the poor.

The other aspect of the Strict Ethical Mandate is our mechanism to ensure we comply strictly with the same, built into the Mandate is a 5% permissible margin for equity investments involved with prohibited investments. This 5% is however distilled through a process termed “purification”. Purification is taken into account as part of our accrual accounting by the Registry. All income derived by the fund as dividends (dividends from our investments are permissible income) are purified, the purification payment is considerably Purified, it is wholly donated to a charity for the poor.

The fund not receiving, but purifying all interest is a key management of this prohibited activity.

Authorised Investments

AE Investor may only hold “Authorised Investments”; this is currently defined as the stocks of up to 50 corporations listed on the approved stock exchanges (NYSE, NYSE MKT LLC or NASDAQ), or cash (which shall be US dollars). All investments must comply with the Strict Ethical Mandate.