What it all means

In this section: Monthly reports summarised
How to read your investment position report
The jargon demystified (ok, Glossary)

 

MONTHLY REPORTS SUMMARISED

Your personal details: Information about you. Use this page to keep us up-to-date when you change address, phone numbers, email addresses, etc.

Your contributions: This report shows cash payments into your Gareth Morgan Kiwisaver account during the month. These contributions include IRD payments, employee contributions, employer contributions, cheque or direct debit payments and the interest earned while these contributions were held at IRD and in the GMK Scheme’s bank account. It does not include money sent to the IRD for you but not yet forwarded to GMK.

Your investment position: This report is a snapshot of your investment at the end of the reporting month. It shows the quantity of each asset held, the end-of-month price of that asset, and the total value in NZ dollars. Details on how to read this report follow.

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HOW TO READ YOUR INVESTMENT POSITION REPORT

What does this report show?  It shows where your money is invested at the end of each month, and the value of those investments.  It shows the number of each security (asset) you hold, the currency in which the security is measured, the price and market value of each security in that currency; the exchange rate used to convert it to NZ dollars, and the value in NZ dollars.

Here is an explanation of what‘s covered in each column and row. A glossary of terms follows this section.

The Columns

  • Security: This shows the currencies, bonds, investment trusts and shares in which your savings are invested.
  • Currency:  This is the country in which the investment is listed.
  • Quantity:  The number of each security held in your Kiwisaver account, rounded to two decimal places.
  • Price:  The closing price on the last business day of the month of the securities you hold.  The price is in the local currency – so for a US share, the price is in US dollars.
  • Local Market Value:  How much your investment is worth in local currency terms (so for your US shares, this value shows how much they are worth in US dollars).  It is equal to the quantity times the price.
  • FX Rate:  The closing foreign exchange rate (versus the NZ dollar) on the last business day of the month.  So for your US shares, this will show the NZD/USD exchange rate. 
  • NZD Market Value:  What each security is worth in NZ dollars.  It is equal to the local market value divided by the FX rate.
  • Percentage of Assets:  How much of your total investment balance each security represents, expressed as a percentage.

The Rows

  • Cash: On-call deposits held across various currencies. Cash is the most liquid asset in your portfolio.
  • Fixed Interest: Usually a fixed term investment bond in government, local authority, banks or corporations returning a specified interest rate. However, these investments may also be perpetual, have a floating interest rate, or convert to shares upon maturity.
  • Income Shares: A capital (or equity) interest in a company. Income shares pay a relatively high and consistent dividend.
  • Growth Shares: A capital (or equity) interest in a company. Growth shares (either held directly or in a fund) that we expect will grow in value.

INVESTMENT POSITION FAQ

What’s the difference between the GMK Cash account and the NZ account? 
When we receive a contribution from the IRD, a direct debit or a cheque, we hold the funds in the GMK Cash account. At the end of the month, the balance is transferred to GMK’s investment manager, Gareth Morgan Investments (GMI), to be invested on your behalf in either cash or securities.

The GMK Cash account balance is how much you have sitting in the ‘holding pen’ after fees and taxes due for the month have been taken account of. This money will be invested over the next month. The NZ Account is how many NZ dollars you hold as part of your invested funds. 

When I multiply quantity by price, I don’t get the same local market value that is shown in the report.  How come?
This is due to rounding. The report shows the quantity to only two decimal places, but we calculate your quantity with a much larger degree of precision. If you want to get an idea of the exact number of units you own of each security, you can divide the local market value by the price.

How come my quantity is showing as zero for a particular stock, but it still has a market value? This is due to rounding – if you hold less than 0.005 of a security, the report rounds the quantity down to 0.00.  This is more prevalent for high-priced securities, such as Google shares.  Over time, provided you are contributing regularly, your quantity of each security will increase to more significant levels.

If you have another question about understanding this report, please email us here and we’ll post the answer here shortly. We will not respond personally to these emails.

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THE JARGON DEMYSTIFIED

Asset: Cash, bonds, shares… the things you “own” (just another word for security).

Accrued Dividend: A dividend that has been declared by a company, but has not yet been paid to shareholders.

Accrued Interest:  This is interest that has been earned but has not yet been paid.  E.g. interest that is paid quarterly will ‘accrue’ from the first day of the quarter until the end of the quarter when it will be paid.

Benchmark: A benchmark is a standard against which the performance of your investments can be measured. The following are the benchmarks for the Investment Directions:

  • Conservative: 40% NZ 90 day bank bill index, 40% NZ Bond index, 5% NZX index, 15% MSCI* index unhedged in NZD terms
  • Balanced: 20% NZ 90 day bank bill index, 20% NZ Bond index, 10% NZX index, 50% MSCI index unhedged in NZD terms
  • Growth: 100% MSCI, unhedged in NZD terms

*Morgan (not that Morgan) Stanley Capital International (MSCI).

Brokerage: Charges by a broker firm for the purchase and sale on market of bonds and shares. Brokerage is normally an agreed percentage of the transaction value.

Dividend: A distribution of profits made by a company to their shareholders. The amount is decided by the company’s board of directors and is usually paid periodically (either quarterly, half-yearly or annually). Note – not all companies pay dividends.

Exchange:  A market where investment securities (assets) are traded (bought and sold).  E.g. the NZX is the New Zealand Exchange for buying and selling NZ listed bonds and shares.

Exchange Rate:  The rate used to convert one currency into another currency.  E.g. to convert the value of your US shares into NZ dollars we have to apply the USD/NZD exchange rate for the end of the reporting month. Or, if we are selling NZD and buying British pounds (GBP) we have to apply the NZD/GBP exchange rate quoted by the bank conducting the transaction.

Index: A pre-decided group of assets (securities) that represent a particular market or a portion of it. E.g. The NZX 50 Index comprises the top NZ shares by market value listed on the NZX (New Zealand Exchange).

Interest: A cash return on deposits with banks or other financial institutions or on bonds or other fixed interest assets.

Investment Trust: Collective investment vehicles, often specialising in particular sectors, themes or countries.

Liquidity: The ability to convert an asset to cash quickly. E.g. bonds and shares that can be sold on the sharemarket daily are more liquid than a house, which takes time to advertise, secure a buyer and complete settlement.

Market Value: The current quoted price at which investors buy or sell a share, bond, or currency multiplied by your holding of that investment security. The market prices quoted in your GMK portfolio are the closing values published on the last business day of the reporting month, converted to NZ dollars using the relevant exchange rates for the last day of the month.

Security: just another word for asset.


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