Glossary

Term Definition
Absolute Returns The percentage movement in the value of fund units from one period to the next.
Annualised Returns The percentage movement in the value of fund units from one period to the next, adjusted to a compounded basis.
Bond A security issued by a company or a government which promises to give you a fixed sum at a future date in return for a regular, specified level of income until that maturity date.
Benchmark The performance of a basket of stocks or securities over a time horizon, against which the performance of an investment fund is compared against.
Capital Appreciation Increase in the value of capital – the objective of most equity – invested unit trusts
EPF Employee Provident Fund
Distribution The cash payment that a company or a unit trust pays out annually or half-yearly, if any.
Dollar – cost – averaging The mathematical concept of regular investment of a fixed cash amount in a volatile asset (such as a unit trust), by which the average cost of acquisition is lower than the average value of the asset over a period of time.
Diversification The concept of investing various securities to reduce the risk of investing in one security.
Equity The part of a company’s capital which is owned by its shareholders; shares
Fact Sheet A short document produced by the fund managers containing useful information about a unit trust, such as recent performance, asset allocation etc. for the benefits of the investors.
Front-end Load The initial service charge paid by the investors when purchasing the funds.
Fund Manager The group of people or organisation managing the unit trust.
Fund Size The total net asset value (NAV) of the fund.
Income Distribution The portion of dividends, interest and capital gains earned by the unit trust and paid out to unit holders.
Investment Objectives What a financial instrument, such as unit trust, is trying to achieve, for example, to achieve a return of at least 3% within a time period of 6 months.
Lump Sum This is where an investor has a single amount of funds which he wants to invest in a unit trust. This may be the only investment the investor wishes to make.
Management Fee The Investment Manager’s remuneration, which is calculated as a percentage of the total net asset value of the portfolio and is usually accrued at each dealing day.
N.A. Not Applicable, unless otherwise stated.
Net Asset Value (NAV) The market value of the fund’s total assets plus income less expenses.
Performance This is usually quoted as the percentage movement in the value of units from one period to the next. This is usually presented in a percentage format on an Absolute Return basis or an Annualised Return basis. Performance may also be judged on a relative basis against a benchmark.
Portfolio A collection of different types of investments.
Prospectus The legal document that contains all the information about a unit trust. The purchaser indicates that he has read this document when he signs the application form.
Reinvestment Unit holders who opt for reinvestment instruct the Manager to use their income to buy additional units at the net asset value per unit of the fund.
Trustee A legal entity runs by a group of people or an organization to protect the interests of a person or a group of people.
Unit Holders The owners of a unit trust.
Unit Trust A pool of financial instruments that is sub-divided into smaller units, and managed by a fund manager.

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