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. |