| 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. |
