Bull
A "bull" market is simply when there is a distinct UPWARD trend in the price of stock (shares etc.) on the JSE. This is caused by an increase in demand for investment opportunities and inherent growth in the value of companies due to favourable market conditions.

Buyer's Price?
This is the price at which you buy units from the unit trust company. You buy units every time you invest money in unit trusts.

Charges, Compulsory
The management company has to pay certain charges, including marketable securities tax, on the shares they buy, which is why there is a compulsory charge levied when an investor buys units.

Charges, Initial
It refers to a portion of the buyer's price of a unit which represents the management company's expense in connection with the creation and sale of the units.

Distributions
A distribution takes place when the income received by the fund is distributed to investors. The distribution on income consists of the dividends paid by the shares in the portfolio and interest from the interest-bearing securities.

Financial Year
Refers to the period from e.g. 1 July of a year to 30 June of the following year at the end of which the management company has to submit reports of all financial activity for the preceding 12 months. This is done in accordance with the Companies Act of 1973 and the Unit Trust Control Act.

Income Accruals
Income accrual refers to any interest and dividends which are received on shares and any other investments which are part of the investment portfolio of a fund.

Management Fee
The management fee refers to the charge which a management company subtracts annually from the income accruals as its remuneration for managing a unit portfolio. At present it is 0,75% per annum.

Portfolio
This is a group of securities which is purchased by any investor.

Securities
Securities refer to cash, shares, stock, debentures, debenture stock and bonds - any medium in which money is invested.

Security
This refers to any asset which an investor buys in the hope of protecting the money invested in it and to cause the capital value of the investment to grow.

Seller's Price
This is the price at which you sell your units back to the unit trust company. You are able to sell your units at any time.

Trustee
The trustee ensures that the assets of the trust remain the property of the unit holders i.e. the trustee acts as the custodian of the assets. The trust deed is an agreement between the trustee and the management company whereby a unit trust is established.

Typical Unit Trusts
Some examples of funds are:

• Investors' Fund;
• Mining Fund;
• Income Fund;
• Gold Fund;
• Industrial Fund; and
• Top Companies Fund.

 

Underlying Securities
The underlying securities are the securities which are part of a unit portfolio.

Unit
A unit refers to a portion of a unit portfolio - "an interest or undivided share of a unit portfolio."

Unit Portfolio
Refers to a group of securities which make up the investments of a unit trust.

Unit Trust
The unit trust can be regarded as a pool of assets consisting of shares, fixed-interest stocks and cash. The value of this fund is determined on a daily basis and divided into identical units each with the same value. The fund is held in trust for the investors by the trustee.

Back to Index