An Introduction to Mutual Funds Worldwide

GLOSSARY OF INDUSTRY TERMS

NOTE: includes terms in common use, not all of which are necessarily found in the text.

Accumulation Adding income to capital instead of distributing it as dividend.

Accumulation units Net income is automatically retained in the fund and refl ected in the unit price.

Active management An investment management approach that seeks to outperform the market through the application of informed, independent judgement. The opposite of passive management.

Administrator An organisation that provides administrative services to a fund or its management company or trustee.

Adviser The individual or organisation employed by a mutual fund to direct the investment and management of the fund's assets.

Annual charge A charge levied for the management of the mutual fund.

Annual report A yearly statement of the financial progress and status of a mutual fund.

Asked price (US) Price based on the net asset value (NAV) plus sales charge, paid when purchasing shares (see Offer price).

Asset allocation The method by which the investment manager determines the spread and mix of securities and assets in which the fund's capital is invested.

Authorised unit trust (UK) A unit trust scheme authorised by the Financial Services Authority.

Automatic reinvestment The use of income or realised capital gains for the purchase of additional shares or units of a mutual fund.

Back end load A charge levied when units are redeemed.

Balanced fund A fund with a portfolio comprising a mix of bonds ...