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Advisor
The organization employed by a unit trust to give
professional advice on The Funds’ investments and to
supervise the management of its assets.
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Asked or Offering Price
The price at which a unit trust’s shares can be purchased.
The asked or offering price is based on the current net
asset value (NAV) per share plus any sales charge.
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Automatic Investment Plan
A plan offered by some funds where as little as BWP 100 a
month is automatically deducted from an investor’s bank
account and invested in The Fund of their choice.
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Automatic Reinvestment
A service that some funds offer whereby a shareholder's
income dividends and capital gains distributions are
automatically reinvested in additional shares.
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Benchmark
An unmanaged group of securities whose performance is used
as a standard to measure investment performance. Commonly
known as a market index. Some well-known benchmarks are the
Domestic Companies Index ( Botswana Stock Exchange) and the
S&P 500 (US markets).
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Bid or Sell Price
The price at which a unit trust shares are redeemed (bought
back) by The Fund. The bid or redemption price is the
current net asset value per share, less any redemption fee
or back-end load.
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Bond Rating
A system of evaluating the probability of whether a bond
issuer will default. Standard and Poor's Corp. and Moody's
Investors Services, among other firms, analyze the financial
stability of both corporate and government bond issuers.
Ratings range from AAA or Aaa (extremely unlikely to
default) to D (currently in default). Bonds rated BBB or
below by S&P or Baa or below by Moody's are not considered
to be of investment grade. Most funds generally restrict
their bond purchases to issues of certain quality ratings,
which are specified in their prospectuses.
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Capital Gain
Profit that results when the price of a security held by a
fund rises above its purchase price. If the security is
sold, then the capital gain is realized; if the security is
still being held, the gain is unrealized. If the security
has been held for more than a year, the gain is long-term;
otherwise it is shorter-term. A capital loss occurs when the
price of a security falls below its purchase price.
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Capital Gains Distributions
Payments made usually at the end of the year to unit trust
shareholders of gains realized on the sale of securities in
the mutual fund portfolio.
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Capital Growth
A rise in market value of a Funds’ securities, reflected in
its net asset value per share. This is a specific long-term
objective of many mutual funds
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Certificate of Deposit
An interest-bearing, short-term debt instrument issued by
banks.
Closed-End Investment Company
An investment company that offers a limited number of
shares. They are traded in the securities markets, usually
through brokers. Price is determined by supply and demand.
Unlike open-end investment companies (mutual funds),
closed-end funds do not redeem their shares.
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Commercial Paper
Short-term, unsecured promissory notes with maturities no
longer than 270 days. They are issued by corporations to
fund short-term credit needs.
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Confirm Date
The date The Fund processed your transaction, typically the
same day or the day after your Trade Date.
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Contingent Deferred Sales Charge (CDSC)
A fee (or back-end load) imposed by certain funds on shares
redeemed within a specific period following their purchase.
These charges are usually assessed on a sliding scale, such
as four percent to one percent of the amounts redeemed, with
the fee reduced each year the shares are held.
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Custodian
The bank or trust company that maintains a unit trust’s
assets, including its portfolio of securities or some record
of them. The custodian provides safekeeping of securities
but has no role in portfolio management.
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Distributor (Distributions)
An individual or a corporation serving as principal
underwriter of a unit trust’s shares, buying shares directly
from The Fund, and reselling them to other investors.
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Distributions
The payments of dividends and/or capital gains by a unit
trust.
Diversification
A basic risk management tool in which an investor maintains
a mix of common stocks, bonds money markets and other
investments to reduce potential risk.
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(Dollar) Pula-Cost Averaging
The technique of investing a fixed sum at regular intervals
regardless of stock market movements. This reduces average
share costs to the investor, who acquires more shares in
periods of lower security prices and fewer shares in periods
of high prices. In this way, investment risk is spread over
time.
Exchange Privilege
(Or switching privilege)
The right to transfer investments from one fund into
another, generally within the same fund group, at nominal
cost.
Ex-Dividend Date
The date on which a Funds’ Net Asset Value (NAV) will fall
by an amount equal to the dividend and/or capital gains
distribution (although market movements may alter The Funds’
closing NAV somewhat). Most publications which list closing
NAVs place an "X" after a Funds’ name on its Ex-Dividend
Date
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Expense Ratio
The ratio of total expenses to net assets of The Fund.
Expenses include management fees, distribution charges, if
any, the cost of shareholder mailings and other
administrative expenses. The ratio is listed in a Funds’
prospectus. Expense ratios may be a function of a Funds’
size rather than of its success in controlling expenses.
Fiscal Year
An accounting period consisting of 12 consecutive
months.
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Investment Company
A corporation, partnership or trust that invests the pooled
monies of many investors. It provides greater professional
management and diversification of investments than most
investors can obtain independently. Unit trusts, mutual
funds, and "open-end" investment companies, are the most
popular forms of investment company.
Investment Objective
The financial goal (long-term growth, current income, etc.)
that an investor or a fund pursues.
Junk Bond
A speculative bond rated BB or below by Standard & Poor's
Corp. and Ba or below by Moody's Investor Service. "Junk
bonds" are generally issued by corporations of questionable
financial strength or without proven track records. They
tend to be more volatile and higher yielding than bonds with
superior quality ratings. "Junk bond funds" emphasize
diversified investments in these low-rated, high-yielding
debt issues.
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Load
A sales charge added to the purchase of a unit trust shares
("load fund") to cover their selling costs. The commission
is generally stated as a portion of The Funds’ offering
price, and can range up to 8.5%.
Long-Term Capital Gain
A profit on the sale of a unit trust share that has been
held for more than one year.
Management Fee
The amount a fund pays to its investment advisor for
services rendered, including management of The Funds’
portfolio. In general, this fee ranges from .5% to 2% of The
Funds’ asset value.
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Money Market Fund
A fund that aims to pay money market interest rates. This is
accomplished by investing in safe, highly liquid securities,
including bank certificates of deposit, commercial paper,
Botswana government securities and repurchase agreements.
Money Market funds make these high interest securities
available to the average investor seeking immediate income
and high investment safety.
Mutual Fund
An open-end investment company that buys back or redeems its
shares at current net asset value. Most funds continuously
offer new shares to investors. See also
Investment Company.
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Net Asset Value Per Share
The current market worth of a unit trust share. Calculated
daily by taking The Funds total assets: securities, cash and
any accrued earnings, deducting liabilities, and dividing
the remainder by the number of shares outstanding.
No-Load Fund
A commission-free unit trust that sells its shares at net
asset value, either directly to the public or through an
affiliated distributor, without the addition of a sales
charge.
Payable Date
The date on which distributions are paid to shareholders who
do not want to reinvest them. This date can be anywhere from
one week to one month after the Record Date.
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Payroll Deduction Plan
An arrangement between an employer and a unit trust,
authorized by the employee, through which a specified sum is
deducted from an employee's salary to buy shares in The
Fund.
Portfolio Manager
A professional hired by the unit trust advisor to make
investment decisions concerning the purchase and sale of
securities for the unit trust portfolio in accordance with
The Funds’ objectives.
Portfolio Turnover Rate
The rate at which The Funds’ portfolio securities are
changed each year. Aggressively managed funds generally have
higher portfolio turnover rates than do conservative funds
that invest for the long term. High portfolio turnover rates
generally add to the expenses of a fund.
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Prospectus
An official document that each investment company must
publish, describing the unit trust and offering its shares
for sale. It contains information required by the Regulatory
Authority, including fees and expenses of The Fund, past
performance and how to buy and redeem shares.
Record Date
The date The Fund determines who its shareholders are;
"shareholders of record" who will receive The Funds’ income
dividend and/or net capital gains distribution. Frequently
the business day immediately prior to the Ex-Dividend Date.
Redemption Fee
A fee charged by a limited number of funds for redeeming, or
buying back, fund shares.
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Redemption Price
The price at which a unit trust’s shares are redeemed
(bought back) by The Fund. The redemption price is usually
equal to the current net asset value per share. Also called
the bid, call or sell price.
Reinvestment Date (Payable Date)
The date on which a share's dividend and/or capital gains
will be reinvested (if requested) in additional fund shares.
Reinvestment Privilege
A service that some unit trust’s offer whereby a
shareholder's income dividends and capital gains
distributions are automatically reinvested in additional
shares.
See Automatic
Reinvestment.
Risk
The measure of an investor's ability to withstand volatility
in the markets. Investors with a near-term focus are likely
to be more conservative than those with a long-term
viewpoint who can benefit from the market's fluctuations by
taking advantage of compounding and historical growth of the
markets.
Share
Unit of ownership
Systematic Withdrawal Plans
Some unit trust’s offer withdrawal programs whereby
shareholders receive payments from their investments. These
payments are usually drawn from The Funds’ dividend income
and capital gain distributions, if any, and from principal
only when necessary.
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Total Return
The performance of an investment, including yield
(dividends, interest, capital gains) as well as changes in
per share price, calculated over a designated period of
time. Assuming reinvestment of capital gains and income
distributions, multiply the number of shares owned by the
net asset value per share. Subtract the original investment
from the result. Then divide that figure by the original
investment and multiply by 100. (Assuming your shares are
now worth BWP 8,000 and the investment was BWP 5,000, divide
BWP 3,000 by BWP 5,000 getting 0.6. Multiplied by 100
percentage increase the total return was 60%.)
See Yield.
Trade Date
The actual date on which your shares were purchased or sold.
The transaction price is determined by the closing Net Asset
Value on that date.
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Transfer Agent
The organization, usually a bank, that unit trust’s employ
to prepare and maintain records relating to shareholder
accounts. Some unit trust groups operate in-house transfer
agencies.
Variable Annuity
A type of insurance contract that guarantees future payments
to the holder, or annuitant, usually at retirement. The
annuity's value varies with that of the underlying portfolio
securities, which may include unit trust shares. All monies
held in the annuity accumulate tax-deferred.
Yield
Income or return received from an investment, usually
expressed as a percentage of market price, over a designated
period. For a unit trust, yield is interest or dividend
before any gain or loss in the price per share. See
Total Return.
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