Glossary

Annualized return
The yearly change in the value of an investment, including the effects of compounding. 
 
Asset Allocation
The division of holdings among different types of assets, such as stocks, bonds and money market.

Balanced Fund
A fund that aims to provide a combination of growth, income and conservation of capital by investing in a mix of stocks, bonds and/of money market instruments.
 
Bond
A type of security that pays a fixed amount of interest at a regular interval over a certain period of time. Bonds are essentially loans given to companies and government entities who promise to pay back the loan at a specified interest rate.
 
Bond Fund
A fund that invests in debt securities usually issued by governments and corporations. Bond funds usually emphasize regular income stream. 
 
Compound Interest
Interest paid on both the original investment, as well as the interest it accumulates. 
 
Diversification
The process of holding a variety type of investments with a view to reduces the overall volatility of the portfolio.
 
Dividends Distribution
Payouts of gains realized during the year on securities that the fund has sold at a profit, minus any realized losses.

Equity Fund
A fund that invests in local and/or overseas stocks. Equity funds usually seek capital growth. 
 
Ex-Dividend Date
The day the fund goes ex-dividend. On the date and after, the buyer of shares would not be entitled to the most recently declared dividend. 
 
Fixed-Income Fund
A fund that seeks current income by investing in fixed-income securities such as bonds.
 
Guaranteed Fund
A fund which contains a structure whereby the principal or a guaranteed amount of return will be paid to investor at a specific date in the future. 
 
Index
A benchmark against which financial or economic performance is measured, such as the HSI. 
 
Index Fund
A fund which is managed to track the return of a specified market index such as the Canadian or International stock market. In an index fund, the manager does not attempt to anticipate which companies will provide a better return. They manage the fund to provide a return as close to the index as possible. 
 
Inflation
The term used to describe rising prices of goods and services within an economy.

Money Market Fund
A fund invests in short-term debt instruments. Due to the nature of these investments, money market funds are generally the least risky of the market-based funds and generally offer the lowest return of all market-based funds. 
 
Management Fee
The amount paid to a fund manager for overseeing the holdings of the fund. Normally accrued daily and reflected in the fund's Net Asset Value.
 
Net Return
The rate of return earned by an investment after all applicable fees and deductions have been applied. 
 
Net Asset Value (NAV)
The market value of a fund's total assets, minus liabilities.
 
No-Load Funds
Funds that are sold without an initial sales commission.
 
Prospectus
A legal document that gives prospective investors information about an investment including its objectives and policies, risks, costs and past performance. Before investment in a fund one should read the prospectus. 
 
Redemption Fee
A fee charged when an investor sells his/her investment in a fund.
 
Risk Tolerance
An investor's ability to endure declines in the prices of investments while waiting for them to increase in value.
 
Securities
The general term for what your investment actually buys (ie. shares, stocks, bonds, debentures, etc.).
It generally means any shares, stocks, debentures, loan stocks, funds, bonds or notes of, or issued by, any body, whether incorporated or unincorporated or any government or local government authority. 
 
Securities & Futures Commission (SFC)
The statutory body established under the Securities and Futures Commission Ordinance which regulates the securities and futures industry in Hong Kong. In respect of MPF schemes, SFC is responsible for authorizing investment manager, offering document, advertisements and marketing materials of MPF schemes and pooled investment funds. 
 
Share
Unit of ownership in a unit trust or mutual fund (also see Unit)
 
Stock
A stock is an equity or a share in a corporation. When you invest in a company's stock, you're buying a piece of the company. 
 
Stock Exchange
A stock exchange (such as the Toronto Stock Exchange or TSE) is a place where licensed investment professionals can buy and sell stocks and other investments. 

Trustee
The party named in a trust or plan who is authorized to hold the assets of the trust or plan for the benefit of the participants or beneficiaries. 
 
Value Investing
The investment strategy that choose stocks which seem to be underpriced relative to their intrinsic worth or future prospects. The value investor believe that others will eventually recognize an undervalued security's true worth, causing its price to rise.
 
Volatility
Measurement of the extend of fund price movement. In general, the greater the volatility, the greater the risk.