FIMM FCE key terms

A collective investment arrangement in which investors pool money into a fund managed by a professional fund manager, with the fund divided into units whose value moves with the underlying portfolio.

A single equal share of ownership in a unit trust fund. Each unit represents a proportionate claim on the fund's assets and income, and unit holders hold units rather than the underlying securities.

A person or entity that owns units in a unit trust fund and therefore holds a beneficial interest in the fund's portfolio, subject to the terms of the deed and the fund's constitution.

The total value of a fund's assets, such as securities and cash, minus its liabilities, calculated at a valuation point. It is the basis for pricing units and measuring fund size.

The fund's net asset value divided by the number of units in issue. It is the price at which units are typically created or cancelled and the reference for investor returns.

A pricing method where an investor's purchase or redemption order is priced at the net asset value per unit struck at the next valuation point after the order is received, not at a previously known price.

The time, usually daily, at which a fund's assets are valued and its net asset value per unit is calculated. Orders received after it are normally dealt at the following valuation point.

The deadline on a dealing day by which purchase, redemption or switching instructions must reach the manager to be processed at that day's valuation point rather than the next one.

A day on which the fund manager accepts and processes unit transactions such as purchases, redemptions and switches, as specified in the fund's deed or prospectus and subject to the fund's calendar.

A fee charged when units are first purchased, often a percentage of the investment amount, used to cover distribution and sales costs. It reduces the amount actually invested in the fund.

An ongoing fee deducted from the fund's assets, usually calculated as a percentage of net asset value, to pay the fund manager for managing the portfolio and administering the fund.

A single figure expressing a fund's total annual operating costs, including management and administrative fees, as a percentage of its average net asset value, helping investors compare cost levels.

The process by which a unit holder sells units back to the fund manager and receives the prevailing net asset value per unit, less any applicable charges, usually paid within a stated period.

A fee sometimes levied when an investor exits a fund, often expressed as a percentage of redemption proceeds or scaled down over the holding period to discourage very short-term trading.

Moving an investment from one fund to another within the same management company, typically subject to a switching fee and to the minimum holding and eligibility rules of the receiving fund.

The disclosure document describing a fund's investment objective, strategy, risks, fees, charges and operational details. It must be registered or lodged with the regulator and made available to investors before they invest.

A short, standardised disclosure document summarising a fund's key features, risks and costs in plain language, intended to help retail investors compare products quickly before subscribing.

The legal instrument establishing a unit trust fund, setting out the rights and obligations of the manager and trustee, the investment powers and the rules for unit pricing and termination.

An independent party that holds the fund's assets on behalf of unit holders and oversees the manager's compliance with the deed and applicable rules, safeguarding investor interests.

The licensed entity responsible for investing the fund's assets according to its stated objective and strategy, and for administering the fund and reporting to unit holders and the regulator.

A financial institution that safekeeps a fund's securities and cash, settles trades and performs related administrative functions, separate from the manager's investment decision-making role.

A statement of what a fund seeks to achieve, such as income, capital growth or a mix, and the time horizon and constraints within which the manager must operate when selecting investments.

The rules describing how a fund may invest, including permitted asset classes, geographic and sector limits, concentration limits and use of derivatives, which the manager must follow.

A fund that can create new units and cancel existing ones in response to investor demand, so its unit count changes over time and it generally trades at net asset value per unit.

The process by which the manager issues new units to meet subscriptions and cancels redeemed units, keeping the number of units in issue aligned with the fund's net asset value.

A payment of income or realised gains from a fund to unit holders, either in cash or as additional units, in accordance with the fund's distribution policy stated in its deed or prospectus.

An adjustment that increases the number of units in issue and proportionately reduces the price per unit without changing the total value of a holding or the fund's net asset value.

The risk that a fund cannot sell assets quickly at a fair price to meet redemptions, or that an investor cannot exit at the expected price, particularly in stressed or thinly traded markets.

The risk that the value of a fund's investments falls because of movements in share prices, interest rates, currencies or other market factors, affecting unit prices regardless of manager skill.

The requirement to explain a fund's material risks, including market, liquidity, currency and concentration risks, in plain language so investors can judge whether the product suits them.

The official record, maintained by the manager or registrar, of the persons entitled to units in a fund and the number of units each holds, used to determine entitlements and distributions.

A voluntary, long-term retirement savings arrangement in which members contribute to approved funds managed by PRS providers, with contributions accumulated for retirement and subject to withdrawal rules.

A licensed institution approved to establish and manage private retirement scheme funds, including the retirement funds offered to members and the related administration and member services.

An individual who has joined a private retirement scheme by contributing to one or more of its retirement funds and who holds the resulting interest in those funds.

The overall arrangement established by a PRS provider, comprising the retirement funds it offers, the governing rules and the administrative framework under which members contribute and withdraw.

A fund within a private retirement scheme in which members' contributions are invested according to a stated strategy, with its value accumulated for retirement and subject to scheme withdrawal rules.

A retirement fund within a PRS designed with a more conservative risk profile and typically lower volatility, intended as a default or foundational holding for members building long-term retirement savings.

A retirement fund within a PRS that offers a different or higher risk-return profile than core funds, allowing members to diversify or tailor their retirement portfolio to their preferences.

Money paid by a member, or on the member's behalf, into a private retirement scheme and invested in the chosen retirement funds, accumulating until withdrawal under the scheme's rules.

The point at which a member's interest in a PRS, or in employer contributions made for the member, becomes fully the member's own and is no longer forfeitable under the scheme rules.

The process by which a PRS member takes money out of the scheme, subject to age, vesting and scheme conditions, and settled at the applicable fund prices after any charges.

The retirement fund or investment arrangement into which a member's contributions are placed when the member does not make an active choice, intended to suit a typical long-term saver.

A description of a member's or fund's tolerance for investment risk, used to match retirement fund selection and asset allocation to the member's circumstances and time horizon.

A reduction in taxable income available to qualifying PRS contributors up to a stated annual limit, which lowers the effective cost of contributing and is a common reason to join a scheme.