90-Day Bill Rate: the current rate of interested paid for three month bank bills issued by banks to larger investors.

90-Day Bill Rate Index: The index of returns generated from three month bank bills issued by banks to larger investors.

Absolute Return Strategy: An investment approach of specialised investment funds that aim to produce positive returns in falling, flat or rising markets. This strategy employs a variety of methods and styles, and unlike traditional investment funds, they are not concerned with relative performance against a stated benchmark or index. Absolute Return Strategies have a low correlation with shares and bonds and, as part of a diversified portfolio, they can enable investors to enjoy more stable returns. Hedge funds fall into this asset class.

Active management: A style of investment management that aims to provide returns above a set benchmark, through daily monitoring, research, analysis, asset allocation and stock selection. The opposite of passive management.

Account Fee: An account fee calculated daily for your wrap account, based on the total value of your Investments (and your Call Account) and deducted monthly from your Call Account. This fee is charged by the Service provider.

Administration fee: a fee charged to an investors account, usually monthly, by the Custodian of a wrap account

Aggressive: An investment approach designed to provide above-average returns by taking above-average risk.

All Ords: The All Ordinaries Share Price Index of Australian top 250 companies used to benchmark managed fund performance.

Annuity: A type of investment that guarantees payment of specific amounts at specific times, or a single lump sum payment, generally for the purposes of retirement income. Annuities are sponsored by insurance companies and other financial institutions and sold by agents, banks, stockbrokers and financial planners.

Appreciation: An increase (gain) in the value of an asset.

Asset: Something you own and control.

Asset allocation: The apportionment of an investment portfolio among the relevant asset classes or sectors, to preserve capital, protect against market volatility, reduce risk while taking advantage of any positive market movements through diversification of asset type.

Asset classes: A group of assets that have similar characteristics and behaviour. The different categories of financial assets, such as cash, fixed interest (or bonds), property and shares (or equities).

Average annual return: A calculation that converts a cumulative total return into an annualised figure, expressed as a percentage.

Balanced fund: An investment fund that spreads its holdings over a range of asset classes, creating a balance between risk and return.

Bear market: A pessimistic market that is declining over time (a bear is seen as clawing the market down). The opposite to a bull market.

Benchmark: The index of investments against which the performance of the portfolio or investment strategy is measured.

Blue chip shares: Shares in quality, stable companies that have paid regular dividends in both good and bad years.

Bonds: A bond is a debt investment whereby the investor loans money to an entity (Company, Local Bodies or Government) that needs funds for a defined period of time at a specified interest rate. In exchange for money, the entity will issue a certificate (or bond) that states the interest rate to be paid and when the loan is to be repaid in full. It is also known as a Fixed Interest Security. Generally, as interest rates in the economy rise, the value of the bond (their market price) falls. Conversely as interest rates fall, bond prices rise (market price).

Broker: An independent person who buys and sells a range of financial and/or insurance products on behalf of investors and receives a payment called brokerage.

Brokerage: A fee charged by a financial adviser or stock broker for a transaction. Sometimes referred to as commission.

Bull market: An optimistic market in which prices are moving upward over time (a bull tosses the market up). The opposite to a bear market.

Buy/Sell Agreement: An agreed business succession plan to create peace of mind and certainty of outcome, which together with an insurance programme that will enable the business to repay debt, provide an immediate source of artificial revenue, and enable shareholders to receive full value for the capital they have invested in the business.

Capital gain/loss: The difference between an asset's purchase price and selling price.

Capital gains tax: A tax on the gains (profit) of an investment, usually only payable on realised gains resulting from the sale of an asset or investment.

Capital Notes: Fixed income securities issued by companies as a source of long-term capital. They are unsecured and rely upon the company’s credit rating for backing as they are generally ranked lower in order of repayment.

Cash: One of the asset classes, it includes coin and note currency in circulation or in bank accounts, Treasury Bills, on-call accounts, term deposits and money market securities.

Cash Management Account: A professionally managed fund in which the primary investment is cash securities. As a result of the pooling of funds, investors may earn an elevated interest rate on their cash, compared with an ordinary bank account.

Certificate of Deposit (COD): A certificate issued by a bank or financial institution stating that a fixed dollar amount has been deposited with it, for a fixed period of time, at a predetermined rate of interest.

Codical: Legally binding documenting additional or amended clauses to a person's will.

Collateralised Debt Obligations (CDOs): CDOs are securities issued by investment vehicles established and managed by international investment specialists and are linked to a portfolio of securities, such as corporate bonds, loans and other receivables. These can be assessed by independent rating agencies based on quality of the underlying assets. CDOs diversify the number of issues, reducing the impact of a single issuer default, and the overall portfolio’s risk. This re-distribution of risk and return can provide higher returns than for individual assets of the same grading.

Commission: A fee paid to a financial adviser or stockbroker for a financial transaction or advice. Sometimes also referred to as brokerage and Fees.

Compound interest: Interest earned on both the principal amount and any interest earned previously and reinvested. Because of the 'compounding' effect, money grows much faster when income from an investment is reinvested.

Consumer Price Index (CPI): An index that measures the change in the cost of a 'basket' of basic goods and services, showing how the cost of living changes over time. The most widely accepted indicator of inflation.

Conservative: An investment approach designed for a shorter term and low risk.

Contribution: an amount of money (lump-sum or regularly) placed into a fund.

Coupon rate: The stated rate of return on a bond or fixed interest security. Credit ratings: When investing in fixed interest securities, there is a risk (however small it may be) that the institution will be unable to pay your interest or return your deposit on the agreed terms. There are a number of credit rating agencies (e.g. Standard & Poor’s, Moody’s) that review an institution’s credit and rate it in terms of relative risk. Institutions receive a rating, referred to as Investment Grades. See Investment Grade.

Currency hedging: An approach which aims to reduce the impact on the returns from exchange rate fluctuations as a result of diversification into international asset classes.

Custodian: An entity who is appointed to look after your investments in a wrap account and is paid a custodial service fee.

Debenture: A loan or fixed interest term deposit usually ranked ahead of shareholders, sometimes secured ahead of unsecured creditors and debenture holders.

Debt: Money lent in exchange for interest income and the promised repayment of the loan at given future dates.

Debt security: A security (i.e. bond, certificate of deposit, debenture) representing borrowed funds that must be repaid by the issuer at some point in the future. The issuer pays rent for the use of these funds by way of interest.

Depreciation: A decrease in the value of an asset through wear and tear or obsolescence.

Derivative: A financial contract that derives its value from another physical asset. Examples of derivatives include futures and options.

Disclosure Statement: A legal requirement for Financial Advisers to provide their Disclosure Statement to investors prior to giving investment advice.

Distribution: In a managed fund, a distribution is the amount paid out to investors on a regular basis. Such payments comprise a share of any net income and/or realised capital gain earned by a fund or investment over the period. A dividend is a form of distribution for a company.

Diversification: The process by which investors hold a variety of different asset classes, in an effort to reduce the overall volatility and risk of their portfolio.

Dividend: An amount paid per share to the owners of a company (shareholders) from after-tax earnings.

Dollar-cost averaging: An investment method in which the same amount of money is invested at regular intervals, usually monthly. As the market price of the investment rises and falls, the investor may benefit by buying more units when prices are low, and fewer when prices are high.

Dow Jones: (DJIA - Dow Jones Industrial Average) is the Dow Jones index of US top 30 high quality companies used to benchmark managed fund performance.

Duration: The measure of effective maturity of a bond and indicates the interest rate sensitivity of a bond portfolio.

Earning Per Share (EPS): The amount of annual earnings (after tax but before dividends), divided by the number of shares issued by the company.

Efficient frontier: Represents the highest level of satisfaction an investor can achieve given available set of portfolios. Those that provide the best attainment trade-off between risk (market volatility) and return.

Equity: (a) A share, or (b) The net value of assets owned by an individual over and above the debt against the investment, or (c) Ongoing ownership in specific business or property.

Enduring Power of Attorney: A document that enables you to give authority to another person so that they can act on your behalf. Unlike a Will, an Enduring Power of Attorney operates while you are still alive, and can protect you against unforeseen events or when you lose the ability to make decisions. There are two types - Property and Personal Care and Welfare.

Entry fees: Costs associated with entering an established managed fund or investment.

Estate planning: Specific planning to ensure your assets are owned by the correct structures for protection from creditors and minimising tax, as well as passing on assets in an orderly and efficient manner to designated individuals. Estate planning includes writing wills, setting up Discretionary Family Trusts or trading trusts and memorandum of wishes, establishing Enduring Powers of Attorney for both Property and Personal Care and Welfare, as well as trust management.

Exit fees: Costs associated with exiting an established managed fund, mortgage or investment.

Financial adviser: An individual who provides investment advice to others, for a fee..Goldridge Financial Advisers are Members of the Institute of Financial Advisers (IFA) and must abide by the IFA's Code of Ethics and Professional Conduct. Licensing of Financial Advisers as Authorised Financial Advisers (AFA’s) will take effect from mid 2010. Only those advisers who have been authorised by the Securities Commission of NZ will be permitted to provide investment advice.

Fixed interest securities: Debt securities such as term deposits, debentures and bonds, which pay a constant level of interest. As securities, they can be bought and sold in the secondary market, therefore their capital value may fluctuate as interest rates change.

Fund: Investments managed in a collective basis or as a managed fund.

Futures: A derivative investment. An obligation to buy or sell a specified quantity of an underlying asset at a particular time in the future, at a price agreed at the time the contract is executed.

Gearing: (a) Borrowing specifically to fund an investment, e.g. to buy shares or purchase a house using a mortgage, or (b) A measure of the debt ratio, which is the amount of borrowing compared with the equity in an asset.

Growth assets: Assets, such as shares and property, that are expected to provide strong investment returns over time.

Growth fund: A managed fund whose primary goals are capital gains and long-term growth.

Growth manager: An investment manager who seeks to buy shares in companies that have prospects of high earnings growth, with the expectation of continued relatively high earnings growth over the long-term.

Hedge fund: A type of investment fund in which the manager is authorised to use a number of higher risk investment techniques such as derivatives and leverage/borrowing to generate a higher return.

Hedging: The practice of combining two or more securities or investment activities in order to reduce or minimise risk and protect against possible loss. Options and futures are often used to hedge an investment.

High income equities: Securities that possess debt and share characteristics. The usual form of equity-income hybrid pays a predictable (fixed or floating) rate of return or dividend for a specified period, but may at maturity be converted into an underlying share. A common example is a convertible preference share.

Imputation credit: Recognition of tax already paid (or taxation credits) that is passed back to shareholders who have already received tax-paid dividends from holding shares or managed share investments.

Income: Funds generated from interest and dividends.

Income fund: A managed fund whose primary goals are income generation, high dividend yields and preservation of capital.

Index: A measurement of a collection of company share prices used to benchmark managed fund performance.

Index fund: A professionally managed fund where the investment mirrors a chosen index or benchmark. The management style of this type of fund is typically passive.

Inflation: The rate at which the economy’s general level of prices for goods and services rise without corresponding increases in productivity. Inflation is typically measured by reviewing the cost of a 'basket' of selected goods and services. Refer the Consumer Price Index.

Interest: The return "rent" paid by the borrower for the use of the lender's money.

Initial margin: The minimum amount of equity provided by an margin investor at the time of purchase. Insurance: The transfers or shifts of the potential risk from one to a larger number willing to share losses on an equitable basis by all members of that group. Insurance therefore substitutes a small certain cost (premium) for a large uncertain financial loss that would otherwise exist. Common types of insurance are, Life, health, home, contents, vehicles and mortgage repayment insurance.

Investment: An asset purchased with the intention of producing an income or capital gain, or both, for the owner.

Investment climate: The specific market conditions that influence the probability of achieving the investment objectives over a recommended planning horizon for an investment strategy.

Investment Grades: Investment grades are provided by internationally recognised companies (eg Standard & Poors and Moodys) for institutions such as banks, finance companies and individual investments. (eg –Current minimum investment grade is BBB-)

From 1 March 2010 credit ratings from approved rating agencies for non bank deposit takers (NBDT’s) are mandatory.

Investment Statement: A document legally required by the Securities Commission New Zealand for all securities or funds on public issue. The document outlines the nature of the product and provides details on how to invest, what to expect from the investment and what expected risks are involved. An investor must receive a copy of this document, and is expected to read it, before applying to invest. Life

insurance: A policy agreement between an individual and an insurance company, where the investor agrees to pay a specified amount (premium) to the company for a specified amount of coverage in the event of the insured’s death.

Liquidate: To sell an investment or to convert an investment into cash.

Liquidity: The ability (speed and ease) to liquidate or sell an asset with little or no loss in value.

Listed security: A security that is bought and sold via an exchange, such as shares on the stock exchange.

Lump-sum: (a) A single, often large, sum of money used to initiate an investment; or b) A superannuation benefit taken in cash rather than as a pension or annuity.

Managed investments/funds: Funds that allow investors to pool their money with that of other investors so the fund can buy a wider range of investments. These investments are managed by a professional fund manager who makes all the investment decisions and usually charge a management fee called MER.

Management Expense Ratio (MER): A ratio expressing the management, trustee costs and certain other expenses of a managed fund as a proportion of the net asset value of the fund.

Market: A forum where buyers and sellers are brought together to exchange commodities, assets or securities.

Market capitalisation: The total market value (or market cap) of a company's shares.

Market efficiency: Is the principle that an efficient market reflects all possible information quickly and accuracy.

Margin calls: Notification of the need to reduce the margin or loan balance in order to meet maximum loan lending ratio set for the investments.

Margin loans: Borrowed funds made available at stated interest rates, in a margin or leveraged transaction.

Margin trading: The use of borrowed funds to purchase securities, resulting in returns (positive and negative) being magnified while reducing the amount of capital invested.

Maturity date: The date on which a fixed interest security matures and the principal repaid.

Master fund: A type of investment fund that enables investors to channel money into one or more underlying investments managed by a number of different fund managers. Also referred to as a Master Trust.

Memorandum of wishes: Is an important adjunct to a trust which, although not binding, provides clear guidelines for the trustees for the on-going management of your trust, the financial care of beneficiaries and ultimately, the final settlement. It is important that you take time to think about the objectives you wanted to be achieved from forming a trust. This provides protection for both the beneficiaries and trustees should you not be around.

Modern portfolio theory: An approach to portfolio management that uses several basic statistical measures to develop a portfolio plan.

Moderately aggressive portfolio: An investment approach for clients with a longer time frame.

Money market: A trading market for short-term securities, such as bills of exchange, COD's and promissory notes. Securities within the money market all have terms of 1 year or less.

Monitoring Fee: A fee payable to your adviser and if using a wrap account, to the custodian.

Morningstar: One of the leading managed fund rating services. A five star rating is Morningstar's top rating for any fund or funds management company.

Mortgage-backed securities: Debt securities where the underlying asset ‘backing’ or collateral is a pool of mortgages. Investors purchase a stake in the interest and capital repayments of these mortgages, without the burden of administration and servicing. The mortgage payments in turn are used to pay interest and principal on the debt securities to investors.

NASDAQ: (National Association of Securities Dealers Automated Quotation System) An electronic system for providing bid-ask quotes on OTC securities.

Net Asset Value (NAV): The total assets of a company, or managed fund, less total liabilities. A purer measure is Net Tangible Assets (NTA), which do not include intangible items, such as goodwill.

NZSX-50: An index or measurement of the average movement in share price of a selection of major (top 50) New Zealand companies listed on the New Zealand Stock Exchange.

Official Cash Rate (OCR): An interest rate set by the Reserve Bank of NZ to implement monetary policy, so as to maintain price stability. Changes to the OCR rate influences short-term interest rates such as the 90-day bill rate, floating mortgages and the like, which in turn influences the overall level of economic activity and therefore inflation.

On-call cash accounts: An account paying a rate of interest calculated on a daily basis, where money can be withdrawn at any time.

Options: A derivative investment, giving the holder an option, the right but not the obligation, to buy or sell a specified quantity of an underlying asset at a particular date, at a price that is agreed when the contract was executed.

Par (or face) value: The principal amount of a bond or share, known as "issue" or "face" value.

Passive management: A style of investment management that aims to achieve performance equal to the market or index returns. The opposite of active management.

P/E ratio: The price / earnings ratio relates the company's Earning Per Share (EPS) to the market value of its shares.

Pension: A regular payment to a person, either by the Government in the form of superannuation, or from a superannuation benefit.

Plan: Investment or Insurance plan detailing your current circumstances, objectives and risk profile. Your Plan should be reviewed at least once every three years by your Adviser.

Premium: (a) Investment - the price paid above par or face value, or (b) Insurance- the individual cost of sharing risk amongst the larger group. Payment can generally be paid annually or monthly.

Pooled investments: Individual investments are combined in one pool to gain access to investments not normally accessible to individuals.

Portfolio: A collection of investments, securities or property, held by an investor, or managed fund.

Principal: The initial amount of money put into an investment or taken as a loan.

Property securities: A term for shares in property trusts listed on the stock exchange.

Property trust: A managed fund that invests in a portfolio of 'real' property (i.e. commercial, industrial, rural land and buildings).

Prospectus: An official document provided by the issuer of an investment and lodged with the Companies Office that fully outlines a publicly available investment.

Rally: A rapid rise, usually following a decline, in the general price level of a market or asset class.

Realise: To sell an investment.

Realised gain: When an investment is sold and it has increased in value, a capital gain is realised. If an investment has increased in value, but has not yet been sold, there is an 'unrealised' gain.

Real return: Net return on investment after inflation, or net of tax and inflation.

Rebalancing: The process of regular reviews and re-adjustment of the portfolio's asset allocation back to or close to their original or desired weightings.

Redemption/redeem: To withdraw, or sell, an investment.

Redemption price: The price at which an investor can withdraw their units from a fund or trust.

Reinvest: (a) Where an investment matures and is invested once again in the same investment under the same terms, or (b) A form of compounding where dividends or income earned from an investment is added to the original investment, increasing total invested with the aim of achieving higher capital growth and greater distributions in the future.

Retail Funds: A managed fund or investment to which access is opened to the public for direct investment. Management fees for these investments are usually higher due to their individual nature.

Return: The reward from investing either as income (dividends / interest) or increased value (capital gain), usually expressed a percentage.

Reviews: The regular review of investment portfolio performance, investor risk tolerance and progress to pre-determined goals. The regular review of insurance cover in place.

Risk Profile: An investor should complete a Risk Profile prior to investing and update his profile with his Adviser at least every 3 years.

Risk: The chance that the actual return from an investment may differ from what is expected.

Credit risk: The possibility that an institution holding your capital (e.g. a debenture issuer) may fail to pay interest or return your capital.

Business risk: The degree of uncertainty associated with a business's ability to generate earnings and pay returns owed to investors.

Event risk: Comes from largely (or totally) unexpected events that have a significant and immediate effect on the underlying value of an investment - such as a change of government, war, acts of terrorism.

Exchange rate risk: The possibility that when investing in international assets the exchange rate may rates decline during the life of that investment.

Financial risk: The degree of uncertainty surrounding a business's ability to service its debt. The greater the proportion of debt to equity, the greater this risk.

Inflation or purchasing power risk: The possibility that the purchasing power of your money may not keep pace with inflation (e.g. by not investing at all or not investing sufficiently in growth products). This risk increases if you achieve a poor real return on funds invested.

Liquidity risk: The possibility that you may not be able to readily access your funds when you want or need them most, because they are invested in illiquid assets (e.g. real estate or funds with fixed investment periods or conditions).

Manager risk: The possibility that you will invest with a fund manager based primarily on their recent past performance without regard to their investment style or their fundamental ability to cater to your particular needs or performance expectations over the time frame you have in mind.

Market risk: The possibility that movement in a market can cause an investment to decrease (as well as increase) in value. This volatility within markets exposes investors to risk, but also creates the opportunity for capital gain and long-term growth.

Objective risk: the risk that you fail to achieve the goals and objectives you desire. This is perhaps your greatest risk of all and can lead to your greatest danger, that of outliving your money. This risk will increase if you aren’t perhaps able to accept adequate risk necessary for your investments to achieve your required targets, or if you fail to stick with your agreed strategies, or lack sufficient self discipline with unplanned consumption or planned investment programme.

Re-investment risk: The possibility that when investing in fixed interest securities (term deposits, debenture and bonds) you may have to re-invest maturing money at a lower rate of interest, should interest rates decline during the life of that investment.

Recommended planning horizon: The minimum timeframe required for an investor to achieve their return objectives outlined by an investment strategy.

Reserve Bank: The Reserve Bank of New Zealand Central bank is NZ’s Central Bank. It provides the country with price stability by controlling inflation, as it acts as the regulatory authority of the country’s monetary policy (i.e. sets interest rates) and as lender of last resort.

Risk of not diversifying enough: The possibility that if you put all your investment capital into one basket (e.g. the property market or share market) a fall in that market will adversely affect all of your capital. Diversification is a deliberate strategy aimed at reducing the impact that volatility in one asset class, sector or market will have on your overall portfolio of assets.

Risk of diversifying too much: The possibility that you spread your investment capital too thinly and end up accepting risky investments that under-perform, in an effort to avoid a degree of credit or market risk.

Regulatory risk: The possibility of government policy changes negatively affecting your financial or estate planning strategies (e.g. superannuation and retirement incomes policy, re-introduction of death duties or capital gains taxes).

Regular Contribution fee: A regular contribution fee payable for regular contributions made to a wrap account payable to the Custodian.

Timing risk: The possibility that a strategy of trying to find the best time for entry or exit from markets will expose you to greater short-term volatility, and the possibility of missing capital gain opportunities with sudden unpredictable rises in the markets.

Value risk: The possibility you will pay too much for a particular product or that you will sell it too cheaply.

Risk management investment: The monitoring and controlling of various factors within an investment strategy, with the aim of reducing the likelihood of lower than expected returns.

Risk/return: The generally accepted relationship or correlation between risk and return. There is an understanding that an investor needs to be compensated for taking higher risk, by receiving higher returns. The inverse also applies, if an investor wishes to take less risk, they need to accept lower returns.

Risk tolerance: Risk tolerance is the level of risk that an individual believes he or she is willing to accept. It is important to note that risk tolerance is a complex attitude, and like any attitude, it has multiple levels of interpretation. Risk tolerance reflects an individual’s values, beliefs and personal goals, and overlaps with feelings of wanting to feel confident and in control.

Salary sacrifice: A portion of pre-tax salary that an employee chooses to contribute to a superannuation fund, rather than taking it directly in cash.

Sector: A group of securities that share common characteristics, such as geographic location, company size or industry such as telecommunications, forestry, agriculture, tourism, pharmaceuticals and technology or financial sector.

Security: An investment that represents evidence of debt or ownership or the right to acquire or sell an ownership interest in a business or asset.

Shares: Units representing the part ownership of a company. Also known as equities.

Speculation: The purchase of a high risk investment offering highly uncertain earnings and value.

Standard & Poor's: A major US research and credit rating agency.

S&P 500: The Standard & Poors index of US top 500 companies used to benchmark managed fund performance.

Stockbroker: A person who buys and sells securities on behalf of others in return for brokerage or commission.

Stock exchange: A market with a trading floor where securities are bought and sold.

Style neutral manager: An investment manager that has a portfolio construction approach which minimises any prolonged tilt to growth or value bias in their investing. These managers typically use a broad bottom-up stock research and selection approach.

Socially responsible fund: A managed fund that incorporates ethics and morality into their investment decisions.

Superannuation: A means of putting aside money during your working life for use in retirement paid out either as a lump-sum amount or as a regular annuity.

Superannuation fund: An investment fund where a number of people invest their money with a professional manager who manages the entire fund on their behalf. Often, some individual’s balances may be locked-in, meaning that they cannot be accessed or withdrawn until retirement or a certain age is reached.

Switching: Transferring units between two managed funds or superannuation products.

Term life insurance: Generally the least expensive form of life insurance, term life insurance covers an individual for a nominated period of time (term). If the person insured dies while covered, the designated owner/beneficiaries will collect a lump-sum death benefit. There are no other associated benefits.

Time horizon: The time period your funds are available for investment. The best results are achieved over long time periods. It is extremely difficult to create high returns when investing for short time periods (less than 5 years). The longer your investment period, the greater the certainty of achieving your desired rate of return. Funds invested for capital gain should be funds you don’t need to access in the short or medium term.

Trade-weighted index (TWI): An index measuring the value of New Zealand's currency in relation to the currencies of those of its major trading partners - A$, US$, UK pound, Japanese Yen, Euro.

Unit price: The price for each unit in a unit trust. This is calculated by dividing the value of the total assets by the total number of units held by investors.

Trust: Is a legal arrangement between two parties where one (the trustees and legal owners) holds trust assets for the benefit of others (the beneficiaries). Trusts are often used as a way to manage and preserve the transfer of assets, in a tax effective manner from one generation to another. Types of trust - discretionary trusts, testamentary trusts and trading trusts.

Trust deed: A document setting out the terms and conditions surrounding the establishment and management of a trust, including methods of application, investment and withdrawal of trust funds.

Trust investment policy: A policy designed to meet the objectives of the trust. This policy should take account of the particular circumstances of the trust as well as the factors listed in the Trustees Acts as relevant to the strategy. It should deal with the preservation of capital and the adequacy of capital and income and should be satisfactory for the time horizon of the trust. This investment policy must be updated as the law and circumstances of beneficiaries change.

Testamentary trust: Is a trust arising from the execution of one’s Will. You retain ownership and control of your assets until death, upon which your specified assets are transferred into the trust free of gift duty.

Units: A share of a unit trust or managed fund, reflecting an investor's entitlement to the assets of the fund.

Unit trust: A pooled investment fund or collective investment, established under a trust deed. A professional manager appointed by the trustees manages and invests these funds on behalf of investors and returns their share in the income earned by the trust.

Unrealised capital gain: Occurs when an investment increases in value, but is not yet sold or realised. This is also known as a paper profit.

Value Fund: A managed fund that seeks shares in companies that are under-valued by the market.

Value manager: An investment manager who seeks to buy shares in companies that are priced lower than what research indicates their long-term prospects warrant.

Vesting: When an investor becomes entitled to receive their superannuation. Some employers or companies grant full benefits after an employee has worked for them for a predefined number of years. Some companies gradually increase the benefits over a number of years of employment.

Volatility: Refers to the unpredictable upward and downward shifts of investment values over a period of time. The greater the volatility, the more frequent and larger the possible shifts or variations in performance.

Warrants: A long-lived option that gives the holder the right, but not the obligation, to buy shares in a company at a price specified on the warrant.

Wholesale funds: A managed fund to which access is limited to bulk investment via large institutions. Management fees for these investments are usually lower due to bulk characteristics.

Will: A legal document that specifies how an individual's assets will be distributed after their death.

Wrap Account: A wrap account is a combined administration and investment service. It’s a system, rather than a product, that provides access to a range of funds, shares, bonds and other investments. A fee is charged by the custodian for managing the wrap account.

Yield: The promised rate of return on an investment. The interest rate earned on a fixed interest security, or dividend paid on shares, usually expressed as a percentage return.

Yield to Maturity (YTM): The fully compounded rate of return earned by an investor over the period of a bond, including interest income and price appreciation.

If you want to know the meaning on any term not listed here please contact us.

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