Glossary attachment

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Sales Load

The sales charge or commission not exceeding 5% of the net asset value, which may be included in the Offer Price of certain classes of Units or deducted from the Net Asset Value in order to determine the Redemption Price of certain classes of Units.

SECP Commission

The Securities and Exchange Commission of Pakistan, established under section 3 of the Securities and Exchange commission of Pakistan Act, 1997.

Settlement

Completing a trade between brokers acting as agents or between a salesperson and the client. A trade is settled when the required payment is made for securities purchased or the correct documentation has been delivered and the client receives the proceeds from the sale.

Share

Part of equity ownership in a corporation.

Shareholders' Equity

Ownership interest of common and preferred stockholders in a company. That is, it represents the difference between the assets and liabilities of a company.

Shariah Advisor

Means an Islamic Financial Institution, an Islamic scholar or a body of Islamic scholars, appointed in its place by the Pension Fund Manager with the approval of the Commission, having knowledge of Islamic finance, to supervise and monitor the activities of the Pension Fund to ensure that all its activities comply with Shariah.

Shariah Compliant

Shall mean any activity that is in accordance with the Islamic Shariah, as may be advised to the Pension Fund Manager by Shariah Advisor.

Shariah Compliant Fund

These funds invest in securities which are shariah compliant.

Shariah or Islamic Shariah

Means divine guidance as given by the Holy Quran and the Sunnah of Prophet Muhammad (Peace Be Upon Him) and embodies all aspects of the Islamic faith.

Short Selling

Sale by an investor of borrowed shares, obtained through a broker. The investor's expectation is that the market price of the security will decline in value and that the shares will be repurchased at a lower price (cover his/ her short position), and thus make a profit.

Spread

(1) The difference between the bid and ask price of a security.

(2) The difference in yields between two bonds or debentures.

(3) The buying and selling of puts or calls on the same underlying security, but with different strike prices and/ or expiration dates.

Stock Broker

A securities firm or an employee of such a firm who is licensed to trade securities. The broker does not own the securities that are bought or sold, but acts as an agent for the buyer or seller and charges a commission for the service.

Stock Exchange

Means Karachi Stock Exchange, Lahore Stock Exchange, Islamabad Stock Exchange or any other stock exchange registered under section 5 of the Securities and Exchange Ordinance.

Sub-Fund

Means a collective investment sub-scheme of a specified investment class and/or investment policy set up within the overall Pension Fund. The Deposited Property shall be accounted for and segregated with respect to each Sub-Fund.

Subscription Day

Means every Business Day provided that the Management Company may with the prior written consent of the Trustee and upon giving not less than seven days’ notice in at least one newspaper, either English or Urdu, declare any particular Business Day not to be a Subscription Day.

Tax Credit

An amount subtracted from the federal tax payable, which will directly reduce the amount of tax payable.

Technical Analysis

A method of evaluating future security prices and market directions, based on statistical analysis of variables such as trading volumes (historic) and price changes, in order to identify patterns.

Total Return

The annual return on an investment including interest income, dividend income and capital gains.

Total Return Calculation

To calculate the return from open-ended mutual funds Investors can apply the following equation and guidelines:

Profit from investment can be calculated as follows:

(RP+D-PP)

Symbol stands for:

a    =    Date of investment
b    =    Date of calculation of return or date of redemption
x    =    (b-a) means period of investment holding
PP =    Purchase Price or NAV at the beginning of relevant year
RP =    Redemption Price or NAV at the end of relevant year
D   =    Dividends received during the investment holding period or relevant year

The return can be worked out by dividing the profit from investment by the PP and then be annualized. Investors can work out the return for the entire holding period (i.e. x), or separately for each year.

Open-ended funds recover a sales charge (called sales load) from unit/ shareholders. Sales load is a certain fixed percentage of NAV. Some mutual funds recover the sales load when investors purchase the units, whereas others do when investors redeem the units. Mutual funds generally do not charge sales load on reinvestment of dividend. The shorter the period of investment, the greater will be the impact of the sales load. Maximum benefit can be derived from mutual fund investment by regularly investing, reinvesting the dividend and holding the investment for a longer period.

Transfer

The redemption of units in one account to purchase units in another account within the same family of funds. The transaction usually takes place at the same time.