Employee Stock Plans & Options

A fund class that retains and reinvests income rather than paying it out in cash.

Example: Interest earned by the portfolioThe complete collection of investments owned by an investor or managed under one mandate. remains in the fund and increases unit value.

An accumulating share classA version of the same fund portfolio with different fees, currencies, distribution policies, or investor eligibility. keeps the income earned by a fund in the portfolio rather than paying it out. The retained income is reflected in the class's NAV and can continue compoundingThe process by which returns earn additional returns over time..

If the portfolio earns interest worth ₦5 per share, an accumulating class retains it. An otherwise similar distributing class may pay the ₦5, so its NAV would normally be lower by roughly the amount paid, all else equal.

Both classes usually own the same underlying portfolio, but fees, currency or tax treatment can also differ. Check the class identifier and prospectusThe formal document explaining a fund's objective, strategy, risks, fees, governance, and dealing rules. rather than relying only on “acc” in its name. Accumulation is convenient for investors who do not need cash income, but it does not avoid market losses.

A fund option that retains or reinvests income so it contributes to unit-value growth.

Example: Instead of paying cash income, the fund reinvests it and the value represented by each holding compounds.

An accumulation option keeps a fund's income invested instead of paying it to the investorA person or organisation that commits capital with the expectation of a financial return. as cash. The retained income is reflected in the value of the holding, either through a higher unit value or another mechanism stated by the fund.

Suppose a bond fundA fund that invests mainly in bonds with the aim of earning interest income and possible capital gains. earns income equal to ₦5 per unit. Under an accumulation option, the investor does not receive ₦5 in cash; the income remains in the fund and contributes to the unit's value and future compounding.

Check exactly how the fund implements the option and how tax applies, because terminology differs across markets. Accumulation changes the treatment of income, not the investments owned or their risk. An investor who needs regular cash may prefer an income or distributing option instead.

An investmentAn asset or commitment of money made with the expectation of future income, growth, or both. route made directly with a fund managerThe licensed firm responsible for investment decisions and day-to-day management of a fund. without an intermediary receiving distributionIncome or realised gains paid by a fund to its unitholders. compensation.

Example: An investor opens an account on the manager's platform and deals directly with the fund.

A direct plan is an investment route that deals with a fund manager without an adviser or distributor receiving sales compensation. Where a fund offers comparable direct and distributor classes, the direct route may have lower ongoing costs.

An investor might open an account on the manager's own platform and subscribe without using an agent. The fund, portfolio and dealing priceThe price applied to a subscription, redemption, or switch in a fund. may be the same as another route, while the fee structure differs because no distribution payment is included.

Confirm that a distinct direct plan or class actually exists and compare its expense ratioA fund's annual operating expenses expressed as a percentage of its average net assets. with the advised route. The investor receives less selection or ongoing help, so direct access suits someone able to choose and monitor the fund. The term is market-specific and should not be assumed from the sales channel alone.

A fund class designed to pay qualifying income to investors.

Example: The distributing class pays quarterly income to unitholders.

A distributing share class is designed to pay eligible income from the fund to investors. Payments may be monthly, quarterly, yearly or irregular, depending on the class rules and income available.

A class may pay ₦3 per unit after a quarter in which the portfolio earns distributable income. An investor with 10,000 eligible units receives ₦30,000 before tax, while the class's NAV normally falls to reflect value leaving the fund.

Check whether the stated frequency is a target or commitment, what can fund the payment and whether income can be reinvested automatically. Compare total returnThe complete investment result from price changes plus income, assuming distributions are included., not cash yield alone. The same portfolio's accumulating class may retain income and therefore show a different NAV path.

An option under which a fund may distribute declared income or gains to unitholders.

Example: A fund declares ₦0.08 per unit and pays an investor according to the units held on the record dateThe date used to determine which registered holders qualify for a distribution or corporate action..

A dividendA payment made from a company's profits to eligible shareholders. option allows a fund to pay declared income or gains to unitholders instead of retaining everything in the portfolio. Despite the name, the payment may come from more than company dividends.

If a fund declares ₦0.08 per unit and an eligible investor owns 100,000 units, the gross payment is ₦8,000 before tax. The fund may make no payment when there is nothing available or when no distribution is declared.

Check the record date, payment frequency, source of distributions and reinvestmentUsing distributions or proceeds to buy additional units instead of receiving cash. choice. A payment normally reduces the value remaining in the fund and should be assessed together with the change in NAV. “Dividend option” and “income option” may be used differently by different providers.

An option focused on long-term capital appreciationAn increase in the market value of an investment. rather than regular cash distributions.

Example: An investor leaves gains in an equity fundA fund that invests primarily in shares and seeks long-term capital growth. for ten years to pursue compounding and capital growth.

A growth option focuses on increasing the value of the investment over time instead of making regular cash payments. Income and gains generally remain invested so they can contribute to compounding.

An investor may choose the growth option of an equity fund and hold it for ten years. If the portfolio grows, that growth appears in the value of the units rather than as scheduled income paid into the investor's bank account.

“Growth,” “accumulation” and similar labels can overlap, so read the fund's definition. The option does not guaranteeA contractual promise by another party to meet an obligation if the primary debtor does not. capital growth, and it does not change a risky portfolio into a safeA contract providing a right to future equity under specified financing or liquidity events, without being ordinary debt. one. Check fees, tax treatment, distribution policy and whether the investment itself suits the investor's horizon.

A fund option designed to pay eligible income to the investor rather than retain all of it.

Example: A retiree selects quarterly distributions from an income-oriented bond fund.

An income option is designed to pay eligible fund income to the investor rather than keep all of it invested. Payments may come from interest, dividends, rent or other income earned by the portfolio.

A retiree might choose a bond fund's income option that aims to make quarterly distributions. The amount can change and a payment occurs only under the fund's distribution rules; “quarterly” describes timing, not a guaranteed amount.

Check the source, frequency and tax treatment of payments and whether fees are deducted first. Cash paid out no longer compounds inside the fund, and NAV normally adjusts when value leaves the portfolio. The underlying investments still determine whether the fund gains or loses money.

A fund class intended for large professional investors and often carrying lower fees or higher minimums.

Example: A pension fundA pool of retirement assets invested on behalf of members or beneficiaries. qualifies for the institutional class with a ₦500 million investment.

An institutional share class is designed for large investors such as pension funds, insurers, companies or professional asset managers. It often combines a high minimum investment with lower fees.

A pension fund investing ₦500 million may qualify for an institutional class charging 0.7% a year, while a retail class in the same portfolio charges 1.4%. The lower fee can materially improve net returns on a large balance.

Eligibility can depend on investor type, account size or distribution agreement, not money alone. Check the minimum, fee, currency, income treatment and whether the class holds the same portfolio as other classes. Institutional access does not provide protection from the portfolio's investment risks.

An investment route arranged through an adviser, agent, bank, or distribution platform.

Example: An adviser helps an investor select and subscribe to a fund and may receive compensation from the provider.

A regular plan is an investment route arranged through an adviser, agent, bank or platform. The intermediary may help select or service the investment and may receive compensation from the product provider.

An adviser may recommend a fund, complete the subscriptionThe process of buying new units in a fund by submitting money and a valid instruction. and provide ongoing reviews. If the regular class charges 1.5% while a comparable direct class charges 1%, the extra 0.5% helps pay for distribution or advice.

Check who receives compensation, how much it costs and what service continues after the sale. Confirm whether the underlying portfolio is identical to the direct plan before comparing returns. A regular plan can be worthwhile when useful advice exceeds the additional cost, but an intermediary's payment can influence recommendations.

A fund class intended for individual investors, often with lower minimums than institutional classes.

Example: A retail investorAn individual investing personal money rather than managing institutional assets. enters the fund with ₦10,000.

A retail share class is intended for individual investors and usually has a lower minimum investment than an institutional class. In exchange for easier access, it may charge a higher fee.

A retail class might accept ₦10,000 while an institutional class requires ₦500 million. Both can own the same portfolio, but a 1.5% retail expense ratio and 0.8% institutional ratio will produce different net returns.

Check minimum initial and additional investments, fees, currency, income policy and eligibility. “Retail” does not mean the investment is simple or low-risk. Compare only classes that hold the same portfolio, and ask whether a cheaper class becomes available when the account reaches a higher balance.

A diversified fund that gradually changes its asset mix as a stated future date approaches.

Example: A 2045 fund may reduce equity exposure and increase bonds as 2045 gets closer.

A target-date fund holds a diversified portfolio and gradually changes its asset mix as a named future year approaches. The planned change, called the glide pathA planned change in asset allocation as a target date approaches or passes., usually reduces shares and increases bonds or cash over time.

A 2045 fund may hold mostly growth assets today and become more conservative as 2045 nears. The year is a planning reference, often linked to retirement; it is not a maturity dateThe date on which a debt instrument's remaining principal becomes due. or a promise that the investor will have enough money then.

Funds with the same year can use very different glide paths and may keep changing after the target date. Check the current allocation, future path, fees and whether the fund assumes withdrawal at or after the date. The investor's own retirement needs and other assets still matter.