In the context of UITFs, what does the term 'redemption' refer to?

Redemption in the context of Unit Investment Trust Funds (UITFs) specifically refers to the process through which an investor withdraws their invested funds from the UITF. When investors decide to redeem their units, they are essentially selling their ownership in the fund back to the fund manager, which allows them to retrieve the cash value equivalent to their proportionate share of the assets held by the fund. This process is crucial for investors as it represents their ability to access liquidity from their investments.

The other options focus on different aspects of investment transactions. Selling of securities pertains to the actions taken by the fund manager to liquidate underlying assets of the fund. Buying additional units refers to acquiring more investment shares in the UITF, which is not related to the process of redemption. Lastly, dividends distribution involves the allocation of profits or returns to unit holders but does not directly relate to the withdrawal of funds from the UITF. Thus, the correct understanding of redemption is essential for investors looking to manage their investment strategies and access their capital efficiently.