Glossary

All dealings on the Stock Market after the primary launch.

The category in which funds or companies are grouped.

The relative proportions of a fund held in industry sectors (for example, engineering or property).

Another name for stocks and shares, but also applies to any approved or registered financial instrument, such as unit trusts.

The day on which payment is due to complete a purchase or redemption.

Securities carrying ownership rights in a company.

A statistic that measures the performance of a fund adjusted for risk. The higher the ratio, the better the performance for a given level of risk.

This is when a dealer believes that the price of a particular share is going to fall and can see the opportunity to make a quick profit. Under the old settlement system, at the start of the account he would sell more shares than he owned in the hope that

Société d'investissement à capital variable (SICAV) is the French term to describe an open-ended investment company.

This is the difference between the offer price at which units or shares are sold and the bid price at which they are bought back from the public. ie - the Market Maker or unit trust manager's bid price is the price at which the investor can sell to him an4

For returns that are normally distributed, one can say that two-thirds of the time a fund's return will lie within a range of plus or minus one standard deviation of its mean return. For example, A fund with an annualised return of 10% over 5 years with a4

An independent company, which rates unit trusts on performance and the quality of the fund management process.

An investment management process which selects favoured shares or stocks.

This is an instruction to move funds from one fund to another. Switch instructions may be placed over the telephone and in writing and the buy and sell operations are executed on the same day.

Investment management technique that bases portfolio construction on macroeconomic views rather than stock specific views. Top-down factors will apply to both country and sector allocation. Specific stock decisions in a top-down portfolio will most likely4

See Index Fund.

Government department responsible for all the government's financial decisions and for regulation of the financial services sector.

Undertakings for Collective Investments in Transferable Securities. The UCITSs legislation governs how a fund can be marketed with the European Union and is designed to allow cross border fund sales to investors of different nationalities. To obtain UCITS4

Unitised collective investment funds, usually domiciled offshore but increasingly adopted as a structure for UK OEICs. Offer investors a choice of sub funds and share classes within one vehicle. Often offer free switching between each sub fund.

Allocations, in proportion to the amount invested, of a collective investment vehicle, such as a unit trust.

A financial product where money from a number of investors is pooled together and invested collectively in investments such as shares and bonds. Each investor owns a unit, (or a number of them) the value of which depends on the value of those items owned

An investment technique that searches for firms that have not been, to the investor's mind, fully valued by the market and might be due for a re-rating. The manager of a portfolio will not want to pay too highly for stocks, unlike a growth manager, who wi!

Volatility can be simplistically described as riskiness. More accurately volatility is a measure of the movement in a fund's monthly total return over three years compared to the average of those movements

The daily number of shares traded in a security.

This type of security gives the owner the right, but not the obligation, to buy new company shares at an agreed price at a future date. The warrants are then traded on the Stock Exchange and tend to have a more volatile price than company shares. Until wa!

The buyer of a share that has gone ex-dividend is not entitled to the next installment of dividends or interest. When a share becomes ex-dividend its price go may down, particularly if it is a share which pays a high dividend.

The amount of income generated by a fund's investments in relation to the price. It is usually quoted gross i.e. before tax and after charges.

A statistic applying to bonds showing the total return to an investor if the bond is held to maturity or redemption. It is the aggregate of all gross interest, dividends and capital gain or loss at redemption annualised.

Zeros are securities that do not pay interest during their terms but are sold at a discount from their face value. A zero coupon bond generally increases in value as it approaches maturity, and the return comes solely from its appreciation. The difference!