Glossary

If there are any omissions or you require any further clarification of any definitions please contact us.

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absolute percentage growth	-	Expresses the growth of a fund's value as a percentage over the specified period. A negative figure would indicate a decline.
account view	-	A page which details your cash balance and portfolio status.
accumulation unit	-	Units in a unit trust which do not pay income to the investor but which instead redistribute dividend income from the underlying investments back into the capital value of the units.
actively managed funds	-	Unlike index funds (see 'index funds') these are funds where the Manager uses his professional judgement to decide which funds to buy and sell, whilst seeking to out-perform the relevant benchmark.
adviser	-	A person who is qualified to discuss your financial affairs in detail, listen to your needs and make appropriate recommendations.
ADR	-	American Depository Receipts, which are effectively bearer documents (see below) and allow American investors to own shares in foreign corporations. They are tradeable receipts which show that the underlying shares are held on deposits by a bank in the corporation's home country. The bank collects dividends, pays local taxes and converts them to dollars for distribution to shareholders.
AGM	-	Annual General Meeting. The meeting that a company normally holds with its shareholders after announcing its annual results to approve the accounts, re-appoint directors, auditors, etc.
AIM	-	The Alternative Investment Market. The London Stock Exchange's market for growing and smaller companies, created in 1995. It enables companies to attain a listing which is affordable and which does not require them to meet the stringent criteria for full quotation.
all or nothing	-	When placing a trade above normal market size via the personal telephone service you may be asked whether you want to trade 'all or nothing' or 'as many as possible'. All or nothing means that Saga Share Direct will endeavour to trade your entire instruction and in the case that this is not possible your order will not be executed.
allotment	-	The number of shares received on application for a new issue or privatisation. This may be less than the number applied for, but will never be more.
allotment letters	-	Documents representing the right to buy new shares at a stated price in a rights issue, known as the 'call' (see below). It is sometimes possible to sell such shares in a nil-paid form, delivering the allotment letters to the buyer who then pays the call. You can also sell the shares fully-paid if you have paid the call.
amount available to invest	-	This is the investment limit for your account, calculated using the Current Stock Value, Current Cash Balance and any credit or debit which is currently within the settlement period. Note that PEP and ISA accounts can only buy up to the value of the 'Cash Available to Invest'.
analyst	-	An expert in evaluating financial investments such as equities, bonds and Government stocks; undertaking investment research; and making recommendations to institutional and retail investors to buy, sell or hold. Most analysts specialise in a single industry or business sector.
announcements	-	News or information relevant to the security
annual report & accounts	-	A statement of the financial condition of the company and its activities over the past financial year, including Profit and Loss account, Balance Sheet, Notes and a Statement of Cash Flow. All PLCs are obliged to make these available to shareholders and they can be viewed on the company's website, or obtained by writing to the company's head office, or by calling Saga Share Direct.
annual management charge	-	A charge levied by the Fund Manager to cover the cost of investment management and administration, usually for unit trusts and OEICs.
annuity	-	An income guaranteed for life paid in return for handing over a lump sum. An annuity is bought at retirement by holders of most personal pension plans and members of money-purchase company schemes.
as many as possible	-	When placing a trade above normal market size via the personal telephone service you may be asked whether you want to trade 'all or nothing' or 'as many as possible'. As many as possible means that Saga Share Direct will endeavour to trade as many as we can up to the amount you have specified.
ask	-	The ask or asking price is the price for which the holder of the shares is willing to sell. The bid price is the opposite.
at best	-	An order placed with a stockbroker to buy or sell shares at the best price in the market at the time of dealing for the number of shares being traded.
at limit	-	Refer to Limit Order.
authorised unit trust	-	A unit trust scheme authorised by the Financial Services Authority to operate in the UK.
authority to deal	-	Allowing someone other than yourself to invest on your behalf. This will require your written notification. You will need to complete additional documentation to do this.
automated links	-	This enables Saga to trade via the electronic dealing links that exist between Saga Share Direct and the Retail Service Providers (RSPs).

BACS	-	Bank Automated Clearing System. We use this to send funds to, and claim money from your chosen bank account.
balance sheet	-	A financial statement showing a company's assets, liabilities, and shareholders' equity on a given date, often at the end of the financial year.
balances	-	The amount of cash and stock held on your portfolio.
Bank of England	-	The UK's central bank that decides on monetary policies and interest rates.
bargain	-	A purchase or sale, also known as a transaction, deal or trade.
bargain tax date	-	The date on which the deal was transacted.
bargain number / reference	-	A unique reference number given to a deal.
base rate	-	The rate at which the Bank of England lends to other banks in the UK.
basket	-	A portfolio consisting of more than one security that may or may not replicate an index. For example, a share or equity basket is one that contains shares in more than one company.
bear market	-	A falling market, or one that is expected to fall - opposite to a bull market.
bearer document	-	Documents stating that the person in physical possession of them (the bearer) is the owner.
benchmark	-	See 'index'.
beneficial owner	-	The true owner of a security. The registered holder of the shares may act as nominee for the actual shareholder.
benefits	-	Benefits offered by companies to their shareholders over and above the dividend payment, often requiring a minimum shareholding in the company. Also known as 'perks'.
best execution	-	A firm's commitment to obtain the best price for the relevant order - 'dealing at best'.
bid	-	An attempt by one company to take over another.
bid price	-	The price at which a market maker is prepared to buy shares - opposite of the ask price.
bid/offer spread	-	The difference between the buying and selling price of your units. It includes an allowance for the initial charge, if there is one, plus the cost of making the investment.
Board of Directors	-	Individuals legally responsible for running a company.
bond issue	-	A bond issue raises money for a company in the form of long term debt. The company makes regular payments of interest to bondholders with repayment of the principal on maturity. The price of bonds can go up and down.
bonds (or fixed interest securities)	-	Bonds are effectively loans made by governments or corporations to fund spending or raise capital. They are issued for a specified redemption value at a fixed date in the future and provide the holder with regular interest payments until that time. The value of a bond will generally depend upon the outlook for inflation and interest rates, as well as the underlying security of the issuer. Bonds issued by UK Government are generally regarded as very low risk and so are often known as 'gilt edged' investments (gilts). Bonds issued by corporations may be less secure and so the issuer may have to pay a higher rate of interest to attract investor's capital.
bond fund	-	A fund investing primarily in bonds/fixed interest securities.
book cost	-	Original cost of the stock on the date of purchase or transaction.
broker	-	The intermediary agent between a market maker and an investor, who charges a commission for services provided.
brokerage	-	Commission charged by the broker.
bulking	-	Combining many orders in one company's shares together into one deal. Useful when individual orders are below the minimum dealing size. Also known as aggregation.
bull market	-	A rising market, or one that is expected to rise - opposite of bear market. Hence the expression a 'bullish market' .
buy price	-	Price at which you buy shares.

call bonds	- �	The right to redeem outstanding bonds before their scheduled maturity.
call option	- �	Gives the buyer the right to buy or sell shares in the underlying security at a fixed price before a specified expiration date.
call payment	- �	The payment which falls due in respect of any partly paid shares (e.g. right issues). The company 'calls in' payment from the holders of the shares.
cancelled status	- �	These are orders that have been cancelled before being dealt, either by you, by our dealers, or if a limit has expired.
capital appreciation	- �	The growth of the earnings on an investment's principal.
capital gains	-	The profit made when any asset, including stocks, is sold. If a loss is made it is called a Capital Loss.
capital gains tax	- �	Tax payable at a rate equivalent to the taxpayer's highest rate of income tax on any gains over the CGT allowance (�8,500 in 2005/2006) from the sale, transfer or disposal of securities or other asset subject to this tax.
capital growth	-	The increase in an investment's capital value excluding all income.
capitalisation issue	- �	A means by which a company increases the number of its shares in circulation without raising more capital from existing shareholders. Additional shares are issued to existing shareholders in proportion to their holdings without payment (e.g. two new shares for every one held = a 'two for one' capitalisation issue).
cash available to invest	-	This is your current cleared cash balance plus any sales, less any purchases, that will settle in the next 3 business days.
cash bonus	-	An extra dividend paid out of exceptional profits which is in addition to a normal dividend.
cash dividend	-	A cash payment per share held paid to shareholders net of tax - currently 10% for UK equities. Higher rate taxpayers are still liable for the balance of tax.
cash offer	-	An all cash offer, usually in a company takeover.
cash settlement	- �	Payment for deals the day after dealing, (immediate payment at T+1).
cash (or money market) fund	- �	These are funds which invest most of their assets in money market instruments (i.e. cash and near cash, such as bank deposits, certificates of deposit, very short term fixed interest securities or floating rate notes).
CAT standards	- �	Usually used with reference to ISAs, these are standards introduced by the Government that specify minimum requirements for Charges, Access and Terms. However, CAT Standards are voluntary and do not guarantee the performance of the fund or investment, and do not apply to the types of ISAs offered by Saga Share Direct.
certificate	- �	A legal document holding information on the holder and the number and type of shares held by the named person on the document.
change	- �	Indicates the % or pence rise or fall of a security during a given time period.
Chinese walls	-	Artificial barriers to the flow of information set up in large firms to prevent the movement of sensitive information across departments.
cleared funds	- �	When you pay cheques into your account, they have to be 'cleared' through the banking system. This means that you cannot use the amount of the cheque to withdraw any money for 10 business days from the day your account is credited. However, we will allow you to invest these funds before your cheque is cleared.
closing price	-	The price quoted at close of business or close of trading session.
closing purchase	- �	A transaction in which a writer purchases an option having the same terms as an option which he has previously sold, thus terminating his liability as a writer.
collective investment	- �	A generic term encompassing Authorised Unit Trusts, Insurance and Pension funds, OEICs and Investment Trusts.
commission	- �	The charge made by a stockbroker for buying and selling securities on a client's behalf. Varies from broker to broker.
commodity	-	A raw material traded on a commodities market.
common stocks	- �	Securities that represent an ownership interest in a corporation, usually US.
company reports	- �	A statement of the financial condition of the company and its activities over the past financial year. See 'annual report & accounts'.
Compliance Department	-	Individuals entrusted with ensuring that a financial institution is compliant with the Financial Services & Markets Act 2000.
Compliance Oversight	-	Person appointed within an authorised firm to be responsible for ensuring compliance with the rules.
compulsory acquisition	- �	Once 90% of acceptances have been received, the bidding company has the right to purchase the remaining 10% of shares in issue at the offer price.
Conduct of Business Rules	-	Rules established by 2000 Financial Services & Markets Act dictating how firms conduct their business, particularly in terms of the relationship between firm and client.
consideration	- �	The value of the number of shares multiplied by the price, before any other charges have been levied.
Consolidated Tax Certificate	- �	This document is intended to aid you in your personal tax returns to the Inland Revenue. This is sent to all our clients and details all the dividends you have received in your UK account in the previous financial tax year. Not applicable for tax-free accounts such as ISAs or PEPs.
consistency of performance analysis	-	Usually in relation to funds, an indication of previous years' performance taking each year in isolation enabling you to compare one year to the next.
contract	- �	An agreement incorporating conditions between you and the service provider.
contract note	- �	Confirmation from the stockbroker of the bargain, including the full title of the stock, price, commission, stamp duty, and the time of the bargain. These must be kept safely for tax purposes.
contributions	- �	Payments made into a pension, ISA or PEP.
conversion	- �	In relation to shares, this means the conversion of one class of shares into a different class of shares.
conversion ratio	-	This ratio is the number of warrants that must be held and exercised to buy or sell a single unit of the asset e.g. one share. A higher conversion ratio will produce a lower warrant price.
convertibles	-	Fixed interest investments that can be exchanged for a predetermined number of ordinary shares in the underlying company at the individual's discretion. Preference share dividends are stated net of basic rate tax compared with loan stocks which are stated gross. Conversion terms normally run for a fixed period giving the right to convert into the company's ordinary shares within a predetermined time at a predetermined rate.
corporate action	- �	An activity initiated by a company that affects the nature and/or quantity of stock that you hold as a shareholder e.g a rights issue is a common type of corporate action.
corporate bonds	- �	Debt obligations issued by corporations as an alternative to offering equity ownership by issuing stock. Most corporate bonds pay half-yearly interest and promise to return their principal when they mature. Maturities range from 1 to 30 years.
coupon	-	The rate of interest attached to a bond or loan stock that an investor will receive until redemption.
CREST	- �	An electronic means of settling share transactions and registering investors on companies' lists of shareholders. The effect of CREST is that ownership of company stock is treated much like money in a bank account, with information held and transactions booked electronically.
cum	- �	Meaning "with" this is the opposite of Ex, and is used to indicate that the buyer of a security is entitled to participate in whatever forthcoming event is specified. Cum cap, cum div, cum rights etc.
cum rights / Ex rights	- �	Around the time of a rights issue, the company's shares are described as 'cum-rights' or 'ex-rights'. Cum-rights means that anyone who buys shares in the company will be entitled to subscribe for the new shares; but on and after the date of the new issue, shares become ex-rights, and the right to subscribe to the new shares stays with the seller.
cumulative performance analysis	-	Usually in relation to funds, total performance return to date calculated by adding each year's performance to the previous year.
current cash balance	- �	Calculated using the value of cleared funds held and/or pending clearance. Deals pending settlement on your account will be reflected in the 'Amount You Can Invest' figure until they reach settlement when they will be debited/credited from your 'current cash balance.'
current liability	- �	Money owed to the company and due to be paid within a year, such as accounts payable. Current liabilities are found on the company's balance sheet.
current yield	- �	The annual interest on a bond divided by the current market price.
customer reference number	- �	A unique number for us to identify you as a client.

Daily Official List	-	London Stock Exchange publication that details the previous day's trading activity of every share in the Exchange.
day trading	-	Where investors, many of whom are professional, try to make money from buying and selling shares throughout the day, netting off the transactions by the end of the day.
deal	-	In stock market terms this means a sale or purchase of securities. Also known as a bargain, transaction or trade.
dealt status	-	Orders that have been dealt in the market and processed through our order entry system.
debenture	-	A loan raised by a company, paying a fixed rate of interest and secured on the assets of the company.
defensive stock	-	Stock of a company with continuous dividend payments, which has demonstrated relatively stable earnings despite poor economic conditions.
delist	-	The removal of a security's listing on a stock exchange. This is done when the security no longer exists, the company is bankrupt, the public distribution of the security has dropped to an unacceptably low level, or the company has failed to comply with the terms of its listing.
dematerialised (form)	-	Circumstances where securities are held in a book entry transfer system with no certificates as these are held in electronic accounts within CREST.
demutualisation	-	Conversion process by which mutually held organisations become publicly listed companies. Examples include building societies, such as the Halifax, converting to banks.
derivatives	-	Generic name for financial products which are derived from other financial products. The most common are options, futures and swaps.
Deutsche Aktienindex	-	(DAX) is the German stock index on the Frankfurt Stock Exchange.
directors' dealing	-	Any share transaction, undertaken by the Director of the company in which they are employed.
discount	-	When the market price of a newly issued stock is lower than the issue price.
discretionary investment management	-	The engagement of an investment adviser who has complete discretion (often within prescribed limits) to manage and invest your capital without reference to you other than at agreed reporting dates. Also called Discretionary Management.
distributions	-	Income generated by a unit trust or OEIC, which can be either paid out to the investor or reinvested within the fund (see also income or accumulation units). Frequency of distributions may vary from fund to fund.
dividend	-	Payment of a company's post tax profits distributed to its shareholders, usually expressed as pence (per share).
dividend cover	-	The indicator as to the rate that the company may be paying its dividends out of its earnings, and its ability to continue to pay dividends at that rate.
dividend pay date	-	The date on which the dividend is paid.
dividend yield	-	The dividend yield measures the rate of return that an investor gets by comparing the cost of the shares with the dividend paid. You can work it out as follows; dividend per share divided by market price per share times 100.
Dow-Jones Industrial Index	-	The major benchmark measure of the performance of the New York Stock Exchange.
DTI	-	Department of Trade and Industry. Government department responsible for some commercial matters, including monopolies and prosecution of insider dealing.
dual pricing	-	Two prices quoted by a unit trust manager - the lower at which investors can sell and the higher price at which they can buy.

earnings per share	- �	(EPS) Is the net profit after taxation and preference dividend divided by the number of ordinary shares in issue during the year.
effective date	- �	The date a corporate action is effective and resultant new cash and/or stock are distributed.
entitlement offer	- �	Means an issue of new shares by a company which may be subscribed for in return for agreeing to pay for the allotment of the new share at a set price. This entitlement is not tradeable unlike a rights issue.
EPB	- �	("Equivalent Pension Benefits") Before 1974, some occupational pension schemes provided benefits in place of the then State pension scheme. EPBs are usually very small, and are increasingly rare.
equities	- �	An alternative name for ordinary shares.
equity fund	- �	A fund investing primarily in equities.
European Savings Directive	-	Introduced to ensure that individuals pay the correct amount of tax to the correct country, reducing any advantage gained by investing elsewhere in the European Union.
ex	- �	Meaning "without" this is the opposite of cum, and is used to indicate that the buyer of a security is not entitled to participate in whatever forthcoming event is specified. Ex cap, ex div, ex rights etc.
ex-dividend	- �	A share sold ex-dividend means the buyer is not entitled to receive the recently declared dividend.
exchange	-	Market place for trading.
exchange price input code (EPIC)	- �	(Epic Code) A three or four character code, unique to a particular stock, which is used as a systems code when accessing price. Also referred to as stock code.
execution only	-	Where the stockbroker buys and sells at your request with no advice.
exercise notice	- �	A formal notification that the holder of a call/put option wishes to buy/sell the underlying security at the exercise price.
exercise of warrants	- �	The relinquishing of a warrant at a set date together with a cash payment in return for the resultant security.
exit charges	- �	Some Fund Managers levy charges on certain funds, should you decide to sell your investment within a specified period e.g. five years. This type of charge, which is becoming increasingly rare, may replace - or be in addition to - an initial charge.
expired status	- �	These are orders where your specified limit price has not been met by the expiry date you have selected. Expired orders can be re-submitted.
extraordinary general meeting (EGM)	- �	General meeting of a company at which non-routine proposals are voted on by shareholders.
Ex-distribution	- �	The period, which can be no more than two months, immediately before the distribution of income from a fund (excludes cash funds). If you buy a fund during this period, you are not entitled to the next income payment. However, if you sell during this period then you remain entitled to the next income distribution.