Glossary

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face value	-	Value of a bond to be paid out per Ł100 of stock at maturity - usually one hundred pounds (also known as par value). Also the value on the face of a share (perhaps 100p or Ł1) though this bears very little relationship to the market price at which a share is bought and sold.
fill or kill order	-	Type of order input into SETS. It is either completed in full against displayed orders or rejected in full.
final dividend	-	The dividend paid by a company after the end of its financial year, recommended by the directors but authorised by the shareholders at the company's AGM.
Financial Services and Markets Act 2000	-	Legislation that came into effect in December 2001 and imposes regulations on who is allowed to conduct investment business and how it is conducted.
financial year	-	The official tax year dated from 6th April to 5th April the following year.
fixed asset	-	Tangible property used in the operations of a business, but not expected to be consumed or converted into cash in the ordinary course of events.
fixed interest loan	-	Loans issued by a company, the Government (gilts or gilt-edged) or local authority, where the amount of interest to be paid each year is set on issue.
Flexible Commission	-	Saga Share Direct flexible tiered pricing structure, based on the principle of 'The more you deal, the less you pay'.
flotation	-	Term used when a company has its shares quoted on the stock market for the first time.
foreign dividends	-	These securities can pay their dividends in a variety of combinations dependent on the underlying company, the country of origin and the taxation agreement between the country of origin and the UK. Accordingly the associated tax credit may be subject to withholding tax from the country of issue at a variety of rates.
forex	-	Abbreviation for foreign exchange.
forward pricing	-	The pricing of a Unit Trust after the sale and purchase orders of the day have been received and the funds have been revalued.
frequently asked questions	-	(FAQ) refers to a list of the most commonly asked questions on a particular topic.
front-end-load	-	See 'initial charge'.
FSA (Financial Services Authority)	-	Agency designated by the Treasury to regulate the UK financial industry. Introduced in 1997 to take over from the Securities Investment Board and the Self Regulating Organisations (SROs).
FTSE 100	-	The Financial Times Stock Exchange 100 Index which tracks the largest companies by market capitalisation and is the best known indicator of shares values on the London stock market.
FTSE 250	-	The next 250 companies by market capitalisation.
fully paid shares	-	Applies to new issues, when the total amount payable in relation to the new shares has been paid to the company.
fund manager	-	Individual or company that invests money on behalf of clients.
fund objective	-	A fund manager's stated goal for your investment.
funds	-	A generic term used to describe pooled money of individual investors that has been committed to a stock or bond market under the management of an investment professional. They offer the advantage of spreading risk as they invest in a large number of securities at any one time, e.g. unit trusts and OEICs.
fund size	-	Total value of assets under management in a fund, listed as millions of the currency that the fund prices are quoted in.
futures	-	Is based on anticipating what the price of a commodity, or a share will be sometime in the future.

gearing	-	Gearing’ describes the level of company debts, expressed as a percentage of its equity capital. So a company with a gearing ratio of 60% has levels of borrowing which are 60% of its equity capital. The significance of the gearing ratio is that it shows at a glance how much a company is borrowing and allow you to measure that against your own risk criteria. For investment trusts, borrowings can boost the return on capital and income via the ability to make additional investments. Also known as leverage, particularly in the US. Instead of buying ordinary shares in a company you can buy derivatives, such as warrants, and contracts for difference. Any movement in the ordinary share price will be exaggerated by the derivative. The degree of this increased exposure is called gearing.
gilts	-	Also known as Gilt-Edged Securities - market term for UK Government Securities. Gilts offer investors fixed annual interest and the certainty of repayment. Gilts cannot be cashed before their maturity date but are readily traded on the stock market. Gilts are dealt in nominal value form and prices are quoted in pounds per 100 nominal. Gilt prices go up and down.
GMP	-	("Guaranteed Minimum Pension") Some occupational pension schemes "contract out" of the State Earnings Related Pension scheme by providing equivalent benefits, known as GMP.
Good Till Cancelled Order (GTC)	-	An order that remains valid until executed or cancelled by the client subject to a maximum time period.
gross	-	An amount before deduction of tax or commissions.
Group Investment	-	Means an Investment held or to be held in the name of more than one person.
Growth and Income Fund	-	A fund that seeks earnings growth as well as income. These funds invest mainly in the ordinary shares of companies with history of capital gains but that also have a record of consistent dividend payments.
growth shares	-	An established company in a dynamic sector that produces higher than average growth in profits year after year.

hedge	-	A hedge is typically accomplished by making approximately offsetting transactions that will largely eliminate one or more types of risk.
high	-	The highest price that was paid for a stock during a certain period.
high income shares	-	Popular with private investors as they generate high income and also have the potential for good capital performance over the long term.
high-premium convertible debenture	-	A bond with a long term, high-premium, common stock conversion feature and also offering a fairly competitive interest rate.
historic pricing	-	The pricing of unit trusts based on the last valuation of the fund.
holding company	-	A company that owns the securities of another company, usually with voting control.
holdings	-	The common term for stock held in your account(s).
horizontal spread	-	Purchasing either a call or put option and simultaneously selling the same type of option with the same strike price but a different expiration month.

IMA	-	Investment Managers Association - the trade body for unit trusts and similar funds, formerly known as AUTIF. They can be contacted at 65 Kingsway, London WC2B 6TD (020 8207 1361) and www.investfunds.org.uk.
in the money	-	A call/put option where the exercise price is below/above the current market price of the underlying security, i.e. it has intrinsic value.
income drawdown	-	Also referred to as pension fund withdrawal. This allows investors to delay buying an annuity (until age 75 at the latest) and to take an income direct from their pension fund at retirement. The Inland Revenue sets minimum and maximum levels of income that can be taken from the fund each year. Within these limits the investor can choose any level and change the amount drawn at any time. These limits are set at the outset and will apply for the first three years. They are reviewed every three years, after this to take account of the investor's age and the value of his or her fund.
income bonds	-	Securities on which interest is only payable out of profits.
income units	-	Units in a Unit Trust which entitle the investor to regular payments of income.
index (or average)	-	A statistical tool that measures the state of the stock market or the economy, based on the performance of stocks or other meaningful components e.g. the Dow Jones Industrial Average.
index funds	-	Funds which seek to mirror the returns of a market index (e.g. FTSE 100 Index), by investing directly in the securities, which make up that index.Also see 'tracker funds'.
index linked Gilt	-	These differ from conventional Gilts because the interest payments and the capital are adjusted in line with the Retail Prices Index. This means that both the interest and the principal on redemption paid by these Gilts are adjusted to take into account any accrued inflation since the Gilt's issue.
Individual Savings Account (ISA)	-	A tax-efficient environment in which a variety of investments can be held.
initial charge	-	The charge levied on investors by the Fund Manager when units/shares are purchased. Also often known as front-end-load.
initial offer	-	The first offer made by a company for another company's shares. If the offer becomes successful, it will then go "unconditional" and eventually becomes "compulsory".
Inland Revenue	-	The organisation responsible for the efficient administration of tax including Capital Gains Tax and Stamp Duty.
insider dealing	-	The illegal act of buying and selling shares on the basis of confidential 'inside' information not available to other investors.
instalment payment	-	Means the additional payment for a partly paid security (not a nil-paid security) that results in the shares being either fully paid or having another instalment paid towards their being fully paid shares.
intangible asset	-	An asset which has no physical substance, such as goodwill, patents, trademarks and copyrights.
Inter Dealer Broker	-	Member of the London Stock Exchange that acts as a link between firms to enable them to trade with each other anonymously.
interest	-	Cost of using money, expressed as a rate per period of time, usually one year.
interim dividend	-	A dividend declared and paid before annual earnings have been determined, generally half-yearly.
interim results	-	These are released after the first 6 months of the financial year by all companies on the stock exchange.They tend to concentrate on profitability or loss, and may or may not be used to justify an interim dividend.
intermediary	-	A person or institution empowered to make investment decisions for others. These specialists are knowledgeable about investment alternatives and can achieve a higher return than the average investor can.
intrinsic value	-	A call/put option has intrinsic value if the exercise price of the option is below/above the current market price of the underlying security. The intrinsic value is then the difference between the exercise price of the underlying security and the current market value.
investment	-	The use of capital to create more money through income-producing vehicle or through more risk-oriented ventures. The Financial Services & Markets Act 2000 lists items to be regulated as such include shares, bonds, futures, options, life assurance and pensions.
investment business dealing	-	Advising, dealing or managing investments. Those doing so need to be authorised by FSA.
investment club	-	An organisation which consists of a group of people who meet on a regular basis to pool their money and investment ideas, thus benefiting from shared administration costs. Saga Share Direct Investment Club Account is the ideal account for investment clubs.
investment fund	-	A fund of funds, owned by one or more investors, that is managed as one entity by one or more managers. The legal structure of the fund can take many forms and can include unit trusts, investment trusts and OEICs.
investment objective	-	General description of the fund's investment objectives and type of securities the fund invests in.
Investment Trust	-	A company listed on the Stock Exchange which invests in the shares of other companies.
IPO	-	Initial Public Offering. An offering of shares in the equity of a company to the public for the first time - a type of flotation.
irredeemable	-	Debentures, gilts, and loan stock which have no fixed redemption date or undated. Generally, they are therefore only repayable at the option of the borrower or, as with companies, on a liquidation or in special circumstances such as a takeover.
IRS	-	International Retail Service. Provided by London Stock Exchange to allow access to trading in international stocks, with dealing and settlement in sterling. Stock is held and settled through CREST.
ISA regulations	-	The Individual Savings Account Regulations 1998 (statutory instrument 1998 No. 1870) and any other rules and/or regulations relating to ISAs.
ISD	-	Investment Services Directive. European Union Directive imposing common standards on investment businesses.
issue price	-	The price at which shares are offered to investors when a company floats on the stock market.
issuer bid	-	An offer by an issuer to buy back some of its own securities. This is usually done because the company feels the market is undervaluing its securities.

joint account	-	Bank or sharedealing account owned jointly by two or more people.
joint liability	-	Mutual legal responsibility by two or more parties for claims on the assets of a company or individual.

key features	-	This is a document produced by each unit trust providing key features e.g. it states the investment strategy and aims of the trust.