 |
|
| ACCRUED
INTEREST |
Bonds are
securities that earn interest at fixed or variable interest rates.
Interest accrues or accumulates daily. Accrued interest is the amount
of interest accumulated from the last payment date to the current
date. |
| ACTUARIAL
PRICE |
A unit-linked
fund price, used to buy and sell units. ILIM calculates offer and bid
prices for these funds. Unlike most other unit-linked funds, where the
Offer and Bid prices are published, Offer and Bid prices for these
funds are for internal use only, the Actuarial price is published
externally. |
| ADVISOR
/ ADVISER |
1. Person or
company responsible for making pooled fund investments. 2.
Organisation employed by a pooled fund to give professional advice on
the fund's investments and asset management practices. Also known as
investment advisor. |
| AGGRESSIVE
GROWTH FUNDS |
Pooled funds
that strive for maximum growth as the primary objective. |
| AMERICAN
DEPOSITORY RECEIPTS |
Certificates
issued by a U.S. Depository Bank, representing foreign shares held by
the bank, usually by a branch or correspondent in the country of issue. |
| AMERICAN-STYLE
OPTION |
An option
contract that can be exercised at any time between the date of
purchase and the expiration date. Most exchange-traded options are
American style. |
| ANALYST |
Employee of a
brokerage or fund management house who studies companies and makes buy
and sell recommendations on their stocks. Most specialise in a
specific industry. |
| ANNUAL
REPORT |
Yearly record
of a publicly held company's financial condition. It includes a
description of the firm's operations, its balance sheet and income
statement. |
| ANNUAL
RETURN |
The percentage
of change in a pooled fund's net asset value over a year's time,
factoring in income dividend payments, capital gains, and reinvestment
of these distributions. |
| APPORTIONMENT |
ILIM deals in
bulk in the markets on behalf of many funds. A bulk trade is
apportioned, or divided up, in the appropriate amounts for each
individual fund taking part in the trade. |
| ARBITRAGE |
Profiting from
differences in the price of a single security that is traded on more
than one market |
| ASSET
ALLOCATION FUND |
Balanced fund
in which changes are made in the stock and bond percentage mix, based
on the outlook for each market. |
| ASSET PRICE |
This is a
price of a unit linked fund, calculated by the pricing system, that
includes the value of all assets and liabilities of the fund and any
buying or selling costs appropriate to the assets. It excludes sales
charges, management charges and rounding. In
some circumstances, e.g. for DETE reporting, buying and selling costs
are also excluded. |
| AT THE
MONEY |
An option is
at-the-money if the strike price of the option is equal to the market
price of the underlying security. For example, if X stock is trading
at 54, then the X 54 option is at-the-money. |
| AVERAGE |
An arithmetic
mean of selected stocks intended to represent the behaviour of the
market or some component of it. One good example is the widely quoted
Dow Jones Industrial Average, which adds the current prices of the 30
DJIA's stocks, and divides the results by a predetermined number, the
divisor. |
| AVERAGE
MATURITY |
The average
time to maturity of securities held by a pooled fund. Changes in
interest rates have greater impact on funds with longer average life. |
| |
|
 |
|
| BACK OFFICE |
Brokerage
house clerical operations that support, but do not include, the
trading of stocks and other securities. Includes all written
confirmation and settlement of trades, record keeping and regulatory
compliance. |
| BALANCED
FUNDS |
Pooled funds
that invest in both stocks and bonds, typically in relatively equal
proportions |
| BANKER'S
ACCEPTANCE |
A short-term
credit investment created by a non-financial firm and guaranteed by a
bank as to payment. Acceptances are traded at discounts from face
value in the secondary market. These instruments have been a popular
investment for money market funds. |
| BASIS |
The price an
investor pays for a security plus any out-of-pocket expenses. It is
used to determine capital gains or losses for tax purposes when the
stock is sold. |
| BASIS
POINTS |
Refers to
yield on bonds. Each percentage point of yield in bonds equals 100
basis points. If a bond yield changes from 7.25 % to 7.39 %, that's a
rise of 14 basis points. |
| BEAR |
An investor
who believes a stock or the overall market will decline. A bear market
is prolonged period of falling stock prices, usually by 20% or more. |
| BEAR
MARKET |
Period during
which the stock market loses more than 10 percent of its value. |
| BEAR
RAID |
A situation in
which large traders sell positions with the intention of driving
prices down. |
| BETA
(STOCKS) |
Measure of a
stock's risk in relation to the market. 0.7 means a stock price is
likely to move up or down 70 % of the market change; 1.3 means the
stock is likely to move up or down 30 % more than the market. |
| BID PRICE |
The price at
which a market participant is willing to buy securities from ILIM. |
| BID PRICING
BASIS |
An approach to
unit fund pricing that assumes more clients are leaving the fund than
are entering it, and that the fund is in decline. This approach
requires that bid prices of securities are used in fund valuations and
that selling costs are deducted from security values. |
| BLUE
CHIP STOCKS |
Stocks issued
by well-established companies that pay dividends. |
| BOND |
A debt
instrument issued by a company, city, or state, or the U.S. government
or its agencies, with a promise to pay regular interest and return the
principal on a specified date. |
| BONUS ISSUE |
Issue of free
shares from company to existing shareholders. |
| BULL |
An investor
who thinks the market will rise. |
| BULL
MARKET |
Period during
which the stockmarket moves higher for a couple of years straight. |
| BUYING
COSTS |
A calculation
applied in fund pricing to provide for expenditure on brokerage and
other costs arising from buying assets. This is used for funds on an
offer-pricing basis and the value of these costs is added to the
market value of securities in the pricing calculation. |
| BUYOUT |
Purchase of a
controlling interest (or percent of shares) of a company's stock. A
leveraged buyout is done with borrowed money. |
| |
|
 |
|
| CALL
OPTION |
An option
contract that gives the holder of the option the right (but not the
obligation) to purchase, and obligates the writer to sell, a specified
number of shares of the underlying stock at the given strike price, on
or before the expiration date of the contract. |
| CALLABLE |
Debt that may
be redeemed before it matures. |
| CAPITAL
ASSET ANALYSIS |
An analysis of
the current distribution of a funds assets over asset types (equities,
bonds, property, cash) and countries. |
| CAPITAL
EXPENDITURES |
Amount used
during a particular period to acquire or improve long-term assets such
as property, plant, or equipment. |
| CAPITAL
GROWTH FUNDS |
Pooled funds
that strive for maximum growth. Although these funds can earn the
greatest gains, they also can rack up the heaviest losses. Also known
as aggressive growth funds. |
| CAPITAL
GAIN |
When a stock
is sold for a profit, it's the difference between the net sales price
of securities and their net cost, or original basis. If a stock is
sold below cost, the difference is a capital loss. |
| CAPITAL
LOSS |
The difference
between the net cost of a security and the net sale price, if that
security is sold at a loss. |
| CASH AND
EQUIVALENTS |
The value of
assets that can be converted into cash immediately, as reported by a
company. Usually includes bank accounts and marketable securities,
such as government bonds and Bankers' Acceptances. Cash equivalents on
balance sheets include securities (e.g., notes) that mature within
ninety days. |
| CASH
DIVIDEND |
A dividend
paid in cash to a company's shareholders. The amount is normally based
on profitability and is taxable as income. A cash distribution may
include capital gains and return of capital in addition to the
dividend. |
| CASH FLOW |
In
investments, it represents earnings before depreciation amortisation
and non-cash charges. Sometimes called cash earnings. Cash Flow from
operations (called Funds From Operations (FFO) by real estate and
other investment trusts, is important because it indicates the ability
to pay dividends. |
| CEDEL |
A European
Clearing System and Depository. |
| CERTIFICATES
OF DEPOSIT (CDs) |
Debt
instruments issued by banks and building societies. |
| CGT |
Abbreviation
for Capital Gains Tax. For funds where tax is payable, this tax is
charged on profits made on sales of securities. |
| CHANGES IN
FINANCIAL POSITION |
Sources of
funds internally provided from operations which alter a company's cash
flow position: depreciation, deferred taxes, other sources, and
capital expenditures. |
| CHARITABLE
REMAINDER TRUST |
Legal document
set up with a charity, in which the charity pays you income for life.
When you die, the money goes to the charity, tax-free. |
| CLEARING
SYSTEM |
An external
system associated with a capital market that arranges security
settlements eg CREST in ROI and UK. |
| CLOSED-END
FUNDS |
Funds whose
shares are traded on an exchange, similar to stocks. The price per
share doesn't typically equal the net asset value of a share. |
| CLOSING
PURCHASE |
A transaction
in which the purchaser's intention is to reduce or eliminate a short
position in a stock, or in a given series of options. |
| CLOSING
SALE |
A transaction
in which the seller's intention is to reduce or eliminate his long
position in a stock, or a given series of options. |
| COMMERCIAL
PAPER |
Short-term
loans to corporations. |
| COMMINGLED
FUND |
A fund where
the assets belong to more than one client. The term is more often used
in the USA than in Europe. |
| COMMISSION |
Broker fee for
trading on your behalf. |
| COMMON
STOCK |
Unit of
ownership in a public corporation with voting rights, but with lower
priority than either preferred stock or bonds if the company is ever
liquidated. |
| COMMON
STOCK/OTHER EQUITY |
Value of
outstanding common shares at par, plus accumulated retained earnings.
Also called shareholders' equity. |
| COMPLIANCE |
Adherence to
the legislation, regulation and best practice approaches applicable to
the fund management industry. |
| CONFIRMATION |
The written
statement that follows any "trade" in the securities
markets. Confirmation is issued immediately after a trade is executed.
It spells out settlement date, terms, commission, etc. |
| CONSENSUS |
An investment
mandate applied to some Life and Pension funds. ILIM seeks to set the
asset allocation mix of such funds at the average of the mixes applied
by our competitors, hence the term Consensus.
For each element of the mix ILIM tries to obtain an investment
return equal to the index for that market. For an Active fund, ILIM
would try to beat the index. |
| CONSTANT
DOLLAR INVESTING |
Investment
strategy that preserves profits by periodic evaluation and adjustment
of a portfolio. You maintain the same amount in your stock fund each
year by channelling funds from and to a bond or money market fund. |
| CONVERGENCE |
The movement
of the price of a futures contract toward the price of the underlying
cash commodity. At the start, the contract price is higher because of
the time value. But as the contract nears expiration, the futures
price and the cash price converge. |
| CONVERTIBLE
BOND FUNDS |
Pooled funds
that invest in bonds that can be converted into stocks. |
| CORNER A
MARKET |
To purchase
enough of the available supply of a commodity or stock in order to
manipulate its price. |
| CORPORATE
BONDS |
Debt
instruments issued by corporations. |
| COUNTERPARTY |
External
company ILIM trades with, usually a stockbroker or a bank. |
| COUPON RATE |
In bonds,
notes or other fixed income securities, the stated percentage rate of
interest, usually paid twice a year. |
| COVERED
CALL |
A short call
option position in which the writer owns the number of shares of the
underlying stock represented by the option contracts. Covered calls
generally limit the risk the writer takes because the stock does not
have to be bought at the market price, if the holder of that option
decides to exercise it. |
| COVERED PUT |
A put option
position in which the option writer also is short the corresponding
stock or has deposited, in a cash account, cash or cash equivalents
equal to the exercise of the option. This limits the option writer's
risk because money or stock is already set aside. In the event that
the holder of the put option decides to exercise the option, the
writer's risk is more limited than it would be on an uncovered or
naked put option. |
| CPMS |
Combined
Performance Measurement Service. This is a service operated by the
consultants, Mercers, to which many of ILIM’s clients subscribe. It
provides an independent analysis of portfolio performance. ILIM
supplies portfolio data to Mercers to support these analyses. |
| CREST |
Irish & UK
central depository for equity trades. |
| CURRENT
ASSETS |
Value of cash,
accounts receivable, inventories, marketable securities and other
assets that could be converted to cash in less than 1 year. |
| CURRENT
LIABILITIES |
Amount owed
for salaries, interest, accounts payable and other debts due within 1
year. |
| CURRENT
YIELD |
For bonds or
notes, the coupon rate divided by the market price of the bond. |
| CUSTODIAN |
Bank or other
financial institution that safeguards pooled fund securities and may
respond to transactions only by designated fund officers. |
| CUSTODY
FEES |
Fees paid to
custodian. |
| |
|
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|
| DAY ORDER |
An order to
buy or sell stock that automatically expires if it can't be executed
on the day it is entered. |
| DEAL TICKET |
Initial record
of deal. |
| DEBT/EQUITY
RATIO |
Indicator of
financial leverage (gearing). Compares assets provided by creditors to
assets provided by shareholders. Determined by dividing long term debt
by common stockholders' equity. |
| DECILE RANK |
Performance
over time, rated on a scale of 1-10. 1 indicates that a pooled fund's
return was in the top 10 % of funds being compared, while 3 means the
return was in the top 30 %. |
| DEPRECIATION |
A non-cash
expense that provides a source of free cash flow. Amount allocated
during the period to amortise the cost of acquiring long term assets
over the useful life of the assets. |
| DERIVATIVE
SECURITY |
A financial
security, such as an option, or future, whose value is derived in part
from the value and characteristics of another security, the underlying
security. |
| DISINVESTMENT |
Sale of a
security by a portfolio |
| DIVIDEND
DISTRIBUTION |
Some
unit-linked funds (Property Modules, MIIEUT) accumulate income over
six month periods, then distribute the income to unitholders at the
end of the period. The distribution causes the price of the unit fund
to drop. The distribution may be done by way of a cash payment to the
unitholder or by way of an additional allocation of units in the fund.
Most funds do not distribute income, but accumulate it within the
fund. |
| |
|
 |
|
| EARNINGS |
Net income
(profit) for the company during the period. |
| EARNINGS
PER SHARE (EPS) |
Net income for
the past 12 months divided by the number of common shares outstanding,
as reported by a company. The company often uses a weighted average of
shares outstanding over reporting term. |
| EARNINGS
YIELD |
The ratio of
Earnings Per Share after allowing for tax and interest payments on
fixed interest debt, to the current share price. It is the inverse of
the Price/Earnings ratio. Calculate it as Total Twelve Months Earnings
divided by number of outstanding shares, divided by the recent price,
multiplied by 100. The end result is shown in percentage. |
| ENDORSEMENTS |
An agreed
alteration to the terms of an insurance policy. Eg increasing the
amount insured. |
| ENTITLEMENTS |
Amounts of
income due to a fund when a fund holds certain assets e.g. dividends
on equities or interest on cash deposits. |
| EQUITIES |
Shares. |
| EQUITY |
The value of
the common stockholders' equity in a company as listed on the balance
sheet. |
| EQUITY
INCOME FUNDS |
Pooled funds
that favour investments in stocks that generate income over growth. As
a result, they can be less risky than other types of stock funds. |
| EQUITY
OPTIONS |
Securities
that give the holder the right to buy or sell a specified number of
shares of stock, at a specified price for a certain (limited) time
period. Typically one option equals 100 shares of stock. |
| EUROPEAN-STYLE
OPTION |
An option
contract that can only be exercised on the expiration date. |
| EXCESS
MARGIN |
An amount of
money on deposit with a counterparty, usually for futures trades, that
exceeds the amount of margin or safety deposit actually required by
the counterparty. |
| EXCHANGE |
The
marketplace in which shares, options and futures on stocks, bonds,
commodities and indices are traded. Major stock exchanges include the
New York Stock Exchange (NYSE), the National Association of Securities
Dealers (NASDAQ) and the London Stock Exchange (LSE). |
| EX-DIVIDEND
DATE |
Date on which
the value of the income or capital gains distribution is deducted from
the price of a fund's shares. |
| EXECUTION |
The process of
completing an order to buy or sell securities. |
| EXERCISE |
To implement
the right of the holder of an option to buy (in the case of a call) or
sell (in the case of a put) the underlying security. |
| EXPENSE
RATIO |
The percentage
of the assets that were spent to run a pooled fund. |
| |
|
 |
|
| FACE
VALUE |
Value of a
bond or note as given on the certificate. In the US corporate bonds
are usually issued with £1,000 face values, municipal bonds with
£5,000 face values, and government bonds, £1,000 to £10,000 face
values. Also known as the principal. |
| FINANCIAL
PLANNER |
Individual who
helps an individual to establish a financial game plan. Although a
financial planner may have certain licenses or designations indicating
the extent of his or her training, there is no requirement that a
financial planner have a license. |
| FIRST
IN-FIRST OUT (FIFO) |
Basis for
calculating the tax impact of pooled fund profits and losses that
assumes shares sold are the oldest shares owned. |
| FIXED-INCOME
FUND |
Another term for a mutual bond fund. |
| FORWARD
RATES |
Usually used
in the context of foreign currency trading. It is a means of
reflecting interest rate differentials between different currencies
over a period of time. |
| FRONT-END
LOADS |
Sales commission paid to purchase shares of pooled
funds. |
| FUND FAMILY |
The management company that runs and/or sells shares of the
fund. Fund families often offer several funds with different
investment objectives. |
| FUND FLOW |
A statement of
the sources of money flows into a portfolio (eg contributions, income,
security sales) and what the money was spent on (eg payments to
client, expenses, security purchases). |
| FUTURES
CONTRACT |
Agreement to buy or sell a set number of shares of a
specific stock in a designated future month at a price agreed upon by
the buyer and seller. The contracts themselves are often traded on the
futures market. A futures contract differs from an option because an
option is the right to buy or sell, whereas a futures contract is the
promise to actually make a transaction. |
| |
|
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|
| GENERAL
PURPOSE MONEY FUNDS |
Pooled funds
that invest largely in bank CDs and short-term corporation IOUs called
commercial paper. |
| GILTS |
Fixed Interest securities issued by the
government in either Ireland or the UK. |
| GIPS |
|
| GLOBAL
FUNDS |
Pooled funds
that invest in both Ireland and foreign countries. |
| GOOD 'TIL
CANCELED |
Sometimes
simply called "GTC", it means an order to buy or sell stock
that is good until you cancel it. Stockbrokers usually set a limit of
30-60 days, at which the GTC expires if not restated. |
| GROWTH
AND INCOME FUNDS |
Pooled funds
that own primarily blue-chip stocks of well-established companies that
pay out a lot of dividends to their shareholders. These funds
generally develop stock portfolios that balance the potential for
appreciation with the potential for dividend income. |
| GROWTH
FUNDS |
Pooled funds
that invest in the stocks of well-established firms that are expected
to be profitable and to grow for years to come. |
| GROWTH
RATES |
Compound
annual growth rate for the number of full fiscal years shown. If there
is a negative or zero value for the first or last year, the growth is
NM (not meaningful). |
| GIPS |
Global
Investment Performance Standards. The standards seek to remove
subjective elements of performance measurement so that it is possible
to make fair comparisons between the results obtained by different
fund mangers. The standards have widespread industry acceptance
globally. In time, they may replace CPMS, or CPMS may adopt these
standards. |
| GROSS ROLL
UP |
A tax
arrangement introduced on 1/1/2001 for ROI Life funds. Before this
date, funds provided for income tax and capital gains tax daily and
produced fund prices net of tax. Funds launched after this date no
longer provide for tax in fund pricing. Tax is paid only when a client
sells units in the fund. The tax is calculated on the growth in unit
price between the purchase and sale dates. |
 |
|
| HEDGING |
A strategy
designed to reduce investment risk using "call" options,
"put" options, "short" selling, or futures
contracts. A hedge can help lock in existing profits. Its purpose is
to reduce the potential volatility of a portfolio, by reducing the
risk of loss. |
| HEDGING |
Strategy of
investing in one or more securities to protect yourself from potential
losses in other investments. |
| HIGH PRICE |
The highest
(intraday) price of a stock over the past 52 weeks, adjusted for any
stock splits. |
| HIGH-QUALITY
CORPORATE BOND FUNDS |
Pooled funds
that buy bonds issued by the nation's financially strongest companies. |
| HIGH-YIELD
BOND FUNDS |
Risky bond
pooled funds that invest in high-yield bonds of companies with poor
credit ratings. The bonds are rated below triple B by Standard &
Poors and Moodys. Also known as junk bond funds. |
| HOLDING
COMPANY |
A corporation
that owns enough voting stock in another firm to control management
and operations by influencing or electing its board of directors. |
 |
|
| INCOME |
Periodic
interest or dividend distributions obtained from a fund. |
| INCOME
FUNDS |
Pooled funds
that invest in higher-yielding stocks, but may own some bonds. You get
income first along with some growth. These funds usually invest in
utility, telephone, and blue-chip stocks. |
| INDEX |
A) Measure updated regularly that give
a representation of the movement in value of a particular market. B) List of prices or other characteristics representing a
particular group of goods or services which gives an indication of movements over time,
for example, the consumer price index, the average earnings index and the retail sales
index. |
| INDEXATION |
A) Adjustment of payments or values in
line with movements in a particular index of prices or earnings. B) The use of index funds. |
| INDEX FUND |
Investment fund which is designed to
match the returns on a particular stock market index. The fund may hold all the shares in
the particular index or, more commonly, use a mathematical model to select a sample which
will perform as closely as possible to the index. |
| INDICATED
DIVIDEND |
Total amount
of dividends that would be paid on a share of stock over the next 12
months if each dividend were the same amount as the most recent
dividend. Usually represent by the letter e in stock tables. |
| INDICATED
YIELD |
The yield,
based on the most recent quarterly rate times four. To determine the
yield, divide the annual dividend by the price of the stock. The
resulting number is represented as a percentage. |
| INDUSTRY |
The category
describing a company's primary business activity. This usually is
determined by the largest portion of revenue. |
| INFLATION |
Rise in prices
of goods and services. |
| INFLATION
HEDGE |
Term
describing an investment that performs well when inflation heats up. |
| INITIAL
MARGIN |
Minimum
deposit required to trade futures. |
| INITIAL
PUBLIC OFFERING (IPO) |
A company's
first sale of stock to the public. Securities offered in an IPO are
often, but not always, those of young, small companies seeking outside
equity capital and a public market for their stock. Investors
purchasing stock in IPOs generally must be prepared to accept very
large risks for the possibility of large gains. IPOs by investment
companies (closed end funds) usually contain underwriting fees which
represent a load to buyers. |
| INSIDER
INFORMATION |
Relevant
information about a company that has not yet been made public. It is
illegal for holders of this information to make trades based on it,
however received. |
| INSTALMENT
INVESTMENT STRATEGY |
Investment
strategy in which you divide your investment among several pooled
funds and make any new investments into the fund that performs the
worst. |
| INSURANCE
AGENT |
Individual
licensed to sell insurance. |
| INTEREST
INCOME |
Earnings
received, often from bonds. |
| INTERMEDIATE-TERM
BOND FUNDS |
Pooled funds
that invest in bonds that mature in about 5 to 10 years. International
bonds Debt instruments issued by foreign governments or corporations. |
| INTERNATIONAL
FUNDS |
Pooled funds
that invest in stocks or bonds of world-wide companies. |
| IN-THE-MONEY |
A
"call" option is in-the-money if the strike price is less
than the market price of the underlying security. A "put"
option is in-the-money if the strike price is greater than the market
price of the underlying security. For example, an xyz "call"
option with a 52 strike price is in-the-money when xyz trades at 52
1/8 or higher. An xyz "put" option with a 52 strike price is
in-the-money when xyz is trading at 51 7/8 or lower. |
| INVENTORY |
For companies:
Raw materials, items available for sale or in the process of being
made ready for sale. They can be individually valued by several
different means, including cost or current market value, and
collectively by FIFO, LIFO or other techniques. The lower value of
alternatives is usually used to preclude overstating earnings and
assets. For security firms: securities bought and held by a broker or
dealer for resale. |
| INVESTMENT
BANKER |
Firm that
sells stocks or bonds to brokerages which, in turn, sell them to
investors on a securities exchange. |
| INVESTMENT
COMPANY |
Firm that, for
a management fee, invests pooled funds of small investors in
securities appropriate for its stated investment objectives. |
| INVESTMENT
OBJECTIVE |
Description,
included in a fund document, of what a pooled fund hopes to
accomplish. |
| INVESTMENT
TRUST |
A closed-end
fund. These funds have a fixed number of shares which are traded on
the secondary markets similarly to corporate stocks. The market price
may exceed the net asset value per share, in which case it is
considered at a "premium." When the market price falls below
the NAV/share, it is at a "discount." Many closed end funds
are of a specialised nature, with the portfolio representing a
particular industry, country, etc. These funds are usually listed on
stock exchanges. |
| IRREVOCABLE
TRUST |
Legal document
that allows you to avoid probate and reduce the tax bite. You give up
ownership of any asset you placed in this type of trust, and it can't
be changed. |
| |
|
 |
|
| JUNK
BOND FUNDS |
Pooled funds
that invest in bonds issued by companies or governments that are rated
below BBB by Standard and Poor's or Moody's. Also know as high-yield
bond funds. |
| |
|
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|
| |
|
| |
|
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|
| LIMIT
ORDER |
An order to
buy a stock at or below a specified price or to sell a stock at or
above a specified price. For instance, you could tell a broker
"Buy me 100 shares of xyz Corp at £8 or less" or to
"sell 100 shares of xyz at £10 or better." |
| LONG
POSITION |
Occurs when an
individual owns securities. An owner of 1000 shares of stock is said
to be "Long the Stock." |
| LONG
POSITION (OPTIONS) |
An options
position where a person has executed one or more options trades where
the net result is that they are an "owner" or holder of
options (i.e. the number of contracts bought exceeds the number of
contracts sold). |
| LONG TERM
ASSETS |
Value of
property, equipment and other capital assets minus the depreciation.
This is an entry in the bookkeeping records of a company, usually on a
"cost" basis and thus does not necessarily reflect the
market value of the assets. |
| LONG TERM
DEBT |
Value of
obligations of over 1 year that require that interest be paid. |
| LONG-TERM
BOND FUNDS |
Pooled funds
that invest in bonds that mature in more than 10 years. |
| |
|
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|
| MANAGEMENT
CHARGE REBATES |
Management
charges within a unit-linked fund are applied equally to all unit
holders. Rebates are an arrangement whereby ILA reduces the level of
charge for a client by allocating additional Level 2 units to the
client.
This occurs within ILA for certain large pension schemes and allows
marketing personnel customise the level of charges for certain
clients.
It also occurs within certain Level 1 funds that own units in funds
managed by external managers |
| MANAGEMENT
FEE |
Charge for
running the fund. |
| MANAGEMENT/CLOSELY
HELD SHARES |
Percentage of
shares held by persons closely related to a company. |
| MARGIN
ACCOUNT (STOCKS) |
An account in
which stocks can be purchased for a combination of cash and a loan.
The loan in the margin account is collateralised by the stock and, if
the value of the stock drops sufficiently, the owner will be asked to
either put in more cash, or sell a portion of the stock. |
| MARGIN CALL |
Requirement to
place extra funds on deposit with futures counterparty. |
| MARGIN
REQUIREMENT (OPTIONS) |
The amount of
cash an uncovered (naked) option writer is required to deposit and
maintain to cover his daily position valuation and reasonably
foreseeable intrude price changes. |
| MARKET
CAPITALISATION |
The total
dollar value of all outstanding shares. Computed as shares times
current market price. It is a measure of corporate size. |
| MARKET
CYCLE |
The period
between the 2 latest highs or lows of the S&P 500, showing net
performance of a fund through both an up and a down market. A market
cycle is complete when the S&P is 15 % below the highest point or
15 % above the lowest point (ending a down market). The dates of the
last market cycle are: 12/04/87 to 10/11/90 (low to low). |
| MARKET
ORDER |
An order to
buy or sell a stock at the going price. |
| MARKET
TIMING |
Strategy by
which investors attempt to buy low and sell high by buying when the
market is turning bearish and selling at the end of a bull market. |
| MARKET
VALUE |
The value of
an investment in the capital markets at a point in time. |
| MATURITY
DATE |
Date that a
bond is due for payoff. |
| MONEY
MARKET FUND |
A pooled fund
that invests only in short term securities, such as bankers'
acceptances, commercial paper, repurchase agreements and government
bills. The net asset value per share is maintained at £1.00. Such
funds are not federally insured, although the portfolio may consist of
guaranteed securities and/or the fund may have private insurance
protection. |
| MONEY
MARKET POOLED FUND |
Pooled fund
that invests typically in short-term government and company loans and
CDs. These tend to be lower-yielding, but less risky than most other
types of funds. Also known as money market funds or money funds. |
| MOVING
AVERAGE |
Used in charts
and technical analysis, the average of security or commodity prices
constructed in a period as short as a few days or as long as several
years and showing trends for the latest interval. As each new variable
is included in calculating the average, the last variable of the
series is deleted. |
| MUNICIPAL
BOND FUNDS |
Pooled funds
that invest in tax-exempt bonds issued by states and local governments
in the US, Germany and elsewhere. |
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|
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|
| NET ASSET
VALUE (NAV) |
The value of a
fund's investments. For a pooled fund, the net asset value per share
usually represents the fund's market price, subject to a possible
sales or redemption charge. For a closed end fund, the market price
may vary significantly from the net asset value. |
| NET INCOME |
The company's
total earnings, reflecting revenues adjusted for costs of doing
business, depreciation, interest, taxes and other expenses. |
| NOISE |
Price and
volume fluctuations that can confuse interpretation of market
direction. |
| NO-LOAD
POOLED FUND |
Pooled fund
that is sold without sales commission. |
| NOTE |
Another word
for a short-term bond. |
| NO-TRANSACTION
FEE ACCOUNT |
Brokerage firm
account that allows customers to purchase a selection of pooled funds
with no charge or a limited charge. |
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|
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| OBJECTIVE
(POOLED FUNDS) |
The fund's
investment strategy category as stated in the prospectus. There are
more than 20 standardised categories. |
| OFFER
PRICING BASIS |
An approach to
unit fund pricing that assumes more clients are entering the fund than
are leaving it, and that the fund is growing. This approach requires
that offer prices of securities are used in fund valuations and that
buying costs are added to security values.
The price at which a market
participant is willing to buy securities |
| OPALS |
An OTC
instrument sold by investment banks to institutional investors that is
designed (but not guaranteed) to track a stock index. |
| OPEN
INTEREST |
The number of
outstanding option contracts in the exchange market or in a particular
class or series. |
| OPEN-END
FUNDS |
Funds that
permit ongoing purchase and redemption of fund shares (pooled funds
are open-end funds). |
| OPTION |
Gives the
buyer the right, but not the obligation, to buy or sell stock at a set
price on or before a given date. Investors, not companies, issue
options. Investors who purchase call options bet the stock will be
worth more than the price set by the option (the strike price), plus
the price they paid for the option itself. Buyers of put options bet
the stock's price will go down below the price set by the option. |
| OUT OF THE
MONEY |
A call option
is out-of-the-money if the strike price is greater than the market
price of the underlying security. A put option is out-of-the-money if
the strike price is less than the market price of the underlying
security. |
| OVER-THE-COUNTER
MARKET |
An investment
tailor-made by an investment bank for the purchaser rather than a
standard instrument, like an equity or a gilt, traded in the capital
markets |
| OVERWEIGHT |
Exposure to a specific asset (or asset
class) which is higher than the proportion it represents in the market index or benchmark
against which the portfolio is measured. Investment managers may take overweight positions
in shares or sectors they expect to outperform in order to add value to the portfolio. |
| |
|
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|
| PENALTIES |
In the context
of deal settlement, charges levied by stock exchanges or clearing
systems for late settlement. |
| PERFORMANCE |
A mathematical
measurement of the rate of increase or decrease in the value of a
portfolio over a period of time. |
| PERFORMANCE
ATTRIBUTION |
An analysis of
the factors that contributed to a fund’s performance over a period
of time, including market, asset type and currency. |
| PASSIVE
MANAGEMENT |
Where an investment manager establishes
a portfolio which aims to replicate a particular market index or benchmark fund and does
not attempt to actively manage the portfolio. |
| P/E RATIO
EQUATION |
Assume XYZ Co
sells for £25.50 per share and has earned £2.55 per share this year.
£25.50 = 10 times £2.55 so the XYZ stock sells for 10 times
earnings. |
| PHONE
SWITCHING |
In pooled
funds, the ability to transfer shares between funds in the same family
by telephone request. There may be a charge associated with these
transfers. Phone switching is also possible among different fund
families if the funds are held in street name by a participating
broker/dealer. |
| POINT AND
FIGURE CHART |
A price-only
chart that takes into account only whole integer changes in price,
i.e., a 2-point change. Point and figure charting disregards the
element of time and is solely used to record changes in price. |
| PORTFOLIO |
A collection
of assets owned by one or more clients. |
| PORTFOLIO
CONSTRUCTION |
An area in
Fund Management responsible for managing funds according to clients’
mandates. |
| PORTFOLIO
MANAGER |
Person
responsible for making pooled fund investments. |
| POSITIONS |
In a Treasury
context, the Long or Short currency positions held by individual funds
or Treasury pools. |
| PRECIOUS
METALS POOLED FUND |
Pooled funds
that invest in precious metals and mining stocks. |
| PREFERRED
STOCK |
A security
that shows ownership in a corporation and gives the holder a claim,
prior to the claim of common stockholders, on earnings and also
generally on assets in the event of liquidation. Most preferred stock
pays a fixed dividend, stated in a dollar amount or as a percentage of
par value. This stock does not usually carry voting rights. |
| PREMIUM |
A one-off or
regular payment by a client for an insurance contract. |
| PRICE/BOOK
RATIO |
Compares a
stock's market value to the value of total assets less total
liabilities (book). Determined by dividing current price by common
stockholders' equity per share (book value), adjusted for stock
splits. Also called Market-to-Book. |
| PRICE/EARNINGS
RATIO |
Shows the
"multiple" of earnings at which a stock sells. Determined by
dividing current price by current earnings per share (adjusted for
stock splits). Earnings per share for the P/E ratio is determined by
dividing earnings for past 12 months by the number of common shares
outstanding. Higher "multiple" means investors have higher
expectations for future growth, and have bid up the stock's price. |
| PRICE/SALES
RATIO |
Determined by
dividing stock's current price by revenue per share (adjusted for
stock splits). Revenue per share for the P/S ratio is determined by
dividing revenue for past 12 months by number of shares outstanding. |
| PRICES |
Price of a
share of common stock on the date shown. Highs and lows are based on
the highest and lowest intraday trading price. |
| PRIMARY
MARKET |
The first
buyer of a newly issued security buys that security in the primary
market. All subsequent trading of those securities is done in the
secondary market. |
| PRINCIPAL |
Original
investment. |
| PROFIT
MARGIN |
Indicator of
profitability. Determined by dividing net income by revenue for the
same 12-month period. Result is shown as a percentage. |
| PROGRAMME
TRADING |
A large number
of trades by the same broker based
on signals from computer programs, usually entered directly from the
trader's computer to the market's computer system and executed
automatically. |
| PROSPECTUS |
Legal
disclosure document that spells out information you need to know to
make an investment decision on a pooled fund or other security. |
| PROXY |
Document
intended to provide shareholders with information necessary to vote in
an informed manner on matters to be brought up at a stockholders'
meeting. Includes information on closely held shares. Shareholders can
and often do give management their proxy, representing the right and
responsibility to vote their shares as specified in the proxy
statement. |
| PUT OPTION |
An option
contract that gives the holder the right to sell (or "put"),
and places upon the writer the obligation to purchase, a specified
number of shares of the underlying stock at the given strike price on
or before the expiration date of the contract. |
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|
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|
| QUARTILE |
Relative ranking (in quarters) of a
particular portfolio (or a manager) in a league table of returns. So, for example, a
quartile ranking of 2 indicates that 25% of portfolios performed better and 50% acheived a
lower return. |
| QUICK RATIO |
Indicator of a
company's financial strength (or weakness). Calculated by taking
current assets less inventories, divided by current liabilities. Also
called Acid Test. |
| |
|
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|
| RANGE |
The difference
between the high and low price during a given period. |
| REALISED
PROFIT OR LOSS |
If the sale
value of an investment (security, currency position) is greater than
the value for which it was bought, the portfolio makes a realised
profit, if it is less the portfolio makes a realised loss. |
| REBALANCING |
Investment
strategy in which you adjust your mix of investments periodically to
keep the proper percentages of money in each fund, based on your
tolerance for risk. |
| RECORD DATE |
Date by which
a shareholder must officially own shares in order to be entitled to a
dividend. |
| REDEMPTION
CHARGE |
The commission
charged by a pooled fund when redeeming shares. For example, a 2 %
redemption charge (also called a "back end load") on the
sale of shares valued at £1000 will result in payment of £980 (or 98
% of the value) to the investor. This charge may decrease or be
eliminated as shares are held for longer time periods. |
| REDENOMINATION |
Reclassification
of company share capital. |
| REGIONAL
FUNDS |
Pooled funds
that invest in one specific region of the globe. |
| RELATIVE
STRENGTH |
A stock's
price movement over the past year as compared to a market index such
as the S&P 500. Value below 1.0 means the stock shows relative
weakness in price movement (under-performed the market); a value above
1.0 means the stock shows relative strength over the 1-year period. |
| REPO |
An agreement
to loan a security, usually a bond, for a day. The loan attracts a
rate of interest better than the rate obtainable in the cash markets.
The loan can be renewed daily. |
| REPURCHASE
AGREEMENTS |
Generally,
overnight loans secured by U.S. Treasury or similar securities |
| RETURN |
The percentage
gain or loss for a pooled fund in a specific time period. This number
assumes that all distributions are reinvested. |
| RETURN ON
ASSETS (ROA) |
Indicator of
profitability. Determined by dividing net income for the past 12
months by total assets. Result is shown as a percentage. |
| RETURN ON
EQUITY (ROE) |
Indicator of
profitability. Determined by dividing net income for the past 12
months by common stockholders' equity (adjusted for stock splits).
Result is shown as a percentage. |
| REVERSE
STOCK SPLIT |
A
proportionate decrease in the number of shares, but not the value of
shares of stock held by shareholders. Shareholders maintain the same
percentage of equity as before the split. For example, a 1-for-3 split
would result in stockholders owning 1 share for every 3 shares owned
before the split. A firm generally institutes a reverse split to boost
its stock's market price and attract investors. |
| RIGHTS
OFFERING |
Issuance of
"rights" to current shareholders allowing them to purchase
additional shares, usually at a discount to market price. Shareholders
who do not exercise these rights are usually diluted by the offering.
Rights are often transferable, allowing the holder to sell them on the
open market to others who may wish to exercise them. Rights offerings
are particularly common to closed end funds, which cannot otherwise
issue additional common stock. |
| RISK |
In relation to
a pooled fund, chances of losing money. |
| RISK
TOLERANCE |
Amount of
money you can stomach losing in a given year. |
| |
|
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|
| S&P
500 INDEX |
Measure of the
performance of a large group of blue-chip stocks in the U.S. |
| SALES
CHARGE |
The fee
charged by a pooled fund when purchasing shares, usually payable as a
commission to a marketing agent, such as a financial advisor, who is
thus compensated for his assistance to a purchaser. It represents the
difference, if any, between the share purchase price and the share net
asset value. |
| SEC |
The Securities
and Exchange Commission, the primary federal regulatory agency of the
securities industry in the US. |
| SECONDARY
MARKET |
A market that
provides for the purchase or sale of previously owned securities. Most
trading is done in the secondary market. |
| SECURITIES |
Stocks, bonds,
or rights to ownership, such as options, typically sold by a broker. |
| SECURITIES
EXCHANGE |
Tightly
regulated marketplace where stocks, bonds, and cash are traded. |
| SEGREGATED
FUND |
A non-unitised
fund managed by ILIM on behalf of the trustees of a pension scheme
under an investment management agreement. The assets of these funds
belong to the scheme members acting through the trustees. |
| SELLING
COSTS |
A calculation
applied in fund pricing to provide for expenditure on brokerage and
other costs arising from selling assets. This is used for funds on a
Bid pricing basis and the value of these costs is subtracted from the
market value of securities in the pricing calculation. |
| SELLING
SHORT |
If an investor
thinks the price of a stock is going down, the investor could borrow
the stock from a broker and sell it. Eventually, s/he must buy the
stock back on the open market. For instance, you borrow 1000 shares of
XYZ on July 1 and sell it for £8 per share. Then, on Aug 1, you
purchase 1000 shares of XYZ at £7 per share. You've made £1000 (less
commissions and other fees) by selling short. |
| SETTLEMENT
DATE |
The date on
which payment is made to settle a trade. For stocks traded on US
exchanges, settlement is currently 5 business days after the trade,
but this will be reduced to 3 days in 1995. For pooled funds,
settlement usually occurs in the U.S. the day following the trade. In
some regional markets, foreign shares may require months to settle. |
| SHARE |
Unit of
ownership. |
| SHARE
REPURCHASE |
Program by
which a corporation buys back its own shares in the open market. It is
usually done when shares are undervalued. Since it reduces the number
of shares outstanding and thus increases earnings per share, it tends
to elevate the market value of the remaining shares held by
stockholders. |
| SHAREHOLDER |
One who owns
shares. |
| SHORT
POSITION (OPTIONS) |
A position
wherein a person's interest in a particular series of options is as a
net writer (i.e., the number of contracts sold exceeds the number of
contracts bought). |
| SHORT
POSITION (STOCKS) |
Occurs when a
person sells stocks s/he does not yet own. Shares must be borrowed,
before the sale, to make "good delivery" to the buyer.
Eventually, the shares must be bought to close out the transaction.
Technique is used when an investor believes the stock price is going
down. |
| SHORT SALE |
Selling a
security that the seller does not own but is committed to repurchasing
eventually. It is used to capitalise on an expected decline in the
security's price. |
| SHORT-TERM
BOND FUNDS |
Pooled funds
that generally invest in bonds that mature in less than three years. |
| SINGLE-COUNTRY
FUNDS |
Pooled funds
or closed-end funds that invest in one country. |
| SLIPPAGE |
The difference
between estimated transaction costs and actual transaction costs. The
difference is usually composed of revisions to price difference or
spread and commission costs. |
| SMALL
COMPANY STOCK FUNDS |
Volatile
pooled funds that invest in younger companies whose stocks are
frequently traded on the over-the-counter stock market. |
| SOCIALLY
RESPONSIBLE FUNDS |
Pooled funds
that invest in companies that don't pollute the environment or sell
arms. They will not own tobacco or alcohol stocks, nor invest in
companies with poor employee relations. |
| SPECIALIST
FUNDS |
Funds that
invest in one specific industry or industry sector. |
| SPECULATION |
Gambling on a
risky investment in hopes of a high payoff down the road. |
| SPOT RATES |
Exchange rates
for settlement in 2 days time. |
| STAMP DUTY |
Tax levied for
purchase of IR & UK Equities and Properties. |
| STOCK |
Investment
that buys ownership in a corporation, in exchange for a portion of
that company's earnings and assets. |
| STOCKBROKER |
Person
licensed to sell stocks and other types of securities. Also known as a
registered representative. |
| STOCK
DIVIDEND |
Payment of a
corporate dividend in the form of stock rather than cash. The stock
dividend may be additional shares in the company, or it may be shares
in a subsidiary being spun off to shareholders. Stock dividends are
often used to conserve cash needed to operate the business. Unlike a
cash dividend, stock dividends are not taxed until sold. |
| STOCK
FUND BUILDER |
Investment
strategy in which you invest your bond fund's interest income into a
stock fund to build your wealth. |
| STOCKLENDING |
Short term
loan of securities for a fee. |
| STRIKE
PRICE |
The stated
price per share for which underlying stock may be purchased (in the
case of a call) or sold (in the case of a put) by the option holder
upon exercise of the option contract. |
| SWAP |
A derivative
financial instrument. A swap is a financial transaction in which two
parties agree to exchange streams of payment over time. Trades may be
across interest rates, currencies or combinations of both. |
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| TAX-DEFERRED
INVESTMENT |
An investment
that is not taxed until money is withdrawn, usually at retirement. |
| TESTAMENTARY
TRUST |
Legal document
set up by a will when a person dies that is used for special
situations, such as to establish a fund to pay for a child's
education. |
| TICK
INDICATOR |
A market
indicator based on the number of stocks whose last trade was an uptick
or a downtick. Used as an indicator of market sentiment or psychology
to try to predict the market's trend. |
| TIME VALUE |
The portion of
the premium that is based on the amount of time remaining until the
expiration date of the option contract, and that the underlying
components that determine the value of the option may change during
that time. Time value is generally equal to the difference between the
premium and the intrinsic value. |
| TOTAL
RETURN |
The rate of
return on an investment, including reinvestment of distributions. |
| TOTAL
REVENUE |
Total sales
and other revenue for the period shown. Known as "turnover"
in the UK. |
| TRADE |
A verbal (or
electronic) transaction involving one party buying a security from
another party. Once a trade is consummated, it is considered
"done" or final. Settlement occurs 1-5 business days later. |
| TRADE DATE |
The date on
which a trade occurs. Trades generally settle (are paid for) 1-5
business days after a trade date. With stocks, settlement is generally
5 business days after the trade. |
| TRADING
RANGE |
The difference
between the high and low prices traded during a period of time; with
commodities, the high/low price limit established by the exchange for
a specific commodity for any one day's trading. |
| TRANSFER
AGENT |
Entity that
maintains shareholder records, including purchases, sales, and account
balances. |
| TREASURY
BILLS |
Short-term
IOUs to the U.S. Treasury. |
| TRUST |
Legal document
that does not have to be approved by probate court before your loved
ones can inherit your wealth. |
| TRUST DEED |
A legal
document that establishes a unit trust and that sets out the way in
which the trust will be managed and administered. |
| TURNOVER |
For pooled
funds turnover is a measure of trading activity during the previous
year, expressed as a percentage of the average total assets of the
fund. A turnover ratio of 25 % means that the value of trades
represented one-fourth of the assets of the fund. |
| |
|
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|
| UNCOVERED
CALL |
A short call
option position in which the writer does not own shares of underlying
stock represented by his option contracts. Also called a
"naked" call, it is much riskier for the writer than a
covered call, where the writer owns the underlying stock. If the buyer
of a call exercises the option to call, the writer would be forced to
buy the stock at market price. |
| UNCOVERED
PUT |
A short put
option position in which the writer does not have a corresponding
short stock position or has not deposited, in a cash account, cash or
cash equivalents equal to the exercise value of the put. Also called
"naked" puts, the writer has pledged to buy the stock at a
certain price if the buyer of the options chooses to exercise it. The
nature of uncovered options means the writer's risk is unlimited. |
| UNDERLYING
SECURITY |
For options:
the security subject to being purchased or sold upon exercise of an
option contract. For example, IBM stock is the underlying security to
IBM options. For depository receipts: the class, series and number of
the foreign shares represented by the depository receipt. |
| UNIT |
A share in a
Unit-Linked Life Assurance fund or a Unit Trust. Each unit is equal in
value to all other units. |
| UNIT
CERTIFICATE |
Some Unit
Trusts issue unit certificates to clients as evidence of ownership of
units in the trust. |
| UNIT LINKED |
A unitised
portfolio. ILIM operates two types of these portfolios, Unit Trusts
and Unit-Linked Life Assurance funds. Each has its own legal
construct. These portfolios are divided into a number of units of
equal value. Units may be created or deleted, but only if a
corresponding amount of assets is added to or subtracted from the
portfolio so that the value of a unit is unchanged. |
| |
|
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|
| VALUE
AVERAGING INVESTING |
Investment
strategy in which you always make sure that the value of your fund
increases by a specific amount over a specific time period. |
| VALUE
INVESTING |
Style of
investing characterised by search for shares that can be bought
cheaply and therefore offer good value. |
| VENTURE
CAPITAL |
Capital
invested in start-up companies. Such companies are not traded in the
capital markets, hence their need to raise capital by other means. |
| VOLATILITY |
A measure of
risk based on standard deviation in fund performance, usually measured
over 3 years or 5 years. |
| |
|
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|
| WALLFLOWER |
Stock that has
fallen out of favour with investors; tends to have a low P/E. |
| WARRANT |
A security
entitling the holder to buy a proportionate amount of stock at some
specified future date at a specified price, usually one higher than
current market. This "warrant" is then traded as a security,
the price of which reflects the value of the underlying stock.
Warrants are usually issued as a "sweetener" bundled with
another class of security to enhance the marketability of the latter. |
| WASTING
ASSET |
An asset that
has a limited life and thus, decreases in value (depreciates) over
time. Also applied to consumed assets, such as gas, and termed
"depletion." |
| WATCH
LIST |
A list of
securities selected for special surveillance by a brokerage, exchange
or regulatory organisation; firms on the list are often take-over
targets, companies planning to issue new securities or stocks showing
unusual activity. |
| WITHDRAWAL
PLAN |
The ability to
establish automatic periodic pooled fund redemptions and have proceeds
mailed directly to the investor. |
| WORLD
FUNDS |
Pooled funds
that invest in both the U.S. and foreign countries. Also known as
global funds. |
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|
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| YIELD |
A measure of
return on a security. It is a financial calculation based on the
settlement date, maturity, coupon rate, price, redemption value, and
number of annual coupon payments and interest basis of a security. |
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