At-a-glance guide to investment terms

ACTIVELY MANAGED FUNDS: Unit trusts and other investment funds run by managers seeking to beat stock market indices through good stock selection. 

ADVISORY SERVICE: A service whereby stockbrokers suggest share purchases but leave the decision to the investor. 

BASE RATE: The minimum rate of interest set by the Bank of England. 

BED AND ISA: Selling an investment liable to capital gains tax (CGT) to take advantage of the annual CGT allowance and repurchasing it in an Isa, where it will be free of CGT. 

CAT STANDARDS: Voluntary standards covering charges, access and terms on Isas set by the Government as an aid to savers making comparisons between products. The standards vary for the cash, insurance and shares Isas. 

CASH ISA: The portion of an Isa -- £1,000 a year (£3,000 in 1999-2000) - that can be invested in cash deposits. 

COLLECTIVE INVESTMENT: A fund that pools the money of a number of savers to invest in a portfolio of shares, fixed-interest securities or other assets. 

COOLING-OFF PERIOD: The right to cancel an Isa within 14 days without penalty. 

CORPORATE BONDS: Fixed-interest investments issued by companies that wish to borrow money via the stock market to finance their business activities. 

DISCOUNTS: Reductions in initial charges, normally on unit trust Isas only, offered by some financial advisers prepared to forego their initial commission. Or, with investment trusts, the difference between the share price and the value of the trust's underlying assets. 

DISCRETIONARY MANAGEMENT: A service where a stockbroker or investment adviser buys and sells investments on the investor's behalf. 

DIVIDENDS: Income paid to shareholders from company profits. 

EQUITIES: Another term to describe shares in a company. 

GILTS: Fixed-interest investments issued by the Government when it needs to borrow money. 

INDEX TRACKER: A passively invested fund that aims to track the performance of a stock exchange index such as the FTSE 100 - which shows the movements of the share prices of the largest 100 UK companies - by investing in the same shares. 

INDIVIDUAL SAVINGS ACCOUNT (ISA): The new tax-free savings scheme introduced by the Government in April 1999, in which up to £5,000 per annum can be invested (£7,000 in 1999-2000) in one or more investment components - cash, life insurance or shares. 

INVESTMENT TRUSTS: A collective investment fund set up as a company in which investors buy shares. The price of shares is determined by supply and demand and does not necessarily reflect the precise value of the fund's investments. 

KEY FEATURES: A document provided by an Isa manager that explains how the account works and shows the effect of charges and expenses. 

LIFE INSURANCE ISA: The portion of an Isa - £1,000 a year - that can be invested in life insurance funds. 

MINIS: Isas with three component parts which can be bought from different providers. Where this route is chosen, investment in stocks and shares is limited to £3,000. 

MAXIS: An Isa which must include a stocks and shares component and which can also include one or two of the other components but does not have to, thus allowing investors to place their total annual allowance in stocks and shares. 

OEICS: Open-ended investment companies. Funds similar to unit trusts, with only one price at which they are bought and sold. 

PERSONAL EQUITY PLANS: Peps were the tax-free plans for investing in stocks and shares prior to Isas. Existing Peps have not been affected by the introduction of Isas. 

RETURN: The income or capital growth earned by savings. 

RISK: The likelihood that your investment could fall in value. 

SHARE: Part-ownership of a company. 

SHARE EXCHANGE: Schemes offered by managers where individual stocks and shares are sold on behalf of an investor, often on preferential terms, and the proceeds reinvested in a unit or investment trust Isa. 

SPLIT-CAPITAL INVESTMENT TRUST: An investment trust with different categories of shares, with entitlements to different returns. For example, capital growth and no income, or income and no growth. 

STOCK: A term used interchangeably with shares, but originally used mainly to describe fixed-interest investments. 

TAX CREDIT: A 10 per cent tax refund reclaimed by managers on dividends from UK shares held within an Isa or Pep. On interest payments on bonds, tax reclaims are 20 per cent. 

TESSA: Tax-exempt special savings accounts were the tax-free deposit accounts that preceded cash Isas. Any saver who had a Tessa open at the time that Isas were introduced can continue to invest in it until the end of the original five-year term. 

TESSA-ONLY ISAS: At the end of a Tessa's five-year term, savers can transfer the capital invested into one of these special Isas without this money being counted against their annual Isa allowance. 
TRANSFERS: Switching investments in Peps or Isas from one manager to another without endangering the tax-free status. Once an investment is made in an Isa component, however, it cannot be switched to another component. 

UNIT TRUST: A collective investment fund divided into units. The value of the units mirrors the market value of the fund's investments. Each unit has an offer price (at which investors buy) and a bid price (the cash-in value). The difference between the two prices reflects the charge of making the investment. 

YIELD: The annual income generated by an investment. 

Source: The Times: 2 October 1999