Annual General Meeting

A meeting held once a year where shareholders can find out how their company is doing, ask questions of the directors and vote on key issues.

Annual Report and Accounts

A report prepared by a company each year after its year end. It sets out what the company does, how it has performed over the year and its financial position.

The annual report typically contains a financial summary, a chairman's statement and a portfolio review from the fund manager.

A statement on corporate governance and a detailed set of financial statements also forms part of the annual report.

Association of Investment Companies (AIC)

The AIC is the trade body for investment trust companies. Visit www.theaic.co.uk for further information.

Benchmark

An index or other measure against which the performance of an investment trust is compared.

The annual report and accounts will normally compare the Trust's performance with its benchmark and also include an explanation for any under or over performance.

Bid Price

The price at which you sell your shares. It is sometimes shown as the 'sell' price and will be the lower of the two prices shown.

Bid-Offer Spread

The difference between the prices at which you can buy and sell shares. It can also be known as the 'dealing spread'.

When you buy and sell investment trust shares you may see two prices quoted. The 'offer' price is the price that you would pay to buy the shares and the 'bid' price is the price you can sell the shares for.

The difference between the offer price and the bid price is known as the bid-offer spread.

Closed Ended

A trust is known as closed ended because it has a fixed number of shares in issue.

The closed ended structure allows fund managers to take a long term view on their investments as the number of shares will stay the same even when there are more sellers than buyers.

Collective Investment Fund

This is an investment 'vehicle' where investors pool their money and invest in a portfolio of assets with other investors.

A fund manager then invests this money on behalf of the investors, with the aim of providing economies of scale, risk diversification and professional fund management expertise.

Because you're investing in a fund that holds a number of different investments, you are not reliant on the fortunes of just one or two investments.

Investment Trusts are collective investment funds, as are Unit Trusts and OEICs.

Debentures

A debenture is a form of long-term loan that usually pays a fixed rate of interest and is normally repayable on a fixed date.

Discount

This is the amount by which the share price is less than the net asset value per share.

If you buy shares at a discount this means that you will be paying less than Net Asset Value.

If an investment trust trades at a discount to net asset value this could present a buying opportunity, although the discount could subsequently widen rather than narrow.

If a Trust's NAV is 100p but its share price is only 90p the Trust is trading at a discount of 10% (shown as -10%).

Dividend

This is income that is paid from an investment in shares.

Not all investment trusts pay income but those that do can choose to pay dividends monthly, quarterly, half-yearly or annually.

Some investment trusts have a long history of focusing on income for shareholders but such income is not guaranteed and may fall as well as rise.

Dividend Yield

This is the annual level of dividend expressed as a percentage of the current share price.

It is important to remember that future dividends may be higher or lower than indicated by the current dividend yield.

Gearing

At its simplest, gearing means endeavouring to enhance returns by borrowing money to buy more assets. A trust does this in the hope that it makes enough profit to pay back the debt and interest and return something extra for shareholders.

Although Gearing can boost a Trust's returns when investments perform well, losses can be magnified when investments lose value.

Half-Yearly Financial Report

This is a report prepared by a Trust half way through its financial year, setting out the same type of information as its annual report and accounts but in less detail.

The half-yearly report may also be referred to as the interim report.

Individual Savings Account

An Individual Savings Account (ISA) is not an investment in its own right but rather a 'wrapper' in which you hold investments.

An ISA allows you to save cash or invest in shares without paying tax.

Maximum overall annual subscription limits apply to ISAs and these may change at the beginning of each tax year.

Management Company

A company employed by an investment trust in order to provide investment management and administrative/secretarial services.

Allianz Global Investors GmbH, UK Branch (AllianzGI) is the management company for Allianz Technology Trust, The Brunner Investment Trust and The Merchants Trust.

Net Asset Value (NAV)

The NAV is the total value of a trust's assets less its liabilities, divided by the number of shares in issue.

Offer Price

The price at which you buy your shares. It is sometimes shown as the 'buy' price and will be the higher of the two prices shown.

Ongoing Charges Figure (OCF)

The OCF is published annually in order to indicate the level of operational expenses incurred in the running of the trust.

The OCF covers investment management and administrative fees as well as other fees.

The OCF can help you compare the annual operating expenses of different investment trusts (and funds in general).

Open Ended Funds

These are funds where the number of shares in issue varies from day to day, dependent on demand.

Open Ended Investment Companies (OEICs) and Unit Trusts are open ended funds.

Premium

This is the amount by which the share price is more than the net asset value per share.

If you buy shares at a premium this means that you will be paying more than Net Asset Value.

A premium could indicate that the trust or its sector as a whole is in demand, i.e. there are more buyers than sellers.

If a Trust's NAV is 100p but its share price is 110p the Trust is trading at a premium of 10% (shown as 10%).

Share Price

The price of a share, as determined by the stock market.

Spread

This is the difference between a share's bid price and its offer price.

Stamp duty

This is a tax payable on the purchase of shares, including investment trust shares.

Tax year

The tax year runs from 6th April to 5th April of the following year.

Yield

This is the annual income return you receive from holding certain investments.

The yield of a share is calculated using the latest full year dividend divided by the current share price.

Some investment trusts are focused purely on capital growth in which case they will not pay a dividend (so that the dividend yield will be zero).