‘Daily valuation time’
The valuation time is the time of day at which units or shares in a fund are priced.
Dealing is the process of buying and selling investments - such as shares in a company or OEIC, units in a unit trust, bonds etc.
The dealing currency is the currency in which shares or units are bought or sold - this does not have to be the same as the denomination currency of the investment, but this will usually be the case.
Default risk is the risk that a bond issuer may not be able to meet its contractual obligation to investors and will default (ie- not pay) interest payments due on a bond issued by the issuer.
In an OEIC fund, the Depositary oversees the actions of the fund manager on behalf of shareholders (investors). It ensures the fund manager adheres to the investment restrictions of both the OEIC and the regulations of the relevant regulatory body. The Depositary fulfills the same role as the Trustee for unit trusts.
In simple terms, a depository is used to refer to any place where something is deposited for storage or security purposes. In investment terms, it refers to an institution that holds and facilitates the exchange of securities (for example, shares and bonds). Central security depositories allow brokers and other financial companies, such as fund managers, to deposit securities where book entry and other services can be performed, like clearance, settlement and securities borrowing and lending.
Derivatives are financial instruments whose value is derived from that of another investment. The term applies to products such as futures, options and warrants. Derivatives can be used for investment reasons (ie- to try to make money) or to limit risk, reduce costs and/or generate additional income. Investing in derivatives also carries risks, however. In the case of a ‘short’ position, for example, where the fund aims to profit from falling prices, if the price of the underlying asset rises in value, the fund will lose money.
‘Diluted net asset value ('diluted NAV')’
Diluted NAV refers to a reduction in the net asset value of a fund due to the issuance of new units or shares.
A director is a person or corporate entity appointed by the company members to run the company on their behalf. In the UK, companies must have at least one natural person director who is as at least 16 years of age.
‘Discount/premium to diluted NAV’
The discount/premium to diluted NAV (net asset value) is the difference between the underlying value of a fund and the fund's unit or share price. Also see 'diluted net asset value'.
‘Discount/premium to share price’
The discount/premium to share price is the difference between the share price and the underlying value of an investment trust.
Distribution refers to income paid out (distributed) to investors in a fund.
‘Distribution units or shares’
Funds may issue two types of units or shares to investors in a fund. Distribution units/shares (sometimes called 'income' units/shares) are those where income will be paid to investors on set dates relating to the financial year of the fund. Conversely, accumulation units/shares are those where income is not distributed but is instead automatically retained and reinvested. Also see 'accumulation units or shares'.
A yield is the calculation of the income return on an investment relative to its price. It is the amount of income paid by an investment, divided by the current price of that investment, expressed as a percentage of that price. Some funds offer investors the choice of withdrawing this amount (a 'distribution yield'). Calculation yields enable comparisons to be made of the level of income provided by different investment such as shares, bonds, cash or property, or between funds at any one point in time. Also see 'Historic yield'.
If assets are diversified, they are spread amongst a range of types of investment. This can reduce the risk of loss through exposure to only one individual asset, type of asset or sector.
A dividend is the amount, usually expressed on a per-share basis, that a company pays to its shareholders (or that a fund pays to its investors) from after-tax earnings.
When any income received from an investment in the form of a dividend is not distributed to investors but is instead used to buy additional units or shares in the same investment, it is referred to as dividend reinvestment.
Dividend yield is the annual dividend paid by a company or fund on a per-share basis, divided by the current share price, and expressed as a percentage.
Domicile is the location of a fund (or a company) for legal purposes.
Duration is used in relation to investments in bonds. It is a measure of the sensitivity of the bond price to a change in interest rates. Duration is expressed as a number of years. The longer the duration the more sensitive it is. Rising interest rates mean falling bond prices, while declining interest rates mean rising bond prices.