How to read the financial pages

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15. Unit trust information

Information on unit trusts and OEICs is easy to come by.

The weekly and monthly investment magazines provide voluminous information on fund performance, new fund launches, change of manager developments, and so on and the FT on Saturday's 'Databank' page tells you how well various trusts are doing compared to the average.

For daily prices, the best source is the Financial Times 'Authorised Investment Funds' section. The figures reported are compiled by the Investment Management Association (IMA), and ordered according to the name of the fund manager on an A-Z basis.

So the listing starts with Abbey National and ends with Woolwich Unit Trust Managers, taking in some 120 managers in between. Listed underneath each manager's name are the funds which they run.

The first item of information after the fund management company's name is its address and phone number, but not (yet) its web site. If you want detailed information on a fund, telephone or write to them and ask for their latest report, prospectus and key features document. Click here for an example.

For each fund, the tables provide:

1. Name of Fund
   Often the name of the fund tells you where the fund invests and what kind of returns it is aiming for. Invesco's Japanese Smaller Companies fund, for instance, is clearly aiming for high capital growth from Japanese companies with low capitalisations.
2. Initial Charge
   This is an upfront fee which you may have to pay when you buy into a trust and is supposed to cover the fund manager's administrative and marketing costs and any commissions it has to pay. So if the table has the number '5' listed against a fund, it means that 5% of the money you invest will not actually go towards the purchase of units, but will be gobbled up by the fund manager, leaving £95 to be invested in the fund.
   Initial charges are unpopular with investors for obvious reasons. They vary considerably from fund to fund. Equity funds normally carry the highest initial charge, followed by gilt and fixed interest funds. Cash, money market and tracker funds generally levy no initial charge.

3. Other charges
   The letter C in the third column indicates that the trust deducts all or part of the fund manager's periodic charges from the trust capital. The letter E indicates that there is a sliding scale of exit charges when you sell units in the trust. This will usually be instead of an initial charge.
4. Selling price
   This is the price at which you can sell your units in the trust. It is calculated by valuing all the assets of the trust and dividing the total by the number of units in issue to reach a Net Asset Value (NAV) per unit. From this figure, dealing costs are deducted.
5. Buying price
   This is the price at which you can buy units in the trust. Again, it starts with the NAV, but adds to it dealing costs and any initial charge.
6. Price movement on day
   The sixth column tells you how the mid-price of the units (halfway between the buying and selling prices) compares to the mid-price for the day before.
7. Gross Yield
   The final column tells you the gross income paid by the fund as a percentage of the buying price. To produce this figure, it relies on the fund's income in the previous 12 months, so it is essentially backward rather than forward-looking.

The other thing you need to be aware of is a trust's pricing policy. Since 1 July 1988 they have the choice of adopting forward or historic pricing of units.

• Historic pricing involves basing prices on NAV calculated at the last valuation point. This leaves the fund managers open to the risk that prices may turn against them between dealing and the valuation point (i.e. the time of day when NAV is calculated).
• Forward pricing (which is the norm) entails basing prices on NAV calculated at the next valuation point. This system means that buyers cannot know how many units their investments will acquire and sellers cannot know the value of their sales until after the next valuation point.

The internet has become a rich source of information on all kinds of managed funds. There are a number of excellent specialist sites:-

• S&P Micropal (funds-sp.com) - one of the great primary sources of data on collective investments, from past performance to star ranking and the low down fund management groups
• TrustNet (trustnet.com) - Another first rate source of data on open ended funds and closed ended funds (i.e. investment trusts)

1. What are the financial pages? 2. What to look for 3. Business news 4. Share prices in newspapers 5. Investment trust prices 6. Share prices on the internet and television 7. Commentary on share price movements 8. Anticipating company results 9. Finding company results 10. Interpreting company results 11. Takeovers and mergers 12. Indices 13. Sectors 14. Directors dealings 15. Unit trust information 16. Government bonds 17. Corporate bonds 18. Economic data - who needs it? 19. Key economic indicators 20. Conclusion

• How to Read the Financial Pages
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