Here you’ll find definitions of terms used on the AIC site. Enter the term you want to search for in the box, or click on the letter it begins with.

5 A B C D E F G H I J L M N O P R S T U V W Y Z

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

For example, a UK-invested investment trust might have the FTSE All-Share Index as a benchmark and an objective to outperform this. The annual report and accounts will normally include an explanation of how the trust has performed against its benchmark over the year and the reasons for any under or over performance.

See index

The price at which you sell your shares when two prices are quoted. This is sometimes shown as the ‘sell’ price and will be the lower of the two prices shown.

Also see share price

See dealing spread

The directors of an investment trust, who have a legal responsibility to make decisions in shareholders' best interests.

A typical investment trust board has four to six directors including the chairman, all of whom are non-executive, meaning they meet several times a year rather than working on the trust every day.

The board typically appoints an asset manager to manage the investments held by the trust on a day-to-day basis. The board monitors the asset manager's performance, negotiates their fees, and can replace them if performance is unsatisfactory. Investment trust boards must be independent of the asset manager, which means that a majority of directors must be unconnected with the asset manager. More commonly, all directors are independent of the asset manager.