Glossary - D | Skandia UK

Dealer

An individual who places orders to buy or sell securities.

Debenture

A type of debt security backed by the general credit of the issuer and not by a specific security.

Decile

A statistical measure dividing a sample into ten numerically equal groups. See also percentile and quartile.

Deed poll

This is the document you will be given if you decide to legally change your name for a reason other than marriage.

Deferred (delayed) annuity purchase

An option available to a member of certain types of pension scheme, under which the purchase of an annuity can be delayed to no later than age 77 (depending on the pension scheme). In the meantime, income can be withdrawn from the fund.

Defined benefit

An occupational pension scheme where the final pension an employee receives is linked to the size of their final salary; also referred to as final salary schemes.

Defined benefit fund

A pension fund in which the benefits to be paid to the member are defined in advance of the member’s retirement. The benefit is usually expressed as a proportion of the member’s salary on retirement. In these funds it is generally the company or sponsor of the fund (rather than the member) which carries the risk as to the ability of the fund to meet its liabilities. See also defined contribution fund.

Defined contribution

An occupational pension scheme where the contributions made by the employer and employee are set and the final pension an employee receives depends on the size of their fund on retirement. This final fund is then used to buy an annuity. Also referred to as money purchase schemes.

Defined contribution fund

A pension fund in which the amount of the contribution payable (as distinct from the end benefit) is defined. In these funds, the benefit payable to a member on retirement constitutes the aggregate of contributions to the fund (both employer and employee) in respect of the member, plus the investment earnings on those contributions. Unlike a defined benefit fund, the investment risk in a defined contribution fund is borne by the fund members.

Deflation

A general price decline during which consumer spending is substantially curtailed, bank loans contract and the amount of money in circulation is reduced. It is the opposite of inflation and generally applies to more than just a temporary decline.

Delegated switching authority

A legal document in which a policyholder advises the life company that he/she is giving permission to an authorised person/company (usually a financial adviser) to switch the investments within his/her policy without requiring a specific signature each time.

Delivery

The transfer of possession of securities from one individual or firm to another in fulfilment of contracts made on an exchange and on terms which meet all of the requirements of that exchange.

Deposit account

A savings account from a bank or building society that pays interest on the amount of money held in it.

Depository

The Depository is responsible for the safekeeping of securities and independent monitoring of the ICVC’s compliance with FSA regulations.

Depreciation

The writing-down of the cost of an asset systematically over the life of that asset.

Depression

A prolonged slump in economic activity, characterised by rising unemployment and serious falls in production and consumption of goods. See also recession.

Derivative

A financial contract that derives its value from an underlying security, liability or index. Derivatives come in many varieties, including forwards, futures, options, warrants and swaps.

Development capital

Usually refers to investments in relatively small, unlisted companies either in a start-up position or embarking on new or turnaround ventures that entail some investment risk but offer the potential for above average future profits. See also venture capital.

Dilution

A reduction in earnings per share of common stock that occurs through the issuance of additional shares or the conversion of convertible securities.

Dilution levy

A charge levied by the ACD (Authorised Corporate Director) of an ICVC (Investment Company with Variable Capital) to be made for the purposes of reducing the effects of dilution.

Discrete performance

The performance of an investment during a defined time period.

Discretionary trust

This is a type of trust where the trustees can decide who will benefit from the trust and how much they will get.

Distribution

When a company pays money (dividends) to its shareholders.

Distribution fund

A fund which is invested to provide a distribution payment of income on a regular basis to policyholders.

Diversification

The spreading of investment funds among classes of securities and localities in order to distribute and control risk.

Dividend

The amount of a company’s after-tax earnings which it pays to shareholders.

Dividend (distribution) yield

The return on share investment, calculated by dividing the dividend rate by the market price of the share.

Dividend Discount Model

A model for determining the price of a security based on the discounted value of its projected future dividend payments. These models are very sensitive to interest rates.

Dividend warrant

If a company pays a dividend it provides each shareholder with a dividend warrant. This gives information about the dividend such as the class of share, the amount and the tax credit.

Dow Jones

A set of indices compiled daily from New York Stock Exchange closing prices. The averages are unweighted arithmetic indices, useful for showing general price movements. The Industrial Average consists of 30 industrial stocks. Referred to as the 'Dow Jones' and is probably the most widely quoted US index.