A fund invests in lots of companies and markets, often from around the world, which an individual would find difficult and time consuming to do on their own. It brings together money from individual investors to purchase lots of different investments.

As a fund spreads money across lots of different investments, risk can be reduced, while keeping the potential for growth. Different funds have different investment objectives, so it’s important to choose the right one.

An approach is another name for our ready made growth funds. It helps make them easier to understand and helps you choose the one that’s right for you.

A bond is like an IOU, used by companies and governments to raise money. The buyer lends money to the seller in return for regular interest with the money returned at the end of the term of the bond (maturity date). The value of a bond can rise and fall based on the attractiveness of the income and the creditworthiness of the lender.

A share is a small piece of a company.

If a company does well, shareholders (people who own shares) get a proportion of the profit, paid as a dividend.

The value of shares changes according to the company’s performance and other market factors, like how the wider economy is performing.

It’s a type of bond. Instead of lending money to a company, it’s lent to the UK Government. It’s called a ‘Gilt’ because the original paper certificates had a gilt (or gilded) edge.

It’s a pool of money gathered from investors by a company. It’s used to buy, manage or invest in property and land to generate income. Whilst the value rises and falls with the stock market, over the medium to long-term it provides the benefits of owning real estate without needing millions to invest.

It’s an investment fund that invests in other funds, rather than directly in stocks, shares, bonds, etc.

It’s a good way to lower the risk through diversification, and give your money more ways to grow.

Each fund in the product you hold with us is divided into units. When you pay money in, we buy units for you. When you take money out, or when paying account charges, we sell units for you. These are known as trades.

We ask the fund manager to place trades for you. The fund manager sets the fund price on each business day. The price of units will change over time, because it depends on the value of all the assets in the fund.

If you bought new units during the tax year, part of the price you paid was for income already earned by the fund up to the date you bought the units. This isn’t income you earned, but part of the cost you paid for your initial investment.

To make sure you’re not taxed twice on this value, equalisation may be paid by the fund manager. It isn’t taxed as income but is used to adjust the cost you use for working out capital gains.

Authorised Unit Trust Dividends are credits from funds. When they’re credited to a Octopus Money Direct Investment Account, you can see these on the Tax Certificate we’ll issue you with every year. They’re payable for a number of the Octopus Money Direct funds you might hold. You can use these amounts to complete your HMRC self assessment.

Net is an amount after tax has been deducted.

Gross is an amount before any tax is deducted.

All investment income linked to your Ocotpus Money Direct Investments will be paid on a gross basis.

Dividend distributions are income from our funds which are mainly invested in stocks and shares, either paid to you or reinvested into your fund.

You’ll be able to see your dividend received value in your Tax Certificate, if you have an Investment Account with us.