Types of Open-Ended Fund

To assist prospective investors in the selection of an appropriate fund, open-end funds are normally classified according to their investment objective.

Because marketing rules differ from country to country, there is no standard classification and new sectors are being added all the time.

In the United Kingdom the present sectors are as follows

:- Funds Principally Targeting Income - Immediate Income

UK Gilts

· at least 80% of their assets invested in UK Government securities (Gilts)

UK General Bonds

· at least 80% of their assets invested in corporate or public fixed interest securities

UK Corporate Bonds

· at least 80% of their assets invested in Sterling-denominated corporate bonds (or UK corporate bonds hedged back to Sterling) rated BBB+ or above by either Standard & Poors or equivalent (i.e. Moody's Baa1 or above or Fitch BBB+ or above or Duff & Phelps BBB+ or above)

· therefore excludes unrated bonds (not considered to be investment grade) and convertibles (bonds which may be converted into ordinary shares in the company concerned at a future date at the option of the holder)

UK Other Bonds

· at least 80% of their assets invested in Sterling-denominated bonds (or bonds hedged back to Sterling) · at least 20% of their assets in bonds rated below BBB+ by Standard & Poors or equivalent, convertibles and preference shares