The European Smaller Companies Trust: full-year results 2025

Deficit

A deficit occurs when expenses exceed revenues (or taxation), imports exceed exports, or liabilities exceed assets over a specific time period.

Equity

A security representing ownership, typically listed on a stock exchange. ‘Equities’ as an asset class means investments in shares, as opposed to, for instance, bond. To have ‘equity’ in a company means to hold shares in that company and therefore have part ownership.

Gross domestic product (GDP)

GDP is a measure of the size and heath of a country’s economy over a specific period, usually either quarterly or yearly.

Interest rates

The amount charged for borrowing money, shown as a percentage of the amount owed. Base interest rates (the Bank Rate) are generally set by central banks, such as the Federal Reserve in the US or Bank of England in the UK, and influence the interest rates that lenders charge to access their own lending or saving.

MSCI Europe Ex UK Small Cap Index Gross

The benchmark tracks the performance of small-cap companies in developed European countries, excluding the UK, and is calculated with gross returns, making it a potential benchmark for funds that can reclaim these taxes.

Net asset value (NAV) total return (investment trusts):

The theoretical total return on shareholders’ funds per share reflecting the change in Net Asset Value (NAV) assuming that dividends paid to shareholders were reinvested at NAV at the time the shares were quoted ex-dividend. A way of measuring investment management performance of investment trusts which is not affected by movements in discounts/premiums.

Portfolio

A grouping of financial assets such as equities, bonds, commodities, properties or cash. Also often called a ‘fund’.

Share price total return (investment trusts)

The theoretical total return to the investor assuming that all dividends received were reinvested in the shares of the company at the time the shares were quoted ex-dividend. Transaction costs are not taken into account.

Tariffs

A tax or duty imposed by a government on goods imported from other countries.