Aug. 22 (Bloomberg) -- U.K. companies that use clear English when communicating with investors may yield better returns than others that rely on jargon, according to a London-based corporate communications firm.

Clarity Business Solutions in Writing Ltd. is betting on the best communicators in the FTSE 100, by creating an index of the top 10 and buying 1,000 pounds ($1,584) of each one's stock.

``The companies we admire explain their strategies in ways that ordinary people can understand,'' said Clarity's Chief Executive Rupert Morris in an e-mailed statement. ``Successful companies use direct and simple language.''

Anglo American Plc, the world's biggest precious metals company, SABMiller Plc and HBOS Plc are among the 10 best for communicating clearly, based on annual reports, Web sites and other written material, Clarity said. Capita Group Plc and Royal Dutch/Shell Group are two of the worst, with statements that contained the most jargon, according to Clarity's survey.

Shares of the top 10 companies in the survey have gained 13 percent on average this year. That compares with a 3 percent increase from the four poor communicators that Clarity cited. The FTSE 100 has climbed 7 percent so far in 2003.

Clarity's strategy is shared by billionaire Warren Buffett, who has said he only invests in industries he understands. Buffett also says he keeps his sisters Doris and Bertie in mind when he writes the annual report of his investment company, Berkshire Hathaway Inc. They're not experts in finance, so he asks himself if they'll understand what he's writing.

Too Much Jargon

Clarity criticizes Capita, which runs the payment system for London's new traffic toll system, for using jargon such as ``step changes in efficiency'' and ``customer-facing business processes'' when it could use simpler words.

``The company is apparently incapable of describing its activities in comprehensible language,'' Morris said.

Mark Harris, an external spokesman for Capita who works for WPP Group Plc's Finsbury, said nobody at the company was available for comment.

Clarity, created in 1998 by Morris, a former reporter on the London-based Times and Daily Telegraph, will monitor these companies' written communications and sell the stakes if any fall below its standards, he said at a press conference. It may decide to create a mutual fund based on the index, Morris said.

Clarity, whose customers include the London Business School and KPMG LLP, will update the performance of its index each week on its Web site, then review the companies' statements every three months to monitor their performance.

Clarity's 10 Best                  Share Gain
Communicators                      Through 8/21

Anglo American Plc                 28%
BAA Plc                            -6%
Emap Plc                           15%
Foreign & Colonial Investmen Trust 13%
GUS Plc                            25%
Hanson Plc                         46%
HBOS Plc                           11%
Pearson Plc                         9%
SABMiller Plc                     3.4%
Unilever                          -12%

FTSE 100 Index                     7%


Clarity's Four Poor
Communicators

Capita Group Plc                   -3.9%
Gallaher Group Plc                 -5.8%
Shell Transport & Trading Co. Plc  -0.5%
Shire Pharmaceuticals Group Plc    22%

Last Updated: August 22, 2003 05:06 EDT