Glossary

10-K
Annual comprehensive overview of business activity registered companies must file with the SEC within 90 days of the end of the fiscal year.

1042S
Tax form for foreign individuals owning American securities to report income for the calendar year.

1099
Series of tax forms used to report various types of income by financial institutions. 1099 forms include: 1099B, 1099DIV, 1099INT, 1099OID

1099B
A form that reports proceeds from Broker transactions, including the sale or exchange of securities.

1099INT
Reports interest income

1099OID
Reports Original Issue Discount

10-K
Annual comprehensive overview of business activity registered companies must file with the SEC within 90 days of the end of the fiscal year.

401(K)
A defined contribution retirement plan for pretax contributions by an employee (and sometimes also the employer) is available to employees of public companies and for-profit private companies and institutions. 401(k) funds grow tax-deferred until retirement (or 591/2) when they may be distributed without penalty, to be taxed at the account holder’s ordinary income tax rate. Distributions must begin by age 701/2 (see minimum distributions).

403(B)
A defined contribution retirement plan for pretax contributions by an employee (and sometimes also the employer) available to employees of not-for-profit private organizations. 403(b) funds grow tax-deferred until retirement (or 591/2) when they may be distributed without penalty, to be taxed at the account holder’s ordinary income tax rate. Distributions must begin by age 701/2 (see minimum distributions).

457
A plan similar to a 401(k) or 403(b) plan that enables governmental employees to contribute pretax dollars until the employee retires or terminates employment. These plans may also be offered to a select group of management at some nonprofit institutions.

B NOTICE
Notice sent to a taxpayer when an invalid Tax Identification Number is supplied.

BABY BOND
Fixed income securities issued in small denominations, generally with a maximum face value of $5,000.

BACK-END LOAD
Fee that investor pays when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero.

BALANCE SHEET
A financial statement summarizing a company's assets, liabilities and shareholders' equity for a specific date. These three balance sheets provide investors a summary of what the company owns and owes, as well as the amount invested by shareholders.

BALANCED MUTUAL FUND
A fund that invests in both equities (e.g., common stocks and preferred stocks) and debt instruments (e.g., bonds) with the goal of reducing risk by investing in different markets. These funds generally hold a minimum of 25% of their assets in fixed-income securities at all times.

BANKRUPTCY
A legal proceeding involving a person or business that is unable to repay outstanding debts. The bankruptcy process begins with a petition filed by the debtor, which is most common, or on behalf of creditors, which is less common. All of the debtor's assets are measured and evaluated, and the assets may be used to repay a portion of outstanding debt.

BANKRUPTCY COURT
Specialized, federal courtrooms created to settle all types of both personal and corporate bankruptcy cases. Unlike the federal court, which was established by the US Constitution, the bankruptcy court system was established by an act of congress in 1978 as part of the Bankruptcy Reform Act.

BASIS POINT
One one-hundredth (1/100 or 0.01) of one percent. For example, 30 basis points equal 0.30%. Yield differences among fixed income securities are stated in basis points. The smallest measure used in quoting yields on mortgages, bonds, stock, notes, etc.

Business Development Company (BDC)
An organization that invests in and helps small- and medium-size companies grow in the initial stages of their development. Many BDCs are set up much similar to closed-end investment funds and are typically public companies whose shares are traded on major stock exchanges, such as the American Stock Exchange, Nasdaq and others.

BEAR
Someone who believes that the market will decline.

BEAR MARKET
Market condition in which the price of securities falls.

BEARER BOND
A bond that is owned by whoever is holding it, rather than having a registered owner. These bonds are no longer issued. (Coupons were also used for bearer bonds where an individual would clip and return for the interest.)

BENCHMARK
An unmanaged group of securities (hence no expenses) whose overall performance is used as a standard to measure investment performance of other funds or the overall market. Examples of indices used as benchmarks are S&P 500 Index, Russell 3000 Index, MS-World Index and the Lehman Brothers Aggregate Bond Index.

BENEFICIAL HOLDERS
Individual who keeps their securities holdings within their brokerage accounts (in nominee or "street name"). Although these holders will not appear on the register of the security, they do appear in the holdings of the Depositary Trust Company.

BENEFICIARY
The person(s), institution, trustee or estate named to receive death benefits, if any, from insurance or annuity contracts.

BLOCK
A large amount of stock (usually more than 10,000 shares) bought or sold by institutional or other large investors.

BLUE CHIP
A nationally accepted, financially sound company. Blue chips generally sell widely accepted products and services that are of the highest quality. Blue chip companies recognized for their long record of stable and reliable growth.

BLUE SKY LAWS
State regulations designed to protect investors against securities fraud by requiring sellers of new issues to register their offerings and provide financial details. This allows investors to base their judgments on trustworthy data. Companies listed on a U.S. Exchange automatically receive most Blue Sky exemptions.

BOARD OF DIRECTORS
A board of directors (B of D) is a group of individuals that are elected as, or elected to act as, representatives of the stockholders to establish corporate management related policies and to make decisions on major company issues. Every public company must have a board of directors. Some private and non-profit companies have a board of directors as well.

BOARD RESOLUTION
A written statement created by the board of directors detailing which officers are authorized to act on behalf of the corporation. The resolution will be found in the board minutes detailing decisions made during the meeting.

BOND FUND
A fund that holds mainly municipal, corporate and/or government bonds.

BOND RATINGS
A measure of the quality, safety and potential performance of a bond issue. Moody’s Investors Service and Standard & Poor's are two major companies that rate bonds.

BONDS
Debt investment in which an investor loans money to an entity (typically corporate or governmental) which borrows the funds for a defined period of time at a variable or fixed interest rate. Bonds are used by companies, municipalities, states and sovereign governments to raise money and finance a variety of projects and activities. Owners of bonds are debt-holders, or creditors, of the issuer.

BOOK ENTRY ADVICE
An account that contains a position that is in book entry form that is not DRS eligible, thus no physical certificates are held by the stockholder.

BOOK-ENTRY SECURITIES
Investments such as stocks and bonds whose ownership is recorded electronically. Book-entry securities eliminate the need to issue paper certificates of ownership. Ownership of securities is never physically transferred when they are bought or sold; accounting entries are merely changed in the books of the commercial financial institutions where investors maintain accounts.

BOOKS CLOSED
No deposits of additional shares will be accepted, or deposits may only be accepted upon the receipt of legal certified documents. This happens for different reasons, including a request by the company prior to a public announcement, a difference between a local record date and a DR record date, a corporate action or other regulatory matters.

BOOKS OPEN
Following a "books closed" event, the depositary bank will announce the books are open for issuance.

BROKER
A licensed individual or firm that charges fees or commissions for executing buy and sell orders submitted by an investor. It can also refer to a firm that acts as an agent for a customer and charges the customer a commission for its services.

BROKER-DEALER
An individual or firm in the business of buying and selling securities operating as both a broker and dealer, depending on the type of transaction.

BULL MARKET
Market condition in which the price of securities rises.

BUYOUT
An individual group or company’s purchase of at least a controlling percentage of a company’s stock to take over its assets and operations. A buyout can occur through negotiations or through tender offers.

BYLAWS
The written rules by which an organization is governed. They set forth the structure of the board and the organization. They determine the rights of participants and they determine the procedures by which rights can be exercised. In other words, bylaws guide the board in conducting business.

C NOTICE
Notice administered by the IRS to the payers of earnings to begin backup withholding on a security holder. The security holder is responsible for contacting the IRS to resolve the issue.

CALL
The issuer's right to redeem bonds or preferred stock before maturity date. The date when an issuer may call securities is specified by the issuer when securities are issued.

CALL OPTION
An agreement to buy shares at a specified price within a specific time period. The buyer does not have to pay full price for shares unless they exercise the options.

CAPITAL
Financial assets or the financial value of assets, such as cash.

CAPITAL APPRECIATION
The rise in the value of the principal of an investment.

CAPITAL GAIN/LOSS
An increase or decrease in the value of an asset that gives it a higher/lower worth than the purchase price. The gain/loss is not realized until the asset is sold.

CAPITAL GAINS DISTRIBUTION
A payment to shareholders that is prompted by a fund manager's liquidation of underlying stocks and securities in a mutual fund, or derived from dividend and interest earned by the fund's holdings minus the fund's operating expenses.

CAPITAL MARKETS
Markets for buying and selling equity and debt instruments. Capital markets channel savings and investment between suppliers of capital such as retail investors and institutional investors, and users of capital like businesses, government and individuals. Capital markets are vital to the functioning of an economy, since capital is a critical component for generating economic output. Capital markets include primary markets, where new stock and bond issues are sold to investors, and secondary markets, which trade existing securities.

CAPITAL REORGANIZATION
A voluntary, fundamental change in the financial structure of an organization.

CAPITALIZATION TABLE
A spreadsheet or table, typically for a startup or early-stage venture, that shows capitalization, or ownership stakes, in a company, including equity shares, preferred shares and options and the various prices paid by stakeholders for these securities. The table uses these details to show ownership stakes on a fully diluted basis, thereby enabling the company's overall capital structure to be ascertained at a glance. Founders are usually listed first, followed by executives and key employees with equity stakes, then investors, such as angel investors and venture capital firms, and others who are involved in the business plan.

CASH ACQUISITION
A merger of two companies that is mutually agreed upon in which the stockholders or company being acquired receive cash for held shares.

CASH EQUITY
A real estate term that refers to the amount of home value greater than the mortgage balance; it is the cash portion of the equity balance. A large down payment, for example, may create cash equity. It also refers to common stock, and the cash equity market involves large institutions that trade in the stock market with firm capital and trade on behalf of customers.

CASH EQUIVALENT
Investments securities that are for short-term investing, have high credit quality and are highly liquid.

CASH FLOW
A corporation's net income which includes amounts charged for depreciation, amortization and reserve charges. Reserve charges are not paid in dollars but rather are bookkeeping deductions.

CASH IN LIEU
Payment for fractional shares since certificates are not issued for less than one share.

CASH MERGER
Where an acquiring firm buys the target firm's stock with cash instead of the more common practice of exchanging it with its stock. These mergers occur when the target firm's stockholders don't want to be associated with the firm resulting from the merger. It is also called a cash-out merger.

CEDE & COMPANY
The nominee name used by the Depositary Trust Company.

CENTRAL SECURITIES DEPOSITARY
An automated, local securities clearing center for selling trades and safekeeping securities for participants.

CERTIFICATE
A physical certificate form is one of three ways of holding DTC-eligible securities. Paper certificates are the earliest means of holding securities. Because of the steps involved in altering an official certificate of ownership, whether it is sold or transferred, and the inherent risks associated with possible damages, loss or theft, holding shares in the form of certificates is both the most expensive and risky title of ownership.

CERTIFICATE OF APPOINTMENT
Legal document verifying an individual's present possession of an office or position.

CERTIFICATE OF DEPOSIT
A savings certificate with a fixed maturity date, specified fixed interest rate and can be issued in any denomination aside from minimum investment requirements. This restricts access to the funds until the maturity date of the investment. Generally issued by commercial banks and are insured by the FDIC up to $250,000 per individual.

CERTIFICATE OF INCUMBENCY
An official document listing names of incumbent individuals and their respective corporate office within an organization.

CHAPTER 11
A form of bankruptcy that involves a reorganization of a debtor's business affairs, debts and assets. Named after the U.S. bankruptcy code 11, it's generally filed by corporations that require time to restructure their debts, and it gives the debtor a fresh start, subject to the debtor's fulfillment of his obligations under the plan of reorganization. As the most complex of all bankruptcy cases and generally the most expensive, a company should consider Chapter 11 reorganization only after careful analysis and exploration of all other alternatives.

CHAPTER 7
A bankruptcy proceeding in which a company ceases operation and goes completely out of business. A trustee is appointed to liquidate all company's assets, with that money used to pay off the company's debt.

CHARITABLE REMAINDER TRUST
A trust that provides income and tax benefits to the grantor (or his/her beneficiary) for a fixed period or for life. The balance is then distributed to a pre-designated charity.

CHURNING
Excessive trading by a broker in a client's account largely to generate commissions. It's an illegal and unethical practice that violates SEC rules and securities laws. While there is no quantitative measure for churning, frequent buying and selling of securities that does little to meet the client's investment objectives may be construed as evidence.

CLASS ACTION
Action where an individual represents a group in a court claim who allege to have suffered a loss (financial, physical, etc.) due to unjustified or illegal actions by a company.

CLASS OF STOCK
Types of ownership in a corporation, including preferred and common stock.

CLASSIFIED BOARD
A structure for a board of directors in which a portion of the directors serve for different term lengths, depending on their particular classification. Under a classified system, directors serve terms usually lasting between one and eight years; longer terms are often awarded to more senior board positions (i.e. chairman of the corporate governance committee). Classified boards are often referred to as "staggered boards", although staggered boards and classified boards have somewhat different structures. Staggered boards need not be classified, but classified boards are inherently staggered.

CLEARSTREAM
European clearing corporation, this organization supports over 2,500 different companies in over 80 locations worldwide.

CLOSED-END FUND
A publicly traded company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange.

CLOSED-END INVESTMENT COMPANY
A company that invests in diversified portfolios of securities on behalf of investors but that has fixed capitalization. The company issues a fixed number of shares, and by purchasing shares of the company, an investor presumably will share in the gains or losses experienced by the underlying portfolio of investments. When the portfolio performs well, the investor’s shares in the company generally will increase in value; when the portfolio does poorly, the shares generally will decrease in value. The investor must buy or sell shares in the market; they are not purchasable or redeemable by the investment company. As a result, changes in the value of the portfolio are not the only determinant of changes in the price of the shares; share price is also determined by market conditions and investor sentiment.

CO-TRANSFER AGENT
An alternate agent that can transfer securities and deliver records of transfers to the transfer agent electronically.

COLLATERAL
Properties or assets offered to secure a loan. If there is a default on the loan, the collateral becomes subject to seizure.

COMMERCIAL BANK
A financial institution that provides various financial services, such as accepting deposits and issuing loans. Customers can take advantage of a range of investment products that commercial banks offer like savings accounts and certificates of deposit. The loans a commercial bank issues can vary from business loans and auto loans to mortgages.

COMMERCIAL PAPERS
An unsecured, short-term debt instrument issued by a corporation, typically for the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities on commercial paper rarely range any longer than 270 days. Usually issued at a discount from face value and reflects prevailing market interest rates.

COMMITTEE ON UNIFORM SECURITIES IDENTIFICATION PROCEDURES (CUSIP)
An identification number assigned to all stocks and registered bonds. The CUSIP oversees the entire CUSIP system.

COMMODITY
A basic good used in commerce that is interchangeable with other commodities of the same type; most often used as inputs in the production of other goods or services. The quality of a given commodity may differ slightly, but it is essentially uniform across producers. When they are traded on an exchange, commodities must also meet specified minimum standards, also known as a basis grade.

COMMODITY FUTURES TRADING COMMISSION (CFTC)
A U.S. federal agency established in 1974 by the Commodity Futures Trading Commission Act which ensures the efficient operation of the futures markets.

COMMON SHAREHOLDER
An individual, business or institution that holds common shares in a company, giving the holder an ownership stake in the company. This will also give the holder the right to vote on corporate issues such as board elections and corporate policy, along with the right to any common dividend payments.

COMMON STOCK
A security that represents ownership in a corporation. Holders of common stock exercise control by electing a board of directors and voting on corporate policy.

COMMUNITY PROPERTY
Property acquired by either spouse during the course of a marriage.

CONGLOMERATE
A corporation comprised of various and unrelated businesses.

CONSERVATOR
A court appointed individual legally responsible for the property of an individual who is unable to take care of their own matters.

CONTRARIAN INVESTING
An investing technique that ignores current market trends by buying securities that are considered by the investor to be undervalued and out of favor with other investors. See value stock fund.

CONTRIBUTION
Money placed in an Individual Retirement Account (IRA), an employer-sponsored retirement plan, or other retirement plan for a particular tax year. Contributions may be deductible or nondeductible, depending on the type of account.

CONVERSION
The exchange of a convertible type of asset into another type of asset, usually at a predetermined price, on or before a predetermined date. The conversion feature is a financial derivative instrument that is valued separately from the underlying security. Therefore, an embedded conversion feature adds to the overall value of the security.

CONVERSION AGENT
An agent appointed to exchange a convertible security.

CONVERTIBLE BOND
A bond that can be exchanged for the common stock of the same company under the terms set at the time of issue.

CONVERTIBLE STOCK
Stock that is exchangeable for a set number of units of another type of common stock.

CORPORATE ACTIONS
Any event that brings material change to a company and affects its stakeholders. This includes shareholders, both common and preferred, as well as bondholders. When a publicly-traded company issues a Corporate Action, it is initiating a process that will bring actual change to its stock. Corporate actions are typically agreed upon by a company's board of directors and authorized by the shareholders. Some examples are stock splits, dividends, mergers and acquisitions, rights issues and spin offs. Corporate Actions

Any event that brings material change to a company and affects its stakeholders, including shareholders, both common and preferred, as well as bondholders. These events are generally approved by the company's board of directors; shareholders may be permitted to vote on some events as well. Some corporate actions require shareholders to submit a response. Dividends, stock splits, mergers, acquisitions and spinoffs are all common examples of corporate actions.

CORPORATE BOND
A debt security issued by a corporation. Typical features include semiannual interest payments based on a stated coupon rate and payment of the face amount upon maturity. Bonds are the major form of corporate borrowing.

CORPORATE GOVERNANCE
Corporate governance is the system of rules, practices and processes by which a company is directed and controlled. Corporate governance essentially involves balancing the interests of a company's many stakeholders, such as shareholders, management, customers, suppliers, financiers, government and the community. Since corporate governance also provides the framework for attaining a company's objectives, it encompasses practically every sphere of management, from action plans and internal controls to performance measurement and corporate disclosure.

CORPORATE RESOLUTION
A written statement made by the board of directors detailing which officers are authorized to act on behalf of the corporation.

CORPORATION
A business organization that, for tax purposes, is a legal entity. A corporation has limited liability (owners can lose only what they invest), easy transfer of stock and continuity of existence.

COUPONS
The interest rate stated on a bond when it's issued. The coupon is typically paid semiannually. (Coupons were also used for bearer bonds where an individual would clip and return for the interest.)

COURT APPOINTMENT
Court document officially naming the individual or institution that can transact business for a decedent or individual who is unable to handle their own matters.

COVERDELL EDUCATION SAVINGS PLAN
A tax-advantaged savings account designed to provide for a child’s post-secondary education.

CREDIT DATE
Date when shares are credited into an account or when a new account is created.

CREDIT QUALITY
A measure of the safety of a bond and the likelihood of default, based on the issuer’s financial condition. An issuer with very high credit quality will be able to sustain a significant financial setback and still be able to repay its interest and principal obligations in a timely manner. Treasury securities are considered to be of the highest credit quality, because they are backed by the full faith and credit of the U.S. Government.

CREDIT RATING
A published ranking, based on detailed financial analysis by a credit bureau, of one’s financial history, specifically as it relates to one’s ability to meet debt obligations. The highest rating is usually AAA, and the lowest is D. Lenders use this information to decide whether to approve a loan.

CREDITOR MATRIX
When you file for bankruptcy, you must list all of your creditors and their addresses on the creditor mailing list or mailing matrix. This notifies them of the bankruptcy and automatic stay.

CUMULATIVE PREFERRED
A type of preferred stock with a provision that stipulates that if any dividends have been omitted in the past, they must be paid out to preferred shareholders first before common shareholders can receive dividends.

CUMULATIVE VOTING
The procedure of voting for a company's directors; each shareholder is entitled to one vote per share multiplied by the number of directors to be elected. This is sometimes known as proportional voting. This is advantageous for individual investors because they can apply all of their votes toward one candidate.

CURRENT MARKET VALUE
The amount a willing buyer will pay for an asset today. For a bond, it may be at par (at face value), at a premium (above face value), or at a discount (below face value).

CUSIP NUMBER
A numerical identification assigned by the Committee on Uniform Security Identification Procedures to each security approved for trading in the United States.

CUSTODIAN
A financial institution that has the legal responsibility for a customer's securities.

DAY ORDER
An order to buy/sell a security that expires if it is not executed on the same day that the order is placed.

DEALER
An individual or firm that buys or sells securities for their own account. The dealer's profit/loss is the difference between the price paid and the price received for the security. The same individual/firm may function as a broker or dealer.

DEBENTURE
The most common type of bond. These bonds are backed by the credit of the issuer instead of company assets.

DEBIT DATE
The date when all or some of the shares in an account are issued or debited in certificate form or cash.

DECEDENT
An individual who is no longer living.

DECLARATION DATE
The date on which the next dividend payment is announced by the board of directors of a company.

DEFAULT
The state of a bond when any terms of the bond’s indenture are not followed, e.g., the failure to pay interest or principal promptly when due.

DEFERRED COMPENSATION PLAN (457 PLAN)
An arrangement in which part of an employee’s income is deferred to a future date to avoid taxation in the current year.

DEFINED BENEFIT PLAN
A retirement plan that provides a specified benefit based on salary and years of service.

DEFINED CONTRIBUTION PLAN (401K/403B PLANS)
A retirement plan that specifies a rate of employer and/or employee contributions usually defined as a percentage of salary. How much income a participant receives in retirement will depend on several factors, including salary level, duration of contributions, investment earnings and age at retirement.

DELAYED OPENING
A problem that arises which causes the postponement of a stock exchange beyond the normal opening of a day's trading. Postponements may occur due to an increase of buy or sell orders, a disproportionate amount of buyers and sellers, or the anticipation of corporate news.

DEMUTUALIZATION
A mutual company owned by its users/members converts into a company owned by shareholders. In effect, the users/members exchange their rights of use for shares in the demutualized company.

DEPOSIT/WITHDRAWAL AT CUSTODIAN (DWAC)
The automated system for deposits and withdrawals of securities from the Depository Trust Company.

DEPOSITARY
A bank that acts as a transfer agent, corporate action agent, and registrar to issue Depositary Shares which represent the securities of a non U.S. issuer that the Depositary custodizes in the local market.

DEPOSITORY AGENT
A bank or trust company that is appointed by the individual or firm making a tender offer to receive any securities that are tendered, and to pay for them when authorized.

DEPOSITORY TRUST COMPANY
DTCC, through its subsidiaries, provides clearing, settlement and information services for equities, corporate and municipal bonds, government and mortgage-backed securities, money market instruments and over-the-counter derivatives. In addition, DTCC is a leading processor of mutual funds and insurance transactions, linking funds and carriers with their distribution networks.

DEPRECIATION
A decrease in an asset's value caused by unfavorable market conditions.

DEREGULATION
The act of reducing government regulation in order to allow more free markets to create a more efficient marketplace. Some government oversight usually remains after deregulation.

DERIVATIVE
A financial contract whose value is based on, or "derived" from, an underlying traditional security (such as a stock or bond), an asset (such as a commodity), or a market index (such as the S&P 500 Index). Futures contracts, forward contracts and options are the most common types of derivatives. Derivatives are generally used by institutional investors to increase overall portfolio return or to hedge portfolio risk.

DIRECT DEPOSIT
Electronic funds deposited directly into an individual's bank account rather than through a paper check.

DIRECT REGISTRATION STATEMENT (DRS)
Shares that are owned in book entry form that are DRS eligible and can be tracked electronically without the need for a physical certificate.

DIRECTOR
An individual who is elected by the shareholders to serve on the board of directors.

DISBURSEMENT AGENT
A bank or trust company that has a contract with a client company to serve as an agent and record keeper on a merger of two or more companies, in which the shareholder receives cash in exchange for shares.

DISCOUNT BROKER
A stockbroker who provides no investment advice and carries out buy and sell orders at a reduced commission compared to a full-service broker.

DISCRETIONARY INVESTMENT MANAGER
Discretionary investment management is a form of investment management in which buy and sell decisions are made by a portfolio manager or investment counselor for the client's account.

DISSENTING HOLDERS
Shareholders who exercise their legal right to challenge a Reorganization plan filed by a company.

DIVERSIFICATION
A risk-reduction strategy that involves spreading assets across a mix of companies, investments, industries, geographic areas, maturities, and/or investment categories.

DIVIDEND
A distribution, usually quarterly, of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.

DIVIDEND OR INTEREST DISBURSING AGENT
A company or individual appointed by a corporation to distribute dividend income to its shareholders.

DIVIDEND RATE
The total expected dividend payment declared by a company's board of directors that shareholders will receive.

DIVIDEND REINVESTMENT (DRP)
A plan offered by a corporation that allows their shareholders to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.

DIVIDEND/INTEREST ORDER
Authorization from a security holder for dividend/interest payments to be issued to individuals other than the registered holder.

DOMICILE
Legal residence.

DOW JONES INDUSTRIAL AVERAGE
A price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the NASDAQ.

DPO
When a company raises capital by marketing its shares directly to its own customers, employees, suppliers, distributors and friends in the community. DPOs are an alternative to underwritten public offerings by securities broker-dealer firms where a company's shares are sold to the broker's customers and prospects.

DTC
The Depository Trust Company (DTC) is one of the world's largest securities depositories. The DTC, which was founded in 1973 and is based in New York City, is organized as a limited purpose trust company and provides safekeeping through electronic recordkeeping of securities balances. It also acts like a clearinghouse to process and settle trades in corporate and municipal securities.

DTC ELIGIBILITY
An important aspect of being a public company for all OTC Issuers. Obtaining and maintaining eligibility is of utmost importance for the smooth trading of an Issuer’s float in the secondary market.

DUE BILL
A financial tool used to document and identify the seller's duty to deliver securities sold to the buyer.

DUE DILIGENCE
An investigation or audit of a potential investment to confirm all material facts in regard to a sale, such as reviewing all financial records plus anything else deemed material to the sale.

DUE DILIGENCE LETTER
A letter sent to locate a holder before unclaimed/abandoned property is transferred to the original issuer or to the state of the last known address.

DUMMY CUSIP NUMBER
A temporary identification number attached to a security by a company until the official CUSIP number is assigned.

DUTCH AUCTION
A public offering auction structure in which the price of the offering is set after receiving all bids and determining the highest price at which the total offering can be sold. In this type of auction, investors place a bid for the amount they are willing to buy in terms of quantity and price.

DUTCH-TENDER
A Dutch tender aka (Dutch Auctions) offer operates like an auction; a company offers to repurchase a specific number of shares within a given price range. Shareholders are invited to tender shares over a 35 calendar day period and do so by specifying the lowest price within the range that they will accept.

The company collects investor offers, and purchases the tendered shares up to the specified share limit at the lowest price possible. If the company receives more offers at the accepted price than the specified share number, all shareholders who tendered at or below the accepted price will receive a pro-rata allocation.

DWAC
“Deposit and Withdrawal at Custodian” DWAC’s are a method of electronically transferring new share certificates from the Depository Trust Company. DWAC’s are one of two ways of transferring between broker/dealer and the DTC, the other being through the Direct Registration System method.

EARNINGS
Revenue for a specified period of time, after related costs and expenses have been deducted.

EARNINGS REPORT
A statement issued by a company that describes gains and losses over a specific time period. This is also referred to as an income statement.

EBITDA
EBITDA margin is a measurement of a company's operating profitability as a percentage of its total revenue. It is equal to earnings before interest, tax, depreciation and amortization (EBITDA) divided by total revenue. Because EBITDA excludes interest, depreciation, amortization and taxes, EBITDA margin can provide an investor, business owner or financial professional with a clear view of a company's operating profitability and cash flow.

EDGAR
“Electronic Data Gathering, Analysis and Retrieval” EDGAR is an online public database from the U.S. Securities and Exchange Commission. It performs automated collection, validation, indexing, acceptance, and forwarding of submissions by companies and others who are required by law to file forms with the SEC.

ELECTRONIC FUNDS TRANSFER
The electronic exchange or transfer of money from one account to another, either within a single financial institution or across multiple institutions.

EMERGING MARKET
A securities market in countries with developing economies (that is, those that are becoming industrialized) that is of smaller size or that has a short operating history. Emerging markets investments tend to be more volatile than domestic investments due to currency fluctuation and political instability. Consequently, securities prices can fluctuate dramatically.

EMPLOYEE STOCK OPTION PLAN
A stock option granted to specified employees of a company. Employee stock options carry the right to buy a certain amount of shares in the company at a predetermined price. These can be offered to officers or employees.

EMPLOYEE STOCK OWNERSHIP PLAN
A qualified, defined contribution, employee benefit plan designed to invest primarily in the stock of the sponsoring employer. They are "qualified" in the sense that the Employee Stock Ownership Plan's sponsoring company, the selling shareholder and participants receive various tax benefits.

EMPLOYEE STOCK PURCHASE PLAN
A company-run program in which participating employees can purchase shares of the company at a discounted price. Employees contribute to the plan through payroll deductions. At the purchase date, the company uses the accumulated funds to purchase shares in the company on behalf of the participating employees.

EMPLOYER IDENTIFICATION NUMBER (EIN)
A unique identification number assigned to a business for tracking by the Internal Revenue Service. The Employer Identification Number is commonly used by employers for the purpose of reporting taxes.

EQUITY
A stock or any other security that represents an ownership interest.

EQUITY COMPENSATION
Equity compensation is non-cash pay that represents ownership in the firm. This type of compensation can take many forms, including options, restricted stock and performance shares. Equity compensation allows the employees of the firm to share in the profits via appreciation and can encourage retention, particularly if there are vesting requirements.

EQUITY MARKET
The market in which shares are issued and traded, either through exchanges or over-the-counter markets.

ERASURE GUARANTEE
A guarantee made by accredited institutions guaranteeing the legitimacy and accuracy of changes made to bonds and securities.

ESCHEATMENT
The process of turning abandoned/unclaimed properties over to the state.

ESCROW
Money or securities held by a third party. The funds are held by the escrow service until it receives the appropriate written or oral instructions or until obligations have been fulfilled.

ESCROW AGREEMENT
A legal document that outlines the terms and conditions between parties involved in an escrow arrangement. An escrow agreement defines the arrangement by which one party deposits an asset with a third person (called an escrow agent), who, in turn, makes a delivery to another party if and when the specified conditions of the contract are met.

ESTATE
Individual property, money, securities and debt held by an individual at the time of death.

ESTOPPEL
A legal term referring to someone who reneges on or contradicts a previous agreement or claim. Estoppel prevents someone from arguing something contrary to a claim made or act performed by that individual in the past.

EUROCLEAR
One of two principal clearing houses for securities traded in the Euromarket. Euroclear specializes in verifying information supplied by two brokers in a securities transaction and the settlement of securities.

EX-DIVIDEND DATE
The date when the seller, not the buyer, of a stock will be entitled to a recently announced dividend, two days prior to record date.

EXCHANGE AGENT
Agent appointed to exchange outstanding shares of merging companies for shares in the newly founded company or for cash.

EXCHANGE TRADED FUND
An ETF, or exchange traded fund, is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, an ETF trades like a common stock on a stock exchange. ETFs experience price changes throughout the day as they are bought and sold. ETFs typically have higher daily liquidity and lower fees than mutual fund shares, making them an attractive alternative for individual investors.

Because it trades like a stock, an ETF does not have its net asset value (NAV) calculated once at the end of every day like a mutual fund does.

EXECUTOR
Individual(s) appointed in a will to administer an estate of someone who is deceased.

EXPENSE RATIO
Annual percentage of a fund’s average net assets used to pay its annual expenses. The expense ratio, which includes management fees, administrative fees, and any marketing (12b-1) fees, directly reduces returns to investors. It is calculated by dividing the fund’s annual expenses by its average net assets.

EXPIRATION DATE
The day on which an option is no longer valid and, therefore, ceases to exist.

FACE VALUE
The dollar value of a security stated by the issuer. For stocks, it is the original cost of the stock shown on the certificate.

FEDERAL INHERITANCE TAX WAIVER
Authorization by the government given to transfer U.S. securities of a non-citizen decedent without charging any taxes.

FIDUCIARY
A legally appointed individual who is authorized to hold assets in trust for another individual. The fiduciary manages the assets for the benefit of the other individual rather than for his or her own profit.

FINANCIAL INDUSTRY REGULATORY AUTHORITY (FINRA)
The largest non-governmental regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's regulation committee. FINRA responsibilities include governing business between brokers, dealers and the investing public.

FISCAL YEAR
A period that a company uses for accounting purposes and preparing financial statements, which may or may not be the same as a calendar year.

FIXED CHARGE
Any type of fixed expense that occurs on a regular basis, including, salaries, utilities, loan payments and mortgage payments.

FIXED INCOME
Fixed income is a type of investing or budgeting style for which real return rates or periodic income is received at regular intervals and at reasonably predictable levels.

FIXED RATE BONDS
A fixed-rate bond is a bond that pays the same amount of interest for its entire term.

FLOOR
The trading area where options, stocks and options are bought and sold on the New York Stock Exchange. The floor is almost the size of a football field.

FLOWBACK
When issued ADRs are cancelled resulting from net U.S. selling, reducing the liquidity of the ADRs.

FORM 10-Q
10-Q, (also known as a 10-Q or 10Q) or Quarterly Filings are quarterly report mandated by the United States federal Securities and Exchange Commission, to be filed by publicly traded corporations.

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, the 10-Q is an SEC filing that must be filed quarterly with the US Securities and Exchange Commission. It contains similar information to the annual form 10-K, however the information is generally less detailed, and the financial statements are generally unaudited. Information for the final quarter of a firm's fiscal year is included in the 10-K, so only three 10-Q filings are made each year.

FORM 20-F
Securities and Exchange Commission issued form that must be submitted by all "foreign private issuers" that have listed equity shares on exchanges in the U.S. Form 20-F calls for the submission of an annual report within six months of the end of the company's fiscal year, or if the fiscal year-end date changes.

Form 20-F reporting and eligibility requirements are stated in the Securities Exchange Act of 1934. The information requirements are not as strict as for domestic U.S. companies; companies in which less than 50% of voting shares are held by U.S. investors may be eligible.

FORM F-1
A filing with the Securities and Exchange Commission required for the registration of certain securities by foreign issuers. SEC Form F-1 is required to register securities issued by foreign issuers for which no other specialized form exists or is authorized. This form is required under the Securities Exchange Act of 1933.

FORM F-6
A filing with the Securities and Exchange Commission required for the registration of certain securities by foreign issuers. This filing is used to register shares represented by American depositary receipts issued by a depositary against the deposit of the securities of a foreign issuer.

FORTUNE 500
The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks 500 of the largest U.S. corporations by total revenue for their respective fiscal years.[1] The list includes public companies, along with privately held companies for which revenues are publicly available.

FRACTIONAL SHARES
A share of stock that is less than one full share. Fractional shares usually come about from stock splits, dividend reinvestment plans and similar corporate actions. Fractional shares cannot be acquired from the market.

FRONT-END LOAD
A sales charge or commission paid for an investment at the time of purchase.

FUND
A fund is a source of money that will be allocated to a specific purpose. A fund can be established for any purpose whatsoever, whether it is a city government setting aside money to build a new civic center, a college setting aside money to award a scholarship, or an insurance company setting aside money to pay its customers' claims.

FUND ASSETS
The total value of a portfolio’s securities, cash, and other holdings, minus any outstanding debts.

FUND FAMILY
A group of mutual funds sponsored by the same organization, often offering exchange privileges between funds and combined account statements for multiple funds.

FUNDED DEBT
A company's debt, such as bonds, long-term payables or debentures that will mature in more than one business cycle. This type of debt is funded by interest payments made by the borrowing firm over the term of the loan.

FUNGIBLE
Securities representing the same class of equity that can be traded across multiple markets.

FUTURES MARKET
A futures market is an auction market in which participants buy and sell commodity and futures contracts for delivery on a specified future date.

GENERAL PARTNER
In a general or Limited Partnership, a partner with unlimited legal responsibility for debts and liabilities.

GLOBAL REGISTERED SHARES
Shares issued and registered in multiple markets around the world. Global registered shares represent the same class of shares.

GOOD DELIVERY
Certain qualifications that need to be met before a security sold on a stock exchange can be delivered. Qualifications include the security being in proper form to comply with the contract of sale and transferring the title to the purchaser.

GOOD 'TIL CANCELLED (GTC)
An order to buy or sell a security at a set price that remains active until the investor decides to cancel or execute the trade.

GRANTOR
The creator of a trust for benefit of another individual or organization.

GROWTH FUND
A fund that invests in the stocks of companies whose growing earnings are reinvested for the purpose of expansion, research, or development.

GROWTH STOCK
Stock with record growth in earnings at an extremely fast rate.

GROWTH-AND-INCOME FUNDS
Growth and income funds are designed to pursue long-term growth of capital as well as regular dividend income.

GUARDIAN
A court appointed individual who has been granted legal responsibility to care for a child or adult who does not have the capacity for self-care.

HIGH-YIELD BOND
A bond with a credit rating of BB or lower. Also known as junk bonds because of the rewards offered to those who are willing to take on the additional risks of a lower-quality bond. Junk bonds are speculative compared with investment- grade bonds.

HIGH-YIELD BOND FUND
A mutual fund that invests primarily in bonds with a credit rating of BB or lower. Because of the speculative nature of high-yield bonds, high-yield funds are subject to greater share price volatility and greater credit risk than other types of bond funds.

HOLDER
The name of the registered owner of a security and individual who has the rights, benefits and responsibilities of ownership, which may include voting rights and dividend payouts.

HOLDING COMPANY
A holding company is a parent corporation, limited liability company or limited partnership that owns enough voting stock in another company to control its policies and management.

HYPOTHECATION
Securities in a margin account that are used as collateral for money loaned from a brokerage.

INCOME BOND
Type of debt security where only the principal is promised to be paid to the investor, only if the issuing company has enough earnings to pay for the principal.

INCOME FUND
A mutual fund that seeks current income rather than growth of capital. Income funds typically invest in bonds and/or high-yielding stocks.

INCOME STOCK
A stock that pays regular and steady income. These stocks should appreciate enough to keep up with inflation. Income stocks are those of well-established companies, such as utilities, some telephone companies, and some blue-chip companies.

INDENTURE
A contract between an issuer of bonds and the bondholder stating all of the rights and obligations of the bondholder.

INDEX
A statistical measure of change in a securities market.

INDEX FUND
An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Standard & Poor's 500 Index (S&P 500).

INDIVIDUAL RETIREMENT ACCOUNT (IRA)
A retirement plan that provides tax advantages and is established by an individual on their own.

INFORMATION AGENT
An individual or a business entity that has the task of providing explanations of various transactions of another party to relevant persons who need to know the information.

INFORMATION CIRCULAR
A document sent to shareholders outlining important matters to be discussed at the annual shareholders' meeting, or at a special shareholders' meeting. The information circular also solicits proxy votes and provides procedures for voting on key issues.

INHERITANCE TAX WAIVER
Authorization by the tax department of a decedent's estate to transfer the securities of a decedent without charging any taxes.

INITIAL PUBLIC OFFERING (IPO)
The first sale of stock by a private company to the public. In an IPO, the issuer obtains the assistance of an underwriting firm, which helps it determine what type of security to issue (common or preferred), the best offering price and the time to bring it to market.

INITIAL PUBLIC OFFERING PROSPECTUS
Legal document prepared for all potential investors detailing a company's financial history, products and services, and management background.

INSIDER INVESTOR
Insider is a term describing a director or senior officer of a company, as well as any person or entity that beneficially owns more than 10% of a company's voting shares. For purposes of insider trading, the definition is expanded to include anyone who trades a company's shares based on material nonpublic knowledge. Insiders have to comply with strict disclosure requirements with regard to the sale or purchase of the shares of their company.

INSTITUTIONAL INVESTOR
Entities that trade securities in large enough share quantities or dollar amounts that they qualify for preferential treatment and lower commissions. Institutional investors face fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves.

INTER-VIVOS TRUST
A trust used in estate planning that is created during the lifetime of the trustor, which is also known as a living trust.

INTERACTIVE VOICE RESPONSE (IVR)
Technology which allows a computer to interact with individuals through the use of voice and keypad inputs.

INTEREST
Payments made by borrowers to lenders for borrowing money. Interest is usually expressed as an annual percentage rate.

INTERMARKET TRADING SYSTEM (ITS)
An electronic computer system linking the trading floors of all the major equity American exchanges. This system allows all eligible market makers and brokers the ability to execute buy/sell orders at different exchanges whenever they see that a better price quote available.

INTERNAL REVENUE SERVICE (IRS)
A U.S. government agency, established in 1862, that is responsible for the collection and enforcement of taxes.

INTERNATIONAL SECURITIES IDENTIFICATION NUMBER
Identification number for securities traded in non-U.S. markets.

INTESTATE
Individual who is deceased without leaving a will.

INVESTMENT
Using money with the purpose of making a profit, gain income, increase capital, etc.

INVESTMENT BANK
A financial firm, frequently a broker/dealer, that acts as an intermediary between an issuer and the investing public when new securities are initially brought to market.

INVESTMENT BANKER
Individual representing a financial institution that raises capital for corporations. Investment bankers buy public shares of a company presenting an initial public offering and resell them to the public.

INVESTMENT COMPANY ACT OF 1940
The federal law, enforced by the Securities and Exchange Commission (SEC), that regulates the activities of investment companies. Also referred to as “the 1940 Act.”

INVESTMENT OBJECTIVE
The broad goal sought by a fund or investment company (e.g., ‘high current income,’ along with the means to be used to achieve it).

INVESTMENT POLICY/RESTRICTION
The 1940 Act restricts a mutual fund's investment in the securities of broker-dealers, insurance companies, and other investment companies. It also requires mutual funds to establish investment policies in certain areas, including lending, borrowing, industry concentration, investing in real estate, and investing in commodities. Under the 1940 Act, certain fund policies may not be changed without a shareholder vote.

INVESTMENT RISK
A type of risk incurred when making investments. Examples include Financial Risk, Market Risk, Interest Rate Risk, and Inflation Risk.

INVESTMENT-GRADE BOND
Bonds that are appropriate for purchase by conservative investors because they represent moderate-to-low risk of default. A number of firms, including Standard & Poor's and Moody's Investors Service, evaluate bonds. S&P's first four categories are investment grade: AAA to BBB. Moody's investment grades are Aaa through Baa. A bond whose credit quality is considered to be among the highest by the independent bond-rating agencies.

INVESTOR
An investor is any person who commits capital with the expectation of financial returns.

IRA ROLLOVER
A traditional individual retirement account holding money from a qualified plan or 403(b) plan. These assets, as long as they are not mixed with other contributions, can later be rolled over to another qualified plan or 403(b) plan. Also known as a conduit IRA.

IRREVOCABLE BENEFICIARY
A beneficiary designation that cannot be changed without the beneficiary’s consent.

IRREVOCABLE TRUST
A trust that cannot be amended, altered, or revoked.

ISO
An incentive stock option (ISO) is a type of employee stock option with a tax benefit, when you exercise, of not having to pay ordinary income tax. Instead, the options are taxed at a capital gains rate.

ISSUE
Offering securities in an attempt to raise funds. Also, issues are stocks that have been offered to the public.

ISSUER
A legal entity that develops registers and sells securities for the purpose of financing its operations is an issuer. If Acme Corporation sells common stock to generate capital, Acme Corporation is an issuer.

JOINT TENANCY
A type of ownership where two or more people own property together, each with equal rights and obligations. Upon an owner's death, that owner's interest in the property is transferred to the survivors without the property having to go through probate.

JOINT TENANTS WITH RIGHT OF SURVIVORSHIP
A form of account registration in which two or more individuals share an undivided interest in an account. In the event of one tenant’s death, the surviving tenant (or tenants) automatically inherits the property without the necessity of court proceedings.

JUNK BOND
See high-yield bond.

K-1 FORM
A tax document used to report the incomes, losses and dividends of a business's partners or S-corporation's shareholders. Rather than being a financial summary for the entire group, the Schedule K-1 document is prepared for each partner or shareholder individually.

KELMAR AUDIT
An auditing firm known for their prominent audits of general ledger property.

KEOGH PLAN
A tax deferred pension plan available to self-employed individuals or unincorporated businesses for retirement purposes.

LARGE-CAP STOCKS (LARGE-CAPITALIZATION STOCKS)
The stocks of companies whose market capitalization exceeds a certain dollar amount. As of December 2001, as per Morningstar, large-cap stocks had market capitalization of over $5 billion.

LEGEND
A statement on a stock certificate noting restrictions on the transfer of the stock, often due to SEC requirements for unregistered securities. A legend may or may not be legally required on the certificate itself, depending on state laws. Restrictions on the sale or transfer of share ownership are common among privately held corporations.

LETTER OF TRANSMITTAL (LOT)
Letter sent to a shareholder announcing spin-off, merger, or exchange and how they can participate. Shareholders complete and return a form, which includes a W-9 and Affidavit of Loss, along with the securities in order to receive cash-in-lieu payments or exchanged securities.

LETTERS TESTAMENTARY
A court document appointing the executor to distribute assets of an estate.

LEVEL-I DEPOSITARY RECEIPTS
Lowest level of sponsored ADRs that are issued, providing issuers with minimal regulatory and reporting requirements.

LEVEL-II DEPOSITARY RECEIPTS
These are listed on an exchange in the U.S. because the non-U.S. issuer has registered the securities under the Exchange Act of 1934 and has entered into a listing agreement. Level-II Depositary Receipts require more in-depth SEC reporting than Level-I Depositary Receipts.

LEVEL-III DEPOSITARY RECEIPTS
These are sold in a public offering and listed on the U.S. stock exchange. Issuers register the offering under the Securities Act of 1933 and report under the Exchange Act of 1934.

LEVERAGE
The amount of debt used to finance a firm's assets. A firm that has more debt than equity is considered to be highly leveraged.

LIABILITIES
Claims against a corporation which include accounts, wages and salaries payable, dividends declared payable and accrued taxes payable.

LIMIT ORDER
A buy or sell order placed with a broker for a set number of shares at a specified price or better price.

LIMITED PARTNERSHIP (LP)
Two or more partners who conduct a business jointly, and in which one or more of the partners is liable only to the extent of the amount of money that partner has invested. Limited partners do not receive dividends but have access to income flow and expenses.

LIQUIDATION
Selling an account's entire share balance.

LISTED SECURITIES
U.S. securities listed on a U.S. stock exchange. These securities are registered with the Securities Exchange Commission under the Securities Exchange Act of 1934.

LISTED STOCK
The stock of a company that is traded on a securities exchange.

LISTING AGENT
A bank assigned to arrange the listing of securities on an exchange.

LIVING TRUST
A trust used in estate planning that is created during the lifetime of the trustor, which is also known as an Inter-vivos trust.

LOAD
Commission charged to an investor when buying or redeeming mutual fund shares. This may be a one-time fee charged initially when buying into the mutual fund (front-end load), when the investor redeems the mutual fund shares (back-end load), or on an annual basis as a 12b-1 fee.

LOAD FUND
A mutual fund that levies a sales charge, either when shares are bought (a front-end load) or sold (a back-end load).

LONG POSITION
Pertains to stock or asset ownership. When assuming a long position, the investor buys stock, holds it, and then sells it. This would be the proper technique to use when the value of the stock is expected to rise.

LONG TERM INCENTIVE PLAN (LTIP)
A reward system designed to improve employees' long-term performance by providing rewards that are not normally connected to the company's share price. The employee must fulfill various conditions/requirements that prove that they have contributed to increasing shareholder value. The incentives for doing this are usually conditional company shares, which are distributed in two parts. The first part represents an immediate distribution of half of the shares, while the remaining half of the shares will only be presented to the employee if they stay with the company for a predetermined number of years.

LUMP-SUM DISTRIBUTION
The payment of the entire value of a profit-sharing plan, pension plan, or other investment. When it represents an employee’s interest in a qualified retirement plan, the payment must be prompted by retirement (or other separation from service), death, disability, or attaining age 591/2, and must be made within a single tax year to avoid the federal government’s 10% penalty tax.

MANAGEMENT FEE
A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting stocks and managing the portfolio. It can also include other items such as investor relations expenses and the administration costs of the fund.

MARGIN
Borrowed money used to purchase securities.

MARGIN CALL
A broker requirement from an investor using margin to deposit additional funds or securities so the margin account is brought up to the minimum maintenance margin. Margin calls occur when an account value decreases to a value calculated by a broker's particular formula.

MARITAL TRUST
A trust created to allow one spouse to transfer, during life or upon death, an unlimited amount of property to his/her spouse without incurring gift or estate tax.

MARKET CAPITALIZATION
A determination of a company’s total market value, calculated by multiplying the total number of company shares outstanding by the price per share. Also called capitalization.

MARKET MAKER
A security dealer that accepts the risk of holding a certain number of shares of a particular security in order to facilitate trading in that security.

MARKET PRICE
The current quote of a particular stock.

MARKET VALUE
The price that an investment instrument can command on the open financial markets.

MASS TORT
A mass tort is a civil action involving numerous plaintiffs against one or a few corporate defendants in state or federal court. Law firms sometimes use mass media to reach possible plaintiffs.

MASTER LIMITED PARTNERSHIP (MLP)
A type of limited partnership that is publicly traded.

MATURITY DATE
The date on which an obligation becomes due and is repaid to the investor and interest payments stop. This is also the date that a bond can be redeemed.

MEDALLION SIGNATURE GUARANTEE
A guarantee seal applied to securities necessary for the transfer of securities. The Medallion seal affixed is applied by a guarantor who must be a member of the Medallion Program.

MERGER
The combining of two or more companies, generally by offering the stockholders of one company securities in the acquiring company in exchange for the surrender of their stock.

MID-CAP STOCKS (MIDDLE-CAPITALIZATION STOCKS)
Stocks of companies with market capitalizations between the small cap upper and large cap lower boundaries. As of December 2001, as per Morningstar, mid cap stocks had market capitalization between $1 and 5 billion.

MONEY MARKET FUND
A mutual fund that holds investments in high-yield money market mechanisms such as federal securities.

MONEY PURCHASE PLAN
A defined contribution retirement plan that maintains individual employee accounts and determines benefits by the amounts that can be provided from the balance of each individual account. The contribution rate is fixed (i.e., it is not subject to employer discretion like a profit-sharing plan). Contributions are usually calculated as a percentage of the participant’s compensation.

MUNICIPAL BOND
A bond issued by a state, municipality or county to finance its capital expenditures. These bonds are exempt from federal taxes and most state and local taxes.

MUNICIPAL BOND FUND
A mutual fund that invests in tax-exempt bonds issued by state, city, and/or local governments. The interest obtained from these bonds is passed through to shareholders and is generally free of federal (and sometimes state and local) income taxes.

MUTUAL FUND
An assortment of securities owned by any investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund's capital in an attempt to produce capital gains and income for the fund's investors.

NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD)
A group of brokers responsible for establishing legal and ethical standards of its member for over the counter markets.

NATIONAL ASSOCIATION OF SECURITIES DEALERS AUTOMATED QUOTATION SYSTEM (NASDAQ)
The world's first electronic stock market created in 1971 and facilitates trading and provides price quotations on more than 5,000 of the more actively traded over the counter stocks.

NATIONAL CHANGE OF ADDRESS (NCOA)
A registry of individuals who relocate or change their address within the United States maintained by the United States Postal Service. Access to the registry is sold to firms that engage in direct mail and use of NCOA is required in order to obtain bulk mail rates.

NATIONAL MARKET SYSTEM
System for reporting transactions of active over the counter securities, and is sponsored by the NASD and NASDAQ.

NAV CHANGE
The difference between today’s closing net asset value (NAV) and the previous day’s closing net asset value (NAV).

NET ASSET VALUE (NAV)
A mutual fund's price per share value. The per-share dollar amount is calculated by dividing the total value of all the securities in its portfolio by the number of fund shares outstanding.

NET CHANGE
The difference between today's closing price of a security and the previous day's closing price. Net change can be positive or negative and is quoted in terms of dollars.

NET PROFIT
Investment gains after the deduction of all expenses.

NEW ISSUE
A security that has been registered, issued and will be sold on a market for the first time.

NEW YORK FUTURES EXCHANGE (NYFE)
A subsidiary of the New York Stock Exchange dedicated to trading futures products.

NEW YORK SHARE
Represents equity outstanding that allows for a portion of its capital to be outstanding in both the home market and U.S. market through more than one share registrar. These shares are traded on a U.S. stock exchange but a separate registrar is maintained in the home country.

NEW YORK STOCK EXCHANGE (NYSE)
A stock exchange based in New York City, which was founded in 1792 and is considered the largest equities-based exchange in the world based on total market capitalization of its listed securities.

NEW YORK STOCK EXCHANGE COMPOSITE INDEX
Performance measurement of every stock on the New York Stock Exchange that are broken down into four sectors, including industrial, utility, transportation, and financial.

NO-LOAD FUND
A mutual fund that charges no sales commission or load.

NOL
A net operating loss (NOL) is a loss taken in a period where a company's allowable tax deductions are greater than its taxable income.

NOMINEE
An individual whose securities are transferred in order to facilitate transactions, while leaving the customer as the beneficial owner.

NOTICE AND ACCESS
Under the SEC’s Notice and Access rule, corporate issuers and mutual funds must make proxy materials available on a public website, and may choose to send a Notice of Internet Availability of Proxy Materials in place of the complete proxy package.

NOTICE OF PENDENCY
A letter sent to possible members of a class action suit.

ODD LOT
An amount of a security that is less than the normal unit of trading for that particular security

OFAC
A department of the U.S. Treasury that enforces economic and trade sanctions against countries and groups of individuals involved in terrorism, narcotics and other disreputable activities

OFFER
When one party conveys interest to buy or sell assets from another party. The offering price is the highest price the buyer will pay to purchase an asset, and the lowest that the seller will accept for the asset.

OMNIBUS ACCOUNT
An omnibus account is an account between two futures merchants (brokers). It involves the transaction of individual accounts that are combined in this type of account, allowing for easier management by the futures merchant. This protects the identities of the individual account holders, because the futures merchant transacts for them.

OPEN ORDER
An order to buy or sell a security at a set price that remains active until the investor decides to cancel or execute the trade.

OPEN-END FUND
A type of mutual fund that has no restrictions on the amount of shares the fund will issue. If there is a high demand, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.

OPEN-END INVESTMENT COMPANY
An investment company which continually sells or redeems its own shares to meet investor demand. Conversely, a closed-end investment company has a finite number of shares that can be bought and sold when available on market exchanges.

OPTIONAL CASH PAYMENTS
Additional funds sent in by a shareholder in a dividend reinvestment plan which is used to purchase additional shares.

ORIGINAL ISSUE (OI)
Securities issued when a company is first incorporated

ORIGINAL ISSUE DISCOUNT
The difference between the stated redemption price at maturity and the issue price.

OSFI
An independent agency responsible for the regulation of banks, insurance companies, trusts and pension plans in Canada. The Office Of The Superintendent Of Financial Institutions reports to the Minister of Finance. It was formed in 1987 when the Department of Insurance and the Office of the Inspector General of Banks were combined.

OTCBB
The over-the-counter bulletin board (OTCBB) is an electronic trading service provided by the National Association of Securities Dealers (NASD) that offers traders and investors up-to-the-minute quotes, last-sale prices and volume information for equity securities traded over the counter (OTC). All companies listed on this exchange must file current financial statements with the Securities and Exchange Commission (SEC) or a regulator. Different from listings on the Nasdaq and New York Stock Exchange (NYSE), there are no listing requirements for companies listing stocks on the OTCBB.

OUTSTANDING SHARES
Outstanding shares refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

OVER-THE-COUNTER MARKET (OTC)
The market for shares not traded on any U.S. exchanges. This is regulated by the National Association of Securities Dealers and contains brokers who complete transactions via computer and telephone rather than in a centralized marketplace.

OVERVALUED
The perception that a security’s price is too high, given the company’s current value.

OWNER
The name of the individual who is the registered owner of a security.

PAR
The face value of a bond.

PARTNERSHIP
An organization or two or more individuals who manage and operate the business, sharing rights and obligations.

PASSED DIVIDEND
Exclusion of a regular or scheduled dividend.

PAYABLE DATE
The date on which a declared stock dividend is scheduled to be paid.

PENNY STOCK
A stock that trades at a low price, usually under a dollar.

PERSONAL REPRESENTATIVE
Court appointed individual who distributes estate assets.

PINK SHEETS
A daily publication assembled by the National Quotation Bureau with bid and ask prices of over-the-counter stocks. Unlike companies on a stock exchange, companies quoted on the pink sheets system do not need to meet minimum requirements or file with the Securities Exchange Commission.

POISON PILL
An approach used by corporations to discourage hostile takeovers. The target company attempts to make its stock less attractive to the acquirer. There are two types of poison pills, "flip-in" and "flip-over". A "flip-in" allows existing shareholders to buy more shares at a discount. A "flip-over" allows shareholders to buy the acquirer's shares at a discounted price after the merger.

PORTFOLIO
The group of stocks, bonds, and other securities held by an investor or mutual fund.

POWER OF ATTORNEY
Legal document giving one individual the power to act for another individual.

PRE-RELEASE
American Depositary Receipt which is secured by cash collateral instead of securities which are deposited. These are commonly used by brokers who settle cross border trades.

PREFERRED STOCK
A preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares generally have a dividend that must be paid out before dividends to common shareholders, and the shares usually do not carry voting rights.

PREMIUM
The amount that a bond or preferred stock can sell above its par value.

PREPETITION LIABILITY
A term that refers to liabilities that arise prior to a company filing of bankruptcy. A company has to petition for bankruptcy protection; once this is done, liabilities fall into two categories: prepetition, or those that arise prior to petition and post-petition, those that arise after petition. These two types of liabilities are often shown on the balance sheets of companies in bankruptcy protection.

PRICE-EARNINGS (P/E) RATIO
A popular measure of the value of common stock; it is the market price of a share of stock divided by its annual earnings per share. P/E = Stock Price Earnings Per Share.

PRIMARY DISTRIBUTION
The first sale of stock by a private company to the public.

PRINCIPAL
An individual's capital, or the face value of a bond.

PRIVATE COMPANY
A private company is a company with private ownership. As a result, it does not need to meet the Securities and Exchange Commission's (SEC) strict filing requirements for public companies. Private companies may issue stock and have shareholders, but their shares do not trade on public exchanges and are not issued through an initial public offering (IPO). In general, the shares of these businesses are less liquid and the values are difficult to determine.

PRIVATE EQUITY
Private equity is capital that is not noted on a public exchange. Private equity is composed of funds and investors that directly invest in private companies, or that engage in buyouts of public companies, resulting in the delisting of public equity. Institutional and retail investors provide the capital for private equity, and the capital can be utilized to fund new technology, make acquisitions, expand working capital, and to bolster and solidify a balance sheet.

PRIVATE INVESTMENT IN PUBLIC EQUITY (PIPE) DEAL
A deal that occurs when private investors take a sizable investment in publicly traded corporations. This occurs when equity valuations have declined and the company is looking for new sources of capital.

PRIVATE OFFERING, RESALES, AND TRADING THROUGH AUTOMATED LINKAGES (PORTAL)
Automated trading system developed by the National Association of Securities Dealers which provide security descriptions and pricing information.

PRIVATE PLACEMENT
The sale of securities to a small group of select investors as a way of raising capital. Investors usually include large banks, mutual funds, and pension funds. Private placement is the opposite of a public issue, in which securities are made available for sale on the open market.

PROBATE
The legal process in which a will is reviewed to determine whether it is valid and authentic. Probate can also refer to the general administering of a deceased individual's will or the estate of a deceased individual without a will.

PROCEEDS
Money received by the seller of an asset. Net proceeds refers to the amount after the deduction of transaction charges such as commissions or exchange fees.

PROSPECTUS
A legal document required by and filed with the Securities and Exchange Commission. A prospectus provides details about an investment offering for sale to the public and contains details that an investor needs to make an educated investment decision.

PROXY
The authority to act on behalf of another party. Shareholders who do not attend a company's annual meeting may choose to vote their shares by proxy by allowing someone else to cast votes on their behalf.

PROXY ACCESS
"Proxy access" is shorthand for a crucial mechanism that gives shareowners a meaningful voice in corporate board elections. It refers to the right of shareowners to place their nominees for director on a company's proxy card. This lets investors avoid the cost of sending out their own proxy cards when they are dissatisfied with a corporate board and want to run their own candidates for director.

PROXY ADVISORY SERVICES
These firms provides governance services that support engagement among institutional investors and corporations through its research, proxy vote management and technology platforms. Proxy Advisory Service firms empowers institutional investors that collectively manage $20 trillion to make sound voting decisions by uncovering and assessing governance, business, legal, political and accounting risks at issuers domiciled in 100 countries.

PROXY CONTEST
A proxy fight is when a group of shareholders are persuaded to join forces and gather enough shareholder proxies to win a corporate vote. This is referred to also as a proxy battle. Used mainly in the context of takeovers, this term means the acquirer will persuade existing shareholders to vote out company management so that the company will be easier to take over

PROXY STATEMENT
Information given to shareholders that coincide with the solicitation of proxies.

PUBLIC COMPANY
A public company is a company that has issued securities through an initial public offering (IPO) and is traded on at least one stock exchange or the over-the-counter market. Although a small percentage of shares may be initially floated to the public, becoming a public company allows the market to determine the value of the entire company through daily trading.

QUALIFIED 423(B) PLAN
An Employee Stock Purchase Plan that is based upon the length of time the shares were held prior to being sold. This plan provides special tax treatment to employers that offer this type of plan.

QUALIFIED INSTITUTIONAL BUYER (QIB)
Institutions that manage at least $100 million in securities which include banks, savings and loans institutions, insurance companies, investment companies, employee benefit plans, or an entity owned entirely by qualified investors. Also included are registered broker-dealers owning and investing, on a discretionary basis, $10 million in securities of non-affiliates.

QUORUM
A quorum refers to the minimum acceptable level of individuals with a vested interest in a company needed to make the proceedings of a meeting valid under the corporate charter. This clause or general agreement ensures there is sufficient representation present at meetings before any changes can be made by the board. A quorum is normally comprised of a group that is considered as large as possible to be depended on to attend all corporate meetings, which is a qualitative assessment.

QUOTATION
The price being bid (by a prospective buyer) or offered (by a potential seller) for a security. It usually refers to the highest bid and lowest asked (offered) price currently available on a security.

QUOTE
The most recent price at which a security traded, which continuously changes throughout the day.

RALLY
A continued increase in a stock price or market following a decline.

RATIO
The number of whole or fractional shares represented by a single American Depositary Share.

REAL ESTATE INVESTMENT TRUST (REIT)
Similar to a closed-end investment company, but organized to manage a portfolio of real estate investments and distributes to its shareholders at least 95% of its net earnings annually. Usually traded publicly, REITs often specialize in a particular kind of property. They can: invest in real estate such as office buildings, shopping centers, or hotels; purchase real estate (an equity REIT); and provide loans to building developers (a mortgage REIT). A REIT provides centralized management, limited liability, continuity of interest, and transferability of ownership. REITs generally avoid corporate tax by distributing earnings to shareholders. Distributed earnings are then taxed as ordinary income.

RECORD DATE
A date established by the issuer of a security for the purpose of determining the shareholders who are entitled to receive a dividend or distribution.

RECORD HOLDER
A legal owner of stock or securities as it appears in the official books and records of the company.

REDEMPTION
The return of an investor's principal in a fixed-income security, such as a preferred stock or bond, or the sale of units in a mutual fund.

REGISTERED BOND
A bond whose owner is registered with the bond's issuer and recorded on the bond.

REGISTERED OWNER
Individual who owns a security and elects to hold their shares directly, rather than with a broker.

REGISTERED REPRESENTATIVE
An employee of a brokerage firm who has acquired a background in the securities business, has passed a series of tests, and is licensed by the Securities and Exchange Commission (SEC), the New York Stock Exchange (NYSE), and the National Association of Securities Dealers (NASD).

REGISTRAR
An organization that is responsible for record keeping of shareholders.

REGISTRATION
Legal title illustrating the ownership of a security.

REGULATION S (REG. S)
Adopted by the SEC in 1990, these are conditions by which offers and sale of securities outside of the U.S. are exempt from Securities Exchange Commission registration requirements.

REGULATORY COMPLIANCE
Regulatory compliance is an organization's adherence to laws, regulations, guidelines and specifications relevant to its business. Violations of regulatory compliance regulations often result in legal punishment, including federal fines.

REINVESTMENT
Use of investment income to buy additional securities. Many mutual fund companies and investment services offer the automatic reinvestment of dividends and capital gains distributions as an option to investors.

REIT
A Real Estate Investment Trust is a type of security that invests in real estate through property or mortgages and often trades on major exchanges like a stock.

REORGANIZATION
A change in the structure or ownership of a company through a merger or consolidation, acquisition, transfer, recapitalization, change in identity or liquidation.

RESTRICTED LEGEND
A statement (on a stock certificate) noting restrictions on the transfer of the stock, often due to SEC requirements for unregistered securities. A legend may or may not be legally required on the certificate itself, depending on state laws. Restrictions on the sale or transfer of share ownership are common among privately held corporations.

RESTRICTED SECURITIES
Shares of stock in a corporation that are not easily transferable or able to be sold publicly in the U.S.

RESTRICTED STOCK
A restricted stock refers to unregistered shares of ownership in a corporation that are issued to corporate affiliates such as executives and directors. Restricted stock is nontransferable and must be traded in compliance with special SEC regulations.

RESTRUCTURING
Restructuring is a type of corporate action taken when significantly modifying the debt, operations or structure of a company as a means of potentially eliminating financial harm and improving the business. When a company is having trouble making payments on its debt, it will often consolidate and adjust the terms of the debt in a debt restructuring, creating a way to pay off bond holders. A company restructures its operations or structure by cutting costs, such as payroll, or reducing its size through the sale of assets.

RETAIL INVESTOR
A retail investor is an individual investor who buys and sells securities for their personal account, and not for another company or organization.

RETURN OF CAPITAL
A distribution that is not paid out of earnings and profits. It is a return of the investor’s principal.

REVERSE / FORWARD STOCK SPLIT
A reverse/forward stock split is a stock split strategy that includes the use of a reverse stock split followed by a forward stock split. A reverse/forward stock split is usually used by companies to cash out shareholders with a less-than-certain amount of shares.

REVERSE ACH (REVERSE EFT)
Automatic purchases made by shareholders who are enrolled in a dividend reinvestment plan. These purchases are deducted directly from their checking or savings account.

REVERSE STOCK SPLIT
A reduction in the number of a corporation's outstanding shares that increases the value of its stock or its earnings per share. Certificates are surrendered by shareholder and new certificates are issued.

RIGHTS OFFERING
Issuing rights to a company's existing shareholders to buy a proportional number of additional securities at a given price within a fixed period. This is usually offered at a discount.

RIGHTS SUBSCRIPTIONS
A subscription right is the right of existing shareholders in a company to retain an equal percentage ownership over time by subscribing to new stock issuances at or below market prices. The subscription right is usually enforced by the use of rights offerings, which allow shareholders to exchange rights for shares of common stock at a price generally below what the stock is currently trading for.

RISK
The possibility of losing or not gaining value. In investments, there are many kinds of risk including: Inflation Risk, Economic Risk, Financial Risk, Market Risk, etc. Also, the potential dangers facing the subject of an insurance contract.

ROAD SHOW
A presentation by an issuer of securities to potential buyers which is intended to create interest in the securities.

ROLLOVER
An employee’s transfer of retirement funds from one retirement or tax-deferred annuity plan to another plan or to an IRA (without incurring a tax liability). The transfer must be made within 60 days of receiving a cash distribution. The law requires 20% federal income tax withholding on money eligible for rollover if it is not moved directly to the second plan or IRA via a direct rollover or trustee to trustee transfer.

ROLLOVER IRA (IRA ROLLOVER)
A traditional individual retirement account holding money from a qualified plan or 403(b) plan. These assets, as long as they are not mixed with other contributions, can later be rolled over to another qualified plan or 403(b) plan. Also known as a conduit IRA.

ROTH IRA
An individual retirement plan similar to the traditional IRA, but contributions are not tax deductible and qualified distributions are tax free. Non-qualified distributions from a Roth IRA may be subject to a penalty upon withdrawal.

ROUND LOT
A group of shares that can be evenly divided by 100 shares.

RULE 12G3-2(B)
Under the Exchange Act of 1934, an exemption from supplying information. In order to qualify for the exemption the issuer must regularly supply the Securities and Exchange Commission copies of investor information, files with a stock exchange, or information distributed to its security holders.

RULE 144A
A Securities & Exchange Commission rule, which modifies a required two-year holding period on privately placed securities to permit qualified institutional buyers to trade these positions among themselves.

RULE 15C211
Designed to allow a non-reporting public company's securities to be quoted on The Financial Industry Regulatory Authority ("FINRA") Over-the-Counter Bulletin Board ("OTCBB") by filing some simple disclosures.

RUSSELL 2000 INDEX
An index measuring the performance of the smallest 2,000 companies of the largest 3,000 publicly traded companies.

SALES CHARGE
Commonly referred to as the load; a transaction fee or commission paid for an investment instrument, such as a mutual fund. See Load and No-Load Funds.

SARBANES-OXLEY ACT OF 2002
An act passed by U.S. Congress in 2002 protecting investors from the possibility of fraudulent accounting activities by corporations. This act mandated stern reforms to improve financial disclosures from corporations and prevent accounting fraud.

SAY ON PAY
Say on pay is a term used for a rule in corporate law whereby a firm's shareholders have the right to vote on the remuneration of executives. Often described in corporate governance or management theory as an agency problem, a corporation's managers are likely to overpay themselves because, directly or indirectly, they are allowed to pay themselves as a matter of general management power. Directors are elected to a board that has a fiduciary duty to protect the interests of the corporation. In large listed companies, executive compensation will usually be determined by a compensation committee composed of board members. Proponents argue that “say on pay” reforms strengthen the relationship between the board of directors and shareholders, ensuring that board members fulfill their fiduciary duty. Critics of the policy believe that “say on pay” does not effectively or comprehensibly monitor compensation, and consider it to be reactionary policy rather than proactive policy, because it does not immediately affect the Board of Directors. Some argue it is counter-productive because it diminishes the authority of the Board of Directors. The effect of ‘say on pay’ measures can be binding or non-binding, depending on regulatory requirements or internal corporate policy as determined by proxy votes.

SCALE ORDER
A type of buy or sell order that consists of several limit orders at incrementally increasing or decreasing prices.

SECONDARY MARKET
A market where investors purchase securities from other investors, rather than from issuing companies themselves. The New York Stock Exchange and the NASDAQ are secondary markets.

SECTION 19A
These notices report estimated amounts of each fund's current distributions paid from net investment income, net realized capital gains, and return of capital based on each fund's respective fiscal year end. The amounts and sources of distributions reported in these notices are only estimates and are not being provided for tax reporting purposes. The actual amounts and sources of the amounts for tax reporting purposes will depend upon the fund's investment experience during the remainder of its fiscal year and may be subject to change based on tax regulations. The fund will send a form 1099-DIV for the calendar year that will tell how to report these distributions for federal income tax purposes.

SECTOR
A group of securities, often related to a particular industry, that have certain shared characteristics.

SECTOR ALLOCATION
That portion of a fund which invests in narrowly defined segments of the economy, i.e., utilities, healthcare services, telecommunications, etc.

SECTOR DIVERSIFICATION
The percentage of a portfolio’s stocks from companies in each of the major industry groups.

SECTOR FUND
A mutual fund that concentrates on a relatively narrow market sector such as health care, chemicals, or retailing. These funds can experience higher share-price volatility than some diversified portfolio of stocks in many industries because sector funds are subject to issues specific to a given sector.

SECURITIES ACT OF 1933
Created as a result of the 1929 market crash, this legislation has two main goals, to ensure more transparency in financial statements so investors can make informed decisions about investments, and to establish laws against misrepresentation and fraudulent activities in the securities markets.

SECURITIES AND EXCHANGE COMMISSION (SEC)
A government commission comprised of five commissioners created by Congress in 1934 to regulate the securities markets and protect investors. This act also monitors corporate takeovers within the U.S. The statutes administered by the SEC are designed to promote full public disclosure and to protect the investing public against fraudulent and manipulative practices in the securities markets.

SECURITIES EXCHANGE ACT OF 1934
Law created to provide governance of securities transactions on the secondary market (after issue) and regulate the exchanges and broker-dealers in order to protect the investing public. The 1934 Act also established the Securities and Exchange Commission (SEC).

SECURITIES INFORMATION CENTER (SIC)
An organization established in 1977 to operate the Securities and Exchange Commission's Lost and Stolen Securities Program. Missing, lost or stolen securities that are must be reported to the SIC, which maintains the database.

SECURITY
An instrument representing stocks, bonds, and other investment tools.

SELF-TENDER
A firm's offer to buy back its own stock for a price well above fair market value. A self-tender offer usually excludes a targeted number of shareholders; it is not intended to stop trade on its stock.

SENIOR SECURITY
Senior Security is a loan or security that ranks above other loans or securities with regard to claims on assets or earnings. Also known as unsubordinated debt.

SERIES
Multiple issues of preferred stock or multiple classes of common stock issued by the same corporation.

SETTLEMENT
The finality of a transaction in which a customer pays a broker or dealer for securities purchased or delivers the securities sold and receives the proceeds of a sale.

SHARE
A unit representing a measure of ownership in a corporation.

SHARE PRICE
The value of one share in the fund. With most funds, the share price is calculated every day, because the value of a fund’s securities changes every day in response to the movements of the stock, bond and money markets. For some funds, share price is calculated on an hourly basis.

SHAREHOLDER
A shareholder is any person, company or other institution that owns at least one share of a company’s stock. Because shareholders are a company's owners, they reap the benefits of the company's successes in the form of increased stock valuation. If the company does poorly, however, shareholders can lose money if the price of its stock declines.

SHARK WATCH
A firm specializing in the early detection of takeovers. The firm's primary business is usually the solicitation of proxies for client corporations.

SHORT SALE
A market transaction in which an investor sells borrowed securities because of an expectation of a price decline. The investor is required to return an equal number of shares at some point in the future. A short seller will make money if the stock decreases in price. The profit that the investor receives is equal to the value of the sold borrowed shares minus the cost of repurchasing the borrowed shares.

SINGLE-LISTED DEPOSITARY RECEIPTS
Depositary Receipt whose underlying share is not publicly traded in the issuer's home market, and only listed and traded in the DR market. Cancellation will not result in delivery of a locally listed ordinary share.

SMALL ESTATE AFFIDAVIT
Notarized document stating an estate's value and listing the individual who is authorized to distribute proceeds from the estate.

SOCIAL SECURITY NUMBER (SSN)
A nine digit number used by the Internal Revenue Service for tax purposes. All Americans are assigned a SSN, while corporations and trusts are assigned a TIN for tax reporting.

SOFA
State Of Financial Affairs

SOLE PROPRIETORSHIP
Unincorporated business owned by a sole individual who pays personal income tax on profits.

SPAC
Special purpose acquisition companies (SPAC) are publicly-traded buyout companies that raise collective investment funds in the form of blind pool money, through an initial public offering (IPO), for the purpose of completing an acquisition of an existing private company, sometimes in a specified target industry such as information technology.

SPECIALIST
A member of a securities exchange who acts as the market maker to facilitate the trading of a given stock. Specialists hold inventory of the stock, post the bid and ask prices, manage limit orders and execute trades.

SPECULATOR
An individual who assumes a very large risk in the hope of a gain.

SPIN-OFF
The formation of an independent company through the sale or distribution of new shares of an existing business/division of a parent company. Shareowners in the parent company will receive shares in the new company with the total value of new shares remaining the same.

SPONSORED AMERICAN DEPOSITARY RECEIPT
An American depositary receipt (ADR) that is issued in collaboration with the underlying foreign company whose equity shares will underly the ADR shares. With the corporation's sponsorship, ADRs created in the issue afford their owners the same rights normally given to stockholders, such as voting rights.

STANDARD & POOR'S 500 INDEX (S&P 500)
An index of 500 stocks designed to be a leading indicator of U.S. equities and is meant to reflect the risk/return characteristics of the large cap universe.

STATEMENT OF ADDITIONAL INFORMATION (SAI)
An informational brochure on a mutual fund, which is available upon request. The statement contains information that is classified as useful but nonessential by the Securities and Exchange Commission and therefore, typically, is not included in the prospectus. A document provided as a supplement to a mutual fund prospectus. It contains more detailed information about fund policies, operations, and risks. Also known as a Part B prospectus.

STATEMENT ON STANDARDS FOR ATTESTATION ENGAGEMENTS (SSAE 16)
An attestation standard put forth by the Auditing Standards Board (ASB) of the American Institute of Certified Public Accountants (AICPA) that addresses engagements undertaken by a service auditor for reporting on controls at organizations that provide services to user entities, for which a service organization's controls are likely to be relevant to a user entities internal control over financial reporting (ICFR).

STOCK
A type of security that indicates ownership in a corporation and represents a claim on part of the corporation's earnings.

STOCK ACQUISITION
A mutually agreed upon merger of two companies in which the shareholders of the companies being acquired receive the acquiring company's stock in exchange for their shares.

STOCK BOND/POWER
Form used to execute security transfers.

STOCK CERTIFICATE
A stock certificate is the physical piece of paper representing ownership in a company. Stock certificates will include information such as the number of shares owned, the date, an identification number, usually a corporate seal, and signatures. They are a bit bigger than normal piece of paper and most of them have intricate designs to discourage fraudulent replication.

STOCK FUND
A fund that seeks a favorable rate of return through investments in the stocks of various companies.

STOCK LEGEND
Shares that cannot be sold, exchanged or transferred unless requirements are met. These requirements are printed on the stock certificate.

STOCK MERGER
A stock merger is a strategy used during a merger or acquisition of a company. The motivation is an opportunity to pay with stock rather than with cash. Also known as a Stock Swap.

STOCK SPLIT
A corporate action in which a company's existing shares are divided into multiple shares. Although the number of shares outstanding increases, the total dollar value of the shares remains the same compared to pre-split amounts, since no value has been added as a result of the split.

STOCK SWAP
A stock swap is a strategy used during a merger or acquisition of a company. The motivation is an opportunity to pay with stock rather than with cash. Also known as a Stock Merger.

STOCK UNIT
A combination of multiple securities, such as common stock and warrants, sold together as a single product.

STOCKBROKER
A stockbroker, also called a Registered Representative, investment advisor or simply, broker, is a professional individual who executes buy and sell orders for stocks and other securities through a stock market, or over the counter, for a fee or commission. Stockbrokers are usually associated with a brokerage firm and handle transactions for retail and institutional customers. Brokerage firms and broker-dealers are also often referred to as stockbrokers.

STOP LIMIT ORDER
An order that is executed at a specified price (or better) after a given stop price has been reached. Once the stop price has been reached, the stop limit order becomes a limit order to buy or sell at the limit price or better.

STREET NAME
Securities held in the name of a broker or other nominee, instead of being held in the customer's name.

SUBORDINATED DEBT
Subordinated debt is a loan or security that ranks below other loans and securities with regard to claims on a company's assets or earnings. Subordinated debt is also known as a junior security or subordinated loan. In the case of borrower default, creditors who own subordinated debt won't be paid out until after senior debt holders are paid in full.

SUBSCRIPTION
Offer given to existing shareholders to purchase newly issued securities before new securities are offered to other individuals. Subscription prices are set below the normal market price.

SUBSCRIPTION RIGHTS
A subscription right is the right of existing shareholders in a company to retain an equal percentage ownership over time by subscribing to new stock issuances at or below market prices. The subscription right is usually enforced by the use of rights offerings, which allow shareholders to exchange rights for shares of common stock at a price generally below what the stock is currently trading for.

SUCCESSOR TRUSTEE
A trustee who succeeds a previous trustee and who has the same power as the previous trustee.

SUPERANNUATION
A superannuation is an organizational pension program created by a company for the benefit of its employees. It is also referred to as a company pension plan.

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
A supplemental executive retirement plan (SERP) is a nonqualified retirement plan for key company employees, such as executives, that provide benefits above and beyond those covered in other retirement plans such as IRA, 401(k) or nonqualified deferred compensation NQDC plans. There are many different kinds of SERPs available to companies wishing to ensure their key employees are able to maintain their current standards of living in retirement.

SURETY BOND
A bond that guarantees payment if the second party fails to meet the terms of a contract. The surety bond protects the first party against losses resulting from the second party's failure to meet the obligation. There are three parties involved: The Principal, the business or individual who will be performing a contractual obligation. The Oblige, the party who receives the obligation, which is normally a government entity, and the Surety, who guarantees the principal's obligations will be performed.

SURETY PREMIUM
Fee paid by a shareholder to cover insurance for replacing lost securities or by an estate of a deceased shareholder who transfers shares without probate.

T+3 (TRANSACTION DATE + 3)
The settlement date of a security transaction. All purchases and sales of securities are settled on the 3rd business day following the transaction date.

TABULATE
To tabulate information is to organize it into a table. Tabulating is a way of processing information or data by putting it in a table. This doesn't mean the kind of table you eat off of, though. It refers to a table, or chart, with rows and columns. When tabulating, you might have to make calculations. Someone who enjoys tabulating financial information might make a good accountant.

TAKEOVER
A change in the controlling interest of a corporation. A takeover may be a friendly acquisition or a hostile bid. A hostile takeover is usually attempted through a public tender offer.

TAX BASIS
The original value of an asset for tax purposes, adjusted for stock splits, dividends and return of capital distributions. This value is used to determine the capital gain, which is equal to the difference between the asset's tax basis and the current market value.

TAX DEFERRAL
The postponement of taxes due on the earnings or growth related to certain favored investments until the earnings are withdrawn or the investment is sold or otherwise disposed of.

TAXABLE INCOME
The amount of income, after deductions and other items are subtracted from Adjusted Gross Income (AGI), subject to income taxes.

TAXPAYER EQUITY AND FISCAL RESPONSIBILITY ACT OF 1982 (TEFRA)
Federal tax legislation passed in 1982 that requires taxpayers to provide their correct Tax Identification Number to financial institutions (by filling out a W-9 form) who report income from securities to the Internal Revenue Service.

TAXPAYER IDENTIFICATION NUMBER (TIN)
Nine digit number used by the Internal Revenue Service for tax purposes. Corporations and trusts are assigned a TIN for tax reporting, while individuals are assigned a social security number.

TENANCY BY THE ENTIRETY
Joint ownership permits spouses to jointly own property as a single legal entity, with the survivor becoming the sole owner.

TENANCY IN COMMON
Shared, equal ownership of property for two or more people. Each owner has the right to leave his or her share of the property to any beneficiary upon the owner's death.

TENANTS IN COMMON
Co-ownership by two or more people, each owning a defined percentage of the whole. There are no survivorship rights.

TENDER OFFER
An offer to purchase some or all of a shareholders shares in a corporation in order to gain controlling interest. The price offered is usually at a premium to the market price.

TERMINATION
The request to end participation, either by selling all shares or issuing a certificate, in a dividend reinvestment plan account.

TESTAMENTARY TRUST
A trust established by a deceased individual's will.

THIRD MARKET
Trading made by non-exchange-member brokers of exchange-listed securities.

TICKER SYMBOL
A combination of letters that represent a particular security listed on an exchange when traded publicly.

TOTAL RETURN
The sum of the current income and the capital gains (or losses) earned on an investment over a specified period of time. For mutual funds, a percentage change, over a specified period, in net asset value, taking into account capital appreciation, and reinvestment of all distributions of dividends or interest and capital gains, and individual tax considerations adjusted for present value and expressed on an annual basis.

TRADE
Buying or selling a stock, bond, or other financial commodity or option. A buyer and seller must agree on a price before a trade can be carried out. A broker or agent often facilitates this process, serving as an intermediary.

TRADE DATE
The date that the purchase or sale of a security is performed.

TRADER
An individual who buys and sells assets in a financial market, either for themselves, or on behalf of another individual.

TRADITIONAL IRA
A tax-deferred individual retirement account that allows annual contributions of up to $2,000 for each income earner. Contributions are fully deductible for all individuals who are not active participants in employer-sponsored plans or for plan participants within certain income ranges.

TRANSFER
A change in ownership of an asset, from one individual or account to another.

TRANSFER AGENT
A trust company, bank or financial institution assigned by a corporation to maintain records of investors and account balances and transactions, to cancel and issue certificates, to process investor mailings and to deal with shareholder problems and inquiries.

TRANSFER ON DEATH (TOD)
A registration form designating beneficiaries to receive assets at the time of an individual's death without having to go through probate.

TREASURY BILL
A Treasury bill (T-Bill) is a short-term debt obligation backed by the U.S. government with a maturity of less than one year, sold in denominations of $1,000 up to a maximum purchase of $5 million. T-bills have various maturities and are issued at a discount from par. When an investor purchases a T-Bill, the U.S. government writes an IOU; investors do not receive regular payments as with a coupon bond, but a T-Bill pays an interest rate.

TREASURY SHARES
A portion of shares that a company holds in their own treasury.

TRUST
A legal entity in which one person or institution (trustee) holds the right to manage property or assets for the benefit of someone else (trust beneficiary).

TRUST AGREEMENT
A formal relationship in which the trustor grants a trustee the right to hold assets for the benefit of a beneficiary of the trust.

TRUST COMPANY
A trust company is a legal entity that acts as a fiduciary, agent or trustee on behalf of a person or business entity for the purpose of administration, management and the eventual transfer of assets to a beneficial party. The entity acts as a custodian for trusts, estates, custodial arrangements, asset management, stock transfer, beneficial ownership registration and other related arrangements.

TRUSTEE
A person to whom property is committed so that it can be administered on behalf of a beneficiary.

U.S. PAYABLE DATE
The date which U.S. holders receive stock dividend distribution for Depositary Receipts.

UNCLAIMED PROPERTY
Cash, stocks, bonds and other holdings that have been turned over to the state after several years of inactivity. Some states hold onto such property and allow the original owners and heirs to claim it indefinitely. In other states, if the property goes unclaimed for too long, it may become the state's property through a process known as escheatment.

UNDERVALUED SECURITY
A security selling below its market value or liquidation value.

UNDERWRITER
A company or entity that administers public issuance and distribution of securities from a corporation. An underwriter works closely with the issuer to determine the offering price of the securities, buys them from the issuer and sells them to investors via the underwriter's distribution network.

UNIFORM GIFTS TO MINORS ACT (UGMA)
A law adopted by many states to provide a simple method for giving irrevocable gifts to children via a custodial account without having to establish a formal trust. UGMA accounts are managed by a custodian who acts on behalf of a minor. UGMA assets must be turned over to the minor at the state-established age of majority (also called age of termination), which ranges from 18 to 25, depending on the state.

UNIFORM TRANSFERS TO MINORS ACT (UTMA)
Adopted by all states and similar to the Uniform Gifts to Minors Act, this law allows irrevocable transfer of gifts besides money (ranging from real estate and fine art to patents and royalties) to a minor via a simple custodial account. The UTMA either supplements or replaces the UGMA, depending on the state.

UNIT INVESTMENT TRUST (UIT)
Self-liquidating, passive investment companies. They purchase specific investments, hold them for a specific time, then pay out income and principal.

UNRESTRICTED SECURITIES
A security that can be sold publicly within the U.S. because it has been registered with the Securities and Exchange Commission.

UNSPONSORED AMERICAN DEPOSITARY SHARE
An American depositary receipt that is issued without the involvement of the foreign company whose stock underlies the ADR.

UNSUBORDINATED DEBT
Unsubordinated debt is a loan or security that ranks above other loans or securities with regard to claims on assets or earnings. Also known as a senior security.

USUFRUCT
An individual or company that has temporary rights to gain income from someone else's property.

VALUATION
The estimated worth or desirability of an asset such as a security. A valuation makes it easier to decide if an asset would make a good investment at a given purchase price. The price/earnings ratio is an example of a stock valuation.

VALUE STOCK FUND
A mutual fund that emphasizes stocks of companies whose growth opportunities are generally regarded as sub-par by the market. Value stock companies often pay regular dividend income to shareholders and sell at relatively low prices in relation to their earnings or book value.

VALUE STOCKS/VALUE INVESTING
Stocks that are considered to be undervalued based upon such ratios as price-to-book or price-to-earnings (P/E). Historically, these have been stocks that have low price-to-earnings ratios (P/Es), a high level of asset backing, or high dividend yields, or a combination of all three. These companies generally have lower forecasted growth rates than growth stocks.

VENTURE CAPITAL
Venture capital is financing that investors provide to startup companies and small businesses that are believed to have long-term growth potential. For startups without access to capital markets, venture capital is an essential source of money. Risk is typically high for investors, but the downside for the startup is that these venture capitalists usually get a say in company decisions.

VENTURE CAPITAL FUNDS
Venture capital funds are investment funds that manage the money of investors who seek private equity stakes in startup and small- to medium-sized enterprises with strong growth potential. These investments are generally characterized as high-risk/high-return opportunities. In the past, venture capital investments were only accessible to professional venture capitalists, although now accredited investors have a greater ability to take part in venture capital investments.

VEST
The time when stock options granted to an optionee are available for exercise.

VOLATILITY
The degree of fluctuation in the value of a security, mutual fund, or index, volatility is often expressed as a mathematical measure such as a standard deviation or beta. The greater a fund’s volatility, the wider the fluctuations between its high and low prices.

VOLUME
The number of shares or contracts traded in a security or an entire market during a given period of time.

VOLUNTARY CONTRIBUTION
The purchase of additional shares by an individual of a dividend reinvestment account.

VOTING INSTRUCTION CARDS
A card that notes voting issues that will be reviewed at a shareholder's meeting and is issued in exchange for common stock.

VOTING RIGHT
The rights of a shareholder to vote on matters of corporate affairs and policies.

W-8 FORM
Form issued by the Internal Revenue Service that grants a non-U.S. citizen an exemption from taxation on dividend income, interest, sales, etc.

W-8BEN
This form is used by foreign corporations and individuals certifying their non-American status.

W-9 FORM
Form issued by the Internal Revenue Service used to verify Tax Identification Numbers for U.S. citizens.

WAIVER OF PROBATE
An affidavit required to transfer securities from non-probated estates.

WARRANTS
A security giving shareholders the right to purchase securities from the issuer at a specific price within a certain time frame.

WILL
A legal declaration instructing how an individual wishes their property to be distributed after death.

WILSHIRE 5000 TOTAL MARKET INDEX
Originally made up of 5,000 stocks, this is one of the broadest indexes designed to track the overall performance of the American stock markets, making up more than 6,700 companies.

WITHHOLDING
Any tax that is taken directly out of an individual's income before they receives the funds.

YIELD
The return on an investment from the interest or dividend received from a security. The return is expressed as a percentage based on the investment's cost or current market value.

ZERO COUPON BOND
A bond that does not pay interest but is priced at a discount from its redemption price.