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A - B - C

Accrued interest:
Interest that has been earned but not received.

Accumulation plan:
An arrangement which enables an investor to purchase mutual fund shares regularly in large or small amounts.

Annual Report:
A financial report sent yearly to a publicly held firm's shareholders. This report must be audited by independent auditors.

Alternative Trading System:
A privately operated computerized system that performs many of the functions of a stock exchange by centralizing and matching buy and sell orders and providing post-trade information. Also known as Proprietary Electronic Trading Systems (PETS)

Annual And Semi-Annual Reports:
Also known as financial statements. These are the reports a mutual fund company sends to its unitholders which describe the fund's performance over the past year or six-month period and that identifies the securities held by the fund.

An individual who purchases an annuity and will receive payments from that annuity.

A contract that guarantees a series of payments in exchange for a lump sum investment.

Ask Price:
A proposal to sell a specific quantity of securities at a named price.

What a firm or individual owns.

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Back-End Load:
A sales charge levied when mutual fund units are redeemed.

Balance Sheet:
A financial statement showing the nature and amount of a company's assets, liabilities and shareholders' equity.

Balanced Funds:
A mutual fund that holds a mix of securities - usually money market, bonds and equities. The relative balance of these securities can be changed to take advantage of phases in the economic cycle.

Bank Rate:
The rate at which the Bank of Canada makes short-term loans to chartered banks and other financial institutions, and the benchmark for prime rates set by financial institutions.

Bankers' Acceptance:
Short-term bank paper with the repayment of principal and payment of interest guaranteed by the issuer's bank.

Bear Market:
A market in which prices are generally falling.

Bid and Ask:
The bid price is the highest price anyone is willing to pay to buy a stock; while the ask is the lowest anyone will accept to sell a stock. Together, the bid and ask prices are referred to as a "quote".

Blue Chip:
A descriptive term usually applied to high grade equity securities.

Board Lot:
A unit of trading. The board lot on the Winnipeg Stock Exchange is one share for all equity securities.

Board of Directors:
A committee elected by the shareholders of a company, empowered to act on their behalf in the management of company affairs. Directors are normally elected each year at the annual meeting.

A long-term debt instrument with the promise to pay a specified amount of interest and to return the principal amount on a specified maturity date.

Bond Fund:
A mutual fund whose portfolio consists primarily of bonds.

Book/Order Book:
A record of all pending buy and sell orders for a particular stock.

Book Value:
The value of net assets that belong to a company's shareholders, as stated on the balance sheet.

An agent who handles the public's orders to buy and sell securities, commodities or other property. A commission is generally charged for this service.

Bull Market:
A market in which prices are generally rising.

Buying on Margin:
Purchasing a security partly with borrowed money.

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Call Market:
An auction market where orders are batched to accumulate critical mass, then executed together at a pre-defined time.

Preferred shares or bonds that give the issuing corporation an option to repurchase, or "call" those securities at a stated price. These are also known as redeemable securities.

Canada Savings Bond:
A bond issued each year by the federal government. These bonds can be cashed in at any time for their full face value.

Generally, the money or property used in a business. The term is also used to apply to cash in reserve, savings, or other property of value.

Capital Cost Allowance:
A taxation term, equivalent to depreciation, that makes allowance for the wearing away of a fixed asset.

Capital Gain or Loss:
A income tax term referring to profit or loss resulting from the sale of an asset, such as a security.

Capital Stock:
All classes or types of shares represent ownership of a corporation, both common and preferred.

The total amount of all securities, including long-term debt, common and preferred stock, issued by a company.

Cash Equivalent:
Assets that can be quickly converted to cash. These include receivables, Treasury Bills, short-term commercial paper and short-term government and corporate bonds and notes.

A document providing evidence of ownership of a security such as a stock or bond.

Closed-End Funds:
A fund company that issues a fixed number of shares. Its shares are not redeemable, but are bought and sold on stock exchanges or the over-the-counter market.

Commercial Paper:
A negotiable corporate promissory note with a term of a few days to a year. It is generally not secured by company assets.

Common Shares:
Securities which represent part ownership in a company and generally carry voting privileges.

The process by which income is earned on income that has previously been earned.

Consumer Price Index
A statistic that is a measure of the change in the cost of living for consumers. It is used to illustrate the extent that prices have risen or the amount of inflation that has taken place over a period of time.

Contractual Plan:
An arrangement whereby an investor contracts to purchase a given amount of a security by a certain date and agrees to make partial payments at specified intervals.

A security that can be exchanged for another. Bonds or preferred shares are often convertible into common shares of the same company.

A legal business entity created under federal or provincial statutes. Because the corporation is a separate entity from its owners, shareholders have no legal liability for its debts.

Coupon Rate:
The annual interest rate of a bond.

A term applied to stock at a time when the purchaser will be entitled to a forthcoming dividend.

Current Yield:
The annual rate of return that an investor purchasing a security at its market price would realize. This is the annual income from a security divided by the current price of the security. It is also known as the return on investment.

A financial institution, usually a bank or a trust company, that holds a mutual fund's securities and cash in safekeeping.

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D - E - F - G

Day Order:
An order to buy or sell a security valid only for a limited period, normally less than a day.

Day Trading:
Refers to establishing and liquidating the same position or positions within one day's trading.

A bond unsecured by any pledge of property. It is supported by the general credit of the issuing corporation.

An obligation to repay a sum of principal, plus interest. In corporate terms, debt often refers to bonds or similar securities.

Deferred Profit Sharing Plan:
A plan that allows an employer to set aside a portion of company profits from the benefit of employees. A corporation makes a contribution to the plan on behalf of an employee.

Defined Benefit Pension Plan:
A registered pension plan that guarantees a specific income at retirement, based on earnings and the number of years worked.

Defined Contribution Pension Plan:
A registered pension plan that does not promise an employee a specified benefit upon retirement. Benefits depend on the performance of investments made with contributions to the plan.

A condition of decreasing prices. In Canada, deflation is generally measured by the Consumer Price Index.

The act of moving from a non-profit, non-share capital corporation incorporated by special statute to a shareowner based, for-profit corporation.

Charges made against earnings to write off the cost of a fixed asset over its estimated useful life. Depreciation does not represent a cash outlay. It is a bookkeeping entry representing the decline in value of an asset that is wearing out.

The amount by which a bond sells on the secondary market at less than its par value or face value.

The sale of securities. Also refers to a sum payable to shareholders representing their share of profits. A distribution of profits may be in cash or by additional shares.

The investment in a number of different securities. To reduce the risk of loss inherent in investing. Diversification may be among types of securities, companies, industries or geographic locations.

A portion of a company's profit paid to the shareholders.

Dividend Fund:
A mutual fund that holds preferred and common stock that generally pay regular dividends.

Dividend Tax Credit:
An income tax credit available to investors who can earn dividend income through investments in the shares of Canadian Corporations.

Dollar Cost Averaging:
A principle of investing where equal dollar amounts are invested in a share or unit at regular intervals in the hope of reducing the average cost by acquiring more shares in periods of lower securities prices and fewer shares in periods of higher securities prices.

Drips (Dividend Reinvestment Plan):
A plan offered by some companies where the shareholder's dividends are used to purchase additional shares in the company. Many companies will absorb the commission charge that would normally be paid by the investor for additional purchase and many companies offer discounts on shares purchased through a DRIP plan.

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Earned Income:
For tax purposes, earned income is generally the money made by an individual from employment. It also includes some taxable benefits. Earned income is used as the basis for calculating RRSP maximum contribution limits.
For tax purposes, earned income is generally the money made by an individual from employment. It also includes some taxable benefits. Earned income is used as the basis for calculating RRSP maximum contribution limits.

Earnings Statement:
A financial statement showing the income and expenses of a business over a period of time. Also known as an income statement or profit and loss statement.

Common and preferred stocks, which represent a share in the ownership of a company.

Equity Fund:
A mutual fund whose portfolio consists primarily of common and/or preferred stock.

Without dividend. The buyer of shares quoted ex-dividend will not receive an already declared dividend. When shares are cum-dividend, the purchaser will receive the declared dividend.

Expense Ratio:
A mutual fund company's cost of doing business. It includes the fund's management fee as stated in the Simplified Prospectus. Price and performance is always shown net of this percentage which is charged against assets held by the fund.

Face Value:
The principal amount, or value at maturity, of a debt obligation. Also known as the par value or denomination.

Fair Market Value:
The price a willing buyer would pay a willing seller if neither was under any compulsion to buy or sell. The standard at which property is valued for a deemed disposition.

An individual or institution occupying a position of trust. An executor, administrator or trustee. Hence, "fiduciary" duties.

Fixed Assets:
Assets of a long-term nature, such as land and buildings.

Fixed Dollar Withdrawal Plan:
A plan that provides the mutual fund investor with fixed-dollar payments at specified intervals, usually monthly or quarterly.

Fixed Income Investments:
Investments that generate a fixed amount of income that does not vary over the life of the investment.

Fixed Liability:
Any corporate liability that will not mature within the following fiscal period. For example, long-term mortgages or outstanding bonds.

Fixed-period Withdrawal Plan:
A plan through which the mutual fund investor's holdings are fully depleted through regular withdrawals over a set period of time. A specific amount of capital, together with accrued income, is systematically exhausted.

Forward Pricing:
The accepted method of enacting purchase, transfers and redemption transactions on the next close of business.

Front-End Load:
A sales charge levied on the purchase of mutual fund units.

Fund Manager:
Investment counsel to a mutual fund.

Contracts to buy or sell specific quantities of a commodity or financial instrument at a specified price with delivery set at a specified time in the future.

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Growth Fund:
A growth fund is a type of mutual fund that usually focuses on the purchase of equities likely to have superior growth potential. These funds take higher investment risks and invest in more volatile stocks to achieve above average growth. Stock values may appreciate or depreciate depending on the success of the companies invested in and other market factors.

Guaranteed Investment Certificates:
A deposit instrument paying a predetermined rate of interest for a specified term. Available from banks, trust companies and other financial institutions.

I - L

Income Fund
Alternatively called a bond fund. Income funds are a type of mutual fund that holds debt instruments such as government bonds and corporate debentures. Its return is based on both interest earnings and capital gains.

Statistical measure of the state of the stock market or economy based on the performance of stocks or other components.

Index Fund:
A mutual fund that matches its portfolio to that of a specific financial market index, with the objective of tracking the general performance of the market in which it invests.

A condition of increasing prices. In Canada, inflation is generally measured by the Consumer Price Index.

Instalment Receipts
This allows the buyer to pay for the stock in instalments instead of one lump sum.

Payments made by a borrower to a lender for the use of the lender's money. A Corporation pays interest on bonds to its bondholders.

A stock which is listed on more that one exchanges.

International Fund:
A mutual fund that invests in securities from a number of countries.

Investment Advisor:
An individual who furnishes investment advice.

Investment Company:
A corporation or trust whose primary purpose is to invest the funds of its shareholders.

Investment Counsel:
A firm or individual which furnishes investment advice for a fee.

Investment Dealer:
A securities firm.

Investment Fund:
A term generally interchangeable with "mutual fund."

Issued Shares:
The number of securities of a company outstanding. This may be equal to or less than the number of shares a company is authorized to issue.

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Letter of Intent:
An agreement whereby an investor agrees to make a series of purchases of mutual fund units.

The borrowing of money for investment purposes.

All debts or amounts owing by a company in the form of accounts payable, loans, mortgages and long-term debts.

Life Expectancy Adjusted Withdrawal Plan:
A plan through which a mutual fund investor's holdings are fully depleted while providing maximum periodic income over the investor's lifetime.

Limit Order:
An order to buy or sell securities in which the client has specified the price. The order can be executed only at the specified price or a better one.

The ability of the market for a security to absorb a reasonable amount of buying or selling without major price changes.

Commissions charged on the purchase or sale of mutual fund units.

A term signifying ownership of securities. "I am long 100 XYZ," means that the speaker owns 100 shares of XYZ.

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M - N - O - P

Management Company:
The business entity that establishes, promotes and manages a fund or funds.

Management Expense Fee:
The sum paid to the investment company's advisor or manager for supervising its portfolio and administering its operations.

Management Expense Ratio:
A measure of the total cost of operating a fund as a percentage of average total assets.

The amount paid by clients when they use credit to buy a security. The remainder is loaned by their brokers.

Marginal Tax Rate:
The rate of tax on the last dollar of taxable income.

Market Capitalization:
Value of a corporation as determined by the market price of its issued and outstanding securities. It is calculated by multiplying the number of outstanding shares by the current market price of a share.

Market Index:
A statistic which measures trends in securities markets.

Market Maker:
A trader employed by a securities firm who is authorized and required by applicable self-regulatory organizations to maintain reasonable liquidity in securities by making firm bids or offers for one or more designated securities up to a specified minimum guaranteed fill.

Market Order:
An order to buy or sell a security immediately at the best possible price.

Market Price:
In the case of a security, market price is usually considered the last reported price at which the stock or bond is sold.

Market Visibility:
"Visible" liquidity provided by investors' limit orders (bid or ask) that are declared or entered in the Exchange's Order Book.

The date on which a loan or bond or debenture comes due and must be redeemed or paid off.

Money Market:
A sector of the capital market where short-term obligations such as Treasury bills, commercial paper and bankers' acceptances are bought and sold.

Money Market Fund:
A mutual fund made up of government Treasury-Bills and other short-term paper such as a Promissory Note and Banker's Acceptances. Interest yield fluctuates and is generally paid monthly.

Money Purchase Pension Plan:
Another term for defined contribution pension plan.

Mortgage-backed Securities:
Certificates that represent ownership in a pool of mortgages. The holders of these securities receive regular payments of principal and interest.

Mortgage Fund:
A mutual fund that holds mortgages.

Mutual Fund:
An investment entity that pools shareholder or unit holder funds and invests in various securities. The units or shares are redeemable by the fund on demand by the investor. The value of the underlying assets of the fund less liabilities establishes the current price of units.

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Net Asset Value:
Net asset value is the price set on a fund's units by deducting liabilities from assets and dividing by outstanding units.

Net Asset Value per Share:
Net asset value of a mutual fund divided by the number of shares or units outstanding. This represents the value of a share of unit of a fund and is commonly abbreviated to NAVPS.

No-Load Fund:
A mutual fund that does not charge a fee for buying or selling its shares.

Odd Lot:
A number of shares which is less than a board lot.

Open-Ended Fund:
An open-ended mutual fund continuously issues and redeems units, so the number of units outstanding varies from day to day. Most mutual funds are open-ended.

Open Order:
An order to buy of sell a security at a specified price. The order is valid until executed or cancelled.

Contracts which give the holder the right to buy (call options) or sell (put option) a fixed amount of a certain stock at a specified price within a specified time.

The over-the-counter (OTC) or unlisted market maintained by securities dealers for issues not listed on a stock exchange.

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Par Value:
The principal amount, or value at maturity, of a debt obligation. It is also known as the denomination or face value. Preferred shares may also have par value, which indicates the value of assets each share would be entitled to if a company were liquidated.

Pension Adjustment:
An amount that reduces the allowable contribution limit to an RRSP based on the benefits earned from the employee's pension plan or deferred profit sharing plan.

Pension Plan:
A formal arrangement through which the employer, and in most cases the employee, contribute to a fund to provide the employee with a lifetime income after retirement.

All the securities which an investment company or an individual investor owns.

Preferred Shares:
Shares that carry dividends at fixed rates which must be paid before any dividends are paid to common shareholders.

The amount by which a bond's selling price exceeds its face value. Also, the amounts paid to keep an insurance policy in force.

Present Value:
The current worth of an amount to be received in the future. In the case of an annuity, present value is the current worth of a series of equal payments to be made in the future.

Price Discovery:
The interactive process through which the execution price for a trade is established. In an effective market, a security is priced at the value which the supply and demand of well-informed investors place on the security.

Price/Earnings Ratio:
A common stock's current market price divided by the company's annual per share earnings.

Primary Distribution:
A new security issue, or one that is made available to investors for the first time.

The person for whom a broker executes an order, or a dealer buying or selling for his or her own account. Also, an individual's capital or the face amount of a bond.

A legal document describing securities being offered for sale to the public. It must be prepared in accordance with provincial securities commissions regulations.

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R - S - T - U

Ratio Withdrawal Plan:
A type of mutual fund withdrawal plan that provides investors with an income based on a percentage of the value of units held.

Real Estate Fund:
A mutual fund that owns real estate, often commercial properties.

Real Estate Investment Trust:
A closed-end investment company that specializes in real estate or mortgage investments.

Real Return:
Real Return is the net return of an investment, adjusted for inflation during the time you have held that investment but prior to tax considerations.

Realized Earnings:
Realized Earnings is investment income as earned by a fund and considered part of your income.

Preferred shares or bonds that give the issuing corporation an option to repurchase securities at a stated price. These are also known as callable securities.

A redemption is the right given to a security holder to sell, at anytime, some or all of his/her units back to the fund for cash.

Registered Education Savings Plan:
A Registered Education Savings Plan is a plan that enables the contributor, on a tax deferral basis, to accumulate assets on behalf of a beneficiary to pay for post secondary education. There is no tax deduction given on contributions and certain limits and qualifications apply.

Registered Retirement Income Fund:
A Registered Retirement Income Fund is a fund that is commonly used to "store" your accumulated RRSP capital while it is still growing on a tax-deferred basis. However, there are minimum requirements for how much you can take out of a RRIF and all income taken out becomes part of your taxable income.

Registered Retirement Savings Plan:
A Registered Retirement Savings Plan is a retirement savings vehicle in which growth is protected from tax until taken into the RRSP owner’s income.

Retained Earnings:
The accumulated profits of a company. These may or may not be reinvested in the business.

Bonds or preferred shares that allow the holder to require the issuer to redeem the security before the maturity date.

A temporary privilege granted to existing common shareholders to purchase additional shares directly from the company at a stated price.

The possibility of loss; the uncertainty of future returns.

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Sales Charge:
In the case of mutual funds, these are commissions charged to purchasers of fund units, usually based on the purchase or redemption price. Sales charges are also known as "loads."

An investment salesperson or broker who is registered with the provincial securities commission.

Securities Act:
Provincial legislation regulating the underwriting, distribution and sale of securities.

Settlement Date:
The date on which a securities buyer must pay for a purchase or a seller must deliver the securities sold. In general, settlement must be made on or before the third business day following the transaction date.

Shareholders' Equity:
The amount of a corporation's assets belonging to its shareholders (both common and preferred) after allowance for any prior claim.

A document signifying part ownership in a company. The terms "share" and "stock" are often used interchangeable.

Short Sales:
The sale of shares which the seller does not own. The seller is speculating that the price will fall, in the hope of later purchasing the same number of securities at a lower price, thereby making a profit. Sellers must advise their brokers when they are selling short.

Simplified Prospectus:
An abbreviated and simplified prospectus distributed by mutual funds to purchasers and potential purchasers of unit or shares (see prospectus).

Small Cap Fund:
A small Cap Fund is a mutual fund that holds the stocks of small capitalized companies as opposed to large "blue chip" companies.

Specialty Fund:
A Specialty Fund is a mutual fund that focuses its holdings in specific types or geographic areas.

The difference between the rates at which money is deposited in a financial institution and the higher rates at which the money is lent out. Also, the difference between the bid and ask price for a security.

Stock Options:
Rights to purchase a corporation's stock at a specified price.

Stock Yield:
The annual dividend as a percentage of the price of the stock. For example, a stock selling at $40 a share with an annual dividend of $2 a share yields five percent.

Strip Bonds:
The capital portion of a bond from which the coupons have been stripped. The holder of the strip bond is entitled to its par value at maturity, but not the annual interest payments.

Systematic Withdrawal Plans:
A withdrawal feature offered by companies whereby unitholders can receive regular payment from their investments.

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Technical Analysis:
A method of evaluating future security prices and market directions based on statistical analysis of variables such as trading volume, price changes, etc., to identify patterns.

Total Return:
Total Return is the change in value of the fund plus any distribution (i.e. capital gain, interest, and dividends) divided by the value of the fund at the beginning of the period (i.e. cost).

A securities transaction.

Transfer Agent:
A trust company appointed by a company to keep a record of the names, addresses and numbers of shares held by its shareholders. Transfer agents are often responsible for distributing dividend cheques.

Treasury Bills (T-Bills):
Treasury Bills are short-term government issued debt instruments whose return is determined by prevailing market rates of return.

An instrument placing ownership of property in the name of one person, called a trustee, to be held by the trustee for the use and benefit of some other person.

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The purchase for resale of a new issue of securities by an investment dealer or group of dealers.

Unit Trust:
An unincorporated fund whose organizational structure permits the conduit treatment of income realized by the fund.

Universal Life Insurance:
A life insurance term policy that is renewed each year and which has both an insurance component and an investment component. The investment component invests excess premiums and generates returns to the policyholder.

Upstairs Trading:
The matching of customers' buy or sell orders within a member firm's organization against other client orders or against the dealer's own inventory or capital account. Trades are subsequently reported to the exchange as a "cross" or "put through" at, or within, the auction market's bid/ask spread. In these cases the bid/ask spread serves as a reference point, but does not always dictate the actual price at which such trades may be negotiated and executed.

V - W - Y - Z

Variable Life Annuity:
An annuity providing a fluctuating level of payments, depending on the performance of its underlying investments.

In pension terms, the right of an employee to all or part of the employer's contributions, whether in the form of cash or as a deferred pension.

Voluntary Accumulation Plan:
A plan offered by mutual fund companies whereby an investor agrees to invest a predetermined amount on a regular basis.

A certificate giving the holder the right to purchase a security (such as a stock) at a set price within a specified period of time.

Wrap Account:
An account offered by investment dealers whereby investors are charged an annual management fee based on the value of invested assets.

Yield is most commonly associated with a money market fund's return. "Current Yield" is based on daily return, "Effective Yield" on the annual compounded return.

Yield Curve:
A graphic representation of the relationship among yields of similar bonds of differing maturities.

Yield to Maturity:
The annual rate of return an investor would receive if a bond were held until maturity.

Zero Coupon Bond:
A bond that pays no interest and is initially sold at a discount.

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