

   * Glossary of investment terms


Investment terms
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Annual Return
     Simple rate of return earned by an investment for each year.

Average Annual Compound Return
     Annual rates of return, including reinvestment of distributions,
     averaged over a specified period.

Bank Rate
     The minimum rate at which the Bank of Canada makes short-term advances
     to the chartered banks and other deposit-taking institutions. The bank
     rate is set each week at 25 basis points above the average 3-month
     treasury bill rate (T-Bill).

Basis Point
     Used to describe the differences in bond yields. One basis point is
     1/100th of a percentage point

Bear Market
     A declining stock market over a prolonged period (generally at least
     six months but not more than 18 months). Usually caused by the belief
     that a weak economy will produce depressed corporate profits.

Blue Chip
     A well known and actively traded common stock with a record of
     continuous dividend payments and other desirable investment
     attributes.

Bond
     A certificate of debt on which the issuer (corporation or government)
     promises to pay the holder a specific rate of interest over the life
     of the bond. When the bond matures, the principal is repaid in full.

Bull Market
     A rising stock market over a prolonged period (generally at least six
     months but not more than 18 months), Usually caused by the belief that
     a strong economy will produce increased corporate profits.

Call Option
     The right to purchase shares at a predetermined price for a limited
     period of time.

Capacity Utilization Rate
     The percentage of total available industrial capacity in the economy
     (plants and equipment) being used to produce goods.

Capital Gains
     A capital gain is created when an investment is sold at a higher price
     than originally paid.

Convertible Bond
     A bond that may be exchanged (usually for the common stock of the same
     company ) within the terms of the conversion privilege.

Correction
     A market correction is usually a sudden temporary decline in stock or
     bond prices after a period of market strength.

Consumer Price Index
     The Consumer Price Index (CPI) is used to measure inflation. It
     monitors the price of a variety of goods to determine the general
     direction of prices in an economy.

Cyclical Companies
     Companies that report strong earnings when the overall economy is
     doing well and weaker earnings when the economy is in a recession.

Deflationary
     A situation where the general price level of goods and services is
     declining.

Derivatives
     Financial instruments whose value is based on the market value of an
     underlying asset such as stocks, bonds or a commodity (e.g. futures
     contracts, options and forward contracts).

Diversification
     Reducing risk by allocating investment assets among different asset
     classes  such as bonds, stocks and real estate  or among
     geographical areas.

Dividend
     An amount distributed from a company's net profits to its shareholders
     of record on a per share basis.

Dow Jones Industrial Average
     The weighted average price of 30 blue chip U.S. stocks listed on the
     New York Stock Exchange.

Ex-Dividend
     If shares are quoted ex-dividend (without dividend) you are not
     entitled to the declared dividend. If you buy shares quoted cum
     dividend (i.e. before the ex-dividend date) you will receive an
     upcoming already declared dividend.

Fiscal Drag
     A term used to describe a climate where there is little government
     spending to encourage growth in an economy. Usually occurs as a result
     of high deficits that require a reduction in government spending.

Fiscal Policy
     Government policy of directing the economy through taxation and
     government spending.

Fixed Income Security
     A preferred stock or debt instrument that has a stipulated interest or
     dividend rate, such as a bond or GIC.

Fluctuation
     A variation in the market price of a security.

Free Floating Currency
     A currency that is valued in open markets based on the country's
     economic and political outlook, rather than being fixed or tied to any
     other currency.

GDP
     Gross Domestic Product. A measure of a country's total output of goods
     and services.

GIC
     Guaranteed Investment Certificate.

IPO
     Initial Public Offering.

Index
     A statistical yardstick, determined by tracking the ups and downs of a
     particular market by monitoring a group of securities over time.

Inflation
     Increases in the general price level of goods and services. Inflation
     is commonly reported using the Consumer Price Index (CPI) as a
     measure.

Leveraging
     Using borrowed money to acquire financial assets with the objective of
     increasing returns.

Liquidity
     The ability to sell securities at a fair price with relative ease to
     raise cash.

Load
     Term used in the mutual fund industry to identify the sales charge or
     commission on a fund. Common types of loads are front-end loads or
     back-end loads.

Long-term Bond
     A bond that matures in 10 or more years.

Management Fee
     The fee paid to the manager for its services. Usually paid by the
     mutual fund itself, the management fee is generally stated as a
     percentage of the Net Asset Value of the fund.

Monetary Policy
     Federal government policy pursued by the Bank of Canada to control
     interest rates and the supply of money.

Money Market Instruments
     Debt instruments that are easily converted to cash, such as Treasury
     bills or corporate paper with a maturity of less than one year

Mortgage Backed Securities
     $5,000 units with five-year maturities backed by a share in a pool of
     home mortgages insured under the National Housing Act. The securities
     pay interest and a small portion of principal on a monthly basis.

Mutual Fund Prospectus
     A legal document which describes the investment objective of the fund,
     the manner in which the fund is administered and operated, the fees
     and other pertinent information.

NAFTA
     North American Free Trade Agreement.

NASDAQ
     The National Association of Security Dealers Automated Quotation
     System.

No Load
     A mutual fund that does not have a commission or sales charge.

Preferred Shares
     Shares that carry a fixed dividend rate which the company is obliged
     to pay before it distributes dividends to common shareholders. Such
     shares rank ahead of common stock, and after the debenture holders, on
     the dissolution of a company.

Prime Rate
     The interest rate charged by a chartered bank to its most creditworthy
     borrowers.

Private Placement
     The underwriting of a security and its sale to a few buyers, usually
     institutions.

Put Option
     An investment product that gives you the right to sell shares at a
     predetermined price for a limited period of time.

(TSE 35) Toronto 35 Index
     An index of 35 liquid Canadian stocks, including stocks from most
     subgroups, but excluding Real Estate & Construction.

(TSE 100) Toronto 100 Index
     An index of the top 100 companies in the Toronto 300 Index, ranked by
     quoted market value.

(TSE 300) Toronto 300 Index
     An index of 300 Canadian stocks, in fourteen subgroups, designed to
     represent the Canadian equity market.

Treasury Bills
     Short-term government debt, issued in large denominations by the Bank
     of Canada.

Warrant
     A certificate that allows the owner to purchase securities at a set
     price within a specified time frame. Warrants are usually attached to
     a new issue of securities as an inducement to investors to buy the new
     issue.


