Westchester Capital Management, Inc.

All or None - Directs the broker to attempt to fill the entire amount of the order or none of it during the time limit you specify. This differs from "Fill or Kill" orders because "All or None" orders do not require immediate execution. Only applicable to Limit Orders.

American Depositary Receipt (ADR) - Receipt for shares of foreign-based companies that entitle the shareholder to all dividends and capital gains. ADRs allow Americans to buy shares of foreign-based corporations' securities at American Exchanges instead of having to go to overseas exchanges.

Annuity - An investment in which the policy holder makes a lump-sum or installment payment to an insurance company and receives income at retirement.

Arbitrage - Profiting from the differences in price when the same security, currency or commodity is traded on two or more markets.

Ask - The lowest price at which someone is willing to sell a security.

Asset Allocation - The strategy of spreading your investment funds across categories of assets such as Stocks, Fixed Income Investments and Cash Equivalents to help offset risks and rewards, based on your goals and specific situation.

Asset Allocation Funds - Mutual funds that feature a mix of stocks, bonds, and cash equivalents to meet the investment objectives of individual investors.

Average Maturity - The lifetime of a bond, concluding when the final payment of that obligation is due.

Back-end Load - A fee charged by a mutual fund when you sell your shares.

Beta - A statistical measure of a security's or portfolio's volatility (price fluctuations) relative to the market as a whole. (The beta of the overall market is defined as 1, and is represented by the S & P 500® Index over the last 36 months). A security with a beta of 1 indicates its price moves exactly with the overall market. A beta greater than 1 is more volatile than the overall market, while a beta less than 1 indicates that the security's price is more stable than the market (in general and over a long time period).

Bid - The highest price at which someone is willing to buy a security.

Blue Chip - A common stock of an established company that has a long record of stable growth.

Bond - A long-term debt security of the Government or a corporation with maturity of 10 years or more from the issue date. Interest is usually paid every six months and its face value returned, repaid at maturity. The minimum denomination is $1,000, with $1,000 increments thereafter.

Buying Power - This is the maximum dollar value of marginable securities that you can buy in your margin account without depositing additional equity. Buying power is calculated at the close of business each day and may fluctuate throughout the day.

Buy - Indicates you want to purchase a security.

Buy to Close - You "close" a short option position when you buy it back. You must be pre-approved by Schwab to trade options. See Option.

Buy to Open - You "open" a long position when you buy an option. You must be pre-approved by Schwab to trade options. See Option.
[top]

Call Option - Gives its buyer the right to buy 100 shares of the underlying security at a fixed price before a specified expiration date. Call buyers hope the price of the stock will rise. Call sellers hope the price will stay the same or go down. You must be pre-approved by Schwab to trade options. See Put Option.

Capital Appreciation - The growth of the earnings on an investment's principals.

Capital Gains - The difference in value between what you originally paid for an investment and the price at which it was sold, assuming the investment gained value.

Cash Account - This type of brokerage account requires that you pay for trades in full by the settlement date. Some customers have both cash and margin accounts. For comparison see Margin Account.
Note: By law, Individual Retirement Accounts and Custodial Accounts for minors must be cash accounts.

Cash Available - The dollar amount available in your account to buy non-marginable securities without depositing additional equity. It includes the dollar amount of cash in your account plus the loan value of your marginable securities.

Cash Equivalents - Safe and highly Liquid, these types of investments can easily be converted to cash. Cash equivalents include: Treasury bills (T-bills), Money market funds, and Short-term Certificates of Deposit (CD).

Cash-up-front - A requirement for funds on deposit or on receipt in a Schwab office at the time you enter your order. Cash-up-front is required to trade certain types of securities* and is also required for all orders placed in accounts that have a cash-up-front restriction imposed on them.

Certificate of Deposit - Debt instruments issued by banks and savings and loans. Maturities range from overnight to many years.

Certificates of Deposit - are issued at par and pay fixed interest at intervals or maturity. Can be brokered through Broker Dealer.

Closed-end Mutual Funds - A mutual fund that issues a set number of shares, which then are only re-sold on the secondary market exchanges like regular stock shares.

Closed Order - Indicates that a trade order is no longer an active order because it has either been executed or cancelled.

Common Stock - An "equity" security. Common stock is "ownership" of a corporation. An owner of a company's common stock is considered to have an equity position in the corporate structure of that company.

Compounding - The computation of interest paid using the principal plus the previously earned interest.

Corporate Bond - Debt obligations issued by corporations as an alternative to offering equity ownership by issuing stock. Like most municipal bonds and Treasuries, most corporate bonds pay semi-annual interest and promise to return their principal when they mature. Maturities range from 1 to 30 years.

Custodial Account - An account for the benefit of a minor with an adult as the custodian.

Current Yield - The annual interest on a bond divided by the current market price.

Day Order - Automatically expires at the end of the day's standard market trading session if it is not filled. All Market Orders are automatically Day orders. Orders are generally considered to be day orders unless otherwise specified.

Defined Benefit Plan - A company retirement plan in which you expect to receive a fixed amount on a regular basis from your employer, i.e. a pension. The employer is responsible for investing.

Defined Contribution Plan - A company retirement plan such as a 401 (k) or 403 (b), in which the employee elects to defer salary into the plan and directs the investments of that deferral.

Derivative Instrument - A financial instrument or security whose value is based in part upon another security . For example, a stock option is a derivative instrument because its value is based in part upon the value of the underlying stock.

Dilution Effect - on earnings per share and book value per share if all convertible securities were converted and all warrants and stock options were exercised.

Distribution - The income or capital gain made by a mutual fund that is paid to the fund's investors.

Diversification - The allocation of assets among various types of investments.

Dividend - Part of a company's Earnings that are distributed to its shareholders. Dividends can be reinvested to buy more shares or can be paid to you in cash.

Dividend - Amount Value of last quarterly cash dividend or the number of shares an investor receives for each share owned in a stock dividend.

Dividend Reinvestment - Some securities pay a "dividend," which is a distribution of earnings to stockholders. As a stockholder, you may choose to receive dividends in cash or reinvest them into additional shares of the security.
If the mutual fund is the primary stockholder, it will distribute a percentage of these earnings to the fund shareholders.

Dollar Cost - Averaging Buying securities at scheduled intervals at the same dollar amount.

Do Not Reduce (DNR) - Instructs the broker not to reduce your limit price by the amount of the cash dividend when a stock goes ex-dividend and the market price is reduced by the amount of the dividend. You can specify DNR on Limit Orders to Buy, Stop Orders to Sell, or on Stop Limit Orders to Sell.

Dow Jones Industrial Average (DJIA) - Measure of the performance of the collection of 30 "blue-chip" stocks traded on the New York Stock Exchange (NYSE), considered the leaders of the market.

Earnings - The amount of profit a company realizes over a given time period after all costs, expenses, and taxes have been paid.

Earnings Per Share (EPS) - Four times the last quarter's earning divided by the number of shares outstanding.

Earnings Per Share Date - Date of the last earnings announcement.

Electronic Funds Transfer - Transferring funds between accounts and firms electronically.

Ex-Dividend Date - Date a split or dividend is reflected in the price of the security (if you buy a stock on the ex-dividend date, you are not entitled to the dividend); for splits, this is the trading day after the distribution is made.

Face Value - The displayed value on a bond also called principal or par value.

Fed Call - Also known as Regulation T or Reg T Call. This type of call occurs when establishing a margin position. Investors must deposit 50% of the cost of the trade per current Federal Reserve requirements. Schwab reserves the right to impose higher or Special Maintenance requirements.

Fiduciary - One is legally required to act in the best interest and trust of a beneficiary or minor.

Fill or Kill (FOK) - Instructions that your order must immediately be filled in its entirety or canceled. Only applicable to Limit Orders.

Fixed Income Investments - These debt securities (or IOUs for borrowed money) include bonds, money market instruments or preferred stock. They obligate the borrower to pay the bond owner a fixed rate of interest during the term of the loan and to return the principal or face value when the loan matures, and a preferred shareholder would get a fixed dividend. A variety of institutions issue debt obligations, including the U.S. government, state and local governments, publicly held companies, banks and savings and loans.

Fixed Income Securities - Debt securities or IOUs for borrowed money. They obligate the borrower to pay the owner interest during the term of the loan and to return the principal or face value, when the loan matures. A variety of institutions issue debt obligations including the U.S. government, state and local governments, publicly held companies, banks, and savings and loans.
Freeriding This trading violation is the result of buying a security in your Cash Account and then selling the same security without making separate payment on the full purchase price by Settlement Date. This situation is called freeriding because basically it is unauthorized borrowing to pay for a trade.

GNMA (Ginnie Mae) - A bond issued by the Government National Mortgage Association.

Good 'Til Canceled (GTC) - At Schwab, GTC orders remain open for 60 calendar days unless filled or you request that it be canceled before that time.

Government Bond - A bond sold by the U.S. government.

Halted Securities - Occasionally, trading on a given security may be suspended due to a variety of conditions including news and corporate actions. If the security you are attempting to trade has been halted, you can place an order but it will not be executed until the trading halt is lifted. If you have an open order for a security that subsequently is halted, your order will be eligible for execution after the halt has been lifted. Please be aware that when the security resumes trading it may be at a price significantly above or below the most recent trade price.

High - The highest execution price of a trade that day, or on the last trading day.

Immediate or Cancel - Instructions to immediately fill your order either partially or entirely -- or cancel the order. Only applicable to Limit Orders on listed stocks.

Index - A statistical composite that measures changes in the economy or in financial markets. Some indexes are used as a benchmark that economic or financial performance is measured against. Some well-known market indexes include: Standard & Poor's 500 Index, the Dow Jones Industrial Average, the NASDAQ Composite Index, Consumer Price Index, and Russell 2000.

Index Mutual Funds - Mutual funds that seek to replicate the performance of established securities indices.

Indexing - Investing for market returns by purchasing shares in an index fund.

Industrials - In stock market language, this is a general category of firms in the business of manufacturing products. Industrials exclude utility, transportation and financial services companies.

Inflation - An increase in the cost of goods and services which, in turn, decreases the buying power of money. Inflation is usually measured by the Consumer Price Index and Product Price Index.

IRA - An Individual Retirement Account in which some or all of the contribution may be deductible from current taxes, depending on the individual's adjusted gross income and coverage by an employer sponsored retirement plan.

Irrevocable Living Trust - An irreversible legal plan to transfer funds from the donor to the beneficiary, generally offering tax advantages.

Keogh Account - Tax-deferred, qualified retirement account for self-employed persons and unincorporated businesses. Contributions are deductible from gross income.

Last Split Date - The last date on which the shares of a security were increased or decreased by splitting.

Last Trade - The price at which the last trade was executed; after market close, this is the closing price.

Last Trade Date and Time - The date and time the security was last traded.

Limit Order - A request to buy or sell a security only at a price that you specify (the Limit) or better. Place a limit order when you're willing to wait for the price to move and risk that the order might not be executed, because execution of limit orders is not guaranteed. However, if executed, the price you set or better is guaranteed. Buy orders will execute at or below your limit and Sell orders will execute at or above your limit. For comparison, see Market Order.
You may also place time conditions on a limit order. See Time Limits/Conditions.
In a Fast Market you can use a limit order in the opposite way to help reduce risk. In this case you can place a limit order to make sure that you don't buy or sell at a dramatically different price than you expect. When a stock price is moving fast, you can use a limit order to state the maximum price you are willing to pay (or, if selling, the minimum price you are willing to accept). In this case, place your limit at or above the current ask price on a Buy, or at or below the bid price on a Sell order. However, if the stock doesn't hit your limit price, the order won't be executed.

Liquid - A term describing investments that can easily be turned into cash. See Cash Equivalents.

Liquidation - When you buy a security that creates a cash debit or Reg T Call, and during the following trading day or later you sell another security to cover the cash debit or Fed Call - it results in a trade violation called a Liquidation.

Liquid Investment - An investment that can be easily converted to cash.

Liquid Reserve - Personal savings that can be accessed immediately.

Load - The sales charge that some fund companies include when you buy or sell their mutual funds. Some funds have a "front-end" load, meaning you pay the sales charge at the time of purchase (see POP). Some funds have a "back-end" load, meaning the sales charge is paid at the time of the sale.

Low - The lowest execution price of a trade that day, or on the last trading day.

Maintenance Call - A "call" for additional funds or acceptable collateral to be immediately deposited into your margin account. This type of margin call is generated when the equity in a margin account does not meet Schwab's established minimum requirement. This can be caused by fluctuations in market prices or your additional use of margin. For comparison see Reg T.
All margin accounts are governed by the rules and regulations of the Federal Reserve. At Schwab, a margin account generally receives a maintenance call when equity falls below 35% or $5,000.

Margin Account - This type of brokerage account allows you to borrow funds, using you own marginable securities as collateral. The borrowed funds may be used for any purpose, including the purchase of more securities. For comparison see Cash Account.

Margin Balance - The net open balance in your margin account. If negative, you owe Schwab this amount. If positive, the balance is available to earn interest.

Margin Call - This generic term refers to both maintenance calls and "Regulation T" calls (also called Reg T or Fed calls). An investor who receives a margin call is required to deposit additional funds or securities in a margin account either because the equity in the account does not meet Schwab's established minimum equity requirement (maintenance call) or because additional securities have been purchased or sold short.

Margin Interest - Margin interest is charged daily based on your margin balance.

Marginable - A security that may be used as collateral in a margin account. Most listed securities trading at over $5 per share are marginable at Schwab, as are most fixed income securities, OTC stocks, and mutual funds (with a 30-day waiting period.)

Market Indicators - A variety of indices that give an indication of the overall direction and strength of the market.

Market Capitalization - The total value of a company's stock.

Market Maker - An individual, corporation, partnership or group of firms that creates the Bid and Ask prices for a given OTC security. The market maker generally maintains inventory and stands ready to buy and sell the security at the quoted price to maintain an orderly market. A Specialist serves a similar purpose for an exchange-traded security.

Market Order - A customer request to buy or sell as quickly as possible at the best price available (the prevailing price) when the order reaches the marketplace. A market order guarantees execution, but not price. For comparison, see Limit Order.

Maturity Date - Date at which the face value and final interest payment of a fixed income security (for example, bond or note) is due and payable by the debt issuer. For bonds, maturity can range from one day to 30 years or more.

Minimum Quantity - Instructs the specialist to buy or sell a specified number of shares at a limit price with the condition that the first fill must be for a minimum number of shares. Use this condition when you will accept a partial fill, but will only accept a minimum number of shares to be bought or sold.

Money Market Account - A vehicle in which accumulated funds are invested in various short-term securities; seeks to maintain $1 per share value.

Money Market Fund - A highly liquid mutual fund that invests in short-term securities and seeks to maintain a stable net asset value of $1 per share.

Mortgage-Backed Bonds - Bonds that derive their income from a pool of mortgages.

Municipal Bonds - A bond issued by a state, municipality, or revenue district. Municipal bonds (also called "munis") are exempt from federal and, in some cases, state and city taxes. Some investors in bonds or bond funds may be subject to the Alternative Minimum Tax.

Mutual Fund Company - An investment company that pools money from shareholders and invests in a variety of securities such as stocks, bonds, and money market instruments.

Mutual Fund Family - The array of mutual funds offered by a single Mutual Fund Company. Individual funds can have varying degrees of risk and investment objectives.

NASDAQ - National Association of Securities Dealer Automated Quotations system, designed to facilitate over-the-counter stock trading.

Net Asset Value (NAV) - The total value of the assets, including stocks, bonds, and/or other securities, owned by a mutual fund, less all liabilities, divided by the number of outstanding shares. This value does not include any sales charges, such as a Load or 12b-1 Fee. The NAV is calculated once each day after the close of the market.

Net Change - The amount and direction of a security's price change since its previous close.

No-Load Mutual Fund - A mutual fund which does not charge a fee when shares are bought or sold. Sometimes a Transaction Fee or Short-Term Redemption Fee will apply to your transaction.

Nominal Rate - Also known as nominal yield. The percentage of annual interest which would be earned from a fixed income investment (for example, bonds) if the security was purchased at par value; actual rate of return is usually different.

Odd Lot - This is a securities trade made for less than the "normal trading" of 100 shares. In stock trading, any purchase or sale of less than 100 shares is generally considered an odd lot. See Round Lot.

Open - The price at which a security opened for trading on a given day.

Open-end Fund - A mutual fund with no limit to the number of shares that can be issued. These shares are purchased directly from the fund company itself, or through a brokerage firm.

Open Order - A buy or sell trade order that has not yet been executed or cancelled.

Option - A contract that permits the owner (depending on the type of option held) to purchase or sell a security at a specific ("strike") price until a specified expiration date. An option to purchase a security is a "call." An option to sell a security is a "put." The price of the option itself is the "premium." You must be pre-approved by Schwab to trade options. See Call Option and Put Option.

Over-the-Counter (OTC) -Over-the-Counter refers to stocks not traded on registered exchanges. Many OTC stocks are traded through the National Association of Securities Dealers Automated Quotations (NASDAQ), National Market System (NMS), OTCBB (Bulletin Board) or the Pink Sheets.

Pay Date - The date the shares from a split or dividend are sent to the shareholders.

Portfolio - All of the various investments held by an individual investor or organization.

Position - Security holdings in an account or portfolio.

Preferred Stock - A class of stock that pays dividends at a specified rate and has preference over Common Stock in the payment of dividends and the liquidation of assets. Preferred stockholders may have different voting rights. Not all securities have preferred stocks.

Price - The cost for a security. For mutual funds, price is the net asset value (NAV). For mutual funds with a load, the price including the load is the Public Offering Price (POP).

Price/Earnings Ratio - Price of a stock divided by earnings per share.

Principal - The amount of money that is financed, borrowed, or invested.

Program Trading - Computer buying (buy program) or selling (sell program) of baskets of 15 or more stocks by index arbitrageurs, specialists, or institutional traders.

Prospectus A legal document offering securities or mutual fund shares for sale.
When you invest in a mutual fund, the prospectus will provide valuable information about the specific goals, fees, and practices of the fund.
Federal and state securities regulators require that the prospectus include the fund's investment objectives, policies and restrictions, fees and expenses, and how shares can be bought and sold. It should be read carefully prior to investing.

Public Offering Price (POP) - The price an investor pays for a share of a Load mutual fund.
The POP is calculated by taking the Net Asset Value (NAV) and adding any load costs, charged by the Mutual Fund Company to maintain the fund.
If the fund is a No-Load fund the POP and the NAV are the same.

Put Option Gives the buyer the right to sell a number of shares of stock at a price until the option's expiration date. Put buyers hope the price of the stock will fall. Puts may also be purchased to protect an investment in case the price of the stock goes down. You must be pre-approved by Schwab to trade options. See Call Option.

Quantity - The number of shares you want to Buy, Sell or Sell Short.

Quote - The highest bid and lowest ask price for a security at any given time. Bid is the highest price at which someone is willing to buy a security. Ask is the lowest price at which someone is willing to sell a security.

Redemption Fee - A charge imposed by the mutual fund if fund shares are sold within a certain period of time. The length of this holding period varies. See fund Prospectus for details.

Regulation T Call Also called a Fed Call - This is the amount an investor must deposit if buying on margin or selling short, as required by the Federal Reserve Board's Regulation T. Current Federal Reserve requirements are 50% of the cost of the trade. Schwab reserves the right to impose higher or Special Maintenance requirements.

Retirement Plan Distribution - A withdrawal of funds from a retirement plan.

Rights - Rights allow existing shareholders of a corporation to subscribe to shares of a new issue of common stock before that stock is offered to the public. A right usually has a life of 2 to 4 weeks, is transferable, and entitles the holder to buy the new common stock below the Public Offering Price. Rights are often granted to protect existing shareholders from the effects of dilution.

Risk/Return Factor - The relationship between an investment's growth potential and its exposure to loss.

Rollover IRA - A tax-free transfer of assets from one qualified retirement plan to another.

Round Lot - The basic unit of trading for a particular security. For stocks, the generally accepted unit of trading is 100 shares. See Odd Lot.

S&P 500 (Standar & Poor's 500 Index) - Considered to be a benchmark of the overall US stock market. This index is comprised of 500 blue-chip stocks representing industrial, transportation, utility and financial companies with a heavy emphasis in industrials. It accounts for about 70% of the market value of the New York Stock Exchange.

Schwab Mutual Fun OneSource® Service - A service that allows individuals to invest in mutual funds from many well-established fund companies without paying loads, transaction fees or commissions.
Schwab's Short Term Redemption Fee may be charged on each redemption of funds held for 180 days or less and bought through Schwab's Mutual Fund OneSource service with no transaction fee.
Schwab reserves the right to change the funds we make available without transaction fees and to reinstate fees on any funds. Schwab receives remuneration from participating fund companies.

Secret Question and Answer - A question and answer provided by you which Schwab will use for identification and authentication purposes should you forget your password.

Security Type - The type of security such as stock, bond or mutual fund.

Sell - Indicates you already own a security and wish to transfer ownership in exchange for money.

Sell a Fund/Buy Another Fund - This is the action of selling shares in one fund and using those dollars to purchase shares in another fund. Please realize that when you move money between funds, the sale could be taxable and a transaction fee may apply.
Sell Short Indicate a "sell short" order when you want to borrow stock and sell it, with the understanding that you must buy it back later (hopefully at a lower price) and return it.

Sell to Close - A long option position is closed when it is sold. See Option.

Sell to Open - A short position is opened when an option is sold. See Option.

Settlement Date - The business day by which you must pay for securities purchased or deliver securities sold.

Share - A unit of ownership in a company, mutual fund or limited partnership. Company shares are represented by a stock certificate that specifies the company and the shareholder and number of shares.

Short Term Redemption Fee - A fee charged if a mutual fund is not held for a designated period of time.

Special Conditions - Special conditions may be applied to an order, such as All or None (AON) or Do Not Reduce (DNR)
.
Special Maintenance - Schwab may impose higher maintenance requirements on certain securities due to their volatility.

Special Memorandum Account (SMA) - Unlike a credit balance or market value, SMA is a bookkeeping entry that reflects a history of the excess equity* above the required minimum for Regulation T, plus all of the charges and releases from the past activity in the account.
Once the SMA has been credited with any excess equity, it remains available until used for a purchase or a cash withdrawal. The SMA is retained even if the market value of securities held on margin subsequently declines, which could result in an SMA figure greater than your margin Cash Available (inflated SMA). A Fed call is generated when a trade occurs in an account that does not have sufficient SMA to satisfy the initial requirement of the Federal Government.

Specialist An individual, corporation, partnership, or group of firms that is responsible for a given exchange-traded security. The specialist stands ready to buy and sell shares to maintain an orderly market. A Market Maker serves a similar purpose for an OTC security.

Stock - A document that establishes proportionate company ownership represented as shares. Different types of stocks (e.g., common stock) have different advantages and responsibilities associated with them. As a stockowner, you share in the profits and losses of a company.

Stock Dividends - A dividend paid in stock rather than cash.

Stop Order - Indicates a request to Buy or Sell at the market price, but only when the security trades at or past a price that you specify (called the Stop price). Once the stock price moves to or through the stop price, your pending Stop Order becomes a market order which guarantees execution, but not price. For comparison, see Stop Limit.

Stop Limit Order - A combination of a Limit Order and a Stop order used to protect a profit or limit a loss -- This is a request to Buy or Sell a security at a specified limit price or better, but only after the specified stop price has been reached or passed. Even if the stop price is triggered, a Stop Limit order guarantees the limit price, but not the execution. For comparison, see Stop Order.

STRIPS - Zero coupon Treasuries issued by the U.S. at a discount from face value. Interest is paid as a lump sum at maturity.

Surrender Charges - Fees for terminating a Certificate of Deposit (CD), insurance or annuity contract before it matures.

Symbol - The unique 1-5 character designation used to identify a security for trading.

Tax-deferred - Payment of taxes not due until a time in the future.

Ticker Symbol - The unique 1-5 character designation used to identify a security.

Time Conditions - The following time limits may be applied to Stop, Limit, or Stop Limit orders: Day Only, Good Until Canceled, Fill or Kill, Immediate or Cancel.

Time Horizon - The amount of time, usually in years, that you plan to invest a specific amount of money.

Transaction Fee - A fee charged for purchasing or selling certain mutual fund shares.

Treasury Bill - A short-term debt security of the U.S. Government, known as a "T-Bill." T-Bills are short term, highly liquid investments that mature anywhere from 3 months to a year, are sold at a discount, and return to their full face value at maturity. The interest earned is the difference between the face value of the bill (minimum denomination is $10,000 with $1,000 increments) and the purchase price.

Treasury Note - A mid-term debt security of the U.S. Government, with maturities ranging from two to ten years that pay a fixed rate of interest every six months and returns its face value at maturity. Minimum denomination is $5,000 plus $1,000 increments for a two to three year maturity, or $1,000 plus $1,000 for a four to ten year maturity.

Treasury Security Debt - obligations of the U.S. Government that are issued through the Department of the Treasury. Since they are backed by the full faith and credit of the U. S. Government, they are considered virtually free from risk of default. For individual investors, the income of Treasuries is exempt from state and local taxes.

Trust Account - A legal plan by which the trustor places assets in trust for a beneficiary.

Unit Investment Trust (UIT) - A portfolio of securities that are purchased and held in trust. Units in the trust are then sold to investors who receive a share of interest payments and a share of the principal, as the securities in the portfolio mature or are called.

Vested - The percentage of ownership in a retirement plan assets.

Volatility - The magnitude and frequency of changes in a security's value within a short-term period. The more volatile an investment, the higher its risk and potential return. Volatility is usually measured by calculating the annualized standard deviation of daily change in price.

Volume - The daily number of shares traded in a security.

Warrants - A type of security usually issued together with a bond or preferred stock that allows the holder to buy a proportionate amount of common stock at a fixed price (usually above the market price at the time of issuance) for a period of years or to perpetuity. Warrants are transferable and trade on the major exchanges. They are also known as Subscription Warrants.

Zero Coupon Bond - Zeros are securities that do not pay interest during their terms but are sold at a discount from their face value. A zero coupon bond generally increases in value as it approaches maturity, and the return comes solely from its appreciation. The dollar amount difference between the purchase price and the maturity value represents the yield or accretion value. Maturities range from 1 to 30 years.

12b-1 Fee A fee charged by the Mutual Fund Company to pay for marketing, advertising and distribution services. The 12b-1 distribution fee ranges from 0.25% to 1.0% of the fund's assets.
401(k) A type of salary deferral retirement plan that allows employees to make pre-tax contributions from earned income, which reduce their taxable income. Employers can match some or all contributions subject to maximum.
403(b) A qualified retirement plan similar to 401(k) plans designed for non-profit organizations.
52-week High The highest price at which a security has traded within the previous 52 weeks.
52-week Low The lowest price at which a security has traded within the previous 52 weeks.