Glossary A-F


Accrued Interest
This is the interest that has accumulated on a bond or debenture since the last interest payment date, i.e. interest owing to you.

Annual Information Form
A legal document filed with securities regulators that explains in greater detail information contained in the simplified prospectus of a mutual fund. Accrued Interest
This is the interest that has accumulated on a bond or debenture since the last interest payment date, i.e. interest owing to you.

Asset Class
This is a method of grouping assets by type. For example, stocks, bonds and treasury bills are three separate asset classes.

Asset Mix
The allocation of your investment dollars between different classes of assets.

Averages and Indices
These are statistical tools that measure the stock market or economy. They are based on specific stock performance or on other meaningful data. For example, the Dow Jones Industrial Average, the TSE 300 Composite Index, the Consumer Price Index (CPI).

Additional Voluntary Contributions
In addition to basic contributions, you can make additional voluntary contributions (AVCs). These are contributions over and above the required basic contributions. AVCs are deposited in your member account.

Aggressive Portfolio
Silver Thatch Pensions offers an aggressive portfolio – made up almost entirely of equities. This portfolio is intended for individuals who are looking to maximize their returns and who are willing to accept greater short-term risk.



Balanced Fund
A mutual fund where professional investment counsellors determine the asset mix of bonds, stocks and short-term securities according to their assessment of the future investment outlook.

Basis Point
This refers to one one-hundredth of a percentage point and is used to describe differences in the interest rate. For example, two bonds may differ in return by 10 basis points, 8.25% versus 8.35%.

Bear Market
This term is used to refer to a declining market.

Blue Chip
This term is used to describe widely known common stock with a record of continuous dividend payments, as well as other attractive investment qualities.

When you buy a bond, you are lending money to the government or a company. When a bond is issued, it includes a specified maturity date and a particular interest rate.

Bull Market
This term is used to describe a rising market.

Basic Contribution
You and your employer are required to contribute an amount that, when combined, equals 10% of your “earnings” (up to a maximum combined contribution of CI$6,000 a year). Your employer’s share must equal at least 5% of your earnings. If your employer contributes more than 5%, your share of the total 10% contribution will be reduced accordingly.

These contributions – referred to as your basic contributions – are deposited in a member account set up in your name. Your employer will make the contributions on your behalf once each month.

Balanced Portfolio
Silver Thatch Pensions offers a balanced portfolio – made up of about 50% equities,50% bonds. This portfolio is designed to enhance investment returns over the long term while ensuring the short-term preservation of capital.

There are two typical forms of pension benefits. Those that are defined benefits, or those that are defined contributions. Defined benefit plans promise to pay a fixed benefit to you upon your retirement and is usually proportionate to your years of service and your income during that period. Defined contribution pension plans pay benefits solely based upon payments (contributions) into the fund plus the investment earnings on those contributions. The Silver Thatch Pension Plan is a defined contribution pension plan.



Commercial Paper
This generic term describes all short-term (i.e. less than one year) negotiable debt instruments issued by non-financial companies.

Common Stock
When you buy common stock, you are buying shares of ownership in a company. Common stock gives you voting privileges at the company’s annual general meeting.

Compound Returns
You can experience the benefits of compounding when you re-invest the investment profits you earn, for an additional return. Over the long term, compounding can generate significant capital growth.

Consumer Price Index (CPI)
The Consumer Price Index (CPI) reflects the change in the rate of inflation.

Current Return
You can calculate the current return on stock by dividing annual dividends by its market price. On bonds, you divide the annual interest by its current price.

Usually a bank or trust company that holds the cash and securities of a mutual fund for safekeeping.

Conservative Portfolio
Silver Thatch Pensions offers a conservative portfolio – made up of about 25% equities,75% bonds. This portfolio is intended for individuals who want to protect the assets they have already accumulated, but who also want some potential growth.



You can purchase preferred stock or bonds below their par value. The difference between par value and the purchase price is called the discount.

You can spread your investment risk by buying a number of securities in different companies in different industries or locations.

Dollar Cost Averaging
You can reduce the average cost you pay for stock or funds by investing a fixed amount in that stock or fund at regular intervals, for example, $100 monthly contribution to your mutual fund in your RRSP.



Expense Ratio
The total of all expenses paid or payable by a mutual fund during the year divided by the average net asset value of the fund during the year. The ratio is expressed as a percentage by multiplying by 100. The expense ratio of the Integra Fund does not include management fees since management fees are not an expense of the Integra Mutual Funds.

Common and preferred shares, representing ownership in a corporation.



Face Value
Face value is the amount the issuer of a bond or debenture will pay to the investor at maturity. It is the value appearing on the certificate only, and is no indication of market value.

Fixed Income Securities
You may choose to invest in fixed-income securities, as these will regularly pay interest or dividend income, for example, bonds, debentures and preferred shares.

Fixed-Income Instruments or Vehicles
To guarantee income, you may choose these instruments that pay a fixed rate of interest for a specific period, for example, term deposits, Treasury Bills or GICs.

Fundamental Analysis
Among the many ways to analyse securities, this type of analysis is based on a company’s fundamental data, for example, sales, earnings, dividend prospects etc.

Futures allow you to buy something in the future at a price agreed in the present. Originally connected with agriculture commodities, they may now involve government bonds, foreign exchange and Eurodollar deposits.


Glossary G-O


Growth Stock
Financial analysts may determine that a company’s common stock has great potential for superior gains, and dub the security “growth stock.”

Growth Portfolio
Silver Thatch Pensions offers a growth portfolio – made up of about 75% equities,25% bonds. This portfolio is intended for individuals who are looking for greater potential returns and who are willing to accept more risk than the average balanced fund.



In order to protect yourself from loss due to market price changes, you may take specific action to reduce your risk. This is known as a hedge.

Holding Company
In cases where one company owns the securities of another company (usually with voting control), the company in control is called the holding company.



Inflation Risk
Inflation robs you of your money’s purchasing power. As an investor, you should be wary of inflation’s effect on your investment returns, especially over the long term. Your investment returns should always outperform inflation.

Inflation is the term used to indicate cost of living increases. The rate of inflation expressed as a percentage is the change in the Consumer Price Index (CPI). Since inflation decreases your purchasing power, your investment planning should consider the effect of inflation on your earnings.

Investment Company or Fund
A company or fund that uses its capital to invest in other companies.

Investment Counsellors
The professionals engaged to provide portfolio management services to a mutual fund.

Income Portfolio
Silver Thatch Pensions offers an income portfolio – made up almost entirely of bonds. This ultraconservative portfolio is intended for individuals who are looking for maximum security (i.e., minimal short-term fluctuations in value) and who are willing to accept modest returns.



Lagging Indicators
Statistical data that describe business cycle changes that already occurred in the economy as a whole. Lagging indicators include new plant equipment expenditures, consumer credit, short-term business loans, total manufacturing inventories.

Leading Indicators
Statistical data that indicate upcoming changes in the economic business cycle. Leading indicators include employment, capital investment, business starts and failures, profits, stock prices, housing starts and certain commodity prices.

You may choose to invest in liquid securities, which may be readily bought or sold at fair market value. This reduces risk due to changes in your portfolio.

Long-Term Bond
A maturity date on a bond or debenture that is more than 10 years away is considered long term.



Major Trend
Although the market will have temporary ups and downs, there is generally an underlying price trend that prevails and is termed the major trend.

Market Price
The price at which a security is currently trading.

Market Risk
Market risk refers to the short-term ups and downs of the market and the possible risk of a loss in the short term. The level of market risk varies by investment but historical returns show that the greater the market risk, the greater the return over the long term.

Medium-Term Bond
A bond or debenture with a maturity date of between five and 10 years in the future.

Monetary Policy
A policy implemented by a country’s government through its central bank (e.g. the Bank of Canada) to control interest rates and the money supply in the economy.

Money Markets
That part of the capital market where short-term financial obligations are bought and sold. These include government treasury bills, commercial paper and other debt securities with maturities of less than one year.

Mutual Fund
Mutual funds pool money from many investors and invest it in securities according to the stated objectives of the fund. Professional investment counsellors invest the money on behalf of the investors in securities such as stocks, bonds and money market instruments.

Mutual Fund Manager
The individual responsible for the business affairs of a mutual fund. These include the provision of investment management and administrative services to the fund.



Net Asset Value
The market value of the securities held in a mutual fund plus any current assets less any current liabilities.

Net Asset Value per Unit (Unit Price)
The unit price of a mutual fund is its net asset value per unit. It is calculated at the close of each valuation day by dividing the net asset value by the number of units outstanding. Unit prices can be found in most daily Canadian newspapers.

New Issue
The first time a company offers stocks, a new class of stock, or bonds, the securities are described as a new issue for that company.

No-load Fund
A mutual fund that does not charge a commission or fee for buying or selling its units.



Purchasing an option allows you to buy or sell a security at a fixed price within a set period of time.


Glossary P-V


Par Value

Stated value or face value. It is a nominal value of a security, which is determined by an issuer company at a minimum price.

Points apply to security prices. For bonds and debentures, one point means 1% of par value.

A collection of investments held by an institution or a private individual.

Preferred Stock
Securities that represent an ownership interest in a corporation. Both common and preferred stockholders have ownership rights, but the preferred normally has first claim on dividends, and in the event of liquidation, assets.

Price Earnings Ratio (P/E Ratio)
A measure of the price paid for a share relative to the annual income or profit earned by the firm per share.

Calculated as:
Market Value Per Share
Earnings Per Share

Prime Rate
Interest rate which banks charge their best customers.

A legal document that institutions and businesses use to describe the securities they are offering for participants and buyers. It should contain the facts that an investor needs to make an informed investment decision.



A period of sustained increases in the prices of stocks, bonds or indexes. It is caused by a large amount of money entering the market, bidding up the prices.

Rate of Return
The ratio of money gained or lost on an investment relative to the amount of money invested.

Real Estate Investment Trust (REIT)
A tax designation for a corporation investing in real estate that reduces or eliminates corporate income taxes.

Real Rate of Return
The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. (This method expresses the nominal rate of return in real terms, which keeps the purchasing power of a given level of capital constant over time.)

Registered Retirement Income Fund (RRIF)
A retirement fund similar to an annuity contract that pays out income to a beneficiary or a number of beneficiaries. It is designed to provide people with a constant income flow through retirement from the savings in their Registered Retirement Savings Plan.

Registered Retirement Savings Plan (RRSP)
An account that provides tax benefits for saving for retirement. RRSP refers to a provision in the Income Tax Act that allows a person to shelter financial property from income taxes.

Rule of 72
The rule is used to determine the amount of time it will take an investment to double. “72” divided by the interest rate on an investment will give the approximate number of years that it will take an investment to double.



Securities or Investment Dealer
Any person or firm that engages in the business of trading in securities in the capacity of an agent or principal. (This refers to securities firms, which employ investment advisors to work with retail and institutional clients and has underwriting, trading and research departments.)

Fungible, negotiable instruments representing financial value. (Transferable certificates of ownership of investment products such as notes, bonds, stocks, futures contracts and options.)

Senior Bond Issue
A corporate bond issue, which has priority over other bonds as to its claim on the company’s assets and earnings. (An example is a first mortgage bond.)

Senior Debt
A bond or other form of debt that takes priority over other debt securities sold by the issuer. (In the event the issuer goes bankrupt, senior debt must be repaid before other creditors receive any payment.)

Short-Term Bond
A bond or debenture maturing within three years

A type of security that signifies ownership in a corporation and represents a claim on part of the corporation’s assets and earnings



Treasury Bills: The short-term debt of the federal government.

Thin Market
A market with a low number of buyers and sellers. Since few transactions take place, prices are often more volatile and assets are less liquid.

An individual who holds or manages assets for the benefit of another.



One equal undivided share in the fund, or any sub-fund of the fund, into which the beneficial interest of this plan shall be divided, including fractions of units.

The registered holder of a unit, including persons jointly so registered.



Value Date
In the calculation of exchange rates, the date on which a transaction is judged to have occurred.

The rate of change in the price of a security over a given time.