ADV
The Investment Advisor Act of 1940 requires all Registered Investment Advisors to complete Form ADV and file with the SEC. The SEC collects the information for regulatory purposes, such as deciding whether to grant registration. Form ADV information about investment advisors and their business is available to the public through the SEC.

Annual Percentage Yield
APY. The rate of return on an investment for a one-year period. For an interest-bearing deposit account, such as a savings account, APY is equal to one plus the periodic rate (expressed as a decimal) raised to the number of periods in one year. Due to compounding, the APY will be greater than the periodic interest rate multiplied by the number of periods in the year.

Capital Appreciation
An increase in the market price of an asset.

Cashflow
A measure of a company's financial health. Equals cash receipts minus cash payments over a given period of time; or equivalently, net profit plus amounts charged off for depreciation, depletion, and amortization.

Common Stock
Securities representing equity ownership in a corporation, providing voting rights, and entitling the holder to a share of the company's success through dividends and/or capital appreciation. In the event of liquidation, common stockholders have rights to a company's assets only after bondholders, other debt holders, and preferred stockholders have been satisfied.

Compounding
A process whereby the value of an investment increases exponentially over time due to compound interest.

Corporate Governance
A generic term which describes the ways in which rights and responsibilities are shared between the various corporate participants, especially the management and the shareholders.

Distribution
The payment of a dividend or capital gain.

Dividend Discount Model
A procedure for valuing the price of a stock by using predicted dividends and discounting them back to present value. The idea is that if the value obtained from the DDM is higher than what the shares are currently trading at, then the stock is undervalued.

Earnings
Revenues minus cost of sales, operating expenses, and taxes, over a given period of time, also called income.

Earnings Growth
A measure of growth in a company's net income over a specific period, often one year. The term can apply to actual data from previous periods or estimated data for future periods.

Fundamental Analysis
A method of security valuation which involves examining the company's financials and operations, especially sales, earnings, growth potential, assets, debt, management, products, and competition. Fundamental analysis takes into consideration only those variables that are directly related to the company itself, rather than the overall state of the market or technical analysis data.

Individual Investor
An individual who purchases small amounts of securities for him/herself, as opposed to an institutional investor. Also called retail investor or small investor.

Institutional Investor
Entity with large amounts to invest, such as investment companies, mutual funds, brokerages, insurance companies, pension funds, investment banks and endowment funds. Institutional investors are covered by fewer protective regulations because it is assumed that they are more knowledgeable and better able to protect themselves. They account for a majority of overall volume.

Investment Policy
A formal description of the investment philosophy that will be utilized for a given fund, retirement plan, or other investment vehicle.

Liquidity
The ability of an asset to be converted into cash quickly and without any price discount.

Management Fees
A fee collected by the manager that typically offsets any fund expenses. The fee is usually asset based, and is, on average, 1% collected either on a monthly, quarterly, or annual basis.

Master Limited Partnership
Investment which combines the tax benefits of a limited partnership with the liquidity of publicly traded securities.

Mutual Fund
An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Benefits of mutual funds include diversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment.

Net Asset Value (NAV)
Net asset value (per share)--the market value of a fund share. It equals the closing market value of all securities within a portfolio plus all other assets such as cash, subtracting all liabilities (including fees and expenses), and then dividing the result by the total number of shares outstanding.

Portfolio
A collection of investments all owned by the same individual or organization. These investments often include stocks, which are investments in individual businesses; bonds, which are investments in debt that are designed to earn interest; and mutual funds, which are essentially pools of money from many investors that are invested by professionals or according to indices.

Portfolio Monitoring
Monitoring a collection a stocks for the purposes of learning how the prices move or profiting from those movements.

Principal
The original investment.

Quantitative Analysis
The process of determining the value of a security by examining its numerical, measurable characteristics such as revenues, earnings, margins, and market share.

Rate of Return
Percentage appreciation in market value for an investment security or security portfolio.
Reinvested Dividends Earnings not paid out as dividends but instead reinvested. Also called retained earnings.

Risk
Exposure to uncertain change, upside (positive change) or downside (negative change). There are many types of risk associated with investments (e.g., market risk, political risk). There are also many statistical measures, such as standard deviation, used to understand and estimate risk associated with investments.

Risk-Adjusted Return
Investment performance adjusted for the level of risk that the strategy is exposed to. Usually risk is measured by standard deviation or the volatility that is demonstrated by the strategy. Typically, investments showing high return will have an increased level of volatility or a higher standard deviation.

Sector
A distinct subset of a market, society, industry, or economy, whose components share similar characteristics. Stocks are often grouped into different sectors depending upon the company's business.

Separate Account
Ownership of a portfolio of individual securities. Portfolio is customized to the individual investor, taking into account the investor's risk tolerance, investment time horizon, and other investment holdings. Securities are held in the client's own investment account and are not pooled with other investors.

Socially Responsible
An investment in companies that meet certain ethical and moral standards. Socially responsible investments try to maximize returns while staying within these self-imposed boundaries.

Standard & Poor's 500 Index (S&P 500®)
The S&P 500® is a registered trademark of The McGraw-Hill Companies, Inc., and has been licensed for use by Fidelity Distributors Corporation and its affiliates. It is an unmanaged index of the common stock prices of 500 widely held U.S. stocks. Standard & Poor's (a unit of The McGraw-Hill Companies, Inc.) calculates the market prices of these stocks, including the reinvestment of dividends as a way to track the performance of the stock market in general.

Tax Deferred
Income whose taxes can be postponed until a later date. Examples include IRA, 401(k), Keogh Plan, annuity, Savings Bond and Employee Stock Ownership Plan.

Total Return
The return on an investment, including income from dividends and interest, as well as appreciation or depreciation in the price of the security, over a given time period, usually a year.

Volatility
The relative rate at which the price of a security moves up and down. Volatility is found by calculating the annualized standard deviation of daily change in price. If the price of a stock moves up and down rapidly over short time periods, it has high volatility. If the price almost never changes, it has low volatility.

Yield
Yield or Internal Rate of Return is the percentage rate of return paid on an investment in the form of interest or dividends.

Source: www.investorwords.com and www.investopedia.com