Investments & Financial Planning

The Expense ratio is the percentage of the assets that were spent to run a mutual fund as of the last annual statement. This includes expenses such as management and advisory fees, overhead costs and the 12b-1 distribution and advertising fees. The expense ratio does not include brokerage costs for trading the portfolio, although these are reported as a percentage of assets to the SEC by the funds in the Statement of Additional Information. The Statement of Additional Information is available to shareholders on request. Neither the expense ratio or the Statement of Additional Information includes the transaction costs of spreads, normally incurred in unlisted securities and foreign stocks. These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed as an Operating Expense Ratio.

Subscription Right is a privilege granted to owners of certain stocks to purchase newly issued securities in proportion to their holdings usually at prices below the current market price. Rights have a market value of their own and are actively traded. They are different from warrants in that they must be exercised within a relatively short period of time. "Ex-rights" in connection with the rights offering with a stock purchase means shares of stock that are trading without the rights attached. The Ex-rights date is the date on which a share of common stock begins trading "ex-rights", without the right.

"Execution" is the process of completing an order to buy or sell securities. Once a trade is executed, it is reported on a Confirmation Report. The settlement which is the payment and transfer of ownership, occurs in the U.S. between 1 day for mutual funds and 5 days with stocks after an order is executed.

Money markets are for borrowing and lending money for three years or less. The securities in a money market can be either U.S.government bonds, treasury bills or commercial paper from banks and companies. Money market demand accounts are accounts that pay interest based on short-term interest rates. A Money market fund is a mutual fund that invests only in short-term securities, such as commercial paper, bankers acceptances, repurchase agreements and government bills. The net asset value per share is maintained at $1.00. Such funds are not federally insured.

--- Annual report ---> The Annual report is a yearly record of a publicly held company's financial condition. It includes a description of the companys operations, its Balance Sheet and Income Statement. SEC rules require that it be distributed to all shareholders. A more detailed version is named the 10-K report.

Book value per share is the ratio of stockholder equity to the average number of common shares. Book value per share is not an indicator of economic worth, since it reflects accounting valuation and not necessarily market valuation.

A Certificate of deposit is also known as a CD or a time deposit, This is a certificate issued by a bank or thrift that indicates a specified sum of money has been deposited. A Certificate of Deposit bears a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years.

A Dividend reinvestment plan is a automatic reinvestment of shareholder dividends in more shares of a company's stock. Generally, this occurs without commission fees. Some plans provide for the purchase of additional shares at a discount to market price. Dividend reinvestment plans allow shareholders to accumulate stock over the long term using "dollar cost averaging". The Dividend reinvestment plan is usually administered by the company without charges to the shareholder.

Foreign Exchange rates in the newspaper are often "wholesale" or "interbank" rates that are generally only available to large corporations. These rates are not available to smaller retail customers who want to purchase foreign currency for an foreign trip. Generally, your bank rates will be competitive with other retail bank locations.