Glossary of Investment Terms

Deflationary   A term used to describe a situation where the general price level of goods and services is declining.

Derivatives   Derivatives are financial instruments whose value is based on the market value of an underlying asset such as stocks, bonds or a commodity. Examples of derivatives are futures contracts, options and forward contracts. Only certain "permitted derivatives" may be used by mutual funds in accordance with policies of the Canadian securities regulatory authorities.

Distributions   Payments to unitholders of income realized by the Fund. Distributions can comprise interest, dividends or capital gains. The type and frequency of the distribution is dependent on the fund. Generally, distributions comprise only the "taxable income" of the fund.

Diversification   The allocation of investment assets within an asset class, among different asset classes – such as bonds, stocks and real estate, or among geographical areas, to reduce risk.

Dividend  An amount distributed from a company's net profits to its shareholders. This amount is announced before it is paid and is distributed to shareholders of record on a per share basis.

Dow Jones Industrial Average (DJIA)   A key U.S. market indicator, the weighted average price of thirty blue chip U.S. stocks listed on the New York Stock Exchange.

Duration  A measurement of the price volatility of bonds. Bonds with a longer duration are more sensitive to interest rate changes and are therefore more volatile than bonds with short durations.