Glossary of Investment Terms

Management Expense Ratio (MER)   This figure comprises the management fee plus all other expenses (excluding government taxes) that are charged directly to the mutual fund (as set out in each fund's prospectus), stated as a percentage of the Net Asset Value of the Fund.

Management Fee   The fee paid to the manager for its services. Usually paid by the mutual fund itself, the management fee is generally stated as a percentage of the Net Asset Value of the fund. 

Marginal Tax Rate   The highest tax rate applied to your last dollar of income.

Market Value of a mutual fund   Current market price per unit multiplied by the number of units.

Market Value of an account   Total market value of all holdings.

Market Weighted   When a portfolio sector – or stock – weighting matches the weighting held by a market index, we say that the Fund is "market weighted" in that sector or stock.

Monetary Policy   Federal government policy pursued by the Bank of Canada to control interest rates and the supply of money.

Money Market Instruments   Debt instruments such as Treasury bills or corporate paper with a maturity of less than one year, that are easily converted to cash.

Morgan Stanley Capital International Index (MSCI)   Provides a list of indices measuring international performance (such as the World Index, Far East) and national performance (including Australia, Canada and US) based on the share prices of over 1600 companies. It also provides performance measurement for emerging markets and international industry groups.

Mortgage Backed Securities   Like a bond, $5,000 units with five year maturities backed by a share in a pool of home mortgages insured under the National Housing Act. The securities pay interest and a small portion of principal on a monthly basis.

Moving Averages   As the name implies, the Moving Average is the average of a given amount of data. For example, a 14 day average of closing prices is calculated by adding the last 14 closes and dividing by 14. The result is noted on a chart. The next day the same calculations are performed with the new result being connected (using a solid or dotted line) to yesterday's. And so forth. Variations of the basic Moving Average are the Weighted and Exponential moving averages. The Moving Average is probably the best known, and most versatile, indicator in the analysts tool chest. It can be used with the price of your choice (highs, closes or whatever) and can also be applied to other indicators, helping to smooth out volatility.

Mutual Fund Prospectus  A legal document which describes the investment objective of the fund, the manner in which the fund is administered and operated, the fees and other pertinent information. The prospectus should be read thoroughly before making an investment decision.