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Glossary

 

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S&P 500 An unmanaged group of stocks often considered representative of the stock market in general. This index is composed of 400 industrial, 20 transportation, 40 utility, and 40 financial companies.
S&P 500 Index (Monthly Reinvestment) A broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. Performance figures assume that all dividends are reinvested.
S&P 500 Index Fund A fund that invests primarily in the stocks included in the S&P 500 Index. Sometimes referred to as "blue-chip" stocks, they tend to be of large, well-established companies.
Statement of Additional Information (SAI) An attachment to the fund's prospectus that contains more detailed, supplementary information. Also referred to as "Part B," the SAI is available at no charge upon request from a fund.
Sales Charge An amount charged to purchase shares in many mutual funds sold by brokers or other sales agents. The maximum allowable charge is 8.5% of the initial investment.
Same-Day Substitution The buying of one security and the selling of another security, usually of equal value, on the same day.
Science & Technology Fund A fund that invests primarily in the stocks of companies engaged in science and technology industries.
Sec Yield A standardized calculation that the Securities and Exchange Commission requires mutual funds to use when advertising rates of income return. This standardized rate ensures that investors are comparing "apples to apples" when comparing ads from different mutual fund companies.
Secondary Market The market in which securities are traded after the initial (or primary) offering. Gauged by the number of issues traded. The over-the-counter market is the largest secondary market.
Sector Fund A fund that invests primarily in securities of companies engaged in a specific investment segment. Sector funds entail more risk, but may offer greater potential returns than funds that diversify their portfolios. For example, a sector fund may limit its holdings to securities from a particular country or geographic region, or it may specialize in the securities of energy-related firms, or in companies that produce precious metals.
Securities General name for all stocks and shares of all types. In common usage, stocks are fixed interest securities and shares are the rest, though strictly speaking, the distinction is that stocks are denominated in money terms.
Securities and Exchange Commission (SEC) The US federal agency responsible for the enforcement of laws governing the securities industry.
Securities Industry Automated Corporation (SIAC) The computer facility and trade processing company for NYSE, AMEX, NSCC, and PCC.
Securities Investor Protection Corporation (SIPC) Non-profit organization consisting of members of the securities industry who support it on an assessment basis. If a member should fail, that member's customers are protected up to a maximum of $500,000, including up to $100,000 in cash.
Segregation The isolation of securities that the firm may not use for hypothecation or loan. The securities, which must be "locked up" by the firm, represent fully paid-for securities or the portion of a margin account in excess of loanable securities.
Sell-Out Occurs when a contract brokerage firm's client incurs a margin or maintenance call and does not settle the balance by settlement date. The firm then sells the securities at the best price available and the buyer is held liable for the price and costs.
Sell/Write An advanced option order that combines the short selling of an equity and the selling of a put option on the same underlying stock.
Seller's Option A settlement that calls for delivery and payment according to the number of days specified by the seller.
Serial Bonds An issue of bonds that matures over a period of years.
Serial Maturity Type of bond maturity in which part of the issue matures at different times until the whole issue has matured.
Series Refers to options with the same underlying security, same expiration date, same exercise price and the same type.
Series Funds Funds that are organized with separate portfolios of securities, each with its own investment objective.
Settled Inventory The portion of a trader's position that the firm has paid for and maintains. This is the portion that must be financed.
Settlement Date The day when a transaction is to be completed. On this day, the buyer is to pay and the seller is to deliver. Settlement is normally 3 business days on listed equities and 1 business day on listed options.
Settlement Date Inventory The total of all positions in a security on settlement date, including fault, transfer, fails and elsewhere.
Securities and Futures Authority (SFA) (previously known as The Securities Association)The Self-Regulating Organization responsible for regulating the conduct of brokers and dealers in securities, options and futures, including most member firms of the Exchange.
Shareholder An investor. The shareholder is the owner of shares of a mutual fund.
Short Account Account in which the customer has sold short securities. Before a customer may sell short, a margin account must be opened.
Short Exempt A phrase used to describe a short sale that is exempt from the short sale rules. For example, buying a convertible preferred, submitting conversion instructions, and selling the common stock before the stock is received.
Short Position (1) A position in a customer's account in which the customer either owes the firm securities or has some other obligation to meet. (2) Any position on the firm's security records having a credit balance.
Short Sale The sale of securities that are not owned or that are not intended for delivery. The short seller "borrows" the stock to make delivery with the intent to buy it back at a later date at a lower price.
Short-Term Bonds Those maturing within five years.
Short-Term Fund A fund that invests primarily in securities with maturities of less than one year. Short-term funds include taxable money market funds and tax-exempt money market funds (also known as short-term municipal bond funds).
Signature Guarantee A stamp or seal given by a bank or member of a domestic stock exchange that authenticates a signature. A signature guarantee is typically required by a mutual fund sponsor to conduct certain transactions, such as the change in ownership of an account.
Size The number of shares available in a quote. For example, if the quote and size on a stock is 9-3/8 to 9-1/2 3x5, it means that the bid is 9-3/8, the offer is 9-1/2, 300 shares are bid, and 500 shares are offered.
Small Company Growth Fund A fund that seeks aggressive growth of capital by investing primarily in stocks of relatively small companies with the potential for rapid growth.
Small-Caps Shorthand for small capitalization stocks, small-caps usually have a market capitalization of $500 million or less. In general, small caps tend to be less established companies that offer more growth potential than larger capitalized companies, but which also entail greater risk.
Specialist A member of certain SEC-regulated exchanges who must make a market in assigned securities. Specialists also act as two-dollar brokers in executing orders entrusted to them.
Specific Risk The risk created by management, labor or business problems that affect just one company. For example, the value of a particular common stock may fall if the products produced by the company fall out of favor with consumers. See Investment risk.
Spin Off Giving stock dividend in another CUSIP, usually a subsidiary.
Split Fund A mutual fund or unit trust that contains Treasury securities and other types of investments.
Spread The difference between the bid and offer sides of a quote.
Spread Order An advanced option order that combines the purchase and sale of two puts or two calls on the same underlying security.
Spread-Load Contractual Plan A contractual plan for purchasing shares of a mutual fund in which sales charges are not concentrated in the first payment or in the first few payments made by the investor.
Self-Regulating Organization (SRO) An organization recognized by the SIB and responsible for monitoring the conduct of business by, and capital adequacy of, investment firms.
Standard Deviation A measure of the degree to which a fund's return varies from the average of all similar funds.
State Death Taxes States impose either estate or inheritance taxes upon the death of a resident or a person who owns real estate in the state. Estate taxes are based on the size of the decedent's taxable estate, whereas inheritance taxes are based on the amount each person receives as an inheritance. Inheritance tax rates generally vary depending on the type and amount of property and the relationship to the deceased person. For example, inheritance tax rates are often lower for a spouse and higher for more distant relations. Many states simply use an estate tax equal to the credit for state death taxes as calculated under the federal estate tax rules. This does not increase the overall death tax (federal and state); it just diverts some of the tax from the federal government to the state. Some states also impose a generation-skipping transfer tax similar to the federal generation-skipping transfer tax.
State Municipal Bond Funds These funds invest in bonds issued by municipalities located all in one particular state. Residents of that state earn income that is exempt from federal, state, and sometimes city income taxes.
Statement Of Additional Information (SAI) An attachment to the fund's prospectus that contains more detailed, supplementary information. Also referred to as "Part B," the SAI is available at no charge upon request from a fund.
Stock A security that represents ownership in a corporation and that is issued in "shares".
Stock Ahead Refers to a limit order that has not been executed because of other orders at the same limit that were entered earlier.
Stock Dividends A dividend paid by corporations from retained earnings in the form of stock. The corporation declares the dividend as a percentage of shares outstanding.
Stock Fund A fund that invests primarily in stocks.
Stock Power A form that may be endorsed in lieu of endorsing the back of the stock certificate.
Stock Record A ledger on which all security movements and positions are recorded. The record is usually in two formats: One shows movements of the security the previous day and the other shows the current security positions.
Stock Splits The exchange of existing shares of stock for more newly issued shares from the same corporation. Since the number of shares outstanding increase, the price per share goes down. Splits do not increase or decrease the capitalization of the company, just redistributes it over more shares. The effect is the adjustment to the trading price.
Stockholder's Equity Company's net worth. Total liabilities are subtracted from the total assets to arrive at this figure.
Stop Limit Order This order is similar to a stop order, but it becomes a limit order instead of a market order when the price is reached or passed. Buy stop limit orders are entered above the current market; sell stops are extended below it.
Stop Order A memorandum order that becomes a market order when the price is reached or passed. Buy stops are entered above the current market price; sell stops are entered below it.
Straddle Simultaneous long or short positions of puts and calls having the same underlying security and same series designation.
Strangle An option strategy that refers to writing a call and a put with different strike prices on the same underlying security.
Street Name A form of registration in which securities are registered in the name of a brokerage firm, bank, or depository; it is acceptable as good delivery.
StrikePrice (also Exercise Price)The price at which an option can be exercised. For example, the owner of a call ABC April 40 can call in (buy) 100 shares of ABC at 40; the strike price is 40.
Strip A brokerage house practice of separating a bond into two separate securities: a principal portion (PO) and an interest portion (IO). A variation known by the acronym "STRIPS" (Separate Trading of Registered Interest and Principal of Securities) is a stripped zero-coupon bond that is a direct obligation of the U.S. Treasury. Other strips include Treasuries stripped by brokers, such as TIGERS, and Salomon Brothers' tax-exempt M-CATS.
Subject Quote A quote given to indicate the current market status but is not to be taken as a firm ask or bid.
Subordinated Debenture A debenture whose claim to interest and principal of the corporation comes after those of regular debentures and other debt securities.
Subscription Right A stockholder's right to maintain his proportionate ownership in the company by being given the opportunity to buy newly issued stock before the general public.
Supplemental Agreement An agreement that modifies a previous agreement, usually by adding additional conditions
Supplemental Contract A contract issued by the clearing corporation that includes the total of the regular way contract, adjustments made through advisories, and adds by seller processing.
Switching The movement of assets from one fund to another. Also know as "exchanging." An investor will switch mutual funds when their investment objectives change or because of market conditions. This is usually done within a family of funds, but can be done between different fund families. There usually is no charge for a certain number of transactions per year, after which a transaction fee may apply.
Symbol The identifier code assigned to each publically traded investment by the exchange it is traded on.This code is used to identify the correct fund in all transactions. This symbol may only loosely resemble the newspaper listing - these tend to be phonetic abbreviations of fund names.
Systematic Withdrawal System An optional service often available to shareholders that would arrange for a fixed amount to be redeemed from an account and sent to the shareholder on a regular basis (usually monthly, quarterly, or semi-annually).
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