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The registration forms companies file provide essential facts while minimizing the burden and expense of complying with the law. In general, registration forms call for: a description of the company's properties and business; a description of the security to be offered for sale; information about the management of the company; and financial statements certified by independent accountants. Registration statements and prospectuses become public shortly after filing with the SEC.

If filed by U. Registration statements are subject to examination for compliance with disclosure requirements. Not all offerings of securities must be registered with the Commission. Some exemptions from the registration requirement include: private offerings to a limited number of persons or institutions; offerings of limited size; intrastate offerings; and securities of municipal, state, and federal governments.

By exempting many small offerings from the registration process, the SEC seeks to foster capital formation by lowering the cost of offering securities to the public. The Act empowers the SEC with broad authority over all aspects of the securities industry. This includes the power to register, regulate, and oversee brokerage firms, transfer agents, and clearing agencies as well as the nation's securities self regulatory organizations SROs.

The Act also identifies and prohibits certain types of conduct in the markets and provides the Commission with disciplinary powers over regulated entities and persons associated with them. The Act also empowers the SEC to require periodic reporting of information by companies with publicly traded securities. See the full text of the Securities Exchange Act of Proxy Solicitations The Securities Exchange Act also governs the disclosure in materials used to solicit shareholders' votes in annual or special meetings held for the election of directors and the approval of other corporate action.

This information, contained in proxy materials, must be filed with the Commission in advance of any solicitation to ensure compliance with the disclosure rules. Solicitations, whether by management or shareholder groups, must disclose all important facts concerning the issues on which holders are asked to vote.

Tender Offers The Securities Exchange Act requires disclosure of important information by anyone seeking to acquire more than 5 percent of a company's securities by direct purchase or tender offer. Such an offer often is extended in an effort to gain control of the company. As with the proxy rules, this allows shareholders to make informed decisions on these critical corporate events.

Insider Trading The securities laws broadly prohibit fraudulent activities of any kind in connection with the offer, purchase, or sale of securities. These provisions are the basis for many types of disciplinary actions, including actions against fraudulent insider trading. Insider trading is illegal when a person trades a security while in possession of material nonpublic information in violation of a duty to withhold the information or refrain from trading. Registration of Exchanges, Associations, and Others The Act requires a variety of market participants to register with the Commission, including exchanges, brokers and dealers, transfer agents, and clearing agencies.

Registration for these organizations involves filing disclosure documents that are updated on a regular basis. Investment stewardship - Engaging with companies and voting proxies to ensure our clients' interests are represented and protected and the company is focused on responsible allocation of capital and long-term value creation. Index - An investment index tracks the performance of many investments as a way of measuring the overall performance of a particular investment type or category.

It tracks the performance of large U. Inflation - A rise in the prices of goods and services, often equated with loss of purchasing power. Interest rate - The fixed amount of money that an issuer agrees to pay the bondholders. It is most often a percentage of the face value of the bond. Interest rates constitute one of the self-regulating mechanisms of the market, falling in response to economic weakness and rising on strength. Interest-rate risk - The possibility of a reduction in the value of a security, especially a bond, resulting from a rise in interest rates.

Investment advisor - An organization employed by a mutual fund to give professional advice on the fund's investments and asset management practices. Investment company - A corporation, trust or partnership that invests pooled shareholder dollars in securities appropriate to the organization's objective. Mutual funds, closed-end funds and unit investment trusts are the three types of investment companies.

Investment grade bonds - A bond generally considered suitable for purchase by prudent investors. Investment objective - The goal of a mutual fund and its shareholders, e. In exchange for signing a letter of intent, the shareholder would often qualify for reduced sales charges.

A letter of intent is not a contract and cannot be enforced, it is just a document stating serious intent to carry out certain business activities. The performance of all mutual funds is ranked quarterly and annually, by type of fund such as aggressive growth fund or income fund. Mutual fund managers try to beat the industry average as well as the other funds in their category. Liquidity - The ability to have ready access to invested money.

Mutual funds are liquid because their shares can be redeemed for current value which may be more or less than the original cost on any business day. Loads back-end, front-end and no-load - Sales charges on mutual funds. A back-end load is assessed at redemption see contingent deferred sales charge , while a front-end load is paid at the time of purchase. No-load funds are free of sales charges.

Long-term investment strategy - A strategy that looks past the day-to-day fluctuations of the stock and bond markets and responds to fundamental changes in the financial markets or the economy. Market price - The current price of an asset. Market risk - The possibility that an investment will not achieve its target. Market timing - A risky investment strategy that calls for buying and selling securities in anticipation of market conditions.

Maturity - The date specified in a note or bond on which the debt is due and payable. Maturity distribution - The breakdown of a portfolio's assets based on the time frame when the investments will mature. Median Market Cap - The midpoint of market capitalization market price multiplied by the number of shares outstanding of the stocks in a portfolio, where half the stocks have higher market capitalization and half have lower.

Money market mutual fund - A short-term investment that seeks to protect principal and generate income by investing in Treasury bills, CDs with maturities less than one year and other conservative investments. Morningstar ratings - System for rating open- and closed-end mutual funds and annuities by Morningstar Inc.

The system rates funds from one to five stars, using a risk-adjusted performance rating in which performance equals total return of the fund. Mutual fund - Fund operated by an investment company that raises money from shareholders and invests it in stocks, bonds, options, commodities or money market securities.

NASDAQ is a computerized system that provides brokers and dealers with price quotations for securities traded over-the-counter as well as for many New York Stock Exchange listed securities. The fund's NAV is calculated daily by taking the fund's total assets, subtracting the fund's liabilities, and dividing by the number of shares outstanding.

The NAV does not include the sales charge. The process of calculating the NAV is called pricing. Number of Holdings - Total number of individual securities in a fund or portfolio. For a stock portfolio, the ratio is the weighted average price-to-book ratio of the stocks it holds. Par value - Par value is the amount originally paid for a bond and the amount that will be repaid at maturity. Portfolio - A collection of investments owned by one organization or individual, and managed as a collective whole with specific investment goals in mind.

Portfolio allocation - Amount of assets in a portfolio specifically designated for a certain type of investment. Portfolio holdings - Investments included in a portfolio. Portfolio manager - The person or entity responsible for making investment decisions of the portfolio to meet the specific investment objective or goal of the portfolio.

Positive tilt - An investment process which tilt a fund of portfolio toward a specific sector, company, or project based on specific values or norms-based criteria. A sustainable investment style in which the portfolio will be tilted toward sectors, companies, or projects with positive ESG characteristics. There are several kinds of preferred stock, among them adjustable-rate and convertible.

Premium - The amount by which a bond or stock sells above its par value. Price-to-book - The price per share of a stock divided by its book value net worth per share. Prospectus - Formal written offer to sell securities that sets forth the plan for proposed business enterprise or the facts concerning an existing one that an investor needs to make an informed decision.

Prospectuses are also issued by mutual funds, containing information required by the SEC, such as history, background of managers, fund objectives and policies, financial statement, risks, services and fees. Proxy - A shareholder vote on matters that require shareholders' approval. Public offering price POP - A mutual fund share's purchase price, including sales charges. A fund with an R2 of means that percent of the fund's movement can completely be explained by movements in the fund's external index benchmark.

Ratings - Evaluations of the credit quality of bonds usually made by independent rating services. Ratings generally measure the probability of timely repayment of principal and interest on debt securities. Recession - A downturn in economic activity, defined by many economists as at least two consecutive quarters of decline in a country's gross domestic product.

Redemption - Sale of mutual fund shares by a shareholder. Reinvestment option - Refers to an arrangement under which a mutual fund will apply dividends or capital gains distributions for its shareholders toward the purchase of additional shares.

Relative risk and potential return - The amount of potential return from an investment as related to the amount of risk you are willing to accept. Renewable Energy Certificates RECs - A market-based instrument that is issued when one megawatt-hour of electricity is generated and delivered to the electricity grid from a renewable energy resource.

Rights of accumulation - The right to buy over a period of time. For example, this might be done by an institutional investor to avoid making a single substantial purchase that might drive up the market price, or by a retail investor who wants to reduce risk by dollar cost averaging. Risk tolerance - The degree to which you can tolerate volatility in your investment values.

By regulation, a mutual fund sales charge may not exceed 8. The charge may vary depending on the amount invested and the fund chosen. A sales charge or load is reflected in the asked or offering price. See loads. Sector - A group of similar securities, such as equities in a specific industry.

Sector breakdown - Breakdown of securities in a portfolio by industry categories. Securities - Another name for investments such as stocks or bonds. The name 'securities' comes from the documents that certify an investor's ownership of particular stocks or bonds. Securities and Exchange Commission SEC - The federal agency created by the Securities and Exchange Act of that administers the laws governing the securities industry, including the registration and distribution of mutual fund shares.

Share - A unit of ownership in an investment, such as a share of a stock or a mutual fund. Share class net assets date - Fund assets included in a specific share class. Share classes - Classes represent ownership in the same fund but charge different fees. This can enable shareholders to choose the type of fee structure that best suits their particular needs. Sharpe Ratio - A risk-adjusted measure that measures reward per unit of risk.

The higher the sharpe ratio, the better. The numerator is the difference between the Fund's annualized return and the annualized return of the risk-free instrument T-Bills. Short-term investment - Asset purchased with an investment life of less than a year. Standard Deviation - A statistical measure of the degree to which an individual value in a probability distribution tends to vary from the mean of the distribution.

Statement of additional information SAI - The supplementary document to a prospectus that contains more detailed information about a mutual fund; also known as 'Part B' of the prospectus. Stock - A long-term, growth-oriented investment representing ownership in a company; also known as 'equity. Also called 'shareholder. Sustainability Bonds - Bond instrument where the proceeds will be exclusively applied to finance or re-finance a combination of both Green and Social Projects.

Sustainable Development Goals SDGs - A United Nations Initiative for all countries to adopt 17 goals that address global challenges including poverty, inequality, climate change, environmental degradation, and peace and justice. Sustainable investing - A forward-looking investment approach that aims to deliver long-term sustainable financial return in a fast changing world. It encompasses a wide ranging spectrum of approaches, the core of which starts with the incorporation of ESG information.

Systematic investment plan - A service option that allows investors to buy mutual fund shares on a regular schedule, usually through bank account deductions. Tax-exempt income - Tax-exempt income is income that is exempt from income taxes. A purchaser of state municipal bonds is exempt from federal taxation on the income earned from the bonds. Thematic: An investment process that focuses on themes or assets specifically related to topic selected based on specific values or norms-based criteria.

A sustainable investment style that focuses on themes or assets specifically related to sustainability, such as renewable energy, water or healthcare. Time horizon - The amount of time that you expect to stay invested in an asset or security. Top 10 holdings - Ten largest holdings in a portfolio based on asset value. Top 10 long and short positions - The top 10 holdings ranked by market value in each position category long and short. A long position is one in which an investor buys shares of stock and as an equity holder will profit if the price of the stock rises.

With a short position an investor will sell shares of stock that they do not own but have borrowed. The investor in a short position will profit if the price of the stock falls. Top five contributors - Top five industries in a portfolio based on amount of invested assets. Top five detractors - Five assets in a portfolio that generated largest negative returns losses. Top five holdings - Top five securities in a portfolio based on amount of invested assets.

Top five industries - Top five industries in a portfolio based on amount of invested assets. Total return - Accounts for all of the dividends and interest earned before deductions for fees and expenses, in addition to any changes in the value of the principal, including share price, assuming the funds' dividends and capital gains are reinvested. Also, a method of calculating an investment's return that takes share price changes and dividends into account.

Tracking Error - The active risk of the portfolio. It determines the annualized standard deviation of the excess returns between the portfolio and the benchmark. Transfer agent - An agent, usually a commercial bank, appointed to monitor records of stocks, bonds and shareholders.

A transfer agent keeps a record of the name of each registered shareholder, his or her address, the number of shares owned, and sees that certificates presented for the transfer are properly canceled and new certificates are issued in the name of the new owner.

Treasury bill - Negotiable short-term one year or less debt obligations issued by the U. Treasury bond - Negotiable long-term 10 years or longer debt obligations issued by the U. Treasury note - Negotiable medium-term one year to 10 years debt obligations issued by the U.

Treasury security - Securities issued by the U. Treasury Department and backed by the U. Trustee - 1. An organization or individual who has responsibility for one or more accounts.

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That little eye-opener is thanks to a magic formula called compound interest. What to invest in: Stocks. Or at least investment vehicles that provide exposure to the stock market. The stock market is the place that will deliver the best long-term return on your money. The secret to making money in stocks: Stay invested. So says a guy you might have heard of named Warren Buffett. Saving vs. Two big differences between them: time and the type of account you use as a holding pen for your money.

Investing is what you do with money earmarked for long-term goals like retirement. With a long time horizon, you can make growth, rather than liquidity, the priority. Dun dun duuunnnn. Over time, inflation erodes the purchasing power of cash. Now imagine the effect of decades of inflation on wads of money.

You want your long-term investments to outpace inflation, right? Well… Why you should invest in the stock market One look at the historic rate of return of the major asset classes shows that the stock market is going to give you the biggest bang for your bucks. While this is a valid concern, and investing does carry risk, having a diverse portfolio can better equip you to weather the market and ultimately achieve your goals. Investing any amount of money is never a futile exercise, thanks to the magic of compound interest.

What is compound interest? It's like a runaway snowball of money growing larger and larger as it rolls along. All you need to get it going is starter money. As interest starts to accumulate on your initial investment, it is added to your ball of cash.

You continue to earn interest, your balance expands in value and picks up speed — and on and on it goes. The sooner you get the snowball rolling, the better. The four most common entry points into the stock market are: Individual stocks. Mutual funds. A mutual fund is a basket that contains a bunch of different investments — often mostly stocks — that all have something in common, be it companies that together make up a market index see the box for more about the joys of index funds , a particular asset class bonds, international stocks or a specific sector companies in the energy industry, technology stocks.

There are even mutual funds that invest solely in companies that adhere to certain ethical or environmental principles aka socially responsible funds. Because index funds generally charge lower fees, called expense ratios , than traditional mutual funds. And that lower cost is a big-time boost to your overall returns. These funds are made up entirely of the stocks contained in a particular index. So the returns of these index funds mirror that of the market they track.

To do that they employ managers to pick and choose the investments in a fund. The cost of that management, along with expenses for trades, administration, marketing materials, etc. And historically, very few actively managed mutual funds have outperformed their benchmark indexes and passive funds long term.

Taking on more risk means your investment returns may grow faster—but it also means you face a greater chance of losing money. Conversely, less risk means you may earn profits more slowly, but your investment is safer. Deciding how much risk to take on when investing is called gauging your risk tolerance. On the other hand, you might feel better with a slower, more moderate rate of return, with fewer ups and downs. In that case, you may have a lower risk tolerance. But if you had needed your money during one of those dips, you might have seen losses.

Risk and Diversification Whatever your risk tolerance, one of the best ways to manage risk is to own a variety of different investments. If your investments were concentrated in bonds, you might be losing money—but if you were properly diversified across bond and stock investments, you could limit your losses. By owning a range of investments, in different companies and different asset classes, you can buffer the losses in one area with the gains in another.

This keeps your portfolio steadily and safely growing over time. How Can I Start Investing? These are automated investing platforms that help you invest your money in pre-made, diversified portfolios, customized for your risk tolerance and financial goals. With a financial advisor, you can build a relationship with a trusted professional who understands your goals and can help you both choose and manage your investments over time.

That means sticking with an investment strategy whether markets are up or down. Regularly investing helps you take advantage of natural market fluctuations. When you invest a consistent amount over time, you buy fewer shares when prices are high and more shares when prices are low. Over time, this may help you pay less on average per share, a principle known as dollar-cost averaging. You also should remember that no investment is guaranteed, but calculated risks can pay off.

Good investing begins by investing in yourself. Learn about the types of retirement accounts. Get your emergency savings squared away. Create a strategy for paying down your student loan debt. And with those key financial tools in action, you can start investing with confidence—putting the money you have today to work securing your future.

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