Glossary of Terms

The information presented here is not intended as financial, investment, tax or legal advice and is provided for educational purposes only.
Take Over
The acquisition of a corporation (the target) by another (the acquirer) by the purchase or exchange of stock. See Tender Offer.
Target Stock
A special class of common or preferred shares with dividends and/or earnings participation linked to a specific segment of the issuer's business.
Tax Aware Portfolio Management
A commitment to exercise a reasonable effort to achieve fund tax efficiency by a portfolio's advisor. Less commitment than an investor would expect in a tax managed fund.
Tax Deferred
Income whose taxes can be postponed until a later date. Contributions to a 401(k) plan, for example, are not taxed until they are withdrawn from the account, but when withdrawn, they are fully taxed at the applicable tax rate.
Tax Efficiency
A characteristic of a financial instrument that permits a dealer or an end user to establish or modify a position in a way that requires lower tax payments than an alternate similar position or instrument. Mutual funds are frequently evaluated on the basis of their ability to defer tax for their shareholders.
Tax Loss Carry-Forward
A tax benefit that allows an individual or a fund to offset past losses against future profits.
Tax Managed Fund
An open-end mutual fund managed with the objective of minimizing taxes even at the expense of benchmark tracking, diversification or pre-tax return.
Tax Year
The 12-month period used by an individual to report income for income tax purposes. For most individuals their tax year is the calendar year.
Tax-Exempt Security
A bond that is not taxed at the federal, state and/or local level. Typically, tax-exempt securities are municipal bonds issued by state or local governments (or their agencies). Mutual funds may be tax-exempt if they invest exclusively in tax-exempt securities.
Taxable Equivalent Yield
The return an investor would have to realize on a fully taxable investment to equal the stated yield on a tax-exempt investment.
Technical Analysis
Analysis of the supply and demand for securities using charts and graphs to identify price trends that may forecast future price movements.
Tender Offer
A company's public announcement that it will buy, at a given price (usually higher than the current market price), some or all of the stock of another company. The company making the tender offer typically seeks to take over the target company. See Take Over.
Term Asset-Backed Securities Loan Facility (TALF)
A consumer and business lending initiative to finance the purchase of existing mortgages and mortgage-backed securities. TALF is one of several initiatives to deal with the financial crisis that began in late 2007. See Public-Private Investment Program; see Toxic Assets/Legacy Assets; see Troubled Assets Relief Program.
Ticker (or Ticker Symbol)
The ticker is a fund's trading symbol, such as QQQ.


Time Value Of Money
The concept that the use of money has value. The sooner money is received the more valuable it is because it can earn interest. In short, a dollar today is more valuable than a dollar at some point in the future, because the dollar can earn interest between now and then.
Top-Down Approach
An approach to investing in which the investor first looks at general trends in the economy and then chooses specific industries and particular companies that will benefit from these broad trends.
Total Assets
Total current assets plus total noncurrent assets.
Total Liabilities
Total current liabilities plus long-term debt and deferred income taxes.
Total Non-Current Assets
Equals intangibles plus other non-current assets.


Total Return
The sum of all investment income plus changes in the market value of an investment.

A measure of a company's leverage, calculated by dividing the sum of its short- and long-term debt by its shareholders' equity, using figures from its most recently reported balance sheet.

The lower a company's debt/equity ratio, the less encumbered it is by debt. Whereas debt/capital ratios show debt relative to the value of things a company owns and the money it has borrowed, debt/equity ratios show debt relative to just the things it owns.

Toxic Assets/Legacy Assets
Term coined in 2007 to describe financial assets such as mortgage-based securities that financial institutions could not resell because their value had declined significantly. In 2009, the U.S. Treasury began using the term "legacy assets" to describe such securities. Such assets create uncertainty about the balance sheets of institutions that hold them; this uncertainty has compromised their ability to raise cash and their willingness to make loans. Some of these assets have declined in value for fundamental reasons as foreclosures have risen; others continue to perform as expected but have declined in value due to poor market liquidity.
Tracking Error
Used to describe the volatility of returns of a portfolio relative to the returns of its benchmark portfolio, typically expressed in terms of the standard deviation of the differences between the portfolio and index returns over a specific horizon (such as a year). Net-asset-value tracking error is the difference between the net-asset-value of the fund or trust and the returns of the index or strategy on which the fund is based. Price-to-index tracing error is the difference between the returns based on the closing market prices for a fund or trust and the returns based on the closing market prices of the underlying index.
Trade Date
The date on which a security is sold by one party and bought by another.
Trailing P/E Ratio

Latest closing share price divided by earnings per share based on the last reported 12 months of earnings. Companies with negative earnings receive an "NA," for not applicable.

The P/E ratio is one of the most widely used measures of a stock's valuation. Generally speaking, the lower a stock's P/E ratio is, the less expensive its shares are relative to its profits. There are several different types of P/E ratios, each of which uses a different earnings figure. Trailing P/E is considered the most conservative, since it uses earnings that have already been booked. Forward P/Es use analysts' earnings projections for either the current, not-yet-completed fiscal year, or the next fiscal year.

P/E comparisons are best made between companies in like industries, since growth rates vary widely from industry to industry. Alternatively, investors may use the price/earnings-to-growth, or PEG (PEG), ratio, which normalizes a stock's P/E for its projected growth rate.

Trailing P/E can be calculated using either GAAP of pro forma earnings per share.

Transfer Agent
The organization employed by a mutual fund to prepare and maintain records relating to the accounts of its shareholders.
Transfer of Assets
A movement of assets between retirement accounts of the same type such as a traditional IRA to traditional IRA or a qualified plan to a plan of the same type maintained by the same employer. Assets are sent directly from one custodian (trustee) to a new custodian (trustee) without the participant receiving the funds. A transfer of assets is not a taxable event and therefore is not reported to the IRS.
Debt securities issued by the U.S. government and backed by the full faith and credit of the United States of America. Treasury bills have maturities of one year or less and are issued at a discount to face value. Treasury notes are intermediate-term securities with maturities of one to 10 years. Treasury bonds are long-term securities with maturities of 10 years or more. Income from Treasuries is exempt from state and local, but not federal, taxes.
Treasury Bill, Bond, Note
Negotiable debt obligations issued by the U.S. government and backed by its full faith and credit. Treasury bills are short-term securities with maturities of one year or less. Treasury notes are intermediate-term securities with maturities of 2 to 10 years. Treasury bonds are long-term securities with maturities of 10 years longer.
Troubled Assets Relief Program (TARP)
A program created by the government that established a $700 billion Treasury fund to buy toxic assets from financial institutions, thereby helping to address the financial crisis that began in late 2007. TARP was created with the passage of the Emergency Economic Stabilization Act of 2008. In practice, much of the initial TARP funding flowed into nonvoting preferred equity shares of banks and bank holding companies. It was believed this approach would shore up bank capital and translate into increased lending. See Toxic Assets/Legacy Assets.
An agreement created at the direction of one party (the grantor) under which another party (the trustee) manages and invests assets for the benefit of a third party (the beneficiary). There are many types of trusts and many reasons for their creation. Often, a grantor seeks to control the distribution of property during his lifetime or seeks to ensure the financial well-being of others (a spouse or minor children, for example) after his death. See Trustee.
An individual or organization that manages and invests assets for the benefit of another. In all trust-related matters, a trustee is legally obliged to act in the beneficiary's best interests. See Trust.
Trustee-to-Trustee Transfer
A method of moving account assets in which the assets are sent directly from one custodian (trustee) to the receiving custodian (trustee).
Turnover Rate
  See Portfolio Turnover.