WaterStreet Investment Consultants, LLC

Interest that has accumulated between the most recent payment and the sale of a bond or other fixed-income security.

A style of investing in which managers try to add value through market timing, theme selections and/or the selection of individual stocks or bonds.

State or local government tax based on the value of real property as determined by the county tax assessor.

A municipality may sell a second bond issue at a lower interest rate cost, placing the proceeds of the issue in an escrow account from which the first issue’s principal and interest will be repaid when due.

A set of guiding principles intended to promote full disclosure and fair representation in the reporting of investment results.

A measure of a nonsystematic return, or the return that cannot be attributed to the market; how the manager performed if the market had no gain or loss.

A municipal bond insurance company.

The decline in the carrying value of a security.

Nominal yield that may compound to produce a higher effective annual yield.

Yield that compounds once per year.

The interest rate differential that exists when proceeds from a municipal bond are invested in taxable securities with a yield that is higher.

An obligation to pay at the end of a payment period.

Debt security that is backed by a lien on a specific asset; the most common types of asset-backed securities are those that are backed by car loans and credit cards.

The indicated quality rating of fixed-income securities within a portfolio.

State or local unit of government created to perform a single activity or a limited group of functions and authorized by the state legislature to issue bonded debt.

Law that when enacted allows the unit of government to sell a specific bond issue or finance a specific project.

The average length of time an issue of serial bonds and/or term bonds with mandatory sinking funds and/or estimated prepayments is expected to be outstanding; also the average maturity of a bond portfolio.

An inordinately large amount of bond principal maturing in any single year; also called a Term Bond.

A short-term security, one year or less, used for interim financing to be repaid from the proceeds of a planned long-term bond issue.

Smallest measure used in quoting yields on bills, notes, and bonds; one basis point is 0.01% of yield.

Bond that has no identification of the owner of the security; presumed to be owned by the bearer or the person who holds it.

A standard, such as a market index, used for comparison, example: the S&P 500 Index can be used as a benchmark for comparing an equity portfolio's performance.

Price at which a dealer is willing to buy a bond.

Note security whereby an issuer borrows money from an investor and agrees and promises, by written contract, to pay a fixed principal sum on a specified date and at a specified rate of interest.

Lawyer who writes an opinion on the bond or note as to its tax exempt status and the authenticity of its issuance.

The semi-annual yield that equates the discounted value of a bond’s actual future cash flows with the bond’s present value in the market.

Portfolio of municipal bonds sponsored by registered investment companies that offer shares to investors either through (1) closed-end funds or unit investment trusts, which offer shares of a fixed portfolio of municipal bonds; or (2) open-end or managed funds, which offer shares in a managed portfolio of municipal bonds whose size will vary as shares are purchased or redeemed.

Insurance issued by a private insurance company for either an entire issue or specific maturities that guarantees to pay principal and interest when dues; provides a credit rating of triple-A and thus a lower borrowing cost for the issuer.

Amount at which a bond or note is bought or sold above its par value or face value without including accrued interest.

The portion of an issuer’s debt structure represented by outstanding bonds, sometimes limited by constitutional or legislative restraints.

System of security ownership in which the ownership is held as a computer entry on the records of a central company for its owner.

A description of an investment process that emphasizes individual bond selection over consideration of economic trends or the market in general; bottom-up managers identify bonds for purchase by analyzing research reports, bond screens or personal knowledge of a company's products and services; bottom-up managers believe that they can find attractive bonds regardless of the overall direction of the economy.

Ageneral term used to describe the market average.

An option granting the holder the right to buy the underlying asset on (or before) a specified date at a specified price.

A bond with an embedded call option; the issuer can redeem the bond prior to maturity.

The dollar amount invested in an asset; capital is used to distinguish the return earned on the dollar amount of the investment from the return attributed to interest of dividend income.

The profit resulting from the increase in the value of a security (as distinguished from profit due to income).

The loss resulting from the decrease in the value of a security.

Sources of financing for corporation sand governments in need of funds, as well as sources of investment opportunities for providers of funds.

The value of a security on a company’s books, which starts at the acquisition price and drifts toward par over the life of the bond.

Highly liquid, low-risk debt securities which have a maturity of one year or less; including money market funds, Treasury Bills, and most Certificates of Deposit.

A measure of a corporation's net income plus depreciation and other non-cash charges; managers focus on cash flow to gauge a corporation's ability to pay dividends.

Form of lease revenue bond that permits the investor to participate in a stream of lease payments, installment payments or loan payments relating to the acquisition or construction of specific equipment, land or facilities.

Community Facilities District; if a bond issue name has CFD in it you know it is a Mello-Roos Bond; the name refers to the taxing District that is set up to authorize the issuance of bonds, that will benefit from the financing, and from which special taxes will be collected for the bonds’ repayment.

A type of mortgage-backed security that separates pools of mortgages into different maturity classes, called tranches; tranches pay different rates of interest and typically mature in 2, 5, 10, or 20 years.

An account in which different investors' assets are combined; commingled funds are commonly offered by banks, insurance companies, and mutual fund companies.

A single return representing the performance of all portfolios managed in a particular style.

A method of calculating interest where interest earns interest; compounding increases the investor’s effective yield on unpaid principal of outstanding investments.

A measure of the curvature in the price/yield relationship; the rate of change in duration.

A type of equity management that invests in diversified portfolios, typically using a broad index such as the S&P 500 Index as their benchmark; usually these managers are expected to achieve returns that are comparable to general market performance, at the least.

A type of fixed income management that invests a corporation's liquid assets that are used for day-to-day operations.

The tendency for the returns of two assets, such as a portfolio and an index, to move together relative to their average; the measurement of this statistic (the correlation coefficient) can range from -1 (perfect negative correlation) to 1 (perfect positive correlation); a correlation of 0 means no relationship can be found.

The contractual rate of interest on a bond.

A measure of the degree to which two assets move in tandem relative to their average; defined as the correlation between two assets multiplied by their standard deviation, a positive covariance means that the two asset returns move together, a negative covariance means they vary inversely.

Legally binding commitment by the issuer of municipal bonds to the bondholder; impairment of a covenant can lead to a Technical Default.

This is the margin of safety for payment of debt service on a revenue bond that reflects the number of times the actual and/or estimated project earnings or income for a 12-month period of time exceeds debt service that is payable.

A style of fixed income investing in which a manager analyzes the financial condition and creditworthiness of bond issuers, hoping to find bonds, which she believes are mis-priced based on the analysis.

A style of fixed income investing in which a manager buys corporate bonds which he believes will be upgraded by one or more credit agencies in the near future; the manager relies on credit research to find companies with improving financials that merit an upgrade.

The risk that an obligation, such as a bond, will not be paid and result in a loss.

Also known as cash-on-cash return; the annual cash flow of an investment as a percentage of the amount invested.

Bonds selling at a premium are called “cushion” bonds because they cushion the price volatility in an up and down market.

A nine-digit code that uniquely represents a security.

A bank, insurance company, brokerage firm, or other financial institution that keeps custody of stock certificates and other assets on behalf of the investor; custodians send regular statements, usually monthly or quarterly, that detail the holdings, values and transactions made in the investor's portfolio during the period.

Date carried on the face of a bond or note from which interest normally begins to accrue.

The maximum statutory or constitutional amount of debt that the general obligation bond issuer can either issue or have outstanding at any time.

Ratio of the issuer’s general obligation debt to a measure of value, such as real property valuations, personal income, general fund resources, or population.

Payments for principal and interest.

Bank trustee account established by the trust indenture and used as a backup security for an issuer’s bonds.

Failure to pay in a timely manner principal and/or interest when due.

Refunded bonds for which the payment of principal and interest has been assured through the structuring of a portfolio of government securities, the principal and interest on which will be sufficient to pay debt service on the refunded, outstanding bonds.

A pension plan in which an employer promises to pay certain defined or fixed benefits to its employees upon retirement; the benefits generally are based on the earnings and number of years of employment of the employee near the end of his/her employment.

A pension plan in which an employer makes certain defined or fixed contributions on behalf of an employee; usually, the contribution is a percentage of the employee's salary.

Property taxes that have been levied but remain unpaid on and after the due date.

For bonds bought or sold in the secondary market, delivery and payment must be in three business days.

The minimum incremental face amount of a security that can be traded; for most corporate and government bonds, the denomination is $1,000.

The amount of debt that a particular local unit of government has incurred in its own name or assumed through annexation.

A bond whose price is currently below par; a bond whose coupon rate is less than its yield.

Reducing future cash flows to their present value.

The spread to a floating-rate bond’s index that discounts the bond’s expected future cash flows to the bond’s actual present value.

Non-interest-bearing note sold at a discount and maturing at par; a U.S. Treasury Bill is a discount note.

Term bond that is quoted and traded in dollars rather than in yield-to-maturity; well known issues of well known names in the market.

The change in value for a small change in yield.

Approximates the internal rate of return for the entire portfolio.

Bond with two distinct pledged sources of revenue, such as earmarked monies from a specific enterprise or aid payment, as well as the general obligation taxing powers of the issuer.

A measure of managers' performance in down markets relative to the market itself; a down market is one in which the market's quarterly return is less than zero.

A linear measurement of the interest rate sensitivity of the value (or price) of a security; the change in value, as a percent of value, for a small change in yield; also known as modified duration or present-value duration.

The accretion or amortization of a bond toward par over time according to the yield of the security.

The set of portfolios that maximize return for different levels of risk and, conversely, that minimize risk for different levels of return.

Fund that contains monies that only can be used to pay debt service.

An issuer may chose to sell a new issue called a refunding issue and use the proceeds of the second issue to pay off the original issue, much the same as a home owner refinancing a mortgage in an effort to save interest costs.

The return calculated by subtracting the risk-free rate of return from the actual return on an asset; an indication of the return the manager could have gotten in the market in the chosen period.

Financial Guaranty Insurance Co.; a municipal bond insurer.

A person or firm responsible for holding and investing assets on behalf of a beneficiary; for example, the administrators of a pension plan act as fiduciaries on behalf of the employees invested in the plan.

Generally a bank, investment-banking company or independent consulting firm that advises the issuer on all financial matters pertaining to a proposed issue and is not part of the underwriting syndicate.

The bank, designated by the issuer, to pay interest and principal to the bond holder.

12-month time horizon by which state and local governments annually budget their respective revenues and expenditures.

A coupon rate that is constant over the life of a bond.

A coupon rate that changes over the life of a bond.

Annual legal sequence by which enterprise revenues ae paid out for operating and maintenance costs, debt service, sinking fund payments, etc.

A type of defined contribution plan that allows employees of a corporation to contribute a percentage of their salary to the plan on a pre-tax (and after-tax) basis; the employer also may contribute to the account.

Type of defined contribution plan that allows employees of non-profit organizations, such as schools, hospitals, and charities, to contribute a percentage of their salary to the plan on a pre-tax (and after-tax) basis; the employer also may contribute to the account.

Financial Security Assurance Inc.; a municipal bond insurer.

The pledge of “the full faith and credit and taxing power without limitation as to rate or amount.”

A form of securities analysis that focuses on fundamentals of a company, such as information on its balance sheet and income statements; analysts use this information to predict how the company's securities will perform; analysis includes research of trends in a company's assets, earnings, sales, dividends, products, management and competitors.

The value of a payment or stream of payments on a specified future date.

An agreement that calls for the delivery of a specific amount of a commodity or financial instrument at a particular price on a stipulated future date; the buyer is obligated to purchase the underlying commodity.

Bond secured by a pledge of the issuer’s taxing powers (limited or unlimited); more commonly the general obligation bonds of local governments are paid from ad valorem property taxes and other general revenues.

Tax levied on real estate and personal property.

Sum total of a state’s or local government’s debt obligations.

Generally, all annual receipts of a revenue bond issuer prior to the payment of all expenses; normally only Net Revenues are pledged to the repayment of bonds.

General obligations, or loans, made to insurance companies; they pay the lender a guaranteed interest rate for the life of the contract, regardless of market conditions; at the contract's maturity, the insurance company returns the principal to the lender; the insurance company takes all market, credit and interest rate risk on the GIC, but it hopes to profit by earning more on its investments than it credits in interest on the GIC.

The period over which return is to measured.

The end of the period over which return is to be measured.

Fixed income strategy that involves matching the durations of assets and liabilities to "immunize" or prevent them from being affected by interest rate movements; this strategy is often employed by pension funds, insurance companies, etc. that must make regular pay-outs to their beneficiaries.

A general term encompassing both dividends and interest.

Legal document describing in specific detail the terms and conditions of a bond offering, the rights of the bondholder, and the obligations of the issuer to the bondholder.

A cross-section of the market that provides a benchmark against which many investors are measured.

Funds that are invested to mirror the characteristics of a broad-based market index such as the S&P 500; because these funds generally hold investments in proportion to that of the index, they are considered to be passive portfolios.

Used to finance facilities for private enterprises, water and air pollution control, ports, airports, resource-recovery plants, and housing; backed by the credit of the private corporation borrower rather than the credit of the issuer.

A measure of value added by the manager; the ratio of (annualized) excess return above the benchmark to (annualized) tracking error.

The income paid on debt securities.

A style of fixed income investing in which a manager makes investment decisions based on his forecast for the direction of interest rate movements.

Short-term loans to be repaid from general revenues or tax collections during the current fiscal year; short-term loans in anticipation of bond issuance or grant receipts.

Bonds maturing in 5 to 15 years.

The annualized yield that would result in a zero net present value for an investment (including its cost).

Firm engaged in raising capital for an issuer; participates as the middleman in purchasing securities from the issuer and in selling the same securities to investors.

State or local unit of government that borrows money through the sale of bonds and/or notes.

Bond issues that the three major bond rating agencies, Moody’s, Standard & Poor’s, and Fitch rate BBB or Baa or better.

Most non-rated bonds and bonds rated below investment grade.

A JPA is formed when it is to the advantage of two or more public entities with common powers to consolidate their forces to acquire or construct a joint-use facility.

Bonds whose principal and interest are payable exclusively from rental payments from a lessee; rental payments are often derived from earnings of an enterprise that may be operated by the lessee or the lessor.

A written opinion from bond counsel that an issue of bonds was duly authorized and issued.

A form of supplement or, in some cases, direct security for a municipal bond under which a commercial bank or private corporation guarantees payment on the bond under certain specified conditions.

Principal and interest payments that, together, represent more or less equal annual payments over the life of the loan.

A claim on revenues, assessments or taxes made for a specific issue of bonds.

Bond secured by the pledge of tax that is limited as to rate or amount.

The ease and efficiency of purchasing or selling a security.

The position of the buyer of a security.

The weighted average time for the bondholder to receive all cash flows, both interest and principal; takes into account the present value of the interest rate stream as well as the maturity of the bond.

The value of a corporation as determined by the market price of its issued and outstanding shares of common stock; managers often use market capitalization as one of their investment criteria.

A manager who speculates on broad market moves rather than on specific securities; based on predications of market movements, the manager will move in and out of the market to enhance returns.

The act of shifting between asset classes to increase returns based on forecasts of market movements.

The current value of an asset.

Approximates the next year’s income for the entire portfolio.

Local Bond Pooling Act of 1985 to facilitate the financing of local government facilities by bond bank pools funded by bond proceeds; the pool, formed under a JPA, can buy any type of legally issued debt instrument within or without its geographic area.

The time at which a debt issue becomes due and the principal must be repaid.

The maximum amount of principal and interest due by a revenue bond issuer on its outstanding bonds in any future fiscal year.

MBIA Insurance Corp.; a municipal bond insurer.

Mortgage-backed security.

Community Facilities District Act of 1982 established another method whereby almost every municipal subdivision of the state may form a special, separate district to finance a long list of public facilities by the sale of bonds and finance certain public services on a pay-as-you-go basis.

The average of the bid and ask price.

A measure of the sensitivity of a bond to changes in interest rates; it represents the percentage change in a bond's price per a small percentage change in interest rate; to arrive at the modified duration, divide the Macaulay duration by (1+the yield to maturity of the bond).

Low-risk, short-term fixed income securities that generally mature within one year; they can be issued by banks, nonfinancial corporations, the U.S. Treasury or state and local governments.

Another name for a defined contribution pension plan; the employer contributes a specified amount of cash each year to each employee's pension fund.

A debt security backed by an underlying pool of mortgages; investors receive payments out of the interest and principal of the underlying mortgages.

Bond backed by a lien on the monthly payments of a large pool of mortgages, usually issued by a state or local housing authority.

Bonds issued by any of the 50 states, the territories and their subdivisions, counties, cities, towns, villages, and school districts, agencies, such as authorities and special districts created by the states, and certain federally sponsored agencies such as local housing authorities; historically the interest paid on these bonds has been exempt from federal income taxes and is generally exempt from state and local taxes in the state of issuance.

Short-term municipal obligations, generally maturing in one year or less.

Independent self-regulatory organization established by Congress in 1975 which is charged with primary rulemaking authority, under the SEC, over dealers, dealer banks, and brokers in municipal securities.

Composite returns that include the effects of management fees.

Market value of all the bonds in a mutual fund portfolio divided by all the outstanding shares.

Gross general obligation debt less self-supporting general obligation debt, housing bonds, water revenue bonds, etc.

Generally speaking, issuers award competitive bond sales to the underwriter bidding the lowest NIC.

Gross operating revenues of an enterprise less operating and maintenance expenses but exclusive of depreciation and bond principal and interest.

California name for Special Assessment bonds or Improvement Bonds; a special district is formed, public improvements are constructed, assessments are levied on all the properties in the district in proportion to the benefit derived from the improvement.

Option-Adjusted Convexity; the measure of a bond’s convexity that takes into account the effect of any embedded options.

Option-Adjusted Duration; the measure of a bond’s duration that takes into account the effect of any embedded options.

Option-Adjusted Spread; the expected spread to Treasuries for a bond with embedded options.

Option-Adjusted Yield; the yield that discounts future cash flows (assuming no option exercise) to the value of the bond plus the value of the embedded option.

Price at which a dealer is willing to sell a bond

Prospectus circulated for an issuer prior to a bond sale with salient facts regarding the proposed financing.

Standard municipal bond fund; has no fixed number of bonds in its portfolio; buys issues as investors buy shares in the fund, sells issues as investors redeem shares; the tax-free dividend is dependent on a pro-rata share of the interest earned, and this varies as the income of the portfolio varies.

The computation used in multi-index style analysis that combines the historical returns of a defined set of indexes into a unique blend that most closely represents a manager's style.

Some maturities of a new bond issue that have an offering price substantially below par; the appreciation from the original price to par over the life of the bonds is treated as tax-exempt income and is not subject to capital gains tax.

Over the Counter; the buying and selling method used in the secondary market for municipal bonds (and unlisted stocks).

The proportionate share of the general obligation bonds of local governments located wholly or in part within the limits of the reporting unit of government that must be borne by property owners within the unit.

Refers to the principal or face value of a bond; a bond whose price is par has a dollar price of 100% of the face value.

A bond that is priced at par (100% of the face value); a bond whose yield equals its coupon.

Revenue bonds that have an equal lien on the revenues of the issuer.

Passive managers generally hold generic, well-diversified portfolios which represent a broad-based market index, such as the S&P 500 Index; they do not try to add value through strategies such as market timing, theme selection and/or individual stock selection.

A security that represents a pro-rata share of cash flows, minus a servicing fee, generated from underlying mortgages; a pool.

Receiving payments in the form of more bonds.

Generally a bank that performs the function of paying interest and principal for the issuing body.

A fund set up by an employer to pay employees retirement benefits; there are two broad categories of pension plans: defined benefit and defined contribution.

Term used to describe the discrete set of assets managed for a client.

A class of equity ownership in a publicly held corporation that pays dividends at a specified rate like a bond, yet can appreciate (or depreciate) in value like common stock; the corporation must pay dividends on preferred stock before it is free to distribute earnings to the holders of common stock; in the event of liquidation, the owners of preferred have a prior claim on any assets after the creditors have been satisfied; does not carry voting rights.

A bond whose price is currently above par; a bond whose coupon rate exceeds its yield.

The value on settlement of a payment or a stream of payments due and payable at some specified future date(s), discounted at some interest or discount rate (yield); the act of calculating present value; the cost (price plus accrued) of purchasing a security.

The change in value, as a percent of price, for a small change in yield.

The ratio of the market price of a company's stock to its book value; this ratio helps equity managers determine if a stock is overvalued.

The yield of a bond priced to the first call date rather than maturity.

A company's stock price divided by its earnings per share; also known as the price-earnings multiple; this ratio helps equity managers evaluate how expensive a stock is compared to its earnings; the ratio can be calculated using the previous year's reported earnings or using a forecast of future earnings.

The ratio of the market price of a company's stock to its sales revenues; this ratio helps equity managers determine if a stock is overvalued.

The face value of a bond, exclusive of interest.

A defined contribution plan in which the employer makes contributions on behalf of its employees based on the profits of the firm.

An option granting the holder the right to sell the underlying asset on (or before) a specified date at a specified price.

A bond with an embedded call option; the investor can force the issuer to redeem the bond prior to maturity.

Conditional affirmation of the legal basis for the bond or note issue.

A statistic that measures the reliability of alpha and beta in explaining the return of a manager as a linear function of the market; it is produced by regression analysis.

Revenue anticipation bonds.

Legal commitment by a revenue bond issuer to maintain rates at levels to generate a specified debt-service coverage.

Also known as return or total return; the amount by which a portfolio or composite increases or decreases over a stated period of time.

Various alphabetical and numerical designations used by institutional investors, Wall Street underwriters, and commercial rating companies to give relative indications of bond and note creditworthiness; Standard & Poor’s and Fitch Investors Service Inc. use the same system, starting with their highest rating of AAA, AA, A, BBB, BB, B, CCC, CC, C, and D for default; Moody’s Investors Services uses Aaa, Aa, A, Baa, Ba, B, Caa, Ca, and D; each of the services use + or – or +1 to indicate half steps in between; the top four grades are considered Investment Grade Ratings.

A company which invests in real estate or loans secured by real estate; investors purchase shares in a REIT to participate in the performance of the underlying real estate assets; REIT's are traded on market exchanges, much like closed-end mutual funds.

Process of retiring existing bonds prior to maturity from excess earnings or proceeds of refunding bonds; also refers to redeeming shares in a mutual fund by selling the shares back to the sponsor.

Legislatively established subdivision of government established to revitalize blighted and economically depressed areas of a community and to promote economic growth; Tax Allocation Bonds are issued to pay the cost of land and building acquisition and their redevelopment and are repaid by the incremental increase in tax revenues produced by the increase assessed value of the area after redevelopment.

Issuance of a new bond for the purpose of retiring an already outstanding bond issue.

Non-negotiable instrument in the name of the holder either registered as to principal or as to principal and interest.

A statistical process, which attempts to explain movements in one variable by movements in one or more other variables; for example, a fund's returns might be explained by the returns of the market.

A return that is calculated for a specific time period with a floating end point.

Financial transaction in which one party “purchases” securities (primarily U.S. Government bonds) for cash and simultaneously the other party aggress to “buy” them back at some future time according to specified terms.

Also a pension plan; funds designed to provide for the retirement of an entity's employees including: 401(k) Plan, 403(c) Plan, Defined Benefit Plan, Defined Contribution Plan, Money Purchase Plan, Pension Plan, profit-Sharing Plan.

The percentage increase or decrease in the value of a defined group of investments for a stated time period.

Indicates how returns are calculated with respect to the inclusion of fees charged by the manager.

The ratio of earnings before interest and taxes to total assets; this ratio helps measure a firm's profitability.

The ratio of net profits to equity.

A type of multi-factor style analysis in which the multiple factors are the returns of benchmark indices.

Municipal bond whose debt service is payable solely from the revenues derived from operating the facilities acquired or constructed with the proceeds of the bonds.

The uncertainty of future returns.

A measure of qualifying an investor's attitude toward risk and return; investors with a high risk tolerance are willing to take on risk for the potential of receiving higher return on their investments.

Trading market for outstanding bonds and notes; an OTC market, a free form negotiated method of buying and selling, usually conducted by telephone or computer.

A particular group of securities with similar characteristics.

An equity management style that overweighs stocks of industry sectors that are considered to be more promising and underweight those in less promising sectors.

Switching between bonds of the same class with similar ratings, coupons and maturities to capture the benefits of temporary mispricing among these securities.

The legally available revenues and assets that are used to pay the bond holders; the key component that supports debt service.

Choosing particular securities to include in a portfolio; a manager may attribute strong performance relative to the benchmark index or target policy to security selection.

Bond of an issue that features maturities every year, annually or semiannually over a period of years, as opposed to a Term Bond, which is a large block of bonds maturing in a single year.

The actual date on which cash is exchanged for a security.

Risk is measured using the standard deviation of the returns in the portfolio; the Sharpe Ratio relates the difference between the portfolio return and the risk-free rate to the standard deviation of that difference for a given time period.

The actual date on which cash is exchanged for a security.

The position of the seller of a security.

Bonds or notes sold on an interim basis with tax-exempt securities for a period of from one to five years.

Money set aside on a periodic basis to retire term bonds at or prior to maturity.

The excess return above the MAR divided by the downside risk; the excess return earned for the downside risk taken.

Bond secured by a compulsory levy of special assessments, as opposed to property taxes, made by a local unit of government on certain properties to defray the cost of local improvements and/or services that represents the specific benefit to the property owner derived from the improvement.

A gauge of risk that measures the spread of the difference of returns from their average; the more a portfolio's returns vary from its average, the higher the standard deviation.

Registration of bonds in the name of a dealer or other third party instead of the owner, usually for custodial or safe keeping purposes; this also facilitates buying and selling from the account.

Separate Trading of Registered Interest and Principal Securities; zero-coupon Treasury securities that are coupon or principal payments separated from Treasury coupon bonds.

A description of the strategy used to determine the investment decisions within an asset class.

The systematic risk associated with a manager's style; calculated by dividing the standard deviation of the manager's bootstrap data by the style risk.

Term maturity in a housing mortgage bond issue; these will be the first bonds to be called from the proceeds of prepaid mortgages.

A transaction that allows an investor to exchange one set of payments/bonds for another.

An option on a swap; provides the buyer with the right but not the obligation to enter into a swap agreement with the seller under specified terms during a specified timeframe.

Risk that is common to all investments; cannot be diversified away.

Describes a pension fund that benefits the members of a union; from the Taft-Hartley Act of 1947, which set forth various regulations concerning the relationship between management and unions.

Tax Anticipation Note.

Total resource of the community that is legally available for taxation.

Describes a security, such as a bond, or an entity, such as a foundation, on which taxes are not levied.

Describes asecurity, such as a bond, or an entity, such as a foundation, on which taxes are levied.

Yield an investor would have to obtain on a taxable corporate or U.S. government bond to match the same after-tax yield on a municipal bond.

Bonds issued in conjunction with a redevelopment project; taxes pledged to their repayment come from the increase of assessed value over and above a pre-established base.

Bonds exempt from federal income, state income, or state tax and local personal property taxes.

A form of securities analysis that focuses on historical trading volume and patterns in the markets; it generally involves the use of computers to analyze overall buying and selling trends in the markets; not concerned with the financial position of individual companies.

Failure by the issuer to meet the requirements of a bond covenant; these defaults do no necessarily result in losses to the bond holder; default may be cured by simple changes of policy or actions by the issuer.

The act of offering bonds to a sinking fund.

A large block of bonds of long maturity; may be part of a serial Bond issue; there may be more than one term bond in an issue or a single maturity.

Issued by Puerto Rico, the Virgin Islands, etc.; interest on this debt is exempt from state income taxes.

Scarcity of secondary market supply or few bid or offer quotes for a particular security.

A calendar convention where every month is assumed to have 30 days; the Securities Industry Association (SIA) has published the rules for calculating the number of days of accrued interest using the 30/360 calendar.

A description of an investment approach that analyzes and forecasts trends in the economy as a whole; based on this information, managers select industries and companies within those industries that should benefit from the trends.

Uses all the information available to calculate the return of all projected cash flows from a security over a fixed time period, including cash flow reinvestment.

Arisk statistic that measures the extent to which composite or index returns vary over a designated period of time; calculated by using quarterly composite returns or quarterly index returns in the standard deviation formula; comparing the total volatility of a product's performance to the total volatility of a benchmark provides insight into the product's level of volatility (risk) compared to the benchmark.

A measure of how closely a manager's returns track the return of a benchmark; the annualized standard deviation of the differences between the manager's and the benchmark's quarterly returns.

The day a trade occurs, as opposed to settlement date.

Holding of bonds in inventory by the dealer for purposes of buying or selling.

Tax and Revenue Anticipation Note.

A debt obligation issued by the U.S. Treasury with a maturity of one year or less; because of their short maturities and government guarantee of principal and interest payment, T-bills are safe, highly liquid investments.

Risk is measured using Beta; relates the difference between the portfolio return and the risk-free rate to the portfolio beta for a given time period.

Bank designated as the custodian of funds and official representative of bondholders; appointed to insure compliance with the trust indenture and represents bondholders to enforce their contract with the issuer.

General obligation bonds of smaller units of local government within a given issuer’s jurisdiction.

An agreement to purchase an issuer’s unsold securities at a set price, thereby guaranteeing the issuer proceeds and a fixed borrowing cost.

Mutual fund of a fixed number (20 to 30) of different issues in a portfolio placed in a trust; units or shares are sold in the trust and each unit receives a proportionate amount of the tax-exempt interest earned by the bonds; as the bonds mature or are called, principal is returned to the investor.

A pool of managers with similar investment styles that are grouped together for comparison purposes.

A measure of managers' performance in up markets relative to the market itself; an up market is one in which the market's quarterly return is greater than or equal to zero.

The benefit or suitability of an investment; utility value of an investment is its return less a penalty for risk; a high utility value on an investment implies that the investment has an attractive risk-return profile.

A measure of potential loss.

Bond whose yield is not fixed but is adjusted periodically according to a prescribed formula.

A statistical measure of dispersion around the mean of a distribution.

Variability (standard deviation) of the price, yields or return of a security.

The rate of interest earned on an investment.

The curve that shows the relationship between yields and maturities.

: The yield that discounts the cash flows of a bond, assuming that it is called on a particular call date, to the present value of the bond in the market.

The yield that discounts the cash flows of a bond to the present value of the bond in the market.