This glossary of terms is provided as an aid to understanding the terms most widely used. Definitions are not legal interpretations.

Annual Report

An annual report is a comprehensive report on a company's activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company’s activities and financial performance.


Involves a purchase in one market and a sale in a different market to capitalise on what appear to be temporary distortions in price. The term is also used to refer to any trading between markets aimed at profiting from price discrepancies.

Asset Allocation

Selecting an weighting assets in and investment portfolio.


One who expects a decline in prices (the opposite of "bull").

Bear market

Any market in which prices are on a declining trend.

Bearish and bullish

When conditions suggest lower prices a bearish situation is said to exist. If higher prices appear warranted, the situation is said to be bullish.

Best Bid

The best bid is effectively the highest price that an investor is willing to pay for a security.

Best Offer

The best offer is effectively the price at which the investor is willing to sell for a security.


The measurement of how changes to a selected share price correlate to the overall movements in the share market as a whole.

Bid-ask spread

The difference between the bid (to buy) and offer (to sell) prices.


An offer of free additional shares to existing shareholders.


The fee or commission charged by a stockbroking firm for the buying or selling of shares.


One who expects a rise in prices. (the opposite of "bear").

Bull market

Any market in which prices are on an increasing trend.

Buy Back

When a company decides to repurchase a portion of existing shares to reduce the number of shares issuable.

Capital Gain

The profit made from the sale of a security, specifically the difference between the sale price of the security and the initial cost of the investment.

Capital Loss

The loss suffered from the sale of a security, this occurs when the security is sold at a lower sale price than the initial cost of the investment.

Capital Reconstruction

The act of putting a company into voluntary liquidation and then selling its assets to another company with the same name and same shareholders, but with a larger capital base.


The actual movement of the share price.

Close out

To liquidate a position or fulfill an obligation by taking an equal and opposite position.

Corporate Action

The process undertaken by an entity for the purpose of giving an entitlement to holders of a class of the entity's securities. These processes include bonus issues, rights issues, dividends/other payments, or offers that are classed under a buy-back scheme.


Cum-dividend essentially means 'with-dividend', as shares quoted cum dividend entitle a buyer to the current dividend on offer. The price of the shares normally reflect the monetary value of the dividend. Ex-dividend is the opposite to cum-dividend.


The removal of a listed security from the exchange on which it trades. Maybe voluntarily or involuntarily, due to not being in compliance with the listing requirements of the exchange.


Spreading investment over multiple products or securities. Diversification usually reduces portfolio risk because the returns on various asset classes are not perfectly correlated.


Part of a company's profits paid to shareholders as a reward for their investment in the company. Usually expressed as a number of cents per share held.

Distribution Reinvestment Plan

Where investors elect to use their dividend and/or capital gain distributions to purchase additional units in the fund rather than receive the money.

Earnings Per Share (EPS)

The measurement of shareholder earnings for each equivalent ordinary share, usually over a twelve month period. This measurement is calculated by dividing the selected company's earnings by the total number of shares on issue.


Essentially equities are shares. They therefore represent a part-ownership of a chosen company, as distinct from debt securities including debentures and bonds.

Exchange Traded Fund

An exchange traded fund (ETF) is a fund that trades like a single security. It is a fund comprised of baskets of securities that reflect the composition of a sharemarket index. The ETF's value is based on the net asset value of the underlying stocks that it represents.


Used to indicate that the buyer is not entitled to participate in whatever forthcoming corporate action is specified.


An ex-dividend is when shares, even though recently sold, still entitle the seller to retain the current dividend from a company. Shares are normally quoted ex-dividend four business days before a company's book closes.


Making an investment to reduce the risk of adverse price movements in an asset.


A statistical construction that measures relative or absolute price changes and/or returns for a given group of securities.

The purpose of an index calculation is usually to provide a single number which represents the movements of a variety of prices or rates and is indicative of the behaviour in a market.

Index Fund

A fund designed to track the performance of a market index.

Index Tracking

A reference to the correlation between a portfolio's return and the return on a benchmark index, or, alternatively, to the portfolio's tracking error relative to the index.

Index-Tracking Fund

A fund that invests in the same securities as those that make up an index in the same proportions. For example, the allocation of SmartMIDZ mirrors that of the NZX MidCap Index.

Initial Public Offering (IPO)

The first sale of stock by a company to the public.

Last Traded Price

The last price represents the most recently traded price (i.e. the price at which the last trade occurred).


A characteristic of a market. In a liquid market, you should be able to buy and sell securities quickly easily without the trades having an undue effect on the share price. This is because there is a high level of trading activity in liquid markets.

Listed Company

Company which has agreed to abide by NZX Listing Rules so that its securities can be bought and sold on NZX.

Listing Rules

These are the rules the guide the procedures and behaviour of all entities listed on NZX.


A trader who has bought or who holds a position that will benefit from increasing prices.

Market Capitalisation

The value placed on a company by the market. It is the number of shares on issue multiplied by the market share price.

NZX 50 Index

The NZX 50 Index (NZ50) is the main stock market index in New Zealand. It comprises the 50 biggest stocks by free-float market capitalisation trading on the New Zealand Stock Market (NZSX). The calculation of the free-float capitalisation excludes blocks of shares greater than 20% and blocks between 5% and 20% that are considered strategic.

Payment Date

The date when the corporate action will be distributed.


A collection of securities and/or other financial instruments under common ownership and management.


An interest in the market in the form of open contracts which have not been liquidated.

Record Date

The date when the Share Registry reviews which shareholders are entitled to benefits, e.g. a dividend.

Rights Issue

This is a privilege given to shareholders to buy additional shares in a company in which they have already invested.

Secondary Market

The financial market in which previously issued shares are bought and sold. Also known as the aftermarket.

Share Registry

An external organisation which records changes in share ownership. Additionally they may issue share holding statements and make adjustments for dividend payments, bonus and rights issues.


One of the equal parts of which a company's capital is divided into. A share entitles the holder to a proportion of the companies profits.


Another term used for share or equities. Additionally also describing the inventories held by a business.

Stock Exchange

The market on which stocks/shares/equities are traded.


A stoppage in the trading of a security for an extended period of time that normally occurs when there is a lack of material financial information on the security.

Tick Size

The minimum price movement that can occur for a security.

Trading Halt

A temporary suspension in trading of a security usually in anticipation of a price-sensitive news announcement.


The return on an investment compared to either the original investment amount or, more commonly, the current market value of the investment. Yield is quoted on an annualised basis.