advisory services guide (ASG)
Under the Australian financial services (AFS) licensing system this is now called a Financial Services Guide.

annuities (in retirement income stream products)

Australian financial services (AFS) licence
Any person who wishes to carry on a financial services business (such as advising on financial products, dealing in financial products or operating a registered scheme) must hold an Australian financial services licence. ASIC regulates the provision of licences and the conduct of licensees.

assets
The resources owned by a company, fund or person. Assets can be tangible, eg. cash, investments, property and equipment, or intangible, for example goodwill, patents.

asset classes
A broad category of assets, eg shares, cash, property.

beneficiary (in retirement income stream products)

brokerage
A fee charged by a broker to execute a transaction for you, eg buy or sell shares. It is usually calculated as a percentage of the amount you invested.

commutation and non-commutable (in retirement income stream products)

compliance plan
A document lodged with ASIC by a managed investment scheme. It describes the measures that the responsible entity (the operator of the scheme) has put in place to ensure that the scheme operates within the law and the scheme’s constitution.

complying income streams (in retirement income stream products)

constitution
A managed investment scheme’s constitution sets out the rules which apply to the managed investment scheme.

dividend
A dividend on shares is a payment to shareholders by a company. A dividend is part of the profits earned by the company.

dividend imputation
A tax rule under which the tax paid at the company level is credited to individual shareholders. With imputation, if the company has paid company tax, the dividends you receive carry a tax credit which can be offset against your tax liability on the dividends.

eligible termination payment (ETP) (in retirement income stream products)

enforceable undertaking
An enforceable undertaking is an undertaking given to us (and accepted by us) that is enforceable in a court. They are generally accepted by us as an alternative to civil or administrative action where there has been a contravention of the legislation we administer.

financial product
A financial product includes any of the following: interests in a managed investment scheme, derivatives, general insurance, life insurance, superannuation, basic deposit products and retirement savings accounts. For some purposes shares and debentures are also classed as financial products.

financial services guide (FSG)
You must be given an FSG by an Australian financial services (AFS) licence holder or its authorised representative before you receive a financial service. In time critical cases, the services may be provided immediately and the FSG must then be provided within 5 days. The FSG explains the nature of financial services being offered, the fees charged and how the person providing the service deals with customer complaints.

franked dividends
With dividend imputation, if a company pays company tax, the dividends carry a tax credit which can be offset against your tax liability on the dividends. If a company pays the full company tax rate, the dividends are fully franked.

fund manager
A commercial organisation that manages investors’ money for a fee. When the fund is a managed investment scheme, the fund manager is usually the responsible entity.

listed company’s shares
listed company’s sharescan be bought and sold on the Australian Securities Exchange (ASX). A requirement of listing is that the company agrees to abide by the ASX rules.

margin call
If the listed prices of shares or units fall below a level that would cover a lender’s loan to you, then the lender will ask you to contribute the difference.

option
The right to buy or sell shares or securities at a set price and within a set period. The buyer/seller has the right but not the obligation to buy or sell. If the option is not exercised, the buyer/seller forfeits the money paid for the option (the option premium).

oversubscribed
When the value of share applications received in a company float is more than the number available to be issued.

pensions (in retirement income stream products)

personal advice
Financial advice that takes into account your personal objectives, financial situation or needs.

principal
A principal holds a licence and authorises an agent (representative) to act on its behalf. The agent may be an employee or someone external to the licence holder. Only agents external to to the licence holder are called authorised representatives. Employees and authorised representatives are collectively called "representatives".

product disclosure statement (PDS)
The document that the issuer of a financial product must provide to potential investors of the product. It gives information about the issuer, benefits, risks and costs of the product and certain other information.

property trust
A type of collective investment (investors pool their money together and a professional manager operates the scheme) which invests in residential or commercial properties.

prospectus
The document that must usually be issued by a company seeking to raise money from the public. It gives details of the financial and management status of the company.

reasonable benefit limit (RBL) (in retirement income stream products)

responsible entity
A licensed entity or body that operates a managed investment scheme.

retirement income stream products

return
The amount you make on your investment. Often refers to the annual amount you receive, eg a dividend.

reversionary beneficiary (in retirement income stream products)

rights issue
When a company provides existing shareholders the opportunity to buy more shares in the company at a discounted rate and without the need to buy through a broker.

securities
For financial markets these are the many types of financial instruments (that is documents) which are traded in financial markets (except futures contracts). For example, bonds, shares

securities exchange see sharemarket

shares
A share is simply a part-ownership of a company. If, for example, a company has issued a million shares, and you own ten thousand shares in it, then you own one per cent of the company. As a part-owner of a company, you are investing in the management of the company. You should invest in companies you feel confident are well run.

sharemarket
At its most basic, the stock market (or stock exchange) is a market which brings together people who want to buy shares in a company, and those who want to sell their shares. The laws of supply and demand determine the prices buyers and sellers settle on. The companies that use the service provided by the stock market, ie their shares can be bought and sold on the Stock Exchange, are referred to as listed companies.

Although providing a market for the buying and selling of shares in listed companies is the core activity of the Australian Securities Exchange, it also provides a market for a growing number of secondary products derived from shares (called 'derivatives') such as options and warrants. If you want information about these more complex products, we recommend you speak to your stockbroker.

speculative
The speculative deal involves taking a big risk, but deliberately so, in the hope of making an extraordinary gain.

statement of advice (SOA)
When you receive personal advice from an Australian financial services (AFS) licensee or its authorised representative then you will be given an SOA as well as a financial services guide. The SOA records the advice you have been given and explains the basis for the advice.

stock exchange see sharemarket

stockmarket see sharemarket

takeover
When one company acquires shares in another company in order to get a controlling interest in that company. See Takeovers: information for shareholders

trust account
The account where an adviser, solicitor or other professional holds a client’s money on behalf of them. The trust account is usually used to park a client’s money until they decide how they want to invest their money.

unit
When you invest in a managed investment scheme, you hold units in the scheme. The units may fluctuate in value depending on the market performance of the underlying assets of the scheme.

warrant
A certificate giving you the right to buy shares at a stipulated price within a specified time.