EAFE Index

European, Australia, and Far East index computed and published by Morgan Stanley Capital International. (MSCI)

Efficient Market

A market theory that dissuades investors from using fundamental research to find undervalued or mis-priced securities. The central idea is that market prices already reflect the full knowledge of investors, which makes it impossible to outperform the market.

Emerging Market

Refers to the financial market or economy of a developing nation, which is often new or has a short history.

Enhanced

A fund designed around an index but not tracking it verbatim. Often enhanced funds bet extra heavily on an index or bet against an index by selling it short.

Exchange-traded fund (ETF)

The broad class of funds, excluding closed-end funds, which trade throughout the day over an exchange. ETFs have low annual expenses, but you must pay commissions to trade them. ETFs do not redeem shares for cash, and thus do not need to sell securities (possibly realizing capital gains) to pay investors who redeem their shares. They are typically more tax-efficient than mutual funds. Unlike closed-end funds, ETFs market prices usually closely track their NAVs. Most ETFs are index funds.

Ex-dividend date

The date of ownership to receive a dividend payment. When a company announces it will pay a dividend, investors are required to be shareholders of the stock by a certain date of record to receive the dividend. It's after this date of record that the stock is said to be ex-dividend.

Expense ratio

The annual fee that all funds or ETFs charge their shareholders, expressed as a percentage of the fund's average daily net assets. This ratio includes such items as the management fee, trustee's fee, license fee, and 12b-1 fee, among others. It does not include the commissions you must pay to buy and sell ETF shares, or the costs incurred by the fund in trading its securities. HOLDRs do not express their fees as expense ratios, but instead charge a flat quarterly fee per 100 shares.