Every term, in plain words.
25 definitions. Each says what the term means and, underneath, the part people get wrong — knowing what return of capital is is not the same as knowing what it does to you.
Adjusted cost base ACB · cost base
What the tax system treats as the amount you paid for a holding — your purchase price plus commissions, adjusted for anything that has happened since.
It moves. Return of capital lowers it every time you are paid, so the figure on your statement the day you bought is almost never the figure that matters when you sell.
Capital gain
The profit when you sell something for more than its adjusted cost base.
Only half is taxable in Canada, which makes it the cheapest kind of investment income for most people at most income levels.
Covered call
An option the fund sells against shares it already owns. The buyer gets the right to buy those shares at a set price; the fund keeps the premium either way, and pays much of it out as distributions.
The premium is not free money. It is sold in exchange for giving up the gains above that set price, so these funds tend to hold up in flat markets and lag badly in strong ones.
Distribution
The cash a fund pays out, usually monthly, expressed per unit. The fund collects income from its holdings and passes it on.
Not the same as a dividend. A distribution is a mix — dividends, capital gains, foreign income and return of capital — and each piece is taxed differently.
DRIP distribution reinvestment plan
An arrangement where distributions automatically buy more units instead of arriving as cash. Those units then pay too, so the position compounds.
A broker DRIP buys whole units only; the remainder stays as cash. Some brokers charge for it.
Eligible dividend
A dividend from a Canadian public company that has already paid full corporate tax. It is grossed up by 38% on your return, then largely offset by the dividend tax credit.
The grossed-up figure counts in your net income, which is what income-tested benefits like Old Age Security are measured against — so $100 can cost you benefits as though it were $138.
Ex-dividend date ex-date
The cutoff that decides who gets paid. You must already own the units before this date; buy on it, or after, and the payment goes to the seller.
The price also opens lower that morning by roughly the distribution. That is not a loss — the fund is about to hand out cash it currently holds.
Foreign withholding tax
Tax the source country takes from a dividend before it reaches the fund. The United States withholds 15% from dividends paid to Canadian holders.
You never see it as a line item and it is not a fee, so it does not show in the management expense ratio. Outside a registered account you can claim it back as a credit; inside a TFSA or RRSP it is simply lost.
Fund of funds
A fund whose holdings are other funds rather than individual companies.
Its published management fee is often 0%, which is true and misleading: it charges nothing directly and you still pay the fees of everything it holds. This site shows the combined figure instead.
Grey list
Funds we hold data on and do not list. Either they have not been through our audit yet, or they exist in our data only so we can resolve what a listed fund actually holds.
Being on it is not a judgement about the fund.
Issuer provider
The company that builds and runs an ETF, sets its fee and publishes what it holds. The legal term in Canada is investment fund manager.
Not a bank, though several are bank-owned, and not a hedge fund.
Leverage
Borrowing inside the fund to hold more than your money alone would buy. A fund at 125% exposure has borrowed 25 cents for every dollar you put in.
It amplifies both directions, and fees are charged on the gross exposure — so a leveraged fund of funds costs more than the weighted fees of its holdings would suggest.
Management fee
The annual charge for running the fund, taken out before anything reaches you, in every market. The most certain number in investing.
Not the whole cost. Trading expenses inside the fund and foreign tax withheld at source both reduce what you receive without appearing here.
Marginal tax rate
The rate you pay on your next dollar of income — not the average rate across everything you earn.
It differs by the kind of income. At the same salary, a dollar of eligible dividends, a dollar of capital gain and a dollar of interest are all taxed at different rates.
Non-cash distribution phantom distribution
A distribution the fund declares, reinvests on your behalf and immediately consolidates away, so your unit count is unchanged and no money arrives. Usually a year-end event.
You may still owe tax on it. In exchange your cost base rises by the same amount — but only if you record it, and people who do not end up paying tax twice on the same dollar.
Overlap
The share of two funds that is the same underlying holdings. Two funds with high overlap are one position bought twice, not diversification.
It can be structural rather than coincidental: a fund of funds may hold another fund you also own directly.
Pay date
The day the cash actually reaches your account — typically one to two weeks after the ex-date.
Being entitled and being paid are separated by a gap, so the first month feels wrong in both directions.
Record date
The day the fund reads its register to see who holds units.
Since Canada moved to one-day settlement in May 2024, it falls on the ex-date, so there is one cutoff in practice rather than two.
Red list
Funds that have been through our audit and failed it, each with the reason written down.
It is a statement about whether we can describe a fund accurately, not a prediction about how it will do.
Return of capital RoC
Part of a distribution that is your own money handed back rather than income earned. Not taxed when you receive it; instead it lowers your adjusted cost base.
The tax is deferred, not cancelled — it returns as a larger capital gain when you sell. And a cost base cannot go below zero: once it reaches zero, further return of capital is an immediate capital gain with nothing sold.
Risk rating
The fund's own published rating, from Low to High, set by a standard method based on how much its value has moved historically.
It measures past volatility, not the chance of a distribution being cut — which is the risk an income investor actually cares about.
T3 slip
The tax slip an ETF issues, breaking the year’s distributions into their taxable components.
ETFs are trusts, so you get a T3 rather than the T5 you may expect — and trusts have until the end of March to issue them, weeks after other slips and a month before the filing deadline.
Total return
What you actually made: the change in price plus every distribution, compounded as though each was reinvested. The only figure that answers whether a holding was worth owning.
A fund can pay a large yield and still have a poor total return, because the payments came out of the unit price. Yield alone cannot tell you which happened.
Unit
One share of an ETF. Distributions are declared per unit, so your income is the rate times how many you hold.
Taking distributions as cash keeps the count flat; reinvesting grows it, which is why the same starting position can end up paying very different amounts.
Yield distribution yield
The last twelve months of distributions actually paid, divided by the current unit price. On this site it is measured, never forecast.
A high yield can mean a generous fund or a falling price, and the arithmetic cannot tell you which. Read it next to total return.
Then see it on real numbers.
Every term above is doing work somewhere in the screener — explore what the funds actually pay, cost and return.