Glossary of Terms

Glossary of Terms

ABS: Asset-backed security - bonds backed by financial assets; typically these assets consist of other than mortgage loans (e.g., credit card receivables, auto loans, home-equity loans, etc.).

ADR: American Depositary Receipt - a negotiable receipt for the shares of a foreign-based corporation held in trust by a financial institution that entitles the shareholder to all dividends and capital gains and is traded in the United States.

ADS: American Depositary Share - a share issued under a deposit agreement representing the underlying ordinary share that trades in the issuer’s home market.

Annualized Return: Rate of return of the account smoothed as though the return occurred equally over 12-month periods. When the specified time frame is less than a year, the rate of return is projected as though the same performance continues to occur for a 12-month period.

Averages: PRICE/ BOOK, PRICE/ EARN and PRICE/ CF averages are asset-weighted harmonic averages; MARKET CAP, LT DEBT/ EQUITY and YLD averages are asset-weighted arithmetic averages; ROE averages are calculated as the ratio of PRICE/ BOOK average to PRICE/EARN average, subject to availability. Note that PRICE/CF is suppressed for the Commercial Banking, Insurance and Thrift and Mortgage Finance industries in both the portfolio and the index calculations for consistency with MSCI’s practices.

Bond: Long-term securities with a maturity of greater than one year.

Book Value: Assets minus liabilities. Also known as shareholders’ equity.

CMBS: Commercial mortgage-backed security - Bonds that are backed by pools of commercial mortgage loans.

CMO: Collateralized mortgage obligation - A multiclass bond backed by a pool of mortgage pass-through securities or mortgage loans.

Coupon: The rate of interest payable annually. Where the coupon is blank, it can indicate that the bond can be a zero-coupon, a new issue, or that it is a variable-rate bond.

Cur Yld: Current Yield -The annualized income from the investment (dividends, interest, etc.) divided by the current market price of the investment.

Current Face: The current monthly remaining principal on a bond. Current face is computed by multiplying the original face value of the security by the current factor.

Duration: The weighted maturity of a fixed-income investment’s cash flows, used in the estimation of the price sensitivity of fixed-income securities for a given change in interest rates.

Enhanced Income Index: 70% Bloomberg Barclays U.S. Aggregate Bond Index, 30% S&P Developed $25 Billion Plus Index with net dividends. The Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based benchmark that measures the investment-grade, U.S. dollar-denominated, fixed-rate taxable bond market. This index is a total return index which reflects the price changes and interest of each bond in the index. The S&P Developed $25 Billion Plus Index measures the performance of developed-market equities that have market capitalizations greater than $25 billion (USD).

Fundamental Information: MARKET CAP, PRICE/ BOOK, PRICE/ EARN, PRICE/ CF, LT DEBT/ EQUITY, ROE and YLD for each security are provided by Bloomberg, L.P., and are generally shown unadjusted. Please note that Bloomberg does not provide negative numbers in the data feed. Index fundamentals are calculated from holdings’ data as provided by the relevant index or by Thomas Reuters Worldscope, excluding negative numbers for consistency. Thus, index fundamentals calculated by Brandes may differ from those computed and published by index providers.

Interest (payment): An amount charged to a borrower by a lender for the use of money, normally expressed in terms of an annual percentage rate of the principal amount.

Intrinsic Value: The actual value of a company or an asset based on an underlying perception of its true value.

Large Cap: Large capitalization - refers to those companies with a market capitalization generally greater than $5 billion (USD).

Lt Debt/Equity: Long-term debt of a corporation divided by the corporation’s common equity.

Margin of Safety (MOS): The difference between the intrinsic value of a stock and its market price.

Maturity: The date when the principal amount of a security becomes due and payable, if not subject to prior call or redemption.

Mkt Cap: Market capitalization - the number of common shares outstanding multiplied by the current market price per common share.

Mortgage-Backed Security: Bonds that are backed by pools of residential mortgage loans.

MSCI EAFE SMID Cap Index: The MSCI EAFE SMID Cap Index captures mid and small cap representation across developed markets countries, excluding the U.S. and Canada.

MSCI World SMID Cap Index: The MSCI World SMID Cap Index captures mid and small cap representation of developed market countries.

ORD: Ordinary - shares of foreign securities traded on their local exchange.

Original Face: The face value or original principal amount of a security on its issue date.

Par: The face value of a bond.

Pass-through: A mortgage-backed security for which the payments on the underlying mortgages are passed from the mortgage holder through the servicing agent (who usually keeps a portion as a fee) to the  security holder.

Price/Book: Price per share divided by book value per share.

Price/CF: Price per share divided by cash flow per share.

Price/Earn: Price per share divided by earnings per share.

Realized Gain/Loss: Profit or loss resulting from the sale or other disposal of a security. Gains and losses are based on first in first out (FIFO) accounting methodology.

Return on Equity (ROE): Net income divided by common equity.

Russell 2500: The Russell 2500 with gross dividends measures the performance of the small- to mid-cap segment of the U.S. equity universe.

Total Return (Cumulative Return): Rate of return of the account over the specified time period.

Total Return: Investment performance measure over a stated time period which includes coupon interest, interest on interest, and any realized and unrealized gains or losses.

Unrealized Gain/Loss: A tentative gain or loss on an investment that has not been realized. A gain or loss becomes realized once the investment is actually sold.

World Balanced Index - BAL INDEX (rebalanced daily): Composed of 70% MSCI World Index with net dividends and 30% U.S. Broad Investment Grade Corporate Bond Index. The MSCI World Index captures large and mid cap representation of developed markets. The U.S. Broad Investment Grade Corporate Bond Index tracks the performance of U.S. dollar-denominated bonds issued in the U.S. investment-grade bond market. Prior to April 1, 2015, the World Balanced index was composed of a 50 percent allocation to each benchmark in the blend. Brandes Investment Partners believes the rebalance of the benchmark’s allocation better represents the Global Balanced strategy’s asset allocation to equities and fixed income.

Yield to Maturity (YTM): The rate of return anticipated on a bond if it is held until the maturity date.

Yield: Yield - annual income from the investment (dividend, interest, etc.) divided by the current market price of the investment.