DSC (deferred sales charge)

A fee charged when you sell DSC-class fund shares. Also known as a back-end load, these deferred charges typically decrease each year a fund is held, until eventually they reach zero. Deferred sales charges give investors an option to avoid sales charges altogether if the fund is held for several years.

Derivatives

Derivatives are investments that are "derived" from something else. For example, options are derivatives because the option has an underlying stock, commodity or other asset on which its price is based. Futures, forwards and options are the most common types of derivatives, which are used to generate returns and/or hedge away certain risks.

Directional trading

Directional trading involves taking long or short positions on the belief that profits can be made by correctly predicting the direction of price movements in a security.

Distressed securities

A financial instrument in a company that is near or currently going through bankruptcy. This usually results from a company’s inability to meet its financial obligations. As a result, these financial instruments have suffered a substantial reduction in value.

Diversification

A risk management technique that makes a wide variety of instruments within a portfolio. The rationale behind this technique contends that portfolios of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment within the portfolio. Diversification is the basic premise behind Modern Portfolio Theory.

Dow Jones Industrial Average (DJIA)

A price-weighted average of 30 actively traded blue-chip stocks, primarily industrials including, stocks that trade on the New York Stock Exchange and Nasdaq. The Dow, as it is called, is a barometer of how shares of the largest U.S. companies are performing.

Downside standard deviation

Also known as semi-variance or semi-deviation, downside standard deviation is similar to standard deviation except that it only considers returns below a defined target. The target can be a constant (example 1%), a series (equity benchmark or index) or the investment's own mean return.

Drawdown

A drawdown refers to any peak-to-trough decline during a specific record period of an investment, fund or commodity, and is usually quoted as the percentage between the peak and the trough.

Due diligence

The process of research and analysis, performed by perspective investors, into the details of a potential investment prior to making an investment decision; such as the analysis of a company’s business operations and management, and the verification of material facts.