Tracking Stock
Tracking stock refers to shares issued by a company, which pay a dividend determined by performance of one particular division in the company.
Tracking stock is often set up by companies divided into divisions, where one or more divisions make distinguished business results. All revenues and expenses of these subsidiary divisions are separated from financial statements of the parent company. However, parent company and its shareholders still control subsidiary divisions. This type of tracking stock is often called "designer stock."
Tracking stock also refers to a security that mirrors performance of a larger index. Examples of these tracking stocks are QQQQ that mirrors the Nasdaq 100 Index and SPDR that mirrors the S&P 500 Index.
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