A {\em square} is a word of the form $uu$. In this paper we prove that for a given finite word $w$, the number of distinct square factors of $w$ is bounded by $|w|-|\Alphabet(w)|+1$, where $|w|$ denotes the length of $w$ and $|\Alphabet(w)|$ denotes the number of distinct letters in $w$. This result answers a conjecture of Fraenkel and Simpson stated in 1998.