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Glossar1

Glossar1

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Gl os s ar y

Adv iso r
The organization employed by a mutual fund to give professional advice on the fund's
investments and to supervise the management of its assets.

Asked or Off ering Pric e

The price at which a mutual fund's shares can be purchased. The asked or offering price means the current net asset value (NAV) per share plus sales charge, if any. For a no-load fund, the asked price is the same as the NAV.

Ass et Al locat ion Fund

a fund that spreads its portfolio among a wide variety of investments, including domestic and
foreign stocks and bonds, government securities, gold bullion and real estate stocks. This gives
small investors far more diversification than they could get allocating money on their
own. Some of these funds keep the proportions allocated between different sectors relatively
constant, while others alter the mix as market conditions change.

Auto mat ic Re inve st me nt
A service offered by most mutual funds whereby income dividends and capital gain
distributions are automatically invested into the fund by buying additional shares and thus
building up holdings through the effects of compounding.

Balanc ed Fund
Amutual fund that maintains a balanced portfolio, generally 60% bonds or preferred stocks
and 40% common stocks.
Bid or Se ll Pric e

The price at which a mutual fund's shares are redeemed (bought back) by the fund. The bid or redemption price means the current net asset value per share, less any redemption fee or back-end load.

Bo nd Fund
A mutual fund whose portfolio consists primarily of corporate, municipal or U.S. Government
bonds. These funds generally emphasize income rather than growth.
Bond Rati ng

System of evaluating the probability of whether a bond issuer will default. Standard and
Poor's Corp. and Moody's Investors Services, among other firms, analyze the financial
stability of both corporate and government bond issuers. Ratings range from AAA or Aaa
(extremely unlikely to default) to D (currently in default). Bonds rated BBB or below by S&P
or Baa or below by Moody's are not considered to be of investment grade. Mutual funds
generally restrict their bond purchases to issues of certain quality ratings, which are specified
in their prospectuses.

Capital Apprec iat ion Fund

A mutual fund that seeks maximum capital appreciation through the use of investment
techniques involving greater than ordinary risk, such as borrowing money in order to provide
leverage, short-selling and high portfolio turnover.

Ca pi tal Gai ns Dis tribut ion s
Payments (usually annually) to mutual fund shareholders of gains realized on the sale of
portfolio securities.
Capital Grow th
A rise in market value of a mutual fund's securities, reflected in its net asset value per share.
This is a specific long-term objective of many mutual funds.
Certificat e of Dep osit
I nterest-bearing, short-term debt instrument issued by banks and thrifts.
C los ed- End Inv es tm en t Co mpa ny

An investment company that offers a limited number of shares. They are traded in the
securities markets, usually through brokers. Price is determined by supply and demand.
Unlike open-end investment companies (mutual funds), closed-end funds do not redeem their
shares.

Comme rcial Pap er
Short-term, unsecured promissory notes with maturities no longer than 270 days. They are
issued by corporations, in denominations starting at $10,000, to fund short-term credit needs.
Common Stock Fund
An open-end investment company whose holdings consist mainly of common stocks and
usually emphasize growth.

Co nfir m Date
The date the fund processed your transaction, typically the same day or the day after your
trade date.

Co nt ing en t Def er red Sale s Char ge (CDSC)

A fee (or back-end load) imposed by certain funds on shares redeemed within a specific
period following their purchase. These charges are usually assessed on a sliding scale, such as
four percent to one percent of the amounts redeemed, with the fee reduced each year the
units are held.

Cus tod ian
The bank or trust company that maintains a mutual fund's assets, including its portfolio of
securities or some record of them. Provides safekeeping of securities but has no role in
portfolio management.

Dai ly Divi de nd Fund
This term applies to funds that declare their income dividends on a daily basis and reinvest or
distribute monthly.

Def er re d Comp en sa tio n Plan
A tax-sheltered investment plan to which employees of state and local governments can defer
a percentage of their salary.
Di st ributor
An individual or a corporation serving as principal underwriter of a mutual fund's shares,
buying shares directly from the fund, and reselling them to other investors.

Div er sif icat ion
The policy of spreading investments among a range of different securities to reduce the risks
inherent in investing.

Rup ee- Cos t Ave ragi ng
The technique of investing a fixed sum at regular intervals regardless of stock market
movements. This reduces average share costs to the investor, who acquires more shares in
periods of lower securities prices and fewer shares in periods of high prices. In this way,
investing risk is spread over time.

Exchan ge Priv il eg e (O r swi tchi ng priv il eg e)
The right to transfer investments from one fund into another, generally within the same fund
group, at nominal cost.
Ex-Div ide nd Dat e

The date on which a fund's Net Asset Value (NAV) will fall by an amount equal to the
dividend and/or capital gains distribution (although market movements may alter the fund's
closing NAV somewhat). Most publications which list closing NAVs place an "X" after a fund\u2019
name on its ex-dividend date.

Ex pe ns e Rat io

The ratio of total expenses to net assets of the fund. Expenses include management fees,
12(b)1 charges, if any, the cost of shareholder mailings and other administrative expenses.
The ratio is listed in a fund's prospectus. Expense ratios may be a function of a fund's size
rather than of its success in controlling expenses.

Fan ni e Mae (Fed era l Mor tga ge A sso cia tion )
An agency established by the federal government, but owned by private stockholders, which
issues mortgage-backed certificates in $25,000 denominations. Timely payment of both
interest and principal are insured. A growing number of mutual funds emphasize investments
in these and other mortgage-backed securities.

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