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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.
Ba lanc ed Fund
A mutual 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.
Bo nd 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.
Ca pi tal App rec 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 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.
Co nfir m Date
The date the fund processed your transaction, typically the same day or the day after your
trade date.
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.
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.
Global Fund
A fund that invests in both Indian. and foreign securities.
Grow th F un d
A mutual fund whose primary investment objective is long-term growth of capital. It invests
principally in common stocks with significant growth potential.
Inco me Divid en d
Payment of interest and dividends earned on the fund's portfolio securities after operating
expenses are deducted.
Inco me F und
A mutual fund that primarily seeks current income rather than growth of capital. It will tend
to invest in stocks and bonds that normally pay high dividends and interest.
Ind ex Fund
A mutual fund that seeks to mirror general stock-market performance by matching its
portfolio to a broad-based index, most often the Standard & Poor's 500-stock index.
Junk Bo nd
A speculative bond rated BB or below by Standard & Poor's Corp. and Ba or below by
Moody's Investor Service. "Junk bonds" are generally issued by corporations of questionable
financial strength or without proven track records. They tend to be more volatile and higher
yielding than bonds with superior quality ratings. "Junk bond funds" emphasize diversified
investments in these low-rated, high-yielding debt issues.
Load
A sales charge or commission assessed by certain mutual funds ("load funds,") to cover their
selling costs. The commission is generally stated as a portion of the fund's offering price,
usually on a sliding scale from one to 8.5%.
Load Fund
A mutual fund that levies a sales charge up to 8.5%, which is included in the offering price of
its shares, and is sold by a broker or salesman. A front-end load is the fee charged when
buying into a fund; a back-end load is the fee charged when getting out of a fund.
Low-Load F und
A mutual fund that charges a small sales commission, usually 3.5% or less, for the purchase of
its shares.
Ma nag em en t Fe e
The amount a mutual fund pays to its investment adviser for services rendered, including
management of the fund's portfolio. In general, this fee ranges from .5% to 1% of the fund's
asset value.
Mo ne y Mark et F und
A mutual fund that aims to pay money market interest rates. This is accomplished by
investing in safe, highly liquid securities, including bank certificates of deposit, commercial
paper, government securities and repurchase agreements. Money Market funds make these
high interest securities available to the average investor seeking immediate income and high
investment safety.
Mutua l Fund
An open-end investment company that buys back or redeems its shares at current net asset
value. Most mutual funds continuously offer new shares to investors.
Ne t A ss et Value Per Shar e
The current market worth of a mutual fund share. Calculated daily by taking the funds total
assets securities, cash and any accrued earnings deducting liabilities, and dividing the
remainder by the number of shares outstanding.
No-Load F un d
A commission-free mutual fund that sells its shares at net asset value, either directly to the
public or through an affiliated distributor, without the addition of a sales charge.
Payabl e Dat e
The date on which distributions are paid to shareholders who do not want to reinvest them.
This date can be anywhere from one week to one month after the Record Date.
Pro sp ec tus
An official document that each investment company must publish, describing the mutual
fund and offering its shares for sale. It contains information required by the Securities and
Exchange Commission.
Re cord Dat e
The date the fund determines who its shareholders are; "shareholders of record" who will
receive the fund's income dividend and/or net capital gains distribution. Frequently the
business day immediately prior to the Ex-Dividend Date.
Re de mp tio n Fe e
A fee charged by a limited number of funds for redeeming, or buying back, fund shares.
Re de mp tio n Pric e
The price at which a mutual fund's shares are redeemed (bought back) by the less expensive
fund. The redemption price is usually equal to the current net asset value per share.
Re inv es tm en t Pr ivi le ge
A service that most mutual funds offer whereby a shareholder's income dividends and capital
gains distributions are automatically reinvested in additional shares.
Sector F und
A fund that operates several specialized industry sector portfolios under one umbrella.
Transfers between the various portfolios can usually be executed by telephone at little or no
cost.
Seri es F un d
A mutual fund whose prospectus allows for more than one portfolio. Portfolios may be
specialized (Sector Fund) or broad (growth stock, along with a money market portfolio).
Management can create additional portfolios as it sees fit.
Shor t Sel li ng
The sale of a security which is not owned by the seller. The "short seller" borrows stock for
delivery to the buyer, and must eventually purchase the security for return to the lender.
Sp ec ial ty Fund
A mutual fund specializing in the securities of a particular industry or group of industries or
special types of securities.
Sy st ema tic Withd rawal Plans
Many mutual funds offer withdrawal programs whereby shareholders receive payments from
their investments. These payments are usually drawn from the fund’s dividend income and
capital gain distributions, if any, and from principal only when necessary.
Un derw ri te r
The organization that acts as the distributor of a mutual fund's shares to broker/dealers and
the public.
Var iabl e An nui ty
A type of insurance contract that guarantees future payments to the holder, or annuitant,
usually at retirement. The annuity's value varies with that of the underlying portfolio
securities, which may include mutual fund shares. All monies held in the annuity accumulate
tax-deferred.
Ze ro Coupon Bo nd
Bond sold at a fraction of its face value. It appreciates gradually, but no periodic interest
payments are made. Earnings accumulate until maturity, when the bond is redeemable at full
face value. Nonetheless, interest is taxable as it accrues. As a result, zero coupon bonds are
often used for IRAs, Keoghs and other tax-deferred retirement plans.