Glossary

After-tax Return: An investment's return after all income taxes have been deducted.

Annual report: The yearly audited record of a corporation or a mutual fund's condition and performance that is distributed to shareholders.

Assets: Economic resources of an enterprise or person. A mutual fund's assets include cash and securities.

Asset Allocation: An investment strategy that divides an investor's investment dollars among a variety of complimentary asset classes such as bond and stock funds, in an effort to provide an enhanced return in an up market and downside protection in a down market.

Average Annual Total Return: The historical return of a mutual fund. The return is calculated after expenses.

Average Maturity: The average period it takes for securities to reach maturity held by a mutual fund. Funds with longer average maturity can be greatly affected by fluctuations in interest rates.

Basis Point: One basis point is .01 of 1%. 100 basis points equals 1%.

Beneficiary: The person named in a life insurance policy to receive the insurance proceeds upon the death of the insured.

Bond: A security that represents a loan investors make to corporations and/or governments. A bond pays a stated return over a fixed period of time.

Bond Fund: A mutual fund that invests exclusively in bonds.

Capital Appreciation: An investor whose objective is capital appreciation relies on price per share appreciation and not on current income. Such an objective would be appropriate for an investor who has a long-term investment horizon and who is willing to assume a fair degree of risk for a higher return.

Capital Gain: The difference between a security's purchase price and its selling price, when the difference is positive.

Capital Gains Distribution: Payments made to shareholders of mutual funds that represent their proportional share of the net capital gains realized by the sale of securities from the fund's portfolio. These payments are separated from income or dividend distributions for tax reporting purposes.

Capital Loss: The amount by which the proceeds from the sale of a security are less than its purchase price.

Cost Basis: The purchase price of an investment, used to calculate capital gains when the investment is sold.

Custodian: A bank that holds a mutual fund's assets, settles all portfolio trades and collects most of the valuation data required to calculate a fund's net asset value (NAV).

Diversification: Spreading risk by putting assets in several categories of investments -- stocks, bonds, and money market instruments so that any effects of weakening or failure in one area will not be overly serious to the total investment in the portfolio.

Dividend: A mutual fund's payment of profits to its shareholders.

Dollar-cost Averaging: An investment strategy which involves regular investing over time into the same security or mutual fund. A dollar-cost averaging program does not guarantee a profit or protect against loss in a declining market.

Dow Jones Industrial Average (DJIA): A popular index used to measure and report value changes in representative stock groupings. "The Dow" is a price-weighted average of 30 actively traded blue chip stocks primarily of industrial companies.

Equity: The net worth of a business, consisting of capital stocks, capital surplus, earned surplus, and, occasionally, certain net worth reserves.

Equity Fund: A mutual fund that invests primarily in stocks. Also known as a stock fund.

Equity Security: Instrument, such as a stock, that represents an ownership interest in a corporation.

Ex-dividend Date: The date following a mutual fund distribution's record date and prior to the payable date. Investors who purchase shares on or after the ex-dividend date are not entitled to the distribution payment.

Expense Ratio: The ratio between a mutual fund's operating expenses for the year and the average value of its net assets.

Exchange Privilege: The ability to transfer money from one mutual fund to another within the same fund family.

Fixed-income Security: Instrument, such as a bond, that pays a fixed rate of return.

Index: A benchmark against which investment performance is judged.

Individual Retirement Account (IRA): A tax-deferred account to which an eligible individual can make annual contributions to save for retirement up to $4,000 per year ($8,000 for a single-income married couple filing a joint income tax return).

Investment Objective: The goal of a mutual fund and its shareholders, e.g. growth, growth and income, income, and tax-free income.

Liquidity: The ability to have ready access to invested money. Mutual funds are liquid because their shares can be redeemed for current value (which may be more or less than the original cost) on any business day.

Market Value: The price at which a security is bought or sold. The market value is calculated by multiplying the number of shares owned by the most recent share price.

Monthly Dividend Yield: The previous month's dividend, annualized and divided by the current NAV or offering price. (monthly dividend X 12 months/fund's price)

Mutual Fund: A portfolio of stocks, bonds, and/or money market securities that is owned by many investors and managed by a professional investment company.

NASDAQ: National Association of Securities Dealers Automated Quotations system, which is owned and operated by the National Association of Securities Dealers. NASDAQ is a computerized system that provides brokers and dealers with price quotations for securities traded over-the-counter as well as for many New York Stock Exchange listed securities.

Net Asset Value (NAV): The market value of a fund share. NAV is calculated each day by taking the closing market value of all securities owned plus all other assets such as cash, subtracting all liabilities, then dividing the result (total net assets) by the total number of shares outstanding.

Payable Date: The date on which a fund's distribution is paid to shareholders.

Prospectus: Formal written offer to sell securities that sets forth the plan for proposed business enterprise or the facts concerning an existing one that an investor needs to make an informed decision. Prospectuses are used by mutual funds, describing the history, background of managers, fund objectives, a financial statement and other essential information, which should be used and read by potential investors.

Proxy: A shareholder vote on matters that require shareholders' approval.

Record Date: The date on which a shareholder must officially hold fund shares in order to be entitled to a distribution payment.

Redemption: Sale of mutual fund shares by a shareholder.

Reinvestment Option: Refers to an arrangement under which a mutual fund will apply dividends or capital gains distributions for its shareholders toward the purchase of additional shares in the shareholders account.

SEC Yield: A standard yield calculation developed by the Securities and Exchange Commission (SEC) that allows for fairer comparisons among bond funds ? also referred to as the ?current yield.? It is based on the most recent 30-day period covered by the fund?s filings with the SEC. The yield figure reflects the dividends and interest earned during the period after deduction of the fund?s expenses for the period.

Shareholder: Owner of one or more shares of stock in a corporation or one or more shares or units in a mutual fund. A common shareholder is generally entitled to three basic rights of ownership: 1. claim on a share of the company's undivided assets in proportion to the number of shares held, 2. proportionate voting power and 3. dividends when earned and declared.

Simplified Employee Pension Plan (SEP): A retirement plan for small businesses and self-employed individuals.

Standard & Poor 500 Index: Broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks commonly known as the Standard & Poor's 500 or S&P 500.

Systematic Investment Plan: A service option that allows investors to buy mutual fund shares on a regular schedule, usually through bank account deductions.

Total Return: Accounts for distributions and changes in the value of the principal, including share price, assuming the funds' dividends and capital gains are reinvested. Often, this percentage is presented in a specified period of time (one, five, ten years and/or life of fund). Also, a method of calculating an investment's return that takes share price changes and dividends into account.

Yield: The return on an investor's capital investment. With respect to mutual funds, it is the percentage of income that a mutual fund distributes in relation to share price. For example, if a mutual fund distributes $1 per share over a year and has a $10 share price, its yield is 10%.