Glossary

Face Value

Value of security shown on certificate. Also called par value , which is typically $1,000.

Group of mutual funds managed by the same investment management company. Each fund typically has a different objective; one may be a growth-oriented stock fund, whereas another may be a bond fund or an index fund. Shareholders in one of the funds can usually switch their money into any of the family's other funds, sometimes at no charge.

Refers to the U.S. Central Bank, whose functions include interest rate policy, regulation of banks, and "stabilization" of foreign exchange (FX).

Non-interest-bearing deposits of banks with the Federal Reserve. Banks lend excess reserves out to each other.

Rate at which banks charge each other for lending out excess reserves.

A Federally chartered, privately owned company charged with regulating the S&L industry.

Securities that have a claim on assets.

Investment in financial assets.

Financial institutions that assist the transfer of savings from economic agents with excess savings to those that need capital for investments.

Markets or exchanges where financial assets are traded. The largest two in the U.S. are the NYSE and Nasdaq.

Additional risk borne by shareholders because of a firm's use of debt.

Agreement between a company and its lead investment banker in which the latter is obligated to sell all the shares to be issued.

Uncertainty in returns due to factors specific to the company.

A cost that is fixed for a given period of time. It is not dependent on the amount of goods and services produced during the period. Tangible fixed assets include real estate, plant and equipment. Intangible assets include patents, trademarks, and customer loyalty.

The float is the number of shares of a security that are outstanding and available for trading by the public.

The underwriter's revenue associated with assisting a firm in issuing and marketing new securities.

A publicly owned corporation sponsored by the federal government that provides liquidity in the mortgage market. It buys mortgages from mortgage underwriters financed by issuing bonds.

To be used if the fund's return to shareholders may differ due to capital gains or losses. This footnote applied to money market funds only.

To be used if there are any sales charges or account charges which impact yield. This footnote applies to money market funds only.

Capital gains figure includes return of capital.

To be used on any day that a mutual fund's net asset value is reduced by a capital gains distribution.

To be used by any type of fund that reports quotations as of the day prior to the day of reporting.

To be used if the fund's capital gains figure includes short-term gains.

To be used by mutual funds when the fund does not have a sales load, i.e. there is no front-end and no contingent deferred sales load.

To be used by mutual funds if the fund has adopted a rule 12(b)1 distribution plan under which a specific charge is made against the net assets of the fund.

To be used by mutual funds with redemption fees, contingent deferred sales charges, or other charges deducted from net asset value upon redemption other than charges for special services such as wire transfer).

To be used on the ex-date for stock splits or stock dividends.

To be used if the fund began reporting prices to Nasdaq during the current year.

To be used by mutual funds on any day a fund goes ex-dividend.

A non-U.S. company with securities trading on Nasdaq.

The value of a firm based on the cash flow available for distributing to any of the providers of long-term capital to the firm. The free cash flows equal operating cash flow less any incremental investments made to support a firm's future growth.

Refers to situations when a manager who has private information about the direction of movement of an asset takes a private position in the asset before purchasing it for the fund.

Brokers who provide services in addition to assisting in buying and selling of securities in the secondary market. Services can include providing company profiles and investment strategy recommendations.

Mutual fund "supermarkets," the likes of Charles Schwab and Fidelity Investments, are financial services companies that "sponsor" mutual funds, i.e., they provide investors with easy access to a broad range of mutual funds.

This is an agreement that allows an investor to buy or sell a commodity, like gold or wheat, or a financial instrument, like a currency, at some time in future. A future is part of a class of securities called derivatives, so named because such securities derive their value from the worth of an underlying asset. These contracts trade on organized futures exchanges.

Traded contracts specifying a future date of delivery or receipt of a specific product or asset. The assets include agricultural products like, pork bellies and oranges; metal; and financial instruments and indices. They are used by firms to hedge against potentially unfavorable price changes, and by speculators who hope to benefit from betting on the direction or magnitude of change.

Where futures contracts are traded.