Glossary: A-D E-K L-O P-R S-Z

Advisor: The organization employed by a mutual fund to give professional advice on the fund's investments and asset management practices.

Aggressive Growth Funds: Seek maximum capital gains, often by investing in shares of companies with earnings and profits that grow at a rapid rate. Degree of investment risk: high.

Algorithm: Prescribed set of mathematical steps which is used to solve a problem or conduct an operation.

Alternative Minimum Tax (AMT): A minimum tax imposed on taxpayers who itemize deductions, such as interest, medical expenses, state taxes, miscellaneous deductions and passive activity losses, or who earn certain types of income. These deductions are added back into your income and the result is taxed at a flat rate of either 26% or 28%. You would pay the higher of either your regular tax or this alternative minimum tax. If you think you may be subject to AMT, you should consult your tax advisor.

American National Standards Institute (ANSI): A standard-setting, non-governmental organization, which develops and publishes standards for "voluntary" use in the United States. Standards set by national organizations are accepted by vendors in that country.

American Standard Code for Information Interchange (ASCII): The most popular coding method used by small computers for converting letters, numbers, punctuation and control codes into digital form. Once defined, ASCII characters can be recognized and understood by other computers and by communications devices. ASCII represents characters, numbers, punctuation marks or signals in seven on-off bits. A capital "C", for example, is 1000011 while a "3" is 0110011.

Application Program Interface (API): Generic term for any language and format used by one program to help it communicate with another program. Specifically, an imaging vendor can provide an API that enables programmers to repackage or recombine parts of the vendor’s imaging system, or integrate the imaging systems with other applications, or to customize the user interface to the imaging system.

Architecture: Refers to the way a system is designed and how the components are connected with each other. There are computer architectures, network architectures and software architectures.

Archive: A copy of data on disks, CD-ROM, magnetic tape, etc., for long term storage and later possible access. Archived files are often compressed to save storage space.

Asset Allocation: Investment strategy whereby investors diversify assets among stocks, bonds and money market investments. Purpose: to reduce investment risk.

Automated Clearinghouse (ACH): The electronic funds transfer network that enables you to make a direct transfer of money from your bank account to your mutual fund, provided your bank participates in the ACH.

Automatic Reinvestment Plan: An option whereby a shareholder, instead of receiving cash payments, elects to have all income and capital gains distributions from an account used to purchase additional fund shares. Even though reinvested, the distributions may be tax-reportable events. Average

Annual Total Return: How much an investment has grown over a specified period of time. It's calculated by measuring the sum of all dividends and capital gains and is expressed as a percentage of the Fund's average net assets. This return assumes reinvestment of all distributions as well as the change in the price of the Fund's shares.

Backbone: The part of the communications network which carries the heaviest traffic. The backbone is also that part of a network which joins Internets together—either inside of a building or across a city or the country. Internets are connected to the backbone via bridges and/or routers and the backbone serves as a communications highway for Internet traffic.

Back-End Load: A sales charge levied at the time of redemption. It declines annually to zero over an extended holding period, as described in the prospectus.

Backup: A duplicate copy of data placed in a separate, safe "place"— electronic storage, on a tape, on a disk in a vault—to guard against total loss in the event the original data somehow becomes inaccessible. Generally for short-term safety.

Backup Withholding: Withholding and paying the IRS 31% or 30.5% of certain payments made to you, including payments from distributions and redemption proceeds. Certain payments you received will be subject to backup withholding if: The backup withholding rate is 31%, prior to August 7, 2001. As of August 7, 2001, the withholding rate is 30.5%. Backup withholding is claimed when filing your tax return and will either increase the amount of your tax refund or decrease the amount of additional tax you may owe.

Balanced Funds: Seek both growth and income through a portfolio that includes stocks and bonds. Degree of investment risk: moderate.

Bank of Record: Bank designated by the shareholder to which redemptions from the account can be wired or mailed.

Baud: Unit of transmission speed equal to the number of signal events per second. In asynchronous transmission, the unit of signaling speed corresponding to 1 unit interval per second; that is, if the duration of the unit interval is 20 milliseconds, the signaling speed is 50 baud. Technically baud is the same as "bits per second" when, and only when, each signal event represents exactly 1 bit (which is rarely true), but in casual, non-technical usage, baud is often misused to mean bits per second.

Bid Price: The price at which shares of a mutual fund are redeemed by the fund, usually the fund's net asset value per share. This amount may be reduced by a contingent deferred sales charge. Also called the redemption price.

Bear Market: A prolonged period of falling stock prices.

Blue Chip Stocks: Stocks of financially stable, well-established companies that have historically demonstrated their ability to pay dividends in both good and bad times. Degree of investment risk: moderate.

Bond: A security representing debt owed by companies to investors which pays a stated rate of interest and returns the face value to the investor on the maturity date.

Bond Funds: Invest in debt securities issued by corporations or governments. Typically pays monthly dividends. Degree of investment risk: moderate to low.

Bond Rating: An evaluation of the financial strength of a bond issuer. Ratings range from AAA (highly unlikely to default) to D (in default). Standard & Poor's and Moody's Investor Service are examples of two rating services.

Bull Market: A prolonged period of rising stock market prices.

Bug: An error in a computer program causing it to fail unexpectedly.

Business Process Automation: The use of computer-based information technology (specifically workflow technology) to automate the steps in a business process, coordinate the assignment and distribution of work items and information among individuals, and manage the completion of tasks, activities and ultimately business processes.

Business Process Redesign (BPR): The review, evaluation and redefinition of the tasks and activities that comprise a business process. The objective of BPR is to develop more efficient business processes.

Business Process Reeingineering (BPR): The radical restructuring of the business processes, organizational boundaries, and management systems of an organization. Business process redesign and business process automation are components of BPR.

Byte: Eight bits of data grouped together to represent a character or some other computing data.

Capital Gain or Loss: Net profits or losses from the sale of securities in the portfolio.
Capital Gain Distributions:
A taxable distribution paid to shareholders when any investments in their mutual fund's portfolio are sold at a profit. Realized Capital Gains are when stock or bond holdings are sold at a profit. Unrealized Capital Gains represent an increase in the market value of a mutual fund.
Certificate of Deposit (CD):
Short-term investments issued by banks that pay fixed principal and interest over a specified period of time. Unlike mutual funds, CDs are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $100,000. CDs are subject to fluctuating rollover rates and early withdrawal penalties.
 Certified Financial Planner:
Person who has passed examinations accredited by the Denver-based Institute of Certified Financial Planners, testing the ability to coordinate a client's banking, estate, insurance, investment, and tax affairs. (See Financial Planner.)
Class A, B and C Shares:
A way of providing multiple purchase options to investors. Class A shares of a mutual fund typically require payment of a sales charge at the time of purchase (front end). Class B shares typically require payment of a contingent deferred sales charge at time of redemption (back end). Class C shares typically impose 12b-1 and service fees in lieu of either front-end or back-end sales charges. Many  funds offer both Class A, Class B and Class C shares.
Client/Server: The relationship between machines in a communications network. The client is the requesting machine, the server the supplying machine. Also used to describe the information management relationship between software components in a processing system.
Compensation:
Includes salaries, wages, tips, commissions, bonuses, alimony, royalties from creative efforts and “earned income” in the case of a self-employed individual.
Compounding:
Interest, dividends or capital gains accrued on both an original investment and its reinvested earnings. When earnings are reinvested, you buy additional shares, which, in turn purchase even more shares. Confirm:
An acknowledgment sent to a mutual fund shareholder after each account transaction (purchase, sale, etc.) that reflects the details of that transaction.
 Consumer Price Index (CPI):
Commonly used as a measure of inflation, the CPI is the monthly change in consumer prices (e.g., housing costs, food, transportation and utilities) determined by the U.S. Bureau of Labor Statistics.
 Cumulative Total Return:
Measures the total rise in the value of a fund's shares over time and assumes dividends and capital gains distributions were reinvested.
CUSIP Numbers:
Identification numbers and codes assigned to securities for trading purposes. CUSIP stands for the Committee on Uniform Securities Identification Procedures.
Custodian:
A bank or other financial institution that maintains custody of retirement plan assets held in a mutual fund.
Return to Top
 
D
Database: Data that has been organized and structured in a disciplined fashion, so that access to information of interest is as quick as possible. Database management programs form the foundation for most document storage indexing systems.
Database Management System (DBMS): Set of programs designed to organize, store and retrieve machine-readable information from a computer-maintained database or data bank.
Desktop: Slang for any computer function that can be done on a standalone PC, rather than a larger, more powerful, computer.

Direct Rollover:
The direct payment of an eligible rollover distribution from a qualified plan (for example, a lump-sum distribution from a 401(k) or 403(b) plan) to the participant’s IRA or another qualified plan that accepts rollovers. By taking a direct rollover rather than a conventional rollover, the participant can avoid mandatory 20% withholding on the distribution from the qualified plan, since the participant did not take custody of the assets.
Distribution:
1. Payment from a mutual fund including dividends, short-term capital gains, long-term capital gains, tax-exempt dividends and return of capital.
2. The proceeds from the sale of shares from your account.
Diversification:
Investment strategy of spreading investments among a wide variety of securities, thus reducing the impact of any one security on overall portfolio performance.
Dividends:
A distribution of earnings from a fund to its shareholders paid in the form of cash or additional shares of the fund. Dividend Yield:
The annual rate of return on a common or preferred stock investment.
Document: A collection of data, organized into some logical order andpresented on paper.
 
 Dollar-Cost Averaging:
Regularly investing the same amount of money at fixed time intervals in both up and down markets. Rationale: over time, you'll buy fewer shares when the price is up but more shares when the price is down. This plan does not assure profits or protect against losses in declining markets. Investors should consider their ability to invest over the long term, which could include periods of low share prices.
Return to Top
E
Electronic Data Interchange (EDI): An electronic communications standard which connects business trading partners for conducting contract negotiations, sales, invoicing and collections.
Electronic forms: Graphics that are merged electronically with data. Can be as simple as a election form, or a logo.
Electronic mail (email) A means of connecting computers in order to send messages to one or more individuals or groups.

Equity-Income Funds:
Invests primarily in stocks of companies with stable dividend-paying records. Degree of investment risk: moderate. Exchange Privilege:
Enables mutual fund shareholders to transfer their investment from one fund to another within the same fund family. Ex-Dividend Date:
The first day buyers of a security are not entitled to receive distributions previously declared, usually four business days before the record date.
Return to Top
F

Fair Market Value:
The value of your account as of December 31, 2001 (the last business day of the year) as shown on your year-end statement and Form 5498 (if applicable). The fair market value is calculated by multiplying the number of shares in your fund (s) by the net asset value (s).
Fault tolerant components:Fault tolerance implies that if any component of the subsystem fails, the unit will remain operational.
Federal Deposit Insurance Corporation (FDIC):
The government agency that provides deposit insurance for member banks and insures certificates of deposit (CDs) and passbook deposits for up to $100,000.
Fiduciary:
A person legally appointed and authorized to hold and manage assets in trust for another person.
File: All the data that describes one document or image, maintained under a single naming code and stored in a computer or in a storage medium.
File server:  Local Area Network (LANs) were invented to allow users on the LAN to share and thereby conserve the cost of peripherals (printers, modems, scanners) and to likewise share software. The file server is the machine on the LAN where the shared software is stored.
Financial Advisor:
A licensed professional who can help with a variety of issues such as retirement planning, investing and, if qualified to do so, insurance. Click here to learn more about Choosing a Financial Advisor. See also Certified Financial Planner.
Financial Planner:
A professional who analyzes personal financial circumstances and prepares a program to meet financial needs and objectives. May or may not be certified by the Institute of Certified Financial Planners. See Certified Financial Planner. Fiscal Year-End:
The time when a corporation closes its books and determines a profit or loss.
Fixed-Income Security:
A security that pays a fixed rate of return, such as a bond or note. Degree of investment risk: moderate to low. Foreign Tax Credit:
Many funds invest in securities of foreign companies and pay taxes in those countries. If a fund has more than 50% of its assets invested in foreign securities at fiscal year-end, it may pass a foreign tax credit through to shareholders. This credit may be used to offset the amount of tax due on a shareholder’s federal income tax return. Shareholders have the option of taking the foreign tax credit or deduction. However, holding-period rules may apply to receive this benefit. If you have any questions about claiming a foreign tax credit or deduction, please consult a tax advisor.401(k) Plan:
Employer-sponsored, qualified plan that permits employees to make pretax contributions from their salaries. Contributions and earnings grow tax deferred until withdrawn. Withdrawals are taxed at your income tax rate. 403(b) Plan:
A pre-tax salary deferral plan for employees of nonprofit organizations, public schools and churches. Employees can contribute a portion of their salary into a mutual fund or an annuity, and contributions and earnings grow tax-deferred until withdrawn when they're taxed at your income tax rate.
 Front-End Load:
A sales charge levied at the time of purchase. (see Class A, B and C Shares)
Return to Top
G

Global Funds:
Invest primarily in securities of both U.S. and foreign companies. Degree of investment risk: high.
Graphical User Interface (GUI): Computer control system that allows the user to command the computer by "pointing-and-clicking," usually with a mouse, to pictures or "icons," rather than typing in commands.
 Growth and Income Funds:
Invest primarily in common stocks of companies with long track records and have both the potential for higher share value and a solid record of paying dividends. Degree of investment risk: moderate.
Growth Funds:
Invest in equity securities of companies expected to increase in value more rapidly than the overall market. Degree of investment risk: high.       

H

There are no glossary entries for this letter.
Return to Top
I

Income Funds:
Seek a high level of monthly income with relative stability of principal. Degree of investment risk: moderate to low.
Index:
A hypothetical investment portfolio, the returns of which are used as a benchmark to measure relative market performance. An investment cannot be made directly in an index.
Individual Retirement Account (IRA):
A retirement investing tool for employed individuals that allows an annual contribution of 100% of earned income up to a maximum of $2,000. (Nonworking spouses may also contribute up to $2,000.) Some or all of the contribution may be deductible from current taxes, depending on the individual's adjusted gross income and coverage by employee-sponsored qualified retirement plans.
Inflation:
Rise in the price of goods and services that results from spending increases relative to the supply of goods. The Consumer Price Index (CPI) is commonly used as a measure of inflation.
Initial Public Offering (IPO):
A corporation's first sale of common stock to the public.
Interface: An interface is simply a mechanism for different pieces of software to interact. For instance, application programming interfaces (APIs) are provided with operating systems to access system-level services from programming languages; database management systems to access SQL database services; and any number of other types of applications and system software.
International Funds:
Invest in stocks of companies located outside the U.S. Degree of investment risk: high.
Investment Adviser:
Any person who makes investment recommendations in return for a flat fee or percentage of assets managed.
Investment Company:
A company engaged in the business of pooling investors' money and trading in securities for them. The best-known investment companies are mutual funds.
Investment Representative:
See Financial Advisor.
Return to Top
J
There are no glossary entries for this letter
Return to Top
K

There are no glossary entries for this letter.
L Return to Top

 
Local Area Network (LAN): Data communication network of connected devices within a small area, such as a building or group of buildings. High-speed transmissions over twisted pair, coax, or fiber optic cables that connect terminals, personal computers, mainframe computers, and peripherals together at distances of about 1 mile or less.
Long-Term Capital Gain:
Net profit from the sale of securities realized in the fund. A long-term capital gain (or loss) occurs when securities held for more than one year are sold.
Long-Term Gain or Loss:
Gain or loss on the sale or exchange of an asset held for more than 12 months. Lump-Sum Distribution:
The entire amount in an employer's retirement plan that is paid out within one tax year due to termination of employment, retirement or disability. (See Rollover.)                                                                                            Return to Top
 
M

Management Fee:
The fee a fund pays to the investment advisor. This fee, expressed as a percentage of the fund's average net assets, is disclosed in the prospectus.
 Market Capitalization:
The total value of a company's outstanding stock. Market capitalization is used to measure corporate size and is calculated by multiplying the number of outstanding shares by the current market price of the stock.
Market Timing:
An often perilous investment practice based on predicting market cycles. The aim is to anticipate the market trend by buying before share prices go up and selling before prices go down.
Modem: Device that allows digital signals to be transmitted and received over analog telephone lines. Short for modulator-demodulator.
Money Market Funds:
Invest in short-term securities, such as Treasury bills and commercial paper. Degree of investment risk: low.
Municipal Bond Funds:
Invest in bonds issued by local governments–such as cities, counties and states–that use the money for public projects like building schools, highways or libraries. Degree of investment risk: moderate to low.
Mutual Fund:
A professionally managed, diversified investment that enables you to pool your money with other investors. A diversified investment such as a mutual fund may make you less vulnerable to a major decline in any one market or sector than ownership of a single security.
Return to Top
N

National Association of Securities Dealers (NASD):
The self-regulatory organization with authority over firms that distribute mutual funds and other securities.
Net Asset Value (NAV):
It is the dollar value of a single mutual fund share, which is based on the value of the fund's underlying assets, minus its liabilities, and then divided by the number of outstanding shares. NAVs are calculated at the end of each business day.
Return to Top
O

Offering Price:
The price at which one share of a mutual fund may be purchased; it is net asset value per share plus the maximum applicable sales charge.
Operating Expenses:
The day-to-day costs of running a business paid from a fund's assets before earnings are distributed to shareholders. (See Expense Ratio.)
Operating system: Collection of programs that, taken together, manage the hardware and software; it is the operating system that makes the hardware usable, providing the mechanisms that application programs use to interact with the computer.
Open-End Investment Company:
An investment company that continuously offers new shares in an actively managed portfolio of securities.
Ordinary Income Dividend
A dividend of net investment income or a realized short-term capital gain.
Return to Top