Glossary: A-D E-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 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. 

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.