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

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.

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)

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.       

There are no glossary entries for this letter.

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.

There are no glossary entries for this letter

There are no glossary entries for this letter

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.

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.

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.

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.