Glossary

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Adviser: An organization employed by a mutual fund to give professional advice on the fund's investment and asset management practices. Also called investment adviser.

Asset Allocation: The process of dividing your money between different types of assets, such as stocks, bonds and cash, to generate the overall return you need in a manner that is consistent with your risk tolerance.

Asset Classes: Different types of investments. Stocks, bonds and money market investments are broad asset classes, which can be further divided into smaller groups, such as large-cap and small-cap stocks, government and municipal bonds, etc.

Automatic Investment Plan (AIP): A method for investing in mutual funds which enables a shareholder to select a specific amount to be withdrawn from a bank checking or savings account, or an automatic exchange from another mutual fund, on a regularly scheduled basis and invested in additional fund shares.

Automatic Reinvestment: A shareholder-authorized purchase of additional fund shares using dividend distributions or capital gains distributions.

Bond: An IOU issued by a corporation, municipality or government agency. A bond issuer is borrowing money from you and other members of the public and, in exchange, promises to pay interest at regular intervals until the bond matures, at which time investors receive their principal back.

Brokered Certificates of Deposits ("CD"): Brokered CDs are CDs issued by banks that are made available to the customers of a deposit broker. Brokered CDs are obligations of the bank, not the broker. Brokered CDs generally have the features of CDs available directly from banks and are eligible for the same deposit insurance (Federal Deposit Insurance Corporation ("FDIC")) as CDs purchased directly from banks.

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Capital Appreciation: An investment objective of Capital Appreciation indicates you seek to grow the principal value of your investments over time and are willing to invest in securities that have historically demonstrated a moderate to above average degree of risk of loss of principal value to pursue this objective. Some examples of typical investments might include common stocks, lower quality, medium-term fixed income products, equity mutual funds and index funds.

Compounding: A process by which investment earnings build up not only on the money originally invested but also on the earnings and gains made in previous years.

Cost Basis: The original cost of an investment, used to determine capital gains and losses for tax purposes.

Coupon Rate: The interest rate percentage that an issuer of debt securities promises to pay over the life of the security.

Credit Rating: An assessment of a particular issuer's creditworthiness which results in a rating being assigned. Ratings range from AAA (very high) to D (in default). Several companies study issuers and make ratings decisions, including Moody's and Standard & Poor's.

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Diversification: The strategy of investing broadly across a number of different investments to reduce risk; a hallmark of mutual fund investing.

Dollar Cost Averaging: The strategy of investing a fixed amount of money at regular intervals regardless of financial market movements. The goal is to reduce the average cost per share, since you buy more shares when the price is low and fewer shares when the price is high.

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Exchange Privilege: The option of enabling mutual fund shareholders to transfer their investment from one fund to another within the same fund family.

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Fixed-Income Securities: Another term for bonds, which pay a fixed rate of interest until they mature. Bond mutual funds are called fixed-income funds, but the name is misleading because in a bond mutual fund your income and principal value both fluctuate.

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Growth Stock: A stock in a company characterized by above-average growth in earnings or sales. Growth stocks tend to have a high price relative to earnings and provide little, if any, dividend.

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Income: An investment objective of Income indicates you seek to generate income from investments and are interested in investments that have historically demonstrated a low degree of risk of loss of principal value. Some examples of typical investments might include high quality; short and medium-term fixed income products, short-term bond funds and covered call options.

Index: A statistical model that serves as a reference or benchmark for judging how well an investment is performing. The benchmark most often used for stock market performance, for example, is the Standard & Poor's 500® Index, which measures the average performance of 500 widely held large-company stocks.

Investment Grade: Investment-grade obligations are those rated at the time of purchase AAA, AA, A or BBB by S&P, Aaa, Aa, A or Baa by Moody's or which are similarly rated by another nationally recognized statistical rating organization or are unrated but deemed by the Adviser to be comparable in quality to instruments that are so rated.

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Liquidity: The measure of how quickly an investment can be turned into cash. A mutual fund generally is considered a very liquid investment, because shares can be redeemed at any time. In contrast, a house is a very illiquid investment.

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Maturity: The date on which an issuer returns investors' principal, thus satisfying its final obligation to those investors.

Mutual Funds: An investment company that pools the money of many individual investors and uses it to buy a diversified portfolio of securities.

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Net Asset Value (NAV): The value of a single share in a mutual fund, which is determined by dividing the total assets of the fund, minus its liabilities, by the total number of shares outstanding.

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Preservation of Capital: An investment objective of Preservation of Capital indicates you seek to maintain the principal value of your investments and are interested in investments that have historically demonstrated a very low degree of risk of loss of principal value. Some examples of typical investments might include money market funds and high quality, short-term fixed income products.

Prospectus: A legal document providing important information about a mutual fund. Filed with the Securities and Exchange Commission and available to all investors, the prospectus includes information on the fund's objectives and policies, risks, costs, past performance, fund fees, and other pertinent information to prospective investors.

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Redeem: To cash in shares by selling them back to a mutual fund company. Mutual fund shares may be redeemed on any business day.

Reinvestment Privilege: An option which allows shareholders to have their mutual fund dividends automatically used to buy additional fund shares.

Risk Tolerance: An investor's personal ability or willingness to withstand declines or losses in an investment caused by one or more of the different types of investment risk. That ability can be limited by an investor's temperament as well as his/her time frame. For example, someone who is investing for a goal 10 to 20 years or more in the future generally has a higher risk tolerance and may feel more comfortable with riskier investments than the person whose investment goal is only five years or less away.

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Speculation: An investment objective of Speculation indicates you seek a significant increase in the principal value of your investments and are willing to accept a corresponding greater degree of risk by investing in securities that have historically demonstrated a high degree of risk of loss of principal value to pursue this objective. Some examples of typical investments might include lower quality, long-term fixed income products, initial public offerings, volatile or low priced common stocks, the purchase or sale of put or call options, spreads, straddles and/or combinations on equities or indexes, and the use of short term or day trading strategies.

Systematic Withdrawal Plan (SWP): A program which permits shareholders to have a specified amount automatically redeemed either monthly, quarterly, semi-annually or annually, and paid per the shareholder's instructions.

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Trading Profits: An investment objective of Trading Profits indicates you seek to take advantage of short-term trading opportunities, which may involve establishing and liquidating positions quickly. Some examples of typical investments might include short-term purchases and sales of volatile or low priced common stocks, put or call options, spreads, straddles and/or combinations on equities or indexes. This is a high-risk strategy.

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Volatility: The sharp price movement of a security or market within a specified time period.

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