Investor Education

A rise in the market price of an asset.

Profit (or loss) from the sale of a capital asset. Capital gains may be short term (12 months or less) or long term (more than 12 months). Capital losses are used to offset capital gains to establish a net position for tax purposes.

Payments to mutual fund shareholders of gains realized on the sale of the fund's portfolio securities. These amounts, if any, are generally paid once a year.

Referred to as D shares, these funds charge both an asset-based fee and a contingent deferred sales charge.

A type of mutual fund with no front-end load, but has a declining sales charge on redemption.

An investment company whose equity capitalization remains constant. In other words, a fixed number of shares is outstanding. The shares trade based on supply and demand in the secondary market and are not redeemable. (See "Management Company.")

A broker's fee for handling transactions for a client in an agency capacity.

A printed document that states the trade, settlement date and money due from or owed to a customer; it is sent or given to the customer on or before the settlement date.

A feature of Class B shares, a CDSC is a commission or sales fee based upon the redemption of mutual fund shares or variable annuity contracts. It declines annually, to zero over an extended holding period generally up to eight years-as described in the prospectus.

An investment plan for a mutual fund by which an investor agrees to invest a fixed sum of money at specified intervals over an extended period.

(1) A bond feature by which the owner may exchange bonds for a specified number of shares of stock. Interest paid on such bonds is lower than the usual interest rate for straight debt issues.

(2) A feature of some preferred stock by which the owner is entitled to exchange preferred stock for common stock of the same company in accordance with the terms of the issue.

(3) A feature of some mutual fund offerings allowing an investor to exchange shares at NAV for comparable value in another fund with different objectives handled by the same underwriter. (See "Exchange Privilege.")

The price paid for an asset, including any commissions or fees, used to calculate capital gains or losses when the asset is sold.

Charitable remainder trusts (CRTs) are trusts defined in section 664 of the Internal Revenue Code. These trusts provide for a specified distribution, at least annually, to one or more beneficiaries, at least one of which is not a charity. The distribution is for life or for a term of years. At the end of the term, the irrevocable remainder interest is to be held for the benefit of, or paid over directly to charity.

The annual rate of return on a security, dividing the interest or dividends paid by the security's current market price. The SEC requires that current yield calculations be based only on income distributions for the past twelve months, divided by the current price of the share.

A commercial bank or trust company with certain qualifications that holds in safekeeping monies and securities owned by an investment company.