Investor Education

An investment company that conducts its business in a manner other than as a face-amount certificate company or unit investment company. (See "Diversified Management Company," "Closed-End Management Company," "Open-End Management Company.")

Amount paid to the investment manager for its services in the supervision of the investment company's affairs. This fee is set as a percent of the company's net assets. It usually is between ½% and 1% of average annual net assets.

An organization that serves an open-end investment company as an investment Advisor; meaning the entity that manages the portfolio.

The date on that a loan, bond, or debenture comes due; both principal and any accrued interest due must be paid.

Equity securities of medium-sized U.S. companies typically identified as companies with market capitalizations of $2 billion to $3 billion.

An investment vehicle whose primary objective is to generate a high-level current income as is consistent with preservation of capital and liquidity. This is accomplished through the purchase of money market instruments, such as U.S. government securities, bank certificates of deposit, and commercial paper.

The most prevalent type of secured corporate bond. The bondholders are protected by the pledge of the corporation's real assets (real estate), evaluated at the time of issuance.

A mutual fund which invests in a broad range of tax-exempt bonds issued by state, cities, and local governments. The interest obtained from these bonds is passed through to shareowner's free of federal tax. The fund's primary objective is current income.

By common usage a mutual fund is the same as an open-end investment company. A mutual fund (open-end company) is a financial institution whose primary objective is to invest other people's money. By pooling their resources, investors obtain both supervision and diversification of their investments. Mutual fund shares are ordinarily redeemable by the holder at any time at net asset value. In most cases, new shares are offered for sale continuously at net asset value plus a fixed percentage as a sales charge. The assets of a mutual fund are the actual securities it purchases, and its income consists of the dividends and interest on these securities. The earnings of the business are paid out in the form of dividends and capital gains distributions to the shareholders. Mutual funds do not issue bonds, debentures, or preferred stock.