| A | . .1MTX Glossary: FUNDS - Mutual Funds - Exchange Traded Funds (ETFs) FUNDS Glossary Mutual Funds - Exchange Traded Funds (ETFs) . Absolute Return Strategy An absolute return strategy, an investment plan that seeks to provide a consistent return regardless of market direction. Accrued Interest Interest income that has been earned but not yet paid in cash. Active Strategies The strategies have two forms - security selection or market timing. Security selection is the buying and selling of securities to ear a return above a market index such as the S & P 500 Index for U.S. Stocks. Market timing is based on shifting asset class weights to earn a return above that available from maintaining the asset class exposure of the policy asset mix. Additional Auto-Invest Program Investment This indicates the smallest permissible additional investment a fund will accept in an existing automatic-investment plan account. Additional Investment This indicates the smallest permissible additional purchase a fund will accept in an existing account. Additional IRA Investment This indicates the smallest permissible additional purchase a fund will accept in an existing IRA account. If the minimum is zero, then $0 will appear. Advisor The organization employed by a mutual fund to give professional advice on the fund's investments and to supervise the management of its assets. Alpha A measure of the difference between a fund's actual returns and its expected performance, given its level of risk as measured by beta. A positive alpha figure indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates the fund's underperformance, given the expectations established by the fund's beta. All MPT statistics (alpha, beta, and R-squared) are based on a least-squares regression of the fund's return over Treasury bills (called excess return) and the excess returns of the fund's benchmark index. Alpha can be used to directly measure the value added or subtracted by a fund's manager. Alpha depends on two factors: 1) the assumption that market risk, as measured by beta, is the only risk measure necessary and 2) the strength of the linear relationship between the fund and the index, as it has been measured by R-squared. In addition, a negative alpha can sometimes result from the expenses that are present in a fund's returns, but not in the returns of the comparison index. Example: A fund has an alpha of 0.86, a beta of 0.96 and an R-squared of 97. The high R-squared lends further credibility to the accuracy of the fund's alpha and beta. The alpha of 0.86 indicates that the fund produced a return 0.86% higher than its beta would predict. (See also Beta) American Depository Receipts (ADRs) If you see the letters ADR after a company name, this means it is an American Depository Receipt. ADRs represent shares of foreign companies traded in U.S. dollars on U.S. exchanges. They can be treated just like shares of domestic stock-you can buy or sell them through a broker, for example. However, ADRs aren't actually shares of stock, they are tradable receipts for actual shares on deposit at a bank. The purpose of the ADR is to make investing abroad both simpler and less costly for the average individual, who has neither the expertise of a foreign-stock mutual fund manager nor the buying power to trade in the volumes necessary to reduce the cost of foreign-stock transactions. Annual Returns Annual total returns are calculated on a calendar-year and year-to-date basis. Total return includes both capital appreciation and dividends. The year-to-date return is updated daily. For mutual funds, return includes both income (in the form of dividends or interest payments) and capital gains or losses (the increase or decrease in the value of a security). See also Trailing Return. Annual Turnover Percentage of value of stocks in a portfolio that are sold and replaced with new stocks each year. Turnover in indexing should be low. Asia/Pacific ex-Japan An International-Stock Funds category: At least 75% of stocks invested in Pacific countries, with less than 10% of stocks invested in Japan. Ask Price Lowest price any seller is willing to accept for a security at a given time. Asked or Offering Price The price at which a mutual fund's shares can be purchased. The asked or offering price is based on the current net asset value (NAV) per share plus any sales charge. Asset In business and accounting by asset is meant economic resources controlled by an entity as a result of past transactions or events and from which future economic benefits may be obtained. »...more Asset Allocation Fund A fund that spreads its portfolio among a wide variety of investments, including domestic and foreign stocks and bonds, government securities, gold bullion and real estate stocks. Some of these funds keep the proportions allocated between different sectors relatively constant, while others alter the mix as market conditions change. Asset Class Breakdown Percentage of holdings in different types of investments, ie. large stocks, international, bond, etc. Asset Mix The percentage of an investment fund's assets allocated to major asset classes (for example 60% equities, 5% real estate and 35% fixed income). Authorized Participant Often called a specialist, this sophisticated professional trading firm helps create (trade stocks for an ETF) and redeem (trade an ETF for stocks) ETFs. Automatic Investment Plan A plan offered by most mutual funds where as little as $50 a month is automatically deducted from an investor’s bank account and invested in the mutual fund of their choice. This indicates the smallest amount with which one may enter a fund's automatic-investment plan—an arrangement where the fund takes money on a monthly, quarterly, semiannual, or annual basis from the shareholder's checking account. Often, the normal minimum initial purchase requirements are waived in lieu of this systematic investment plan. The systematic investment amount is the minimum amount required for subsequent regular investments in an automatic investment plan. Studies indicate that regular automatic investment, also known as dollar-cost averaging, is perhaps the most successful investment plan for long-term investors. Automatic Reinvestment A service that most mutual funds offer whereby a shareholder's income dividends and capital gains distributions are automatically reinvested in additional shares. Average Credit Quality Average credit quality gives a snapshot of the portfolio's overall credit quality. It is an average of each bond's credit rating, adjusted for its relative weighting in the portfolio. For corporate-bond and municipal-bond funds, Morningstar also shows the percentage of fixed-income securities that fall within each credit-quality rating, as assigned by Standard & Poor's or Moody's. Because it's rare to find individual bonds in a portfolio with a rating below B, the average credit quality of bond funds in Morningstar's database for example ranges from AAA (highest) to B (lowest). U.S. government bonds carry the highest credit rating, while bonds issued by speculative or bankrupt companies usually carry the lowest credit ratings. Anything at or below BB is considered a high-yield or "junk" bond. Average Duration Duration is a time measure of a bond's interest-rate sensitivity, based on the weighted average of the time periods over which a bond's cash flows accrue to the bondholder. Time periods are weighted by multiplying by the present value of its cash flow divided by the bond's price. (A bond's cash flows consist of coupon payments and repayment of capital.) A bond's duration will almost always be shorter than its maturity, with the exception of zero-coupon bonds, for which maturity and duration are equal. Average Market Cap The average market capitalization (market cap) of a fund's equity portfolio gives you a measure of the size of the companies in which the fund invests. (Market capitalization is calculated by multiplying the number of a company's shares outstanding by its price per share.) . . ADVERTISEMENT ^ top Sources: www.finance.gov.ab.ca; finance.Yahoo.com; MFEA.com; Morningstar.com; SEC.gov; Wikipedia.org; Others; .1MTX 2007 ADVERTISEMENT | A | FUNDS Families Glossary: FUNDS - Mutual Funds & Exchange Traded Funds (ETFs)... Mutual Funds Absolute Return Strategy - Accrued Interest - Active Strategies - Asset - Asset Mix Funds Families USA AARP Funds Absolute Strategies Acadian Funds Accessor Activa Adams Harkness Funds Adelante Funds Advance Capital I Advisor Series Trust AdvisorOne Funds Adelante Funds Advance Capital I Advisor Series Trust AdvisorOne Funds Advisors Inner Circle Fund Advisors Inner Circle II Aegis Value AFBA Five Star Fund AIG AIM Investments AIP Alternative Strategies Funds Akros Capital Al Frank Alger Allegiant AllianceBernstein Allianz Funds Allied Asset Alpine Alsin Capital Management Amana American Beacon American Century Investments American Funds American Growth American Heritage American Independence American Money Management American Performance American Trust Ameristock Ameritor AMF AMIDEX Analytic Funds Ancora Appleton Group Funds Aquila Archer Funds Ariel Armstrong Associates Arrivato Funds Artisan Ascentia Capital Partners Ashport Funds AssetMark Aston Funds Atlantic Whitehall Atlas Austin Funds Auxier Funds Aviemore Funds AXA Enterprise Azzad Fund ADVERTISEMENT Absolute Return Strategy - Accrued Interest - Active Strategies - Asset - Asset Mix Absolute Return Strategy - Accrued Interest - Active Strategies - Asset - Asset Mix .1MTX 2007

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