Glossary of Financial Terms
Expressed as a percentage, annualized return calculates the return of a mutual fund or other investment over the period of an average year within a given duration. For example, an annualized ten year-return calculates the average annual return required to result in the 10-year cumulative return.
Asked or Offering Price
The price at which a mutual fund's shares can be purchased. The asked or offering price means the current net asset value (NAV) per share plus sales charge, if any. For a no-load fund, the asked price is the same as the NAV.
The smallest measure used for quoting yields on bonds and notes. One basis point is 0.01% of yield. So, if the Federal Reserve increases rates 50 basis points, or a bond's yield changes 50 basis points, that equates to 0.5% or 1/2 of 1%.
Capital Gains Distributions
A taxable distribution paid to shareholders when any investments in their mutual fund's portfolio are sold at a profit. Realized Capital Gains are when stock or bond holdings are sold at a profit. Unrealized Capital Gains represent an increase in the market value of a mutual fund.
A fund with a fixed number of shares outstanding, and one which does not redeem shares the way a typical mutual fund does. Closed-end funds behave more like stock than open-end funds: closed-end funds issue a fixed number of shares to the public in an initial public offering, after which time shares in the fund are bought and sold on a stock exchange, and they are not obligated to issue new shares or redeem outstanding shares as open-end funds are. The price of a share in a closed-end fund is determined entirely by market demand, so shares can either trade below their net asset value ("at a discount") or above it ("at a premium").
The income or capital gain made by a mutual fund that is paid to the fund's investors.
The option to reinvest cash dividends by purchasing additional shares or fractional shares on the dividend payment date.
Net Asset Value - (NAV)
In the context of mutual funds, the total value of the fund's portfolio less liabilities. The NAV is usually calculated on a daily basis.
A legal document that provides full disclosure of all information investors need to make a sound decision about an investment. Financial institutions file prospectuses with the Securities and Exchange Commission (SEC).
Free cash flow yield
A ratio calculated by dividing a company's free cash flow by its market capitalization.
Represents equity securities within the Fund's portfolio, and is not intended to demonstrate Fund growth, income earned by the Fund, or distributions made by the Fund.