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Glossary
This is not an official set of definitions. Our goal is to provide accurate and clear information, but we have not attempted to define terms with absolute legal precision.
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12b-1 Fee Named for an SEC rule, fee charged by some funds to pay for distribution costs; such as advertising and dealer compensation. The fund's prospectus outlines 12b-1 fees if applicable. Also known as Trails.
1099B A tax form used to report on shares that have been sold or exchanged. It is mailed to clients and the IRS each January. Mutual funds report on exchanges and direct transactions.
1099 DIV A tax form issued by mutual fund companies to shareholders who have received taxable dividends, capital gains, non-taxable distributions (including return of capital), foreign tax credit income, or federal income withheld. It is mailed to clients and the IRS each January.
ABA (American Banking Association) Number Routing number used to wire funds to any bank account.
ACAT (Automated Customer Account Transfer) Process of transferring accounts between different broker dealers.
ACH (Automated Clearing House) An electronic transmission of money from one institution to another. Can be established for the purpose of automatic investment or SWP.
Account Executive See Financial Advisor.
Address of Record Address on account registration. Address to which all formal correspondence and statements are mailed.
Adviser See Investment Advisor.
Aggressive Growth Type of mutual funds that seek maximum capital gains.
Annual and Semi-Annual Reports Summaries that a mutual fund sends to its shareholders which discuss the fund's performance over a defined period and identify the securities currently in the fund's portfolio.
Ask Price The price at which a mutual fund's shares can be purchased. The ask price means the current NAV per share plus sales charge, if any. Is also referred to as offering price.
Assets The investment holdings and cash owned by a mutual fund.
Automatic Investment Method of investing in which funds are drafted from any bank account and wired to a mutual fund on a set schedule for the purpose of purchasing shares in a mutual fund account (also see SIP, PIP).
Automatic Reinvestment Account is set up to automatically use dividend and/or capital gains distributions to purchase additional shares.
B Notice The notification to a mutual fund company by the IRS that a client's TIN on file with the fund company is missing or incorrect. A "B" notice will cause a client's distributions from their fund to have backup withholding. The fund company will need a correct W9 in order to stop the withholding.
Back End Load Fund Type of commission structure where shares are sold without an initial sales charge to the client. A contingent deferred sales charge (CDSC) is charged when the shares are sold. The amount of the CDSC decreases the longer the client holds their shares. Broker dealers are paid by the fund company up front when the shares are purchased. Any CDSC that is charged to the client is retained by the fund company.
Backup withholding The withholding of taxes (at a 31% rate) on disbursements from a client's mutual fund if the client or back office has not supplied the fund company with a correct TIN or if the fund is notified that the client has underreported their income to the IRS. There are four types of backup withholding: 1) applied for ( the client has applied for, but not yet received their TIN), 2) B Notice, 3) C Notice, 4) Noncertification.
Balanced Type of mutual fund which generally invests in both stocks and bonds, with intent of providing capital gains and income. Preservation of capital is a primary objective.
Basis Points One one-hundredth of one percent (1/100th of 1% = .0001 = 1 basis point). Commonly used in the calculation of fees, trail commissions and yields.
Bid or Sell Price Price at which a mutual fund's shares are redeemed by the fund. The bid or redemption price usually means the current net asset value per share (see NAV).
Blue Sky Laws A body of state laws governing registration and distribution of mutual funds. All 50 states and the District of Columbia regulate mutual funds.
Book Entry Shares Shares held on deposit at the fund. No certificate exists for the account. (also see Unissued Shares).
Breakpoint The dollar level of fund purchases that will qualify a client for a reduced sales charge. (also see Linking, LOI and ROA).
Broker Dealer A firm that buys and sells mutual fund shares and other securities from and to the public.
Broker Dealer Services Mutual fund company department dedicated to servicing broker/dealer back offices.
Broker Dealer of Record The name of the Registered Representative/Financial Advisor and their firm who acts on the behalf of the client.
C Notice A notification to a fund company from the IRS that a client has underreported their income. A "C" Notice on a client's account will make them liable for back up withholding. Only the IRS can remove a "C" notice from a client's account.
CFR (Cross Fund Reinvest) Dividend option which instructs the fund to reinvest dividends and/or capital gains from one mutual fund into another mutual fund in the same fund family.
CDSC See Contingent Deferred Sales Charge.
Capital Gain Profit or loss realized on the sale of securities or other assets in a fund's portfolio. Long term capital gains refer to a gain on assets owned in the portfolio for longer than one year. Short term capital gains refer to a gain on assets owned in the portfolio of one year or less. Profits are usually paid out to the mutual fund shareholders once a year.
Capital Growth An increase in market value of a mutual fund's securities, as reflected in the NAV of fund shares. This is a specific long-term objective of many mutual funds. Also known as capital appreciation.
Certificate A document that certifies ownership of mutual fund shares and is negotiable when properly endorsed.
Clearing Dealer Dealer through which other brokerage firms process trades and networking.
Closed End Fund An investment company that offers a fixed number of shares. The securities are traded on an exchange just like stocks.
Commercial Paper Short term obligations with maturities ranging from 2 to 270 days issued by banks, corporations and other borrowers to investors with temporarily idle cash. Such instruments are unsecured and usually discounted. Both Moody's and Standard & Poors's assign ratings to commercial paper.
Commission A fee paid by an investor to a broker or other sales agent for investment advice and assistance with buying and selling securities. The commission makes up most of the sales charge and is determined as a percentage of the offering price. Also referred to as Dealer Concession.
Comm/SERVA service through NSCC which allows the automated movement of commissions paid on trades done directly with a mutual fund. Trail commissions are also paid through this system.
Confirm Number Number assigned by a fund company on any trade placed.
Contingent Deferred Sales Charge (CDSC)A commission imposed by the fund when shares are redeemed during the first few years of ownership. Because the fund pays the Broker Dealer at time of purchase, any CDSC charged is retained by the fund. Schedules vary from fund to fund. Also called back end load charge.
Control Number A unique number assigned to a transaction made through an automated trading system (Fund/SERV).
Conversion Periodically, mutual fund companies will restructure specific funds or groups of funds. When this takes place, a new CUSIP and/or symbol will be assigned to the security. The back office will then perform a "conversion" of that CUSIP to update all positions on the firm's stock record.
Cost Basis The cost of an investment, used as the basis for calculating and reporting capital gains or losses. It is adjusted for stock splits, distributions and return of capital.
Cross-Reinvestment Dividend option which instructs the fund to reinvest the dividends and/or capital gains from one fund into another mutual fund.
Custodian 1.Organization that keeps custody of securities and other assets of a mutual fund. 2. Entity (Such as Raymond James) that acts as in a custodial manner for IRA's and other qualified plans.
Custodial Account Account controlled by the custodian rather than the owner of the assets. Primarily used for retirement plans, minor children or by an employer for the benefit of an employee.
CUSIP (Committee for Uniform Securities Identification Procedures) A unique 9 digit number assigned to all securities for identification.
DST Transfer agent computer system provider.
Dealer Concession The percentage of the sales charge that is payable to the Broker/Dealer and Financial Advisor on a trade. Typically the dealer concession is withheld from the total amount of the trade when making payment to the mutual fund company.
Dealer Number Identification number of the specific Broker Dealer listed on a fund account.
Direct Transaction A purchase, redemption or exchange that the client or Financial Advisor does directly with the fund company via the mail or telephone.
Distribution Payment of income dividends and capital gains. A client can choose to have their distributions paid in cash or reinvest them in additional shares of the same fund or another fund within the same family.
Dividend A payment of cash from a company's profits to its stockholders. Dividends received by a mutual fund from an asset in its portfolio are distributed to its shareholders (also called income dividend).
Dividend Deduct When a redemption of an account occurs between record date and payable date of a distribution, the proceeds of the redemption are reduced by the amount of the distribution.
Dividend Option The manner in which dividends and capital gains are handled. Both dividends and capital gains can either be paid in cash or reinvested back into the fund. A combination of these options is also available, as well as the ability to differentiate between long term and short term capital gains. In all, there are eight possible combinations.
Diversification A benefit of mutual fund ownership. Investments are spread among a number of different securities to reduce the risks inherent in investing. The level of diversification may vary between fund investment objectives.
Dollar Cost Averaging The practice of investing equal amounts of money at regular intervals regardless of whether securities markets are moving up or down (also see Automatic Investment, SIP, PIP).
Equity Fund A mutual fund that invests primarily in stocks. The value of a share in the fund will vary depending upon the performance of the stocks within the portfolio.
Escrow Money or shares held until certain requirements are met. Mutual fund shares may be held in escrow until a client successfully completes an LOI. If the account is redeemed prior to the LOI being completed, the client is not entitled to the shares held in escrow.
Exchange An option enabling mutual fund shareholders to transfer their investment from one fund to another within the same fund family as their needs or objectives change. Typically, funds allow investors to use their exchange privilege several times a year for a low or no fee per exchange. For tax purposes, an exchange is considered a sell of one fund and the purchase of the other (though generally the purchase is done at NAV).
Ex-dividend date The day on which a mutual fund deducts the previously declared dividend from the fund's assets before calculating its net asset value. The NAV will drop by the amount on the dividend.
Expenses See Operating Expenses.
FBO (For the Benefit Of) Abbreviation used in account registration when one party is acting as custodian for another.
Family of Funds A mutual fund "family" is a number of different mutual funds, each with its own investment objective, managed and distributed by the same company.
Fidelity Bond A type of insurance used by the funds to reimburse any fraud by the employees of the distribution company. The amount of Fidelity Bond coverage for each fund is set by law. The trustees of a fund have the responsibility of making sure that the coverage is adequate.
FINRA (The Financial Industry Regulatory Authority) A self-regulating, voluntary association of broker dealers and other investment firms. Operating under the supervision of the SEC, it works to standardize practices, establish high moral and ethical standards in securities trading, consult with the government, establish fair rules of trading and discipline violators of the rules.
Flexible Portfolio Gives the fund manager flexibility in deciding which assets offer the best risk-return trade off at any particular time. Sometimes called "asset-allocation" funds, these funds invest in stocks, bonds, money market instruments, options, futures or foreign securities at various times.
Fractional Shares Less than one full share. Mutual fund companies usually carry their shares out three decimal places.
Free Shares Shares on which a sales charge has already been paid. In the case of back end load funds, reinvested dividend shares and fully aged shares are considered free shares. When a redemption is placed, free shares are always sold first.
Front End Load Type of commission structure where a sales charge is paid by the client when shares are purchased.
Full Dealer Reallowance Generally used as a marketing tool on new funds; the practice of giving the entire sales charge amount to the Broker dealer as commission.
Fully Aged Shares Applies to shares held within a back end loaded fund. When the client has owned them for the stated time (typically four to six years), the shares are no longer liable for CDSC charges.
Fund Look-up Modem access to the various mutual fund companies with whom we network. The access allows us to enter the fund's systems and VIEW the account information. Changes cannot be made through the look-up system.
Fund/SERV (Settlement Entry and Registration Verification) System designed to regulate and standardize mutual fund trade processing as well as networking activities. Fund/SERV is run by the NSCC.
Global Bond Funds Invest in fixed income securities that for the most part are not denominated in U.S. dollars.
Global Funds Invest in securities anywhere in the world. Main objective is long-term capital appreciation, although they may provide some current income.
Growth Funds Invest in the common stock of growth companies. Primary goal is to achieve capital gains.
Growth and Income Funds Seek to provide both capital gains and a steady stream of dividend income by buying the shares of high-yielding, conservative stocks.
High Yield Bond Funds Portfolios that buy the debt securities issued by non-investment grade corporations and municipalities. These types of funds have a higher risk to default due to high leveraging, however they provide a higher yield.
ICI (Investment Company Institute) Non profit group that acts as a steering committee for the NSCC. Also makes recommendations for standardization within the mutual fund industry.
IRA (Individual Retirement Account) A retirement plan that allows individuals to make tax deferred contributions to a retirement account each year.
Income Funds Seek to provide a high level of current income by buying government and corporate bonds as well as high yielding common and preferred stocks. Not designed to provide major capital gains.
Income Bond Funds Invest in a variety of bonds to produce high, taxable current income for shareholders. Usually managed more conservatively than bond funds buying high-yield bonds, and therefore offer lower current yields.
Income Equity Funds Invest in bonds and high yielding stocks with the objective of providing shareholders with a moderate level of current income and a moderate level of long term capital appreciation. Slightly more conservatively managed, usually a higher percentage of their assets in bonds than growth and income funds.
Income Dividends Payments to mutual fund shareholders of dividends, interest, and/or short term capital gains earned on the fund's portfolio securities after deducting operating expenses.
Indemnity Clause included on written requests to mutual fund companies, holding Raymond James responsible for any liability the fund may incur from performing the request. All correspondence including this clause must be signature guaranteed under the Medallion program.
International Funds Invest in stocks and bonds issued outside the United States by foreign companies and governments.
Investment Company A corporation, trust, or partnership that invests pooled funds of shareholders in securities appropriate to the fund's investment objective.
Investment Company Act of 1940 The basic federal law covering mutual funds. It requires registration of all funds, provides for their regulation, prescribes qualifications of officers and director and requires that certain matters receive prior shareholder approval.
Investment Objective The objective of the fund as stated in the prospectus.
Investment Advisor The firm that manages, organizes and administers a mutual fund company.
Issued Shares Shares in the form of a certificate.
JTWROS (Joint Tenants With Rights Of Survivorship) Type of account registration that designates ownership of the funds is shared equally by two or more individuals. No distributions can be made from the account to an individual without the permission of all. Upon the death of an owner, the shares pass to the remaining owner(s).
LOA (Letter of Authorization) Signed by the registered parties on an account, entitling the Financial Advisor, the back office, or the mutual fund company to perform a specified action on the client's behalf.
LOI (Letter of Intent) An agreement between the client and fund in which the client is entitled to a lower sales charge if they purchase a specific dollar amount within a 13 month period. The additional shares the client receives by purchasing under an LOI are held in escrow until the LOI is completed or expires ( also see Linking).
Level See Networking Level.
Level Load Shares A type of commission structure where shares are sold with a low sales charge up front (typically one percent) and are liable to a back end load (typically one percent) for a set period of time (typically one year).
Linking The act of combining various client accounts within the same family of funds for a breakpoint under an LOI or an ROA. Generally, you can link retail and IRA accounts for the same family group (husband, wife and minor children).
Liquidity The ability to cash in all or part of your mutual fund shares on any business day and receive their current value (which may be more or less than your original cost).
Load See Sales Charge.
Load Credit A credit for paying a load on a certain dollar amount that allows you to move within the fund family without paying a load on the new shares.
Long Term Funds An industry designation for all funds other than short-term funds (taxable and tax-exempt money market funds). Long term funds are broadly divided into equity (stock) and bond and income funds.
Management Fee Annual fee paid by a mutual fund to the investment adviser for its services. The average annual fee industry wide is about one half of one percent of fund assets.
Margin Account A client account in which a securities firm extends credit to the client to buy securities. The amount of credit that may be extended is governed by Regulation T of the Federal Reserve Board. Mutual fund shares that are on margin (being borrowed against) are held in a dealer controlled account.
Market Timing The shifting of assets in and out of a mutual fund based on performance of one or more market indicators, such as the Dow Jones Industrial Average, the Index of Leading Economic Indicators, or the Prime Rate. Market timers often exchange between a specific fund and the fund's money market fund for this purpose.
Matrix Level See Networking Level.
Medallion Stamp An industry program to simplify the process of providing signature guarantees. Authorized financial institutions receive a stamp, and guarantees accompanied by the stamp can be accepted up to a certain limit without any further authentication necessary by the delivering financial institution.
Mutual Fund An investment company that pools money from shareholders and invests in a variety of securities, including stocks, bonds, and money market instruments. A mutual fund stands ready to buy back (redeem) shares at current NAV; this value depends on the market value of the fund's portfolio at time of redemption. Most mutual funds continuously offer new shares to investors (open ended fund). Mutual funds are priced once per business day, after market close (4 PM EST).
NSCC (National Securities Clearing Corporation) The nation's largest registered securities clearing corporation. Provides centralized trade processing, clearing and settlement and information to broker dealers, banks, mutual fund companies and other financial institutions. The NSCC helped to develop and continues to coordinate Fund/SERV, Comm/SERV and Networking.
NAV (Net Asset Value) The market worth of one share of a mutual fund. This figure is derived by taking a fund's total assets (securities, cash and any accrued earnings), deducting liabilities, and dividing by the number of shares outstanding.
NAV Purchase The option that allows certain clients to purchase shares of a fund without a sales charge under very specific conditions. Examples include employees of a broker dealer, wrap accounts, or a trade to process some type of correction.
NAV Transfer of Assets A marketing initiative offered by certain funds, often for a limited time. The fund gives clients the opportunity to purchase shares of their funds at NAV when transferring proceeds from the liquidation of another fund company on which the client paid a front end load.
Networking An automated communication system offered from the NSCC, providing broker dealers with fund account daily activity and maintenance as well as providing funds with dealer requests for account maintenance.
Network Master The Fund/SERV screen used to reflect fund account information and to input changes to be sent to the fund accounts.
No Load Mutual Fund Mutual fund without a sales charge/commission on trade activity. Always traded and priced at NAV.
Non-certification Failure of a client to certify his/her TIN. Until the fund receives a W-9 form, they are required by the IRS to take backup withholding on any distributions.
Non-resident Alien A person who is not a tax resident of the United States, as certified by IRS form W-8. Taxes are withheld on taxable income, but the tax rate varies dependent upon treaties signed by the country of origin for the client and the U.S.
Offering Price See Ask Price.
Open End Fund A regulated investment company that offers an unlimited number of shares and stands ready to buy back shares at any time. Another term for mutual fund.
Operating Expenses The normal costs a mutual fund incurs in conducting business, such as the expenses associated with maintaining offices, staff, and equipment. There are also expenses related to maintaining the fund's portfolio of securities. These expenses are paid from the fund's assets before any earnings are paid to the shareholder.
Opportunity Accounts Wrap account program offered through Raymond James's correspondent branches. Opportunity accounts allow the clients to make their own decision regarding transactions with the FA acting as their adviser. For one annual fee and low transaction charges, the clients can enjoy unlimited trading of stocks, bonds, load and no load mutual funds and receive quarterly performance reports which include gain/losses of investments, asset allocation and performance data.
Outside View A Terminal Emulation program which allows for SIS connectivity.
PIP (Periodic Investment Plan) Automated method to dollar cost average. See Automatic investment.
Passport Account The PASSPORT account is a fee based, non-discretionary account. Clients make their own decisions regarding transactions with the FA acting as their advisor. They pay one annual fee and low transaction charges. Features include regular monthly brokerage statements, quarterly performance reports and an annual recap of all activity, including realized gain/loss reports.
Payable Date Date a distribution is paid to a client.
Payee Designated recipient of a distribution.
Payroll Deduction Plan An arrangement that some employers offer employees to accumulate mutual fund shares. Employees authorize their employer to deduct a specified amount from their salary at stated times and transfer the proceeds to the fund.
Performance A measure of how well your investment is doing; yield and total return are two commonly used mutual fund performance measures.
POP Public Offering Price. See Ask Price
Pooling Basic concept behind mutual funds. A fund pools the money of thousands of individual investors who share a common investment objective . The fund uses this pool to buy a diversified portfolio of investments. Each mutual fund share represents ownership in all the fund's underlying securities.
Portfolio A collection of securities owned by an individual or an institution (such as a mutual fund). A fund's portfolio may include a combination of stocks, bonds, and money market securities.
Portfolio Manager The individual or team of individuals responsible for investing the pool of shareholder dollars within a mutual fund. The portfolio manger(s) decide which securities to hold, when to buy, and when to sell.
Portfolio Turnover A measure of the trading activity in the fund's portfolio of investments; how often securities are bought and sold by the fund.
Position File Report generated twice a month for networking funds. Report identifies discrepancies in networking status, levels, dividend options and share balances.
Prior Year Contribution A contribution to an IRA made for the previous tax year. Prior year contributions may be made January 1st through April 15th of the current year for the previous year, as long as the contribution is received or postmarked by April 15th.
Principal Initial amount of money invested.
Professional Management The full-time, experienced team of professionals that decides what securities to buy, hold and sell for a mutual fund.
Prospectus The official document that describes a mutual fund. It contains information required by the SEC on such subjects as the fund's investment objectives, policies, services, and fees. By law, a prospectus must be provided to all investors prior to placing a trade.
Record Date Date that determines which clients are entitled to receive a distribution.
Redeem To cash in your shares by selling them back to the mutual fund. Mutual fund shares may be redeemed on any business day.
Registered Representative See Financial Advisor.
Registration Instructions Instructions sent to the fund on how to set up an account, showing complete registration, dividend option, fund account number (if subsequent purchase), FA and branch information and withholding status. These instructions can be transmitted automatically through Fund/SERV or sent manually by letter or fax.
Reinvestment Privilege An option that allows mutual fund shareholders to reinvest dividends and capital gain distributions automatically in new fund shares. This increases the shareholders total holdings in the fund.
Reinstatement Privilege An option available to mutual fund shareholders that allows them to reinvest any part of the proceeds from a liquidation back into the same family of funds at NAV. Typically the reinvestment must be made within 90 days of the sell. Also called a buy-back.
Rejected Registration A registration that has been transmitted through Fund/SERV but rejected by either NSCC or the fund due to insufficient or incorrect information.
Retail Account Account registered in client name (level 2 or 4 when the client's account is networked). An account that is not dealer controlled.
ROA (Rights of Accumulation) Certain mutual fund companies offer commission discounts if a client purchases over a specified amount. Also see Linking.
Risk/Reward Tradeoff Investment principle that holds that an investment must offer the potential for increasing returns in order to compensate for increasing levels of risk.
Sales Charge Amount charged to purchase (front end load) or redeem (back end load) shares in many mutual funds. The maximum charge is 8.5 percent of the initial investment. The charge is added to the NAV per share when determining the offering price. Also referred to as load.
SEC (Securities and Exchange Commission) Federal agency that regulates registration and distribution of mutual fund shares.
SIAC (Security Industry Automation Corporation) Communication (transmissions) division of the NSCC. A service bureau owned by the NYSE. It interfaces between NSCC and participating broker dealers.
SIPC SIPC insurance covers the value of a clients securities and cash (to specified limits) if a brokerage firm goes under and the securities and cash are seized by creditors. SIPC would cover any instance of this up to the limits specified. Funds do not need SIPC type insurance because mutual fund assets are required by law to be held in a segregated account in the fund's name for the benefit of the client. Only a creditor of the fund may access these monies.
Series Funds Funds that are organized with separate portfolios of securities, each with its own investment objective.
Settlement Date Date the purchase or liquidation settles; T + 3 (trade date plus three days) All purchases should be paid for in full by this date, and all securities must be available for delivery at this time. All shares must be registered in client's name, if paid for, at this time.
Share Balance The total number of shares in an account.
Share Class A designation, usually alphabetic, given to a fund's shares based on calculation of sales charge. Typically A class is used for front end load funds, B class shares for back end load funds and C class is used for level load funds.
Shareholder An investor; the individual owner of shares in a mutual fund.
Short Term Funds An industry designation for funds that invest primarily in securities with maturities of less than one year. Short-term funds include taxable money market funds and tax exempt money market funds (also known as short-term municipal bond funds).
Signature Guarantee An assurance from a financial institution that indicates the signature of the person making a request is true and correct. The guarantor assumes liability for circumstances that arise from a signature that is proved to be invalid. See Medallion Stamp.
Social Code Two digit code used in Networking to designate the type of tax reporting to be performed on a particular account.
SAI (Statement of Additional Information) This document (also known as part B of the registration statement) contains more detailed, information about a mutual fund. It is available upon request at no charge from the fund.
Stock Power A form that transfers ownership of a certificate from the registered owner to another party.
Stock Record A listing, by cusip number, for each security that a broker dealer holds for its clients. The stock record must always be in balance. In other words, the shares we show on the stock record must match to the shares our clients purchase, sell or bring in to be held in streetname or networked.
Street Name Registration in Raymond James' name with no client reference. Used for no load funds and clearing accounts.
SIP (Systematic Investment Plan) Automated method of dollar cost average trading. See Automatic Investment.
SWP (Systematic Withdrawal Plan) A client can choose to have a set amount of money withdrawn (redeemed) periodically from their mutual fund account.
Systematic Exchange A program by which a client can automatically exchange a set amount of money from one mutual fund into one or more other funds within the same family of funds. Can be established on a monthly or quarterly basis.
T + 3 Trade date plus 3 business days. Standard settlement timeframe.
TIN (Taxpayer Identification Number) The 9 digit number assigned by the IRS or Social Security Administration to identify an individual (Social Security number) or inanimate entities such as corporations and trusts.
Form W-9 is used to furnish a social security or TIN as well as certify a client is not subject to backup withholding or to claim exemption from backup withholding, if applicable. The W-9 form is incorporated in our new account form.
TOD (Transfer On Death) A type of account that designates a beneficiary who will automatically become the new owner when the current owner dies. This type of registration has not been approved by all states.
Telephone Redemption An account option that allows a client or broker dealer to liquidate shares by telephone. The proceeds will be sent to the address of record. Often fund companies will establish limits to the dollar amount that can be sold per day.
Total Return A way for investors to calculate how much they have made or lost on an investment over time. Calculated as a percentage; it's figured by dividing the current value of the investment, plus distributions, by the cost of the initial investment. In the case of mutual funds, if dividends are reinvested into the fund, they are included in the current value and don't have to be done as a separate item.
Trade Date Date used to determine the price of a transaction. Date a trade is placed with the broker dealer and transmitted to the mutual fund.
Trail Commission Commission paid to a broker dealer each year the client's money remains in a mutual fund account, as compensation for services to the client. Typically the annual rate ranges from 10 to 50 basis points on the account's assets.
Transfer A change in ownership of shares. Not a taxable event to the fund.
Transfer Agency The organization employed by the mutual fund to prepare and maintain records relating to the accounts of its shareholders. Some funds serve as their own transfer agency, or utilize an outside transfer agent in a very limited capacity (remote).
U/A DTD Abbreviation meaning "under the agreement dated".
UGMA/UTMA Abbreviation meaning Uniform Gift/Transfer to Minors Act. Laws vary from state to state. The agreement allows an adult to fund an investment for a child. The investment is owned by the child and is taxed at the child's rate.
Underwriter The organization that acts as the distributor of a mutual fund's shares to broker dealers and investors.
Unissued Shares Shares held on deposit at the mutual fund company. No certificate is issued.
W-9 An IRS form that certifies a client's TIN. A mutual fund must have a certified TIN to avoid backup withholding.
Wire Order Trade A purchase or redemption transmitted via the telephone or an automated trading system (Fund/SERV) from a broker dealer to a mutual fund company. One advantage of wire order trades is locking in a price the day the trade is placed.
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