Fund Central

D

DEFERRED SALES CHARGE A type of back end load sales charge, a deferred sales charge is a fee charged when shares are redeemed within a specific period following their purchase. DEPRECIATION A decline in an investment's value. DERIVATIVE A financial security whose value is based on, or "derived" from, a traditional security, asset, or market index. DISTRIBUTION The payment of dividends and capital gains to shareholders DISTRIBUTOR The organization arranging for the sale of fund shares either directly to the public or through intermediaries, such as financial advisers. DIVERSIFICATION The practice of spreading investments among different securities to reduce risk. Diversification works best when the returns of the securities are varied, so that losses incurred by securities falling in price are offset by gains of those rising in price. By nature, mutual funds are a diversified investment. Diversification does not guarantee protection against losses in a fund. DIVIDEND Short-term profits, stock dividends or interest income which funds distribute to shareholders. DOLLAR COST AVERAGING A method of investing that calls for the investment of a set dollar amount at regular intervals, regardless of the fund's share price. As a result, more fund shares are bought when prices are low than at high prices, usually bringing down an investor's average cost per share over time. Dollar cost averaging does not, however, guarantee a profit or protect against a loss. DOUBLE EXEMPT FUND A fund that only invests in tax-exempt bonds of issuers from a single state. Income from a double exempt fund is free of federal and state income taxes for investors residing in the same state as the issuers of the bonds. Double-exempt funds have been particularly popular in the high-tax states of California and New York. Double tax exempt funds are usually subject in part or whole to the Alternative Minimum Tax (AMT). AMT percentage calculations for income tax purposes are available after each year end by contacting the fund directly. DOW JONES INDUSTRIAL AVERAGE (DJIA) The oldest, best known, and most widely quoted stock market index. The DJIA reflects a price-weighted average of 30 actively traded blue chip stocks. These 30 securities represent between 15-20% of the market value of the New York Stock Exchange traded stocks. DUAL PURPOSE FUND A closed-end fund offering two classes of stock in approximately equal amounts. One class (income shares) is entitled to all the income from the fund's portfolio (i.e., dividends from investments). The second class (capital shares) is entitled to all of the capital appreciation from the fund's holdings. At the time a dual purpose fund is established, a date is set on which the fund will be liquidated. At that time, income shareholders receive preference up to the par value of their shares and capital shareholders receive any excess.

Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.