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Glossary

F

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face value: the value of a bond, note, mortgage or other security. Most corporate bonds have a face value of $1,000, municipal bonds $5,000 and federal government bonds $10,000. Bonds fluctuate in price after they are issued, but the face value (or principal) is returned to the bondholder at maturity. Also known as par value.

Fannie Mae®a government-sponsored enterprise that primarily buys mortgages from lenders for cash or pools them and sells them as mortgage-backed securities to investors on the open market. Securities issued by Fannie Mae are generally sponsored by, but are not direct obligations of or guaranteed by the U.S. government. Fannie Mae is currently under the conservatorship of the Federal Finance Housing Agency. Equity shares of Fannie Mae are traded on the New York Stock Exchange®. Fannie Mae was formerly called Federal National Mortgage Association.

federal agency notes & bonds: debt instruments issued by an agency of the federal government such as Fannie Mae. Though not general obligations of the U.S. Treasury, they are sponsored by the government and have relatively high bond ratings.

Federal Deposit Insurance Corporation (FDIC): a federal agency established in 1933 that insures funds on deposit (up to $100,000*) in member banks and thrift institutions. Mutual fund assets are not FDIC-insured.

Federal Home Loan Mortgage Corporation (FHLMC): see Freddie Mac®.

Federal National Mortgage Association (FNMA): see Fannie Mae.

Federal Reserve Board: The seven-member Board of Governors that oversees Federal Reserve Banks, establishes monetary policy (interest rates, availability of credit, etc.) and monitors the economic health of the country.

fee-based program: a program offered by broker-dealers that permits investors to purchase mutual funds for an annual asset-based fee, rather than paying commissions or sales charges. Not all broker-dealers offer this program. Please consult your financial professional.

fiduciary: a person, company or association holding assets in trust for a beneficiary, and charged with the responsibility of investing the assets wisely. Examples of fiduciaries are executors of wills and estates, trustees and custodians.

financial professional: a financial professional who helps investors meet their needs and objectives through investments, tax planning, asset allocation, risk management, retirement planning and estate planning.

FINRATM (Financial Industry Regulatory Authority): a non-governmental organization that regulates firms selling securities in the United States. The organization’s objectives are to protect investors and ensure market integrity. Operating under the supervision of the Securities and Exchange Commission, FINRA educates investors, creates rules, enforces laws and regulations, examines securities firms and reviews their sales materials, and settles disputes. FINRA was created through the consolidation of the National Association of Securities Dealers (NASD) and the regulatory entities of the New York Stock Exchange. It also regulates The Nasdaq Stock Market®.

financial statements: the written record of the financial status of a mutual fund or company, usually published in the annual report. Includes a Statement of Assets and Liabilities, a Statement of Operations and a Statement of Changes in Net Assets.

fiscal year: an accounting period of 365 days (366 in leap years), at the end of which the corporate books are closed and profit or loss is determined. A fiscal year is not necessarily the same as the calendar year.

fixed-income fund: a mutual fund that invests in bonds and other fixed-income securities to provide shareholders with current income and to preserve capital. See bond fund.

fixed-income securities: securities that pay a specific interest rate, such as bonds, money market instruments and preferred stock.

floating rate note: debt instrument with a variable interest rate. Interest adjustments are made periodically and are tied to a money market index such as Treasury bill rates. They provide holders with some protection against rises in interest rates, but pay lower yields than fixed rate notes of the same maturity.

Form 1099-DIV: a statement showing the dividends and capital gain distributions received by an account holder in the most recent tax year, sent by mutual fund companies to shareholders for tax return purposes.

Freddie Mac: a government-sponsored enterprise that primarily buys mortgages from lenders for cash or pools them and sells them as mortgage-backed securities to investors on the open market. Securities issued by Freddie Mac are generally sponsored by, but are not direct obligations of or guaranteed by the U.S. government. Freddie Mac is currently under the conservatorship of the Federal Finance Housing Agency. Freddie Mac was formerly called Federal Home Loan Mortgage Corporation.

front-end load: a sales charge applied to the initial purchase of a mutual fund. See also load, contingent deferred sales charge (also known as back-end load) and no-load fund.

FTSE 100: the FTSE (pronounced “FOOT-see”) 100 Index represents 100 of the most highly capitalized companies on the London Stock Exchange. The FTSE is weighted by market capitalization, which means that larger companies have more of an impact than smaller ones when determining overall price movement of the index.

* Congress has temporarily increased FDIC deposit insurance from $100,000 to $250,000 per depositor through December 31, 2013.


Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses, which can be obtained from a financial professional and should be read carefully before investing.