Glossary

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Inception Date

The date that a fund began operations.

Income Fund

A fund that primarily seeks current income rather than capital appreciation.

Index

A benchmark against which to evaluate a fund’s performance. The most common indexes for stock funds are the Dow Jones Industrial Average and the Standard & Poor’s 500 Index.

Index Fund

An investment fund that seeks to parallel the performance of a particular stock market or bond market index. Index funds are often referred to as passively managed investments.

Inflation

The overall general upward price movement of goods and services in an economy. Inflation is one of the major risks to investors over the long term because it erodes the purchasing power of their savings.

Interest Rate Risk

The possibility that a bond’s or bond fund’s market value will decrease due to rising interest rates. When interest rates (and bond yields) go up, bond prices usually go down and vice versa.

Interest/Interest Rate

The fee charged by a lender to a borrower, usually expressed as an annual percentage of the principal. For example, someone investing in bonds will receive interest payments from the bond’s issuer.

International Fund

A fund that invests primarily in the securities of companies located, or with revenues derived from, outside of the United States.

Investment Adviser

A person or organization hired by an investment fund or an individual to give professional advice on investments and asset management practices.

Investment Company

A corporation or trust that invests pooled shareholder dollars in securities appropriate to the organization’s objective. The most common type of investment company, commonly called a mutual fund, stands ready to buy back its shares at their current net asset value.

Investment Objective

The goal that an investment fund or investor seeks to achieve (e.g., growth or income).

Investment Return

The gain or loss on an investment over a certain period, expressed as a percentage. Income and capital gains or losses are included in calculating the investment return.

Investment Risk

The possibility of losing some or all of the amounts invested or not gaining value in an investment.