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Debt security. Security representing a loan that must be repaid to the lender at a future date. Bonds, notes, bills and money market instruments are common debt securities.
Direct U.S government obligations. Securities issued by the United States such as Treasury Bills, Treasury Bonds, Treasury Notes, U.S. Savings Bonds, and other instruments issued by U.S government agencies. Ordinary income attributable to direct obligations may be exempt from state income tax. GNMA, FNMA, and FHLMC securities do not meet the definition of direct U.S. government obligations in most jurisdictions.
Derivative. Financial instrument whose value is based on the value of another underlying security e.g. futures contract, options and warrants.
Distribution. Payout to shareholders of the net income or realized capital gains on the securities in the fund's portfolio.
Distribution rate(s). Percentage at which a mutual fund distributes income to its shareholders. It is calculated by dividing a fund's annualized dividend amount by its current offering price.
Diversification. Investment strategy of spreading investments among a wide variety of securities, potentially lowering risk by reducing the impact of any one security on overall portfolio performance.
Dividend. An income distribution to shareholders that generally comes from the net profits of a corporation (or net income from a mutual fund).
Domestic mutual fund. A mutual fund that invests in one's local securities.
Dollar-cost averaging. Method of accumulating assets by investing a fixed amount of dollars in securities at set intervals. The investor buys more shares when the price is low and fewer shares when the price is high; the overall cost may be lower than it would be if buying a constant number of shares at set intervals.
Dow Jones® industrial average (the Dow). The oldest and most quoted measure of stock market price movements. It is a price-weighted average of 30 actively traded blue chip stocks.
EAFE index. The Europe, Australasia, Far East Index.Created by Morgan Stanley Capital International®, this index is the most widely used measurement of international stock market performance. It represents the performance of approximately 20,000 securities from more than 20 countries.
Endowment Insurance Policy. Endowment policies are payable at the death of the insured or on a specified maturity date if the insured is alive. Premiums generally are payable from the date of issue until the date of maturity but may be limited to fewer years or even to a single lump-sum payment. Premium payments on endowments are high because a large cash value is built up in a relatively short time. Endowments combine savings with insurance, and such policies may be used to provide for college education, mortgage payments, or retirement purposes.
Equity security. Security representing ownership interest in a corporation-stocks as opposed to bonds.
Exchange rate. Price at which one country's currency can be converted into another country's.
Exchange Traded Fund (ETF). Investment funds that are listed and traded on an Exchange. They are designed to track indices of markets or sectors or fixed baskets of stocks.
Ex-dividend. Literally, trading without the dividend. It is the interval between the record date and payment of the next dividend. An investor who buys shares during that interval is not entitled to the dividend. A security or fund that has gone ex-dividend is marked with an "x" in most newspaper listings.
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