Mutual Funds Glossary

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12b-1 Fee

The fee--named for an SEC rule--charged by some funds to pay for distribution costs, such as advertising and dealer compensation. The fund's prospectus outlines 12b-1 fees, if any.

Target Maturity Fund

A fund that invests primarily in zero coupon U.S. Treasury securities, or in coupon-bearing U.S. government securities targeted to mature in a specific year.

Taxable Equivalent Yield

The yield that would have to be earned on a security to pay as much, after tax, as what is earned from a tax-exempt bond.

Tax-Exempt Bond Fund

A fund that invests in municipal bonds. While investors do not pay federal income taxes on the income from these funds, they may be subject to state or local taxes.

T-Bill (Treasury Bill)

A fixed-income security issued by the U.S. Government.

Technology Fund

A fund that invests primarily in the stocks of companies engaged in the technology industry.

Telephone Switching

The movement of an investor's funds from one mutual fund to another on the basis of an order given via telephone.

Top Down

An investment approach that first seeks to define major economic and industry trends, and then proceeds to identify specific companies that are likely to benefit from those trends. (See also "bottom-up.")

Total Return

A measure of a fund's performance that takes three factors into account: income dividends, capital gains distributions, and share price appreciation/depreciation.

Trade Date

The date on which a purchase or redemption of mutual fund shares is conducted.

Transfer

The process of changing ownership of an account within the same fund.

Transfer Agent

The organization employed by a mutual fund to prepare and maintain records relating to the accounts of its shareholders. Some funds serve as their own transfer agents.

Treasuries

Fixed income securities issued by the U.S. government. Treasuries include: Treasury Bills (T-Bills), Treasury Notes, and Treasury Bonds.

Triple Tax-Exempt Fund

A municipal bond mutual fund whose dividends and interest are exempt from federal, state and local income taxes for residents of a particular state.

Turnover Rate

The rate at which the fund buys and sells securities each year. For example, if a fund's assets total $100 million and the fund bought and sold $100 million of securities that year, its portfolio turnover rate would be 100%.