Mutual Fund Terms and Definitions

American Depositary Receipt (ADR)

is a negotiable certificate issued by a U.S. bank representing a specific number of shares of a foreign stock traded on a U.S. stock exchange. ADRs make it easier for Americans to invest in foreign companies, due to the widespread availability of dollar-denominated price information, lower transaction costs, and timely dividend distributions.

Call Option

is a short-term contract entitling the purchaser, in return for a premium paid, the right to buy the underlying security at a specified price upon exercise of the option at any time prior to its expiration. Writing a covered call is the selling of a call option for an equity that is currently held in the portfolio. If the underlying security reaches the strike price of the option, the writer of the option is obligated to deliver the number of shares for which the call option is written.

Cash Flow

equals cash receipts minus cash payments over a given period of time.

The CBOE S&P 500 BuyWrite Index (BXM)

is a benchmark index designed to track the performance of a hypothetical buy-write strategy on the S&P 500 Index.

CBOE S&P 500 2% OTM BuyWrite Index

uses the same methodology as the widely accepted CBOE S&P 500 BuyWrite Index (BXM), but is calculated using out-of-the-money S&P 500 Index (SPX) call options, rather than at-the-money SPX call options.

Debt/Capital Ratio

is a measurement of a company's financial leverage.

Dividend Yield

is calculated by dividing annual dividends per share by the current price per share.

Market Capitalization

represents the total value of a company's outstanding equity securities.

MSCI EAFE Index

is an unmanaged market capitalization-weighted index based on the average weighted performance of widely held common stocks and includes developed markets outside of North America. You can not invest directly in an index.

Price/Earnings (P/E)

refers to the price of a stock divided by its earnings per share.

Price to Book (P/B)

refers to the measurement of a stock's market value to its reported book value.

Russell 1000 Value Index

measures the performance of those Russell 1000 companies with lower price-to-book ratios and lower forecasted growth values.

Russell 2000 Value Index

is an unmanaged capitalization-weighted index based on the average weighted performance of 2000 widely held common stocks. One cannot invest directly in an index.

Russell 2500 Value Stock Index

is an unmanaged capitalization-weighted index based on the average weighted performance of 2500 widely held common stocks. One cannot invest directly in an index.

S&P 500 Total Return Index

is a market-value weighted index consisting of 500 stocks chosen for market size, liquidity, and industry group representation. One cannot invest directly in an index.

MSCI Emerging Markets Net Index

is an unmanaged index considered representative of stocks of developing countries. One cannot invest directly in an index.

Turnover Ratio

is the percentage of a fund's assets that have changed over the course of a given time period, usually a year. Mutual funds with higher turnover ratios tend to have higher expenses.

Convertible Debt

A security which can be exchanged for a specified amount of another, related security, at the option of the issuer and/or the holder.

Warrant

A derivative security that gives the holder the right to purchase securities (usually equity) from the issuer at a specific price within a certain time frame.

Rights

A security giving stockholders entitlement to purchase new shares issued by the corporation at a predetermined price (normally less than the current market price) in proportion to the number of shares already owned.

Standard Deviation

A statistical measure of the extent to which returns of an asset vary from its average.

Beta

A measurement of a fund’s trailing 36-month returns in relation to the overall market (or appropriate market index). Beta of 1 - share price will typically move with the market; Beta more than 1 - share price will typically be more volatile than the market; Beta less than 1 – share price will typically be less volatile than the market.

R-Squared

R2 is a measurement of how closely the portfolio's performance correlates with the performance of a benchmark index, such as the S&P 500. R2 is a proportion which ranges between 0.00 and 1.00. An R2 of 1.00 indicates perfect correlation to the benchmark index, that is, all of the portfolio's fluctuations are explained by performance fluctuations of the index, while an R2 of 0.00 indicates no correlation. Therefore, the lower the R2, the more the portfolio's performance is affected by factors other than the market as measured by that benchmark index.

Average P/E

Refers to the price of a stock divided by its estimated forward 12-month earnings per share

Average P/B

Refers to the measurement of a stock’s market value to its book value.

Market Capitalization

Represents the total value of a company’s outstanding equity securities.

Turnover Ratio

The percentage of a fund’s assets that have changed over the course of a given time period, usually a year. Mutual funds with higher turnover ratios tend to have higher expenses

Longterm EPS

The net income less dividends paid on preferred stocks divided by the number of outstanding shares

ADR

An American depositary receipt (ADR) is a stock that trades in the United States but represents a specified number of shares in a foreign corporation