BACK END LOAD

One of three possible sales charge schedules imposed by funds that charge fees. A back end load, or "deferred sales charge," is a fee charged when fund's shares are sold. The amount of the fee usually varies depending on how long the investment is held--generally the longer the time period, the smaller the fee. Funds sold under several sales charge options usually refer to the shares sold with a back end load as class B shares.

BACKDATING

Backdating is used in relation to funds that offer declining proportional sales charges of larger purchases. This permits investors to count previous purchases of the fund's shares in qualifying for reduced loads or sales charges on subsequent purchases.

BALANCED FUND

A fund with an investment objective of both long-term growth and income, through investment in both stocks and bonds. Typically, the stock/bond ratio ranges around 60%/40%. This broader diversification across asset classes tends to further reduce risk.

BALANCED TARGET MATURITY FUNDS

A fund that invests to provide a guaranteed return of investment at maturity (targeted periods). In order to achieve its investment objective, a balanced target maturity fund invests a portion of its assets in zero coupon U.S. Treasury securities while the remainder is invested in stocks that the manager believes will provide long-term growth of capital and income.

BARBELL

A bond management strategy where the portfolio is invested primarily in short-term and long-term bonds, but in few bonds with intermediate maturities. In theory, this approach allows one portion of the portfolio to take advantage of high yields, while the other portion tempers risk.

BASIS POINT (BP)

The smallest measure used in quoting yields on fixed income securities. One basis point equals one percent of one percent, or 0.01%.

BENCHMARK INDEX

Indicators used to provide a point of reference for evaluating a fund's performance. The most common benchmark for equity-oriented funds is the S&P 500 Index. For fixed-income funds it is the Lehman Brothers Aggregate Bond Index.

BETA

A measure of a fund's risk, or volatility, compared to the market which is represented as 1.0. A fund with a beta of 1.20 is 20% more volatile than the market, while a fund with a beta of 0.80 would be 20% less volatile than the market.

BID PRICE

Also known as the "sell" price, the bid price is the price at which a fund's shares are bought back by the fund. The bid price of a fund share is usually its net asset value.

BLUE SKY LAWS

A body of state laws governing registration and distribution of mutual fund shares. For example, Blue Sky Laws require sellers of mutual funds to register the funds, and provide financial details so that investors can base their judgment on relevant data. All 50 states and the District of Columbia regulate mutual funds.

BOND FUND

A fund that invests primarily in bonds, whether they are issued by corporations, municipalities, or the U.S. government and related agencies. Bond funds generally emphasize income over growth, and can generate either taxable or tax-free income.

BOTTOM-UP

An investment strategy that first seeks individual companies with attractive investment potential, then proceeds to consider the larger economic and industry trends affecting those companies.

BREAKPOINT

Dollar levels of investment in a fund that qualify you for reduced sales charges. The purchases may either be made in a lump sum or by accumulating shares.

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