A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

—The "Automated Clearing House" network is the organization that oversees all forms of automated electronic payment—from direct deposit to automatic debit. ACH is a term interchangeable with EFT.

—A plan that allows you to automatically transfer money from your bank account to a mutual fund account on a regular basis—annually, quarterly, monthly, or bimonthly.

—When you sell an investment for more than you bought it for, the difference in market value is a capital gain. Such gain is considered a "long-term" capital gain if the asset was held for more than one year; assets sold prior to the one-year mark are considered "short-term" capital gains, at the Federal level. Currently, long-term capital gains are taxed at a lower rate than short-term capital gains. Conversely, if you sell off an investment for less than its original price to you, this value is a "capital loss," and can offset your capital gains for income tax purposes.

—Capital gains from a Fund's sale of securities and corporate dividends received by a Fund are distributed to mutual fund shareholders in the form of distributions. These are typically paid annually.

—Mutual funds typically distribute corporate dividends they receive annually (sometimes more frequently). Dividends are a return on your investment, and are taxable as current income (unless held in a non-taxable account, such as an IRA).

—Also known as a "constant dollar plan," dollar cost averaging entails adding a fixed amount of money on a regular basis to an investment account. The advantage to the investor is that he or she is thereby purchasing fewer shares when the share price is high, and more when the price is low. However, dollar cost averaging does not ensure a profit or protect against loss.

—Stands for "electronic funds transfer," a term synonomous with ACH, or "Automated Clearing House."

—Generally, the term fiduciary means an individual legally appointed to hold or manage assets in trust for someone else. Hence, retirement accounts, such as IRAs and 401(k) plans that are overseen by a third-party (such as an employer), are known as fiduciary accounts.

—Stands for "net asset value," which is the dollar value of one share of a mutual fund. It is calculated by taking the fund's assets, subtracting liablities, and dividing this figure by the number of outstanding shares.

—See Fiduciary.

—Also known as a PIN, a personal identification number is a number either assigned to or chosen by you as a password for various types of accounts. For example, they are used to allow you electronic access to bank accounts, either via an ATM or over the phone.

—The sale of mutual fund shares is known as a redemption. You may sell shares back to the fund company at any time. However, in order to discourage short-term trading activity, mutual fund companies may charge a redemption fee for shares sold or exchanged over short periods of time.

—Investing distributions back into their generating account is known as reinvesting. In the mutual fund industry, investors sometimes choose to have their annual distributions reinvested, rather than taking them as cash.

—A signature guarantee is a stamp provided by a bank or other financial institution that verifies your signature. You sign the document and have the signature guaranteed by an eligible guarantor institution (such as a bank, broker-dealer, credit union, national securities exchange, registered securities association, clearing agency, and savings association) that participates in the Medallion Signature Guarantee Program approved by the Securities Transfer Association, Inc. A notary public cannot provide a signature guarantee. Firsthand Funds accept only STAMP 2000 New Technology Medallion Guarantee Stamps.

—Stands for Securities Transfer Agents Medallion Program, an association that approves banks' and other financial institutions' signature guarantee programs.

—Stands for "systematic withdrawal plan," which is the automatic withdrawal of funds from your mutual fund account on a regular basis (e.g., monthly, quarterly, annually). The plan is used as a way to supplement a shareholder's income, while also maintaining an investment. Payments are made either via EFT or check.

—Also known as a TIN, a taxpayer identification number is a tax processing number given to resident and non-resident aliens (and their relatives and dependents), who cannot get a social security number (SSN). The number is formatted like an SSN, and is used only for federal income tax purposes.

—Mutual fund companies use transfer agents to keep track of the individuals and entities that own shares of their funds. A fund company may be its own transfer agent, but this service is typically handled by an outside company, such as a bank or a trust company. A transfer agent maintains shareholder records; pays out distributions; handles purchases, exchanges, and redemptions; and mails account statements and other shareholder literature.