ALPHA
A measure of risk, used for mutual funds with regards to their relation and the market. A positive alpha is the extra return awarded to the investor for taking risk, instead of accepting the market return

ADV FORM
A form filed with the SEC that contains information about a Registered Investment Adviser.

BETA
A statistical measure of a stock’s volatility compared with the overall market. A beta of less than 1 indicates lower risk than the market; a beta of more than 1 indicates higher risk than the market.

CLEARING FIRM
An organization which works with the exchanges to handle confirmation, delivery and settlement of transactions. Such corporations play a key role in ensuring that executed trades are settled within a specified period of time and in an efficient manner.

EXPENSE RATIO
The percentage of the assets that are spent to run a mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs, and 12b-1 (distribution and advertising) fees. The expense ratio does not include brokerage costs for trading the portfolio, although these are reported as a percentage of assets to the SEC by the funds in a Statement of Additonal Information (SAI). The SAI is available to shareholders on request. Neither the expense ratio nor the SAI includes the transactions costs of spreads, normally incurred in unlisted securities and foreign stocks. These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed an Operating Expense Ratio (OER).

HIDDEN LOAD
A sales charge which an invester pays often without realizing it, such as an insurance policy sales charge or a mutual fund 12b-1 fee.

INVESTMENT ADVISER ACT OF 1940
A law requiring investment advisers and firms providing investment advice to register with the SEC and adhere to SEC regulations.

INVESTMENT ADVISER REPRESENTATIVE
A representative is a supervised person of the advisory firm. Supervised persons are defined as “any partner, officer, director, or employee of an investment adviser or other person who provides investment advice on behalf of the investment adviser and is subject to the supervision and control of the adviser

MANAGER TENURE
How many years a mutual fund manager has been running the fund. This is useful for determining how much of a fund’s performance is attributable to its current management. A tenure of zero means the manager has been running the fund for less than one year.

MORNINGSTAR
Founded in 1984, Morningstar is the premier provider of unbiased information about mutual funds, including fund comparisons, risk assessments and other analyses. Morningstar’s analysts are quoted widely in popular press, and Morningstar’s star system for rating funds is closely watched by investers, the fund industry and the media. Based in Chicago, Morningstar is rigorously independent in its dertermination to give mutual fund investers the kind of information and analysis they need to make informed decisions.

MUTUAL FUND

• A – Share
  In a family of multi-class mutual funds, this is the class that is characterized by a front load structure. Not all fund companies follow this class structure, however it is the prominent method of distinction.
• B – Share
  A class in a family of multi-class mutual funds, this class is characterized by a rear-end load structure that is paid only when selling the fund.
• C – Share
  In a family of multi-class mutual funds, the class that has a constant load structure throughout the life of the fund.

PURE NO-LOAD FUND
A mutual fund which doesn’t impose a sales or redemption charge or a 12b-1 fee.

RIA – REGISTERED INVESTMENT ADVISER
A Registered Investment Adviser is an individual who has registered with the Securities & Exchange Commission (SEC) and holds himself or herself out to be an investment adviser. Registration is required of anyone who, for compensation and as part of a business, gives advice, makes recommendation, issues reports or furnishes analysis on securities either directly or through publications. RIA is not a credential. It simply means that an individual or a firm has submitted certain filings to the Securities and Exchange Commission and paid a modest fee.

SEC
The Securities and Exchange Commission is the primary federal regulatory agency for the securities industry, whose responsibility is to promote full disclosure and to protect investors against fraudulent and manipulative practices in the securities markets. The Securities and Exchange Commission enforces, among other acts, the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940 and the Investment Advisers Act. The supervision of dealers is delegated to the self-regulatory bodies of the exchanges. The Securites and Exchange Commission is an independent, quasi-judiciary agency. It has five commissioners, each appointed for a five year term that is staggered so that one new commissioner is being replaced every year. No more than three members of the commission can be of a single political party. The Securities and Exchange Commission is comprised of four basic divisions. The Division of Corporate Finance is in charge of making sure all publicly traded companies disclose the required financial information to investors. The Division of Market Regulation oversees all legislation involving brokers and brokerage firms. The Division of Investment Management regulates the mutual fund and investment adviser industries. The Division of Enforcement enforces the securities legislation and investigates possible violations.

SECTOR ROTATION
An active asset management strategy certain sectors, that tactically overweights and underweights depending on expected performance, sometimes called rotation.

SERIES 65
A securities license required by most U.S. states for individuals that act as an investment adviser.

S & P – STANDARD & POOR’S
A unit of McGraw-Hill, S&P is an investment advisory service that performs several important functions, including maintaining the S&P 500, one of the most widely followed benchmarks of stock market performance. S&P is also one of the most important bond rating agencies, maintains several other stock indexes, and sells a variety of financial data about publicly traded companies. Its Stock Guide is a ubiquitous directory of publicly traded companies and basic information about them. It also publishes reports on companies and an investment newsletter

STANDARD DEVIATION
A statistical measure of the historical volatility of a mutual fund or portfolio, usually computed using 36 monthly returns, more generally a measure of the extent to which numbers are spread around their average. A measure of a mutual fund’s volatility, standard deviation is a statistical measure of the range of a fund’s performance, the higher the number the greater the volatility. When a fund has a high standard deviation, its range of performance has been very wide, indicating that there is a greater potential for volatility. The standard deviation figure provided here is an annualized statistic based on 36 monthly returns.

12B – 1 FEE
An extra fee charged by some mutual funds to cover promotion distributions, marketing expenses, and sometimes commissions to brokers. A genuine no-load fund does not have 12b- 1 fees, although some funds calling themselves “no-load” do have 12b- 1 fees (as do some load funds). 12b-1 fee information is disclosed in a funds prospectus, is included in the stated expense ratio, and is usually less than 1%.