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Investment Terms


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NASDAQ. An American stock exchange, "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations." It is the largest electronic screen-based equity securities trading market in the United States

Net asset value (NAV). Market value of one share of a mutual fund on a given day; also known as the bid price. Unlike the public offering price, the NAV includes no sales charges. It is calculated each business day by taking the closing market value of all securities owned by the mutual fund, plus all other assets (e.g., cash) and subtracting liabilities. To reach the NAV per share, the remainder is then divided by the total number of shares outstanding.

Net capital gain or loss. A gain or loss from the sale of securities in the fund's portfolio. Net short-term gain or loss is generated on securities held 1 year or less; net long-term gain or loss is generated on securities held for more than 1 year.

Net long-term capital gain. Long-term capital gains in excess of long-term capital losses on the sale or exchange of securities (including mutual fund shares) that have been held for more than 1 year. The maximum rate of tax is 15% on net capital gain (0% for taxpayers in the 10% or 15% tax brackets.) Its distribution amount is reported to shareholders on Form 1099-DIV.

New York Stock Exchange (NYSE). Oldest and largest stock exchange (an organized marketplace where stocks and bonds are traded) in the United States. In 2007, the NYSE merged with Euronext to form NYSE Euronext, and in 2008 they acquired the American Stock Exchange.

Nominee. A shareholder who receives a Form 1099-DIV that includes amounts that belong to another person. Special reporting rules applicable to Nominees can be found in IRS Publication 564, Mutual Fund Distributions. IRS publications can be obtained free of charge by calling the IRS at 800/829-3676 (800/TAX FORM). Publications can also be viewed on the IRS website.

Nonprofit. As designated by the Internal Revenue Service, an organization that is exempt from U.S. Federal taxes. Funds received by a nonprofit must be used only in support of its mission and operations.

Non-resident alien (NRA) withholding. U.S tax withheld on income paid by a U.S. payer (such as a U.S. mutual fund) to a foreign individual or entity.

Nontaxable distribution. A return of capital distribution from a fund as reported to shareholders on Form 1099-DIV (See Return of Capital Distribution.)

NSCC (National Securities Clearing Corporation). Securities clearing organization that functions essentially as a medium through which brokerage firms, exchanges and other clearing corporations reconcile accounts with each other.

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