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Portfolio. Combined total of securities owned by an individual or a mutual fund.

Preferred stock. Class of capital stock that pays dividends at a specified rate. It has preference over common stock in the payment of dividends and the liquidation of assets but does not ordinarily carry voting rights.

Price/Book ratio. For an individual company, the P/B ratio is the current share price divided by a company's book value (or net worth) per share. A P/B ratio lower than 1 indicates a company is trading below its book value per share (and, theoretically, below its liquidation value). For a mutual fund, the P/B ratio is the weighted average of the price/book ratios of all the stocks in a fund's portfolio.

Price/Earnings ratio. The P/E ratio for an individual stock compares the stock price to the company's earnings per share. (This figure is often calculated using trailing 12-month earnings, but some stock pickers use forecasted earnings.) The P/E indicates how much the market will pay for a company's earnings. A high P/E usually indicates a strong belief in the company's ability to increase those earnings. A low P/E indicates the market has less confidence that the company's earnings will increase. The P/E ratio for a mutual fund is the weighted average of the price/earnings ratios of the stocks in a fund's portfolio.

Private Activity Bonds. Municipal bonds issued to finance non-essential governmental operations. Income from private activity bonds is tax-exempt for federal regular tax purposes. However, income from private activity bonds is included in the calculation of federal alternative minimum taxable income and may need to be reported by individual taxpayers on IRS Form 6251. The percentage of a fund's tax-exempt income from private activity bonds can be found on the Tax Information page of a specific fund in the online Tax Center. Income from Private Activity Bonds is reported on Form 1099-INT.

Private foundation. An exempt organization established and supported by private donation. An operating foundation conducts its own programs, paying out funds directly for charitable activities. A nonoperating foundation supports charitable activities by making grants to charitable organizations. A donor-advised fund can make grants to private operating foundations.

Privatization. Act of converting a publicly operated enterprise into a privately owned and operated entity. Shares formerly owned by the government, as well as management control, are sold to the public. The theory behind privatization is that these enterprises run more effectively and offer better service as private entities rather than government-run enterprises.

Prospectus. For a mutual fund, the prospectus provides detailed information about its goals, investment strategies, principal risks, performance history, fund management, fees and expenses. Also see Summary Prospectus.

Public offering price (POP). Price at which mutual fund shares are offered for sale to the public. The public offering price represents the net asset value plus any applicable initial sales charges.

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