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Investment Terms


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S&P 500® (Standard & Poor's® composite index of 500 stocks). Market value-weighted index that measures stock market price movements, based on the aggregate performance of 500 widely held common stocks on U.S. stock exchanges.

SAI. A mutual fund's Statement of Additional Information. It contains additional and more detailed information about a mutual fund.

SEC (Securities and Exchange Commission). A federal agency created by the Securities Exchange Act of 1934. The SEC administers statutes designed to promote full public disclosure and protect the investing public against fraudulent and manipulative practices in the securities markets.

Sector mutual funds. Funds that concentrate on one industry such as utilities, health care or financial services. These funds tend to be more volatile than funds holding a diversified portfolio of securities in many industries.

Security. A document identifying ownership of stocks, bonds or other investments. Publicly traded securities can be contributed to a donor-advised fund.

Seven-day current yield. Reflects the interest income per share a money market fund earned on its investments for the last seven days, calculated as an annual percentage rate. Compounding is not taken into account.

Seven-day effective yield. Reflects interest income per share a money market fund earned on its investments for the last seven days when the earnings are reinvested and compounded. The yield is calculated as an annual percentage rate.

Sharpe ratio. Developed by Nobel Prize winner William Sharpe, the Sharpe ratio measures a fund's historical risk-adjusted performance. A higher number indicates better historical risk-adjusted performance.

Short position. Sale of a security not owned by the seller to take advantage of an anticipated decline in the price.

Short-term capital gain dividend. Applicable to foreign investors whose Form W-8 certifications are in good order, a fund's distributions of net short-term capital gain is exempt from U.S. withholding.

Short-term capital gain or loss. Gain or loss on the sale or exchange of a security (including mutual fund shares) that has been held 1 year or less. Short-term capital gain distributions from mutual funds are reported as ordinary dividends on Form 1099-DIV.

Standard deviation. Provides a statistical measure of the range of a fund's returns. A high standard deviation indicates a wide range of returns and, thus, greater volatility.

Standardized (SEC) yield. Non-money market mutual fund's yield, calculated as required by the SEC, based on the earnings of the fund's portfolio during a 30-day period, divided by the offering price per share at the end of the period. This reflects an estimated yield to maturity. It should be regarded as an estimate of the fund’s rate of investment income, and it may not equal the fund’s actual income distribution rate.

Standardized (SEC) yield without waiver. Represents what a fund's standardized (SEC) yield would have been not taking into account any contractually guaranteed expense reductions if applicable.

Statement of average cost (SOAC). When requested, a statement issued by Franklin Templeton that tracks the single-category average basis of fund share purchases, including purchases from the reinvestment of ordinary dividend and capital gain distributions, and share redemptions for the life of a shareholder's account.

Successor. An individual named by the donor to succeed the donor in advising a donor-advised fund account in the event of the donor's death. A successor has no authority over the account until the donor's death, at which time the successor takes on all the responsibilities of the donor, with the ability to recommend grants, and name advisors and successors. A donor may name more than one successor and can declare that the successors will share responsibility for the account, or that the account funds will be split with each successor becoming responsible for a portion.

Summary Prospectus. The summary prospectus was introduced by the SEC on January 1, 2010 to provide investors with a brief summary, in plain English, of the key information about a mutual fund. To make it easier for investors to directly compare mutual funds, the summary prospectus must contain the following elements in standardized order: investment goals; fees and expenses; portfolio turnover; principal strategies, risks and performance; management information; purchase and sale information; tax information; and financial intermediary compensation information. The summary prospectus satisfies the prospectus delivery requirement as long as the complete statutory prospectus and other information are provided online.

Systematic withdrawal plan (SWIP). A withdrawal method that gives mutual fund shareholders the option of receiving regular periodic payments from an account by redemption of shares at net asset value (NAV).

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