Investment and Finance

Convertible securities are bonds or preferred stocks that may be converted (exchanged) into common stock of the issuing company within a specified time period for a specified number of shares.
Convertible securities offer a Mutual Fund a way to participate in the capital appreciation of the common stock into which the securities are convertable, while earning higher current income than is available from the common stock.

Fixed income securities are securities that pay interest at set times at either fixed, floating or variable rates, or which are issued at a discount to their principal amount instead of making periodic interest payments. Fixed income securities include corporate bonds, debentures and other similar corporate debt instruments, zero coupon bonds and variable master demand notes.

Equity securities include common stocks, preferred stocks, securities convertible into common stocks, and rights and warrants to subscribe for the purchase of common stocks. Equity securities may be listed on a stock exchange or NASDAQ National Market System or unlisted.
Warrants are rights to purchase securities at a specified time at a specified price.

Money market instruments are high quality short term instruments including commercial paper, bankers' acceptance and negotiable certificates of deposit of banks or savings and loan associations, short term corporate obligations and short term US government obligations.

Interest rate risk is an increase in prevailing interest rates will cause fixed income securities held by a Mutual fund to decline in value. Longer term bonds are generally more sensitive to interest rate changes than shorter term bonds. Generally, the longer the average maturity of the bonds held by a mutual fund, the more the fund's share price will fluctuate in response to interest rate changes.

NAV is the value of a single share of a fund as reported by the fund through Nasdaq. Shares are sold to the public at NAV plus any sales charge and are redeemed at NAV less any redemption charges.
Each fund calculates NAV separately for each class. NAV is calculated by taking the current value of the funds total assets allocated to a specific share and subtracting the liabilities and expenses charged against that class and then dividing that amount by the total number of shares of that class outstanding.
The NAV of each fund is generally based on the market value of the securities held in the fund. If market value is not available then the fair value is used.
The fair value is determined in good faith by procedures approved by the Boards of Directors or Trustees of the Mutual fund.

These bonds refer to U.S. Government bonds. All U.S. government bonds are tax exempt on the state tax return. These bonds are tax deferred as well and earn interest for 30 years. You do not report the income until you turn the bonds in. They can be rolled into HH bonds. EE bonds are bought at half their face value.

HH U.S. government bonds are designed for people who want current income. The interest is paid semi-annually and is federally taxable. EE bond interest is tax deferred until cashed in.

You are limited to $10,000 a year.