Glossary
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1035 Exchange: an exchange of one life insurance or annuity contract for another without suffering any tax consequences.
12b-1 Fees: fees charged for the expenses of selling, marketing, and distributing a mutual fund. 12b-1 fees include advertising costs such as printing materials and mailing prospectuses. They also include the salaries of the sales people. 12b-1 fees do not include transaction costs.
529 Plan: a college savings plan that gives tax benefits to both the contributor and the recipient. It was authorized in 2003 by the IRS (Section 529 of the Internal Revenue Code) to encourage and help people save for college. The big advantage of a 529 plan is that it allows earnings in the account to grow tax-free and to be withdrawn tax-free at the federal level.
A
A shares: mutual fund shares that are sold at a public offering price, NAV + front-end sales charge. The sales charge can be reduced through breakpoints. They may include a 12b-1 fee, but it is usually lower than for B or C shares. A shares are most appropriate for larger accounts that can achieve breakpoints.
Access: one of the electronic delivery requirements for prospectuses, shareholder reports, and proxy solicitations. Customers must have appropriate access to the documents. Access to the prospectus should be equivalent to a printed version of the prospectus. Thus, they must be able to either print out the document or save it on their own computer. The prospectus should be made readily available for as long as the delivery rules require. Readily available is considered to be one click away from the webpage. The prospectus can be in either HTML or pdf format.
Account Statement: a report sent to a customer that describes their positions, money balances, and account activity for the preceding quarterly period. A firm is required to send account statements at least once per quarter and must send them monthly if there has been any activity in the account.
Acc