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BancWest Investment Services
FREQUENTLY USED FINANCIAL TERMS

Important Financial Terms

12b-1 Fees

A fee charged by the mutual fund company to pay for marketing, advertising and distribution services. The 12b-1 distribution fee ranges from 0.25% to 1% of the fund's assets.

30-day SEC Yield

The net investment income earned by a mutual fund over a 30-day period. The 30-day SEC Yield is expressed as an annual percentage rate based on the fund’s share price. It is calculated by dividing the net investment income per share for the 30 days ended on the date of calculation by the maximum offering price per share on that date.

After-Tax Pre-Liquidation Total Return

Total return received by investing in a mutual fund over a specific time period. This number is calculated assuming the investor pays the maximum marginal federal income tax on every distribution made by the fund during the investment period, and that these distributions are reinvested. The calculation does not take into consideration the tax consequences for capital gains realized on a sale of shares. This return is net of any fees and expenses paid by the investor.

After-Tax Post-Liquidation Total Return

Total return received by investing in a mutual fund over a specific time period. This number is calculated assuming the investor pays the maximum marginal federal income tax on every distribution made by the fund during the investment period, and that these distributions are reinvested. At the end of the investment period, it is assumed that the investor sells the fund, pays any fee associated with selling the fund, and pays capital gain tax based on the maximum marginal federal income tax rate. This return is net of any fees and expenses paid by the investor.

Annual Dividend Return

The increase in value of an investment, expressed as a percentage per year. If the annual return is expressed as annual percentage yield, then the number takes into account the effects of compounding interest. If it is expressed as annual percentage rate, then the annual rate will usually not take into account the effect of compounding interest.

Annual Turnover

Turnover is a measure of the fund’s trading activity, and loosely represents the portion of a fund’s holdings that have changed over a year. A lower turnover ratio indicates a buy-and-hold strategy.

Average Maturity

The length of time before a bond issuer must return the principal amount; there are two types of average maturity: average weighted and average effective. Average weighted maturity is a weighted average of the maturities of the bonds in a municipal bond fund’s portfolio, compounded by weighing each maturity date (i.e., when the security comes due) by the market value of the security. Average effective maturity, used for taxable fixed income funds, is also a weighted average of all the maturities of bonds in a portfolio. Average effective maturity takes into consideration all mortgage payments, puts and adjustable coupons.

Back-End Load

A fee (sales charge or load) that investors pay when selling mutual fund shares within a specified number of years, usually five to 10 years. The fee amounts to a percentage of the value of the share being sold. The fee percentage is highest in the first year and decreases yearly until the specified holding period ends, at which time it drops to zero. Also known as a “contingent deferred sales charge or load.”

Compound Interest

When interest is paid not only on your deposits, but also on interest previously earned on your account.

Convertibles

Securities that may be exchanged, by the issuer or the holder, for a given amount of a different, related security.

Effective Duration

A duration calculation for bonds with embedded options, effective duration takes into account that expected cash flows will fluctuate as interest rates change.

Federal Deposit Insurance Corporation (FDIC)

An independent agency of the U.S. government that protects customers from loss of deposit balances if an FDIC-insured financial institution fails. The FDIC insures checking, savings and certificates of deposit up to the maximum amount set from time to time for account types and customer ownership.

Investment products are not FDIC insured, are not bank guaranteed, are not a deposit, and may lose value.

Front-End Load

A commission or sales charge applied at the time of the initial purchase for an investment, usually mutual funds and insurance policies.

Fund Inception Date

The date a mutual fund begins operation.

Glide Path

A formula that defines the asset allocation mix of a target date fund, based on the number of years to the target date. The glide path creates an asset allocation that becomes more conservative (i.e., includes more fixed-income assets and fewer equities) the closer a fund gets to the target date.

Gross Expense Ratio

Actual fund expenses as stated in the fund prospectus.

Index Funds

Mutual funds that seek to replicate the performance of established securities indices (e.g., Standard & Poor's 500® Index).

Interest

A charge for borrowing money based on a percentage of the amount borrowed, or an amount of funds paid on funds on deposit with a financial institution.

Maximum Sales Load

A sales load is like a commission investors pay when they purchase any type of security from a broker. Although sales loads most frequently are used to compensate outside brokers that distribute fund shares, some funds that do not use outside brokers still charge sales loads. There are two general types of sales loads—a front-end sales load investors pay when they purchase fund shares and a back-end or deferred sales load investors pay when they redeem their shares.

Mean

The average of a set of numbers. As opposed to median, which is the middle figure in a set of numbers and mode, which is the value that appears most often in a set of numbers.

NAV (Net Asset Value)

The total value of the assets, including stocks, bonds, and/or other securities, owned by a mutual fund, less all liabilities, divided by the number of outstanding shares. This value does not include any sales charges, such as a load or 12b-1 fee. The NAV is calculated once each day after the close of the market.

Net Expense Ratio

This is the net fund expense after any expenses were waived and/or partially absorbed by fund management.

No-Load Mutual Fund

Free from commission or fees: Sold directly to customers at net asset value without the addition of a sales commission or other fees.

Options

A financial derivative that represents a contract sold by one party (option writer) to another party (option holder). The contract offers the buyer the right, but not the obligation, to buy (call) or sell (put) a security or other financial asset at an agreed-upon price (the strike price) during a certain period of time or on a specific date (exercise date). Call options give the option to buy at certain price, whereas put options give the option to sell at a certain price.

Preferreds (Preferred Stock)

A class of stock that pays dividends at a specified rate and has preference over common stock in the payment of dividends and the liquidation of assets. Preferred stockholders may have different voting rights. Not all securities have preferred stocks.

Pre-Tax Returns

The pre-tax total return is the total return that an investor receives from investing in a mutual fund over a specific time period. It does not take into consideration any tax consequences for the investment. To calculate this number, we assume that all distributions paid by the fund are reinvested. This return is net of any fees and expenses paid by the investor.

Prospectus

A legal document offering securities or mutual fund shares for sale. When you invest in a mutual fund, the prospectus will provide valuable information about the specific goals, fees and practices of the fund. Federal and state securities regulators require that the prospectus include the fund’s investment objectives, policies and restrictions, fees and expenses and how shares can be bought and sold. Investors should read the prospectus carefully prior to investing.

Redemption Fee

A charge imposed by the mutual fund if fund shares are sold within a certain period of time. The length of this holding period varies. See the fund prospectus for details.

Target Date Fund

Designed to help you work toward your retirement goal, target date funds are broadly diversified mutual funds that help match your investment strategy to the year you expect to retire. They gradually become more conservative as your year of retirement approaches, reducing risk automatically.

Tax Cost Ratio

Tax cost ratio represents the percentage-point reduction in returns that results from federal income taxes (before shares in the fund are sold, and assuming the highest federal tax bracket). For example, if a fund has a 10% pretax return, and taxes reduce that return to 9%, then the tax cost ratio is 1%.

Tax Efficiency

An attempt to minimize tax liability when given many different financial decisions, there’s a wide variety of tax-efficient investment choices, including tax-efficient mutual funds, irrevocable trusts and tax-exempt commercial paper.

Tax Equivalent Yield

The pretax yield that a taxable bond needs to possess for its yield to be equal to that of a tax-free municipal bond. This calculation can be used to fairly compare the yield of a tax-free bond to that of a taxable bond in order to see which bond has a higher applicable yield.

Top Ten Holdings

Presented in a list format with corresponding percentages, the "Top Ten Holdings" represent the 10 underlying securities that comprise the latest list of holdings in a mutual fund as reported by the fund.

Transaction Fee

A fee charged for purchasing certain mutual fund shares. Transaction fees apply for each buy. Transaction fees may apply to certain no-load and low-load funds.

1The consultation with a BancWest Investment Services financial professional is complimentary. Please note: The implementation of any recommendations provided during the consultation may result in trade commissions or other fees, charges or expenses. Any recommendations and guidance provided are limited to assets held at BancWest Investment Services.


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Premier Checking recognizes your preferred customer status and rewards you with premium interest rates, waived fees and other benefits. Learn more or apply now. A Bank of the West Premier Checking account requires a minimum opening deposit of any amount. The $25 monthly service charge will be waived for your first two (2) statement cycles and may be waived thereafter when you maintain at least $25,000 combined average monthly balance per statement cycle in this Bank of the West Premier Checking account plus other eligible personal Bank checking, money market, savings, CDs, and IRAs, and prior end-of-month account balances in eligible BancWest Investment Services investment accounts. Some accounts and services and the fees that apply to them vary from state to state. Standard deposit account fees apply. Relationship requirements and pricing are subject to change without notice.

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