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Part: 5 Here's Our Advice > Glossary - Pg. 297

Glossary 297 trustee An appointed person or institution that is responsible for the benefit of someone else. Trustees are most often trust corporations or trust departments of commercial banks that manage assets on the beneficiaries' behalf for a fee based on a percentage of the size of the trust (usually under 1 percent). A trust may be very restrictive or it may allow the trustee wide discretion, depending on the grantor's wishes. uniform gifts/transfers to minors The Uniform Gifts to Minors Act (UGMA) and Uniform Transfers to Minors Act (UTMA) are state laws that enable gifts to be made to minors. An adult is designated as "custodian" of the property for the minor. The minor, however, is the owner of the property, pays taxes on earnings gen- erated by the property, and has an unrestricted right to use it upon reaching the age of majority. variable annuity A contract that calls for varying payments to the annuitant, depending on the investment success of a separate investment account tied to the annuity. Because the invested funds are primarily in common stocks, this annuity offers greater potential rewards and greater attendant risks than annuities supported by fixed-income securities. vesting The point in time when a participant has a nonforfeitable right to monies in a qualified retirement plan. Vested benefits belong to an employee independent of his future employment. Vesting can be immediate, cliff (for example, 100 percent at five years) or graded (for example, 25 percent each year for four years). volatility Degree (both the frequency and amount) to which an investment's price goes up or down. withdrawal plan An option offered by many open-end investment companies in which an investor can receive payments at regular intervals. Withdrawal plans are generally used by people who want to use their accumulated funds for retirement purposes, in essence creating their own annuity. world bond fund A mutual fund that seeks current income, with capital appreciation as a secondary objective, by investing primarily in bonds that are denominated in U.S. currency. These bonds are frequently offerings of foreign governments or foreign corporations. world or global stock fund A mutual fund that invests primarily in equity securities of issuers located throughout the world. Global funds usually maintain a fair percentage of assets (normally 25 percent to 50 percent) in the United States. Some global funds can invest entirely overseas. yield Income from an investment in the form of dividends or interest. It does not include capital ap- preciation or depreciation. The current yield on a bond is the amount of yearly interest divided by the current value of the bond. A more useful measure of yield is the yield to maturity, which takes into account the fact that bonds selling at a discount or premium to their par value will get closer to their par value as they near maturity. The SEC now requires that mutual funds report (and advertise) yield to maturity. yield to maturity The yield of a bond, including the premium or discount of the bond.