| Alpha |
A measure of risk-adjusted performance, representing the difference
between a fund's actual performance and its expected performance given
its level of risk as measured by beta. |
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| Annuity |
A contract that provides for periodic income payments fo`r a lifetime,
or for a defined period of time, or both. |
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| Appreciation |
The increase in value of an asset |
|
| Asset Allocation |
Investment among a variety of asset classes, so as to manage risk and enhance returns. |
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| Asset Class |
Broad investment category, such as "bonds", "stocks" and "cash" |
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| Balanced Fund |
A type of fund which creates a balance among its assets typically by
including a mix of stocks, bonds and money market instruments |
|
| Beta |
The mean market risk of the securities in a portfolio. This measure
reflects the responsiveness of the portfolio to its corresponding benchmark. |
|
| Bond |
A type of investment representing a loan to the government or a corporation. |
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| Bond Fund |
A collection of similar bond investments pooled together to offer professional money management and diversification |
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| Capital Appreciation |
An increase in an investment's value |
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| Cash |
Available money, cash or currency. |
|
| Certificate of Deposit (CD) |
A negotiable or transferable receipt payable to a depositor for funds
deposited in a bank; pays interest for a fixed period of time |
|
| Collective Trust Fund |
A bank-sponsored fund which brings together the assets of a number of
investors to allow broader availability and more cost-effective investing |
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| Commercial Paper |
Promissory notes sold to the public by large corporations to meet their
short-term needs for funds; major component of any money market fund |
|
| Compounding |
The periodic process by which interest or return is applied to an investment,
as well as to previous interest or returns. |
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| Credit Quality |
Categorization of bonds and bond funds by how likely the issuer is to pay its debts over time |
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| Direct Rollover |
A distribution from a 401(k), 403(b) or 457 plan or IRA that is sent
directly to the trustee, custodian, or issuer of the receiving IRA or
other qualified retirement savings plan |
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| Direct Transfer |
The movement of money from one tax-deferred retirement savings plan
or IRA to another plan, custodian or IRA. A transfer does not constitute
a withdrawal and does not generate any taxes |
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| Diversification |
Investing in a variety of investment types within a particular asset
class in order to manage risk and increase return |
|
| Dividend |
A portion of net profits declared by a company for distribution to
stockholders |
|
| Dividend Yield |
The average of all stocks in a portfolio's trailing 12 month dividend
income (cash distribution of earnings to shareholders) divided by its
market price on the valuation date |
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| Dollar-Cost Averaging |
The practice of investing equal amounts at regular intervals, regardless
of price, to lower the share/unit cost over time |
|
| Duration |
The average time to receipt of all cash flows weighted by their present
values; indicates the price sensitivity of a bond (or a bond fund) to
a change in the general level of interest rates. |
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| Early Withdrawal Penalty |
A 10% IRS penalty on money that is withdrawn from a tax-deferred retirement
savings plan prior to age 59 1/2; does not apply in certain circumstances |
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| Earnings Per Share |
The trailing 12-month net income of a company divided by the number
of shares outstanding |
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| Employer Matching Contribution |
The amount that an employer may contribute on an employee's behalf (usually
expressed as a formula based on contributions) to a retirement savings
plan |
|
| GIC |
Guaranteed Investment Contract. An insurance contract where money is
invested in a general account of an insurer for a specified interest rate
and a set maturity date. Principal and interest are guaranteed by the
insurer |
|
| IRA |
Individual Retirement Account. An account that allows investment on
a tax-deferred basis. Depending on income, contributions to an IRA may
be made on a pre-tax basis. After-tax contributions are also permissible.
Any earnings on an IRA are tax-deferred |
|
| Growth Stocks |
Stocks that are expected to increase in value as the company experiences growth, often paying no dividends as extra cash is reinvested back into the company |
|
Inflation |
An economic condition causing consumers to pay more in the future for
goods or services than they would today |
|
| In-Service Withdrawal |
A withdrawal from a retirement savings plan by a participant who remains
employed |
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| Investment Style |
Categorization of stocks and stock funds reflecting their general investment nature, such as "growth" or "value" |
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| Issuer |
Type of organization backing or issuing a bond, such as the government or a corporation |
|
| Joint and Survivor Annuity |
An annuity that covers two people and pays benefits until the second
person dies |
|
| Large Cap Company Stocks |
Stocks issued by the largest companies in the United States |
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| Liquidity |
The ease with which an investment may be converted to cash |
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| Lump Sum Distribution |
A single payment representing an employee's interest in a retirement
savings plan, resulting from termination of service, death, disability,
or the attainment of age 59 1/2. |
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| Market
Capitalization |
The size of the company issuing a stock as measured by its share price times the number of shares outstanding |
|
| Market Value |
The sum of the market price of the securities in a portfolio as of the
valuation date, rounded to millions of dollars. Also, the fund's total
net assets |
|
| Market Risk |
Risk of day-to-day changes in prices at which a security can be bought
or sold |
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| Maturity |
Date on which the principal amount of a note, draft, acceptance, bond,
or other debt instrument becomes due and payable |
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| Money Market |
The segment of the financial market which trades short-term debt securities |
|
| Mutual Fund |
A fund which pools the investments of individual investors, providing
the benefits of economies of scale as well as access to investments which
may otherwise be unavailable |
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| Normal Retirement Age |
The age at which a participant in the Social Security program or a
retirement savings plan is eligible for full benefits |
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| Number of Issues |
The number of different securities held in a portfolio as of the valuation
date |
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| Portfolio |
A varied group of securities owned by an individual or institution |
|
| Pre-Tax Contributions |
A portion of an employee's salary contributed to a retirement savings
plan or IRA, that is not included in the employee's gross income for tax
purposes |
|
| Prospectus |
A formal document describing an investment opportunity and offering
it for sale |
|
| Price/Earnings Ratio (P/E) |
The price of a stock divided by its earnings per share, reflecting the
amount an investor is willing to pay per dollar of a company's earnings |
|
| Reinvestment |
Using dividends and gains to purchase additional shares in an investment
rather than taking a distribution in cash |
|
| Return |
The amount earned, or lost, on the original worth of an investment |
|
| Risk |
A measure of the chance of loss or not gaining value |
|
| Risk/Return Ratio |
Comparison of an investment's risk to its potential for gain; generally
the greater an investment's risk, the greater its potential for return
over the long term |
|
| Rollover IRA |
An individual retirement account established for the purpose of receiving
a distribution from a qualified plan, in order to preserve the tax-deferred
status of the account |
|
| Roth IRA |
An individual retirement account that accepts after-tax contributions,
providing the potential for tax-free growth, if the account has been open
for five years and the investor is at least age 59 1/2 upon withdrawal |
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| Salary Reduction Agreement |
An agreement between an employee and employer to defer a portion of
the employee's salary into a retirement savings plan |
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| Security |
A contract or document representing equity ownership or debt |
|
| Separate Account |
An investment option offered through an insurance company, maintained
separately from the insurance company's general assets, allowing retirement
plan assets to be invested in diverse securities on a pooled basis |
|
| Small Capitalization Company Stocks |
Stocks of smaller companies, which are generally more volatile than
larger capitalization stocks. These often offer higher potential returns
than stocks of large companies over the long run |
|
| Standard Deviation |
A measure of dispersion around the mean or average return. The higher
the standard deviation, the greater the dispersion of returns and the
higher the risk (volatility) associated with the investment |
|
| S& P 500 |
A composite stock index based on stock prices comprising all major industries,
often used to represent the broad stock market |
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| Stock |
A share of ownership in a corporation; |
|
| Stock Fund |
A collection of similar stocks pooled together to offer professional money management and diversification |
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| Tax-Deferred |
An IRS-approved delay in the payment of taxes on income. For example,
taxes on annual contributions to a retirement savings plan or IRA may
be deferred until the money is withdrawn |
|
| Treasury Bills (T-Bills) |
A U.S. Government short-term security sold to the public, maturing
in periods of 30 days, or 13, 26, or 52 weeks. Because T-Bills are sold
at a discount, the interest earned is the difference between the discounted
purchase price and the amount the government pays at maturity |
|
| Unit (or Share) Value |
The price of an interest in any investment option. The value of a unit
typically varies on a daily basis |
|
| Value Stocks |
Stocks that are considered low in price relative to the underlying value of the company, typically paying higher dividends |
|
| Variable Annuity |
An investment option offered through an insurance company whose underlying
reserves are invested, on a pooled basis, in one or more of the insurer's
market-valued separate accounts |
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| Vesting |
The percent of ownership of employer contributions by a participant
in a retirement savings plan. Vesting is based on various eligibility
factors, as defined in the plan |
|
| Volatility |
Used interchangeably with "risk." Gauge of an investment's tendency
to move up and down in price |
|
| Yield |
Percentage return on an investment. For bonds, yield is calculated by
dividing the coupon by the market price. For stocks, yield refers to dividend
yield, which is dividends divided by market price |
|
| Yield to Maturity |
The single discount rate that sets the present value of all cash flows
from a fixed interest security equal to the current price |
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