When reading about insurance and financial products, you may encounter jargon and acronyms. We’re providing these definitions for informational and educational purposes only. Please discuss your specific situation or questions with an investment professional or go to the Financial Industry Regulatory Authority website for more information.
Common Investment Terms
The trading of securities to take advantage of market opportunities as they occur, in contrast to passive management; active managers rely on research, market forecasts, and their own judgment and experience in selecting securities to buy and sell.
A mathematician who calculates premiums, reserves, dividends, insurance, pension and annuity rates for insurance and financial services companies.
Aggressive Growth Fund
An investment fund that takes higher risk of loss in return for potentially higher returns or gains.
Represents the difference between a fund's actual returns and its expected performance, given its level of risk as measured by beta. A positive alpha is the added value an active manager has contributed over the benchmark returns.
Annual Rate of Return
The annual rate of gain or loss on an investment expressed as a percentage.
A yearly report or record of an investment’s (e.g., a mutual fund’s or company’s) fi nancial position and operations.
The person whose life is insured is the annuitant. The annuitant and the annuity owner may not be the same person.
The time you spend contributing to your annuity is the accumulation phase. The annuitization phase begins when you start receiving money from your annuity.
An insurance contract issued by a life insurance company that provides income at regular intervals for a defined period of time, such as a specific number of years or for life.
Annuity Commencement Date
The date stated in the annuity contract indicating when annuity payments will begin; also known as the annuity start date.
An increase in the value of an investment.
Anything with commercial or exchange value owned by a business, institution or individual; examples include cash, real estate and investments.
Spreading your investments between asset categories (i.e. stocks, bonds, cash or cash equivalents) may help minimize risk. This may happen in part because these investment categories respond to changing economic and political conditions in different ways. Please keep in mind that the use of asset allocation does not guarantee returns or insulate you from potential losses.
A group of securities or investments that have similar characteristics and behave similarly in the marketplace; three common asset classes are equities (e.g., stocks), fi xed income (e.g., bonds), and cash alternatives or equivalents (e.g., money market).
Expenses that are based on the amount of assets in the plan and are generally charged as percentages or basis points
Automatic Asset Rebalancing
An optional service that will periodically exchange money between funds in a participant’s account so as to maintain the investment mix designated by the participant.
Average annual total returns
The annual compounded returns that would have produced the cumulative total return if Fund performance had been constant during the given period.
A fee imposed by some funds when shares are redeemed (sold back to the fund) during the fi rst few years of ownership; also called a contingent deferred sales charge.
A fund with an investment objective of both long-term growth and income, through investment in both stocks and bonds.
Barclays 7-Year Municipal Bond Index
An unmanaged index that consists of a broad selection of investment-grade general obligation and revenue bonds with maturities of approximately seven years.
Barclays Municipal Bond Index
An unmanaged, market value-weighted index of investment-grade municipal bonds with a minimum credit rating of Baa and maturities of one year or more; serves as a broad market performance index for the tax-exempt bond market.
Barclays U.S. 1-3 Year Government/Credit Bond Index
An unmanaged index of U.S. dollar-denominated, investment-grade, fixed-rate, publicly issued, taxable bond market issues (including Treasury, government and corporate securities) with a remaining maturity of one to three years.
Barclays U.S. Aggregate Bond Index
An unmanaged, market value-weighted index of investment grade, fixed-rate debt issues (including government, corporate, asset-backed, and mortgage-backed securities with maturities of one year or more) that is generally representative of the bond market as a whole.
Barclays U.S. Treasury Inflation Protected Securities (TIPS) IndexSM
An unmanaged, market capitalization-weighted index that measures the performance of all U.S. dollar-denominated, fixed-rate, nonconvertible, investment-grade, publicly issued U.S. TIPS with $250 million or more in outstanding face value and a remaining maturity of at least one year.
One-hundredth of one percent, or 0.01%, (for example, 20 basis points equal 0.20%); investment expenses, interest rates, and yield diff erences among bonds are often expressed in basis points.
An unmanaged group of securities whose performance is used as a standard to measure investment performance; some well-known benchmarks are the dow Jones industrial average and the s&p 500 index
Measures the fund's volatility as compared to that of the fund's benchmark index. Less than 1.0 indicates lower volatility than that of the index; greater than 1.0 indicates higher volatility than that of the index.
BofA Merrill Lynch (BofAML) 1-Year T-Bill Index
An unmanaged index that measures the returns of 12-month Treasury bills. Comprises a single issue purchased at the beginning of a month and held for the full month. At the end of that month, that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding T-Bill with the longest maturity.
BofA Merrill Lynch (BofAML) 6-Month Treasury Bill (T-Bill) Index
An unmanaged index that measures the returns of six-month Treasury bills. Comprises a single issue purchased at the beginning of a month and held for the full month. At the end of that month, that issue is sold and rolled into a newly selected issue. The issue selected at each month-end rebalancing is the outstanding T-Bill that matures closest to, but not beyond, six months from the rebalancing date.
BofA Merrill Lynch (BofAML) AAA U.S. Treasury/Agency Master Index
An unmanaged index that gives a broad look at how U.S. government bonds with a remaining maturity of at least one year have performed.
BofA Merrill Lynch (BofAML) U.S. High Yield Cash Pay Constrained Index
An unmanaged, market weighted index that measures the performance of publicly issued, nonconvertible, fixed-rate, coupon bearing, U.S. dollar-denominated, below-investment-grade corporate debt with a maturity of at least one year. Each issue represented must have an outstanding par value of at least $50 million, must be less than BBB/Baa3-rated but not in default, and is restricted to a maximum of 2% of the total index.
A debt security which represents the borrowing of money by a corporation, government, or other entity; the borrowing institution repays the amount of the loan plus a percentage as interest; income funds generally invest in bonds.
A fund that invests primarily in bonds and other debt instruments.
A rating or grade that is intended to indicate the credit quality of a bond, considering the fi nancial strength of its issuer and the likelihood that it will repay the debt; agencies such as Standard & Poor’s, moody’s investors service and fitch issue ratings for diff erent bonds, ranging from aaa (highly unlikely to default) to d (in default).
A person who acts as an intermediary between the buyer and seller of a security, insurance product, or mutual fund, often paid by commission; the terms broker, broker/dealer, and dealer are sometimes used interchangeably
An optional service which allows a participant to establish a self-directed brokerage account; this option carries distinct charges.
Capital Appreciation Fund
An investment fund that seeks growth in share prices by investing primarily in stocks whose share prices are expected to rise.
An increase in the value of an investment, calculated by the diff erence between the net purchase price and the net sale price.
The loss in the value of an investment, calculated by the diff erence between the purchase price and the net sale price.
An investment goal or objective to keep the original investment amount (the principal) from decreasing in value.
The total market value of a company’s outstanding equity.
Cash Alternative or Cash Equivalent
An investment that is short term, highly liquid, and has high credit quality.
Cash Refund Annuity
An annuity that makes periodic payments for the life of an individual and a benefi t payable to a benefi ciary upon death, equal to the premium(s) paid less payments made to the individual.
Class A Shares
Typically impose a front-end sales load and tend to have a lower 12b-1 fee and lower annual expense than other mutual fund share classes; some mutual funds reduce the front-end load as the size of the investment increases.
Class C Shares
These generally have a level load and might include a 12b-1 fee, other annual expenses and either a front- or back-end sales load.
Class I Shares
Are often called “institutional shares” because they’re generally intended for fi nancial institutions purchasing shares for their own clients’ accounts; these shares have no front-end sales charge and cannot be purchased by the general public.
Class R Shares
Typically provided exclusively to retirement plans and charges can vary based on the plan’s requirements and recordkeeping preferences.
Collective Investment Fund
Investments created by a bank or trust company for employee benefi t plans, such as 401(k) plans, that pool the assets of retirement plans for investment purposes; they are governed by rules and regulations that apply to banks and trust companies instead of being registered with the sec; also referred to as collective or commingled trusts.
Compensation paid to a broker or other salesperson for his or her role when investments are bought or sold.
An investment that represents a share of ownership in a corporation.
Company Stock Fund
A fund that invests primarily in employer securities that may also maintain a cash position for liquidity purposes.
The cumulative effect that reinvesting an investment’s earnings can have by generating additional earnings of their own.
Contingent Deferred Sales Charge (CDSC)
An investment company may collect this fee if you withdraw money from your investment early in the contract. It compensates the company for the high cost they incur when setting up your account. The CDSC typically goes down over time and goes away altogether, when you reach to defined period for the contract.
Contract issue date
The date you sign paperwork to buy an annuity.
A bond issued by a corporation, rather than by a government; the credit risk for a corporate bond is based on the re-payment ability of the company that issued the bond.
The risk that a bond issuer will default, meaning not repay principal or interest to the investor as promised; also known as default risk.
The current rate of return of an investment calculated by dividing its expected income payments by its current market price.
A person or entity (e.g., bank, trust company, or other organization) responsible for holding fi nancial assets.
This annuity allows you to potentially grow your assets so they could provide a steady stream of income during retirement. When you purchase the annuity, you deposit money into it over a period of time and that money is invested. At a certain point, usually at retirement, you start receiving payments from the annuity, either in a lump sum or in installments.
The opposite of inflation — a decline in the prices of goods and services.
A decrease in the value of an investment.
Designated Investment Alternative
The investment options picked by the plan into which participants can direct the investment of their plan accounts.
Money you take from your financial account, such as an IRA. Also called a withdrawal.
The practice of investing in multiple asset classes and securities with different risk characteristics to reduce the risk of owning any single investment.
Money an investment fund or company pays to its stockholders, typically from profi ts; the amount is usually expressed on a per-share basis.
Dow Jones Industrial Average (Dow or DJIA)
A widely followed price-weighted index of 30 of the largest, most widely held u.s. stocks.
An estimate of bond price sensitivity to changes in interest rates. The higher the duration, the greater the change (i.e., higher risk) in relation to interest-rate movements.
Money gained on the principal in your financial accounts, such as an IRA.
Generally, economies that are in the process of growth and industrialization, such as in africa, asia, eastern europe, the far east, latin america, and the middle east which, while relatively undeveloped, may hold signifi cant growth potential in the future; investing in these economies may provide signifi cant rewards, and signifi cant risks; also known as developing market.
Emerging Market Fund
A fund that invests primarily in emerging market countries.
Employee Retirement Income Security Act of 1974 (ERISA)
A federal law that imposes various requirements on voluntary established pension plans in the private industry and establishes standards in order to provide protection for plan participants.
A security or investment representing ownership in a corporation, unlike a bond, which represents a loan to a borrower; often used interchangeably with stock.
A fund that invests primarily in equities.
Equity Wash Restriction
A provision in certain stable value or fi xed income products under which transfers made from these products are required to be directed to an equity fund or other noncompeting investment option of the plan for a stated period of time (usually 90 days) before those funds may be invested in any other plan-provided competing fi xed income fund (such as a money market fund).
Exchange Traded Fund (ETF)
An investment company, such as a mutual fund, whose shares are traded throughout the day on stock exchanges at market-determined prices.
A measure of what it costs to operate an investment, expressed as a percentage of its assets or in basis points; the investor pays for these costs through a reduction in the investment’s rate of return; see operating expenses and total annual operating expenses.
Federal Deposit Insurance Corporation (FDIC)
A federal agency that insures money on deposit in member banks and thrift institutions.
Any person or party who exercises any discretionary authority or control over the management of a plan, or any authority or control over the management or disposition of its assets; renders investment advice for a fee with respect to the funds or property of the plan, or has the authority to do so; has any discretionary authority or discretionary responsibility in the administration of the plan.
Financial Industry Regulatory Authority (FINRA)
A self-regulatory organization for brokerage fi rms doing business in the united states, operating under the supervision of the sec; the organization’s objectives are to protect investors and ensure market integrity.
The written record of the financial status of a fund or company, usually published in the annual report; generally includes a balance sheet, income statement, and other financial statements and disclosures.
With this type of annuity, the insurance company guarantees the rate of return and payout. Guarantees are subject to the claims-paying ability of the issuing insurance company.
Fixed Income Fund
A fund that invests primarily in bonds and other fixed-income securities, often to provide shareholders with current income.
Fixed Return Investment
An investment that provides a specifi c rate of return to the investor.
Flat Rate Expenses
Base fees charged to a plan, regardless of the number of participants, and may or may not include preparation of the form 5500, discrimination testing, vesting calculation, etc.
A sales charge on mutual funds or annuities assessed at the time of purchase to cover selling costs.
A group or “complex” of mutual funds, each typically with its own investment objective, and managed and distributed by the same company; also refers to a group of collective investment funds or a group of separate accounts managed and distributed by the same company.
A plan feature that permits participants to purchase investments that are not included among the plan’s general menu of designated investment alternatives.
The change over time in a target date fund’s asset allocation mix to shift from a focus on growth to a focus on income.
A fund that invests primarily in securities anywhere in the world, including the United States.
Any debt obligations issued by a government or its agencies (e.g., treasury Bills issued by the United States)
Group Annuity Contract
An annuity contract entered into between an insurance company and an owner for the benefit of a designated group, such as retirement plan participants.
Growth and Income Fund
A fund that has a dual strategy of growth or capital appreciation and current income generation through dividends or interest payments.
A fund that invests primarily in the stocks of companies with above-average risk in return for potentially above-average gains: these companies often pay small to no dividends and their stock prices tend to have the most ups and downs from day to day.
Guaranteed Interest Account
An account within a fixed or variable annuity that is guaranteed by the insurance company to earn at least a minimum rate of interest while invested in the contract.
Guaranteed Investment Contract
A contract issued by an insurance company that guarantees a specific rate of return on an investment over a certain time period.
Guaranteed Lifetime Withdrawal Benefit
A feature sometimes offered in an annuity contract where the insurance company allows an individual to withdraw a specifi ed amount from an account — even if the account balance is reduced to zero — for the life of the individual, the joint lives of two individuals (e.g., the individual and spouse) or for a specifi ed period of time; also known as a Guaranteed Minimum Withdrawal Benefit.
You can convert a lump sum into payments for life or for a certain number of years from an immediate annuity. Payments begin immediately.
The date on which a fund’s operations begin.
A fund that primarily seeks current income rather than capital appreciation.
A benchmark used to evaluate a fund’s performance; the most common indexes for stock funds are the dow Jones industrial average and the standard & Poor’s 500 index.
An investment fund that seeks to parallel the performance of a particular stock market or bond market index; often referred to as passively managed investments.
Individual Annuity Contract
An annuity contract generally entered into between an insurance company and a person or persons.
Individual retirement account (IRA)
IRAs are accounts that you own and fund through your own contributions. Two common types of IRAs are:
• Traditional IRAs – Contributions are made with pre-tax dollars, and earnings are tax-deferred. This means that you don’t owe taxes until the funds are withdrawn, usually at retirement.
• Roth IRAs – Contributions are made with after-tax dollars, so you don’t pay taxes on the money as it accumulates.
Individual Service Expenses
Charges applied individually to those participants who take advantage of special plan features, such as participant loans.
The general upward price movement of goods and services in an economy; generally one of the major risks to investors over the long term because it erodes the purchasing power of their savings.
Interest Rate Risk
The possibility that the market value of a bond or bond fund will decrease due to rising interest rates; when interest rates (and bond yields) go up, bond prices usually go down and vice versa.
The fee charged by a lender to a borrower, usually expressed as an annual percentage of the principal; for example, someone investing in bonds will receive interest payments from the bond’s issuer.
A fund that invests primarily in the securities of companies located outside of, or with revenues derived from, the United States.
A person or organization hired by an investment fund or an individual to give professional advice on investments and asset management practices.
A corporation or trust that invests pooled shareholder dollars in securities appropriate to the organization’s objective; the most common type of investment company, commonly called a mutual fund, stands ready to buy back its shares at their current net asset value.
The goal that an investment fund or investor seeks to achieve (e.g., growth or income).
The gain or loss on an investment over a certain period, expressed as a percentage; income and capital gains or losses are included in calculating the investment return.
The possibility of losing some or all of the amounts invested, or not gaining value in an investment.
Joint and Last Survivor Annuity
An annuity that provides periodic payments for the joint lives of two individuals with benefi ts payable upon the death of one individual to the surviving individual at a percentage of the original payment amount, depending upon the terms of the contract.
Large Capitalization (Cap)
A reference to either a large company stock or an investment fund that invests in the stocks of large companies.
A fund that invests primarily in large-cap stocks.
Stocks of companies with a large market capitalization; large caps tend to be well-established companies, so their stocks typically entail less risk than smaller caps, but large caps also off er less potential for dramatic growth.
An annuity that makes periodic payments only for the life of one individual; also known as single life annuity.
A fund designed to provide varying degrees of long-term appreciation and capital preservation based on an investor’s age or target retirement date through a mix of asset classes; the mix changes over time to become less focused on growth and more focused on income; also known as target date retirement or age-based funds.
A fund that maintains a predetermined risk level and generally uses words such as “conservative,” “moderate” or “aggressive” in its name to indicate the fund’s risk level; used interchangeably with target risk fund.
The ease that an investment can be converted into cash; if a security is very liquid, it can be bought or sold easily; if a security is not liquid, it may take additional time and/or a lower price to sell it.
The risk that you will live longer than expected with the potential result that you run out of money before you die.
A fee or charge paid to an investment manager for its services.
Market Capitalization or Market Cap
The market value of a company; market capitalization can be determined by multiplying the number of outstanding shares of a company’s stock by the stock’s current market price per share.
The possibility that the value of an investment will fall because of a general decline in the financial markets.
The date on which the principal amount of a loan, bond, or any other debt becomes due and is to be paid in full.
Mid Capitalization (Cap)
A reference to either a medium-sized company stock or an investment fund that invests in the stocks of medium-sized companies.
A fund that invests primarily in mid-cap stocks.
Stocks of companies with a medium market capitalization; mid caps are often considered to off er more growth potential than larger caps (but less than small caps) and less risk than small caps (but more than large caps).
Money Market Fund
A mutual fund that invests in short-term, high-grade fixed-income securities, and seeks the highest level of income consistent with preservation of capital (i.e., maintaining a stable share price).
A leading mutual fund research and tracking firm that categorizes funds by objective and size, then ranks fund performance within those categories.
MSCI ACWI ex USA Index
An unmanaged, market capitalization-weighted index that is designed to measure the performance of the stocks in the global developed and emerging markets, excluding U.S.-based companies.
MSCI EAFE® Index
An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of the stocks in developed markets outside the United States and Canada.
MSCI World IndexSM Free
An unmanaged, free float-adjusted, market capitalization-weighted index that is designed to measure the performance of global developed-market equities. The “Free” suffix denotes an index with a somewhat different history but the same constituents and performance in relation to its counterpart index without the suffix.
An investment company registered with the sec that buys a portfolio of securities selected by a professional investment adviser to meet a specifi ed fi nancial goal (investment objective); mutual funds can have actively managed portfolios, where a professional investment adviser creates a unique mix of investments to meet a particular investment objective, or passively managed portfolios, in which the adviser seeks to parallel the performance of a selected benchmark or index.
An unmanaged index that includes 100 of the largest domestic and international nonfinancial securities listed on the Nasdaq Stock Market, based on market capitalization.
National Association of Securities Dealers Automated Quotation (NASDAQ)
A composite index that measures the performance of more than 5,000 u.s. and non-u.s. companies traded “over the counter” through NASDAQ.
Net Asset Value (NAV)
The net dollar value of a single investment fund share or unit that is calculated by the fund on a daily basis.
New York Stock Exchange (NYSE)
The oldest and largest stock exchange in the united states, founded in 1792.
A mutual fund whose shares are sold without a sales commission and which does not charge a combined 12b-1 fee and service fee of more than 25 basis points or 0.25% per year.
NYSE Arca Tech 100 Index®
An unmanaged, price-weighted index of at least 100 individual technology related securities, consisting of stocks of companies from various industries that produce or deploy innovative technologies to conduct their business.
“Archipelago®”, “ARCA®”, “ARCAEX®”, “NYSE®”, “NYSE ARCASM” and “NYSE Arca Tech 100SM” are trademarks of the NYSE Group, Inc. and Archipelago Holdings, Inc. and have been licensed for use by the Nationwide Funds. This Fund is not sponsored, endorsed, sold or promoted by Archipelago Holdings, Inc. (“ARCA”). ARCA makes no representation or warranty regarding the advisability of investing in securities generally, in the Fund particularly, or the ability of the NYSE Arca Tech 100 Index to track general stock market performance.
Costs associated with running or operating an investment fund; operating expenses may include custody fees, management fees, and transfer agent fees; see also expense ratio and total annual operating expenses.
The price of a stock divided by trailing 12-month earnings per share.
The process or approach to operating or managing a fund in a passive or nonactive manner, typically with the goal of mirroring an index; these funds are often referred to as index funds and diff er from investment funds that are actively managed.
Per Participant Charges
Charges are based on the total number of eligible employees or actual participants in the plan.
A payment feature that may be available in an annuity contract which guarantees periodic payments for no less than a set period of time; for example, in a life annuity, periodic payments would be made to the individual or beneficiary for the longer of either the guaranteed period or the life of the individual.
Plan Administrative Expenses
Charges used to cover services provided for the day-to-day operations of the plan, such as record keeping, accounting, customer service support, daily valuation, etc.
Pooled Guaranteed Investment Contract (GIC) Fund Charges
Charges for a common fixed income investment option that includes a number of contracts issued by an insurance company or bank which pays an interest rate; includes investment management and administrative fees.
A collection of investments, such as stocks and bonds owned by an individual, organization or investment fund.
The individual, team or fi rm making the investment decisions for an investment fund, including the selection of the individual investments.
Portfolio Turnover Rate
A measure of how frequently investments are bought and sold within an investment fund during a year; the portfolio turnover rate is usually expressed as a percentage of the total value of an investment fund.
Money you’ve contributed to your financial account, such as an IRA.
The official document that describes certain investments, such as mutual funds, to prospective investors; the prospectus contains information required by the sec, such as investment objectives and policies, risks, services and fees.
These expenses are a combination of various charges that are included into one; also known as an asset management charge (AMC) or wrap charge.
These terms identify whether contributions are made with pre-tax or post-tax dollars. Qualified contributions come from money that hasn’t been taxed yet, such as money withheld from your paycheck for your 401(k). Nonqualified contributions come from money that has already been taxed, such as the check you write for your Roth IRA.
Rate of Return
The gain or loss on an investment over a period of time; the rate of return is typically reported on an annual basis and expressed as a percentage.
Real Rate of Return
The rate of return on an investment adjusted for inflation.
The selling of fund shares back to the fund; may also refer to the repayment of a bond on or before the agreed upon pay-off date.
A fee, generally charged by a mutual fund, to discourage certain trading practices by investors, such as short-term or excessive trading; if a redemption fee is charged, it is done when the investment is redeemed or sold.
The gain or loss on an investment; a positive return indicates a gain, while a negative return indicates a loss.
An optional rider added to your life insurance or annuity can offer additional coverage and protection on select products at an additional charge to fit your personal situation.
The potential for investors to lose some or all of their investments or to fail to achieve their investment objectives.
An investor’s ability and willingness to lose some or all of an investment in exchange for greater potential returns.
Russell 1000® Growth Index
An unmanaged index that measures the performance of the large capitalization growth segment of the U.S. equity universe; includes those Russell 1000® Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 1000® Value Index
An unmanaged index that measures the performance of the large capitalization value segment of the U.S. equity universe; includes those Russell 1000® Index companies with lower price-to-book ratios and lower forecasted growth values.
Russell 2000® Growth Index
An unmanaged index that measures the performance of the small capitalization growth segment of the U.S. equity universe; includes those Russell 2000® Index companies with higher price-to-book ratios and higher forecasted growth values.
Russell 2000® Index
An unmanaged index that measures the performance of the small-capitalization segment of the U.S. equity universe.
Russell 2000® Value Index
An unmanaged index that measures the performance of the small capitalization value segment of the U.S. equity universe; includes those Russell 2000® Index companies with lower price-to-book ratios and lower forecasted growth values.
Russell Midcap® Growth Index
An unmanaged index that measures the performance of the mid capitalization growth segment of the U.S. equity universe; includes those Russell Midcap® Index companies with higher price-to-book ratios and higher forecasted growth values.
S&P 500® Index
An unmanaged, market capitalization weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.
S&P MidCap 400® (S&P 400) Index
An unmanaged index that measures the performance of 400 stocks of medium-sized U.S. companies (those with a market capitalization of $1 billion to $4.4 billion).
S&P North American Technology Sector Index™
An unmanaged, modified, market capitalization weighted index that measures the performance of the technology sector of the U.S. equity market.
S&P SmallCap 600/Citigroup Value Index
An unmanaged index that measures the performance of the small-capitalization value sector of the U.S. equity market.
A charge for buying an investment.
SEC 30-day yield
An unmanaged, market capitalization weighted index of 500 stocks of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.
A fund that invests in a particular or specialized segment of the marketplace, such as stocks of companies in the software, healthcare, or real estate industries.
Securities and Exchange Commission (SEC)
Government agency created by congress in 1934 to regulate the securities industry and to help protect investors; it is responsible for ensuring that the securities markets operate fairly and honestly.
A general term for stocks, bonds, mutual funds, and other investments.
An insurance company account that is segregated or separated from the insurance company’s general assets; also refers to a fund managed by an investment adviser for a single plan.
A representation of ownership in a company or investment fund
Some investment funds and companies off er more than one type or group of shares, each of which is considered a class (e.g., “class A,” “Advisor” or “Institutional” shares); for most investment funds; each class has diff erent fees and expenses but all of the classes invest in the same pool of securities and share the same investment objectives.
An owner of shares in an investment fund or corporation.
Any fee charged against an investment for purchase and sale, other than the total annual operating expenses.
Calculated using standard deviation and excess returns over the 3-month U.S. Treasury bill to determine reward per unit of risk. The higher the Sharpe ratio, the better the fund's historical risk adjusted performance.
Single premium/single purchase payment
A single premium annuity is a deferred annuity that lets you put money into your annuity account only once, when you first purchase the product.
Small Capitalization (Cap)
Refers to either a small company stock or an investment fund that invests in the stocks of small companies.
A fund that invests primarily in small-cap stocks.
Stocks of companies with smaller market capitalization; often considered to off er more growth potential than large and mid caps but may come with more risk.
Stable Value Fund
An investment fund that seeks to preserve principal, provide consistent returns and liquidity; includes collective investment funds sponsored by banks or trust companies or contracts issued by insurance companies.
Standard & Poor’s 500® Index
An unmanaged, market capitalization-weighted index of leading large-cap U.S. companies in leading industries; gives a broad look at the U.S. equities market and those companies’ stock price performance.
A statistical measure of risk. It reflects the extent to which an asset's rate of return may fluctuate from period to period.
A security that represents an ownership interest in a corporation.
A fund that invests primarily in stocks.
An abbreviation using letters and numbers assigned to securities to identify them; see ticker symbol.
A short-form prospectus that mutual funds may use with investors if they make the long-form prospectus and additional information available online or on paper upon request.
Target Date Fund
A fund designed to provide varying degrees of long-term appreciation and capital preservation based on an investor’s age or target retirement date through a mix of asset classes; the mix changes over time to become less focused on growth and more focused on income; also known as a lifecycle fund.
Target Risk Fund
A fund that maintains a predetermined asset mix and generally uses words such as “conservative,” “moderate” or “aggressive” in its name to indicate the fund’s risk level; also known as a lifestyle fund.
An abbreviation using letters and numbers assigned to securities and indexes to identify them; see stock symbol.
The amount of time that an investor expects to hold an investment before taking money out.
Total Annual Operating Expenses
A measure of what it costs to operate an investment, normally expressed as a percentage of its assets or a dollar amount or in basis points; these are costs the investor pays through a reduction in the investment’s rate of return; see expense ratio and operating expenses.
Fees based on the execution of a particular plan service or transaction.
A person or entity (e.g., bank, trust company or other organization) responsible for the holding and safekeeping of trust assets and may also have other duties, such as investment management; a trustee serving as a “directed trustee” is responsible for the safekeeping of trust assets but has no discretionary investment management duties or authority over the assets.
U.S. Treasury Securities
Debt securities issued by the united states government and secured by its full faith and credits; the debt fi nancing instruments of the united states federal government; often referred to as treasuries.
A representation of ownership in an investment that does not issue shares; most collective investment funds are divided into units instead of shares; see Share.
Investment funds divided into units (e.g., collective investment funds) instead of shares and may off er more than one type or group of units, each of which is considered a class (e.g., “Class A”); for most investment funds, each class has different fees and expenses but all of the classes invest in the same pool of securities and share the same investment objectives.
The dollar value of each unit on a given date.
An owner of units in an investment; see Shareholder.
A fund that invests primarily in stocks that are believed to be priced below what they are really worth.
A variable annuity is a long-term investment product that provides a variable rate of return based on the performance of the investments that you select. A variable annuity is a contract between you and an insurance company, and it’s sold by prospectus. While it may take some time, you should read the prospectuses. They describe risk factors, fees and charges that may apply to you. Variable annuities have fees and charges that include mortality and expense, administrative fees, contract fees and the expense of the underlying investment options.
Variable Annuity Charges
Costs for investments off ered by insurance companies which include investment management and administrative fees, insurance-related charges such sales expenses and surrender and transfer charges when an employee is terminated or withdraws from the plan’s investment.
Variable Return Investment
Investments for which the return is not fixed; includes stock and bond funds and investments seeking to preserve principal but not guaranteeing a particular return (e.g., money market funds and stable value funds).
The amount and frequency of fl uctuations in the price of a security, commodity or a market within a specifi ed time period; generally, an investment with high volatility is said to have higher risk since there is an increased chance that the price of the security will have fallen when an investor wants to sell.
Withdrawal (also called a distribution)
The money you take from your financial account, such as an IRA. For retirement accounts, distributions made prior to age 59½ may be subject to a 10% penalty tax. All taxable distributions at any age are subject to ordinary income tax and surrender charges may apply. You may incur fees or penalties when you make a withdrawal, depending on the type of product and whether the account is qualified or non-qualified.
A fee or expense that is added to or “wrapped around” an investment to pay for one or more product features or services.
The value of interest or dividend payments from an investment, usually stated as a percentage of the investment price.
A fee assessed on certain mutual funds or share classes permitted under an sec rule to help cover the costs associated with marketing and selling the fund; 12b-1 fees may also be used to cover shareholder servicing expenses.