Glossary
Active Management
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 judgement and experience in selecting securities to buy and sell.
Aggressive
An investment approach that accepts above-average risk of loss in return for potentially above-average investment returns.
Annual Rate of Return
The annual rate of gain or loss on an investment expressed as a percentage.
Annual Report
A yearly report or record of an investment’s (e.g., a mutual fund’s or company’s) financial position and operations.
Annuitant
Someone who receives an annual income from an annuity.
Annuity
A form of insurance contract that provides a stream of periodic payments, typically for life. Annuities are available in a variety of forms. See also Life Annuity, Joint and Last Survivor Annuity.
Annuity Commencement Date
The date set forth in the annuity contract on which annuity payments will start. Also known as the “annuity start date.”
Appreciation
An increase in the value of an investment.
Asset
Anything with commercial or exchange value owned by a business, institution or individual. Examples include cash, real estate, and investments.
Asset Allocation
A method of investing by which investors include a range of different investment classes — such as stocks, bonds, and cash alternatives — in their portfolios. See Diversification.
Asset Class
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), fixed income (e.g., bonds), and cash alternatives (e.g., money market funds).
Average Annual Total Return
The yearly average percentage increase or decrease in an investment’s value that includes dividends, gains, and changes in share price.
Basis Point
One-hundredth of one percent, or 0.01%. For example, 20 basis points equal 0.20%. Investment expenses, interest rates, and yield differences among bonds are often expressed in basis points.
Bear Market
An extended period of time when investment prices are falling accompanied by widespread pessimism among investors.
Benchmark
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 Standard & Poor’s (S&P) 500 Index.
Beneficiary
An individual, company, trustee, or estate which receives, or may become eligible to receive, payments or benefits from an insurance policy, retirement plan, annuity, trust, will, or other contract.
Bloomberg U.S. Aggregate Bond Index
Bloomberg’s flagship benchmark measuring the investment-grade, USD-denominated, fixed-rate taxable bond market, including Treasuries, government-related and corporate securities, MBS, ABS and CMBS.
Bond
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.
Bond Fund
A fund that invests primarily in bonds and other debt instruments.
Bond Rating
A rating or grade that is intended to indicate the credit quality of a bond, considering the financial 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 different bonds, ranging from AAA (highly unlikely to default) to D (in default).
Bondholder
The owner of a bond.
Broker
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.
Brokerage Window
A plan feature that permits participants to purchase investments that are not included among the plan’s general menu of designated investment alternatives.
Bull Market
An extended period of time when investment prices are rising faster than their historical average accompanied by widespread optimism among investors.
Capital
Financial assets or the financial value of assets, such as cash. Any asset that is used to generate income or make a long-term investment.
Capital Gain
An increase in the value of an investment, calculated by the difference between the net purchase price and the net sale price.
Capital Loss
The loss in the value of an investment, calculated by the difference between the purchase price and the net sale price.
Capital Preservation
An investment goal or objective to keep the original investment amount (the principal) from decreasing in value.
Capitalization (Cap)
The total market value of a company's outstanding equity.
Cash Alternative or Cash Equivalent
An investment that is short term, highly liquid, and of high credit quality.
Cash Refund Annuity
An annuity that makes periodic payments for the life of an individual and a benefit payable to a beneficiary upon death equal to the premium(s) paid less payments made to the individual.
Certificate of Deposit (CD)
Also called a time deposit, this is a certificate issued by a bank or thrift that indicates a specified sum of money has been deposited. A CD bears a maturity date and a specified interest rate, and can be issued in any denomination. The duration can be up to five years.
Collective Investment Fund
Investments created by a bank or trust company for employee benefit 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. These funds are also referred to as collective or commingled trusts.
Commission
Compensation paid to a broker or other salesperson for his or her role when investments are bought or sold.
Common Stock
An investment that represents a share of ownership in a corporation.
Competing Funds
An investment fund that is identified by the investment manager of another fund and that is subject to special rules relating to an investor’s ability to buy and sell investments between the two funds. See Equity Wash Restriction.
Compounding
The cumulative effect that reinvesting an investment’s earnings can have by generating additional earnings of their own.
Conservative
An investment approach that accepts lower rewards in return for potentially lower risks.
Consumer Price Index (CPI)
The CPI, as it is called, measures the prices of consumer goods and services and is a measure of the pace of U.S. inflation. The U.S. Department of Labor publishes the CPI every month.
Contributions
In retirement planning, this usually refers to payments made by an employee into an employee sponsored, tax-deferred account (i.e. 457, 401(a), 403(b)) or an after- tax account such as a Roth 457 account. In certain types of plans, employers may also make contributions on the employee’s behalf.
Corporate Bond
A bond issued by a corporation, rather than by a government. The credit risk for a corporate bond is based on the repayment ability of the company that issued the bond.
Coupon Rate
In bonds, notes, or other fixed income securities, the stated percentage rate of interest, usually paid twice a year.
Credit Rating
A formula that estimates the financial ability and likelihood that a borrower will live up to his or her future contractual obligations.
Credit Risk
The risk that a bond issuer will default, meaning not repaying principal or interest to the investor as promised. Credit risk is also known as “default risk”.
Current Yield
The current rate of return of an investment calculated by dividing its expected income payments by its current market price.
Custodian
A person or entity (e.g., bank, trust company, or other organization) responsible for holding financial assets.
Death Benefit
A specified payment made to a beneficiary from a retirement plan, insurance policy, or annuity after the plan participant, owner, or policyholder dies.
Debt
The principal and interest owed to a person or organization on borrowed money. Bonds and loans are types of debt.
Default
Failure to make timely payment of interest or principal on a debt security or to otherwise comply with the legal obligations of a debt contract. Failure to pay back a loan.
Deferred Annuity
An annuity contract under which periodic income payments begin at a future date. See Annuity Commencement Date.
Deferred Compensation Plan
Generally, a plan that allows an employee to defer a percentage of compensation to a later date determined by the employee. This may be at retirement or some time before retirement. Often, the withdrawal rules for deferred compensation plans are more flexible than defined contribution plans.
Defined Benefit Plan
A type of retirement plan that pays a certain, or defined, amount of income at retirement based on a specific formula.
Defined Contribution Plan
A type of retirement plan that defines, or specifies, the contributions made to the plan, rather than the benefits paid by the plan. The amount of income paid depends on the contributions made and the investment performance over time.
Deflation
The opposite of inflation — a decline in the prices of goods and services.
Depreciation
A decrease in the value of an investment.
Distribution
A partial or full payment made to a participant or participant's beneficiary from a qualified or non-qualified retirement plan.
Diversification
The practice of investing in multiple asset classes and securities with different risk characteristics to reduce the risk of owning any single investment. Using diversification as part of an investment strategy neither assures nor guarantees better performance and cannot protect against loss in declining markets.
Dividend
Money an investment fund or company pays to its stockholders, typically from profits. The amount is usually expressed on a per-share basis.
Dividend Yield
A measure of how much a company pays out to its shareholders in the form of dividends. The dividend yield is the amount of dividends paid per share over the course of a year divided by the stock price.
Dow Jones Industrial Average (Dow or DJIA)
A widely followed price-weighted index of 30 of the largest, most widely held U.S. stocks. The Dow or DJIA, as it is called, is a barometer of how shares of the largest U.S. companies are performing.
Early Withdrawal Penalty
A penalty on money withdrawn early from an investment that has a pre-set payout date or from a qualified retirement plan. Two examples are cashing a certificate of deposit before it matures and withdrawing from a retirement plan before the age of 59 1/2.
Earnings Per Share
A company's profit divided by its number of outstanding shares. If a company earned $2 million in one year had 2 million shares of stock outstanding, its EPS would be $1 per share.
Emerging Market Fund
A fund that invests primarily in emerging market countries.
Emerging Markets
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 significant growth potential in the future. Investing in these economies may provide significant rewards, and significant risks. May also be called developing markets.
Employee Retirement Income Security Act (ERISA)
The federal law that established legal guidelines for private pension and qualified retirement plans along with certain investment practices. To learn more, visit www.irs.gov.
Equity Fund
A fund that invests primarily in equities.
Equity Wash Restriction
A provision in certain stable value or fixed income products under which transfers made from the stable value or fixed income product are required to be directed to an equity fund or other non-competing 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 fixed income fund (such as a money market fund).
Equity/Equities
A security or investment representing ownership in a corporation, unlike a bond, which represents a loan to a borrower. Often used interchangeably with “stock.”
Exchange
A marketplace in which shares, options, and futures on stocks, bonds, commodities, and indices are traded. Principal U.S. stock exchanges are: New York Stock Exchange (NYSE), American Stock Exchange (AMEX), and the National Association of Securities Dealers Automatic Quotation System (NASDAQ).
Federal Reserve System
The central bank of the United States, established in 1913 and governed by the Federal Reserve Board located in Washington, D.C. The system includes 12 Federal Reserve Banks and is authorized to regulate monetary policy in the United States as well as to supervise Federal Reserve member banks, bank holding companies, international operations of U.S. banks, and U.S. operations of foreign banks.
Fiduciary
Any person or group of people who exercises any discretionary authority or control over the management of the plan, the plan assets, or the administration of the plan, or provides investment advice for a fee.
Financial Industry Regulatory Authority (FINRA)
A self-regulatory organization for brokerage firms doing business in the United States. FINRA operates under the supervision of the SEC. The organization’s objectives are to protect investors and ensure market integrity.
Financial Planner
A person who, for a fee, helps individuals make strategic financial and investment decisions.
Financial Statements
The written record of the financial status of a fund or company, usually published in the annual report. The financial statements generally include a balance sheet, income statement, and other financial statements and disclosures.
Fixed Annuity
An annuity contract in which the insurance company makes fixed or guaranteed payments to an individual for the term of the contract.
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 specific rate of return to the investor.
Fund of Funds
A mutual fund, collective investment fund or other pooled investment that invests primarily in other mutual funds, collective investment funds, or pooled investments rather than investing directly in individual securities (such as stocks, bonds, or money market securities).
Glide Path
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.
Global Funds
A fund that invests primarily in securities anywhere in the world, including the United States.
Government Securities
Any debt obligation issued by a government or its agencies (e.g., Treasury Bills issued by the United States).
Immediate Annuity
An annuity contract under which periodic income payments begin within 12 months of purchase.
Inception Date
The date that a fund began operations.
Index
A benchmark against which to evaluate a fund's performance. The most common indexes for stock funds are the Dow Jones Industrial Average and the Standard & Poor's (S&P) 500 Index. referred to as passively managed investments.
Inflation
The overall general upward price movement of goods and services in an economy. Inflation is one of the major risks to investors over the long term because it erodes the purchasing power of their savings.
Inflation Risk
The risk that rising prices reduces the purchasing power of future interest and principal payments, particularly for fixed rate investments.
Interest Rate Risk
The risk that changes in market interest rates will affect the market value of a fixed-income investment. Generally, when rates rise, prices of existing fixed-rate bonds fall; when rates fall, bond prices rise.
Interest/Interest Rate
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.
Internal Revenue Service (IRS)
An agency of the U.S. Treasury Department charged with enforcing the tax laws, issuing interpretations of the tax law, auditing tax returns, and making criminal investigations. For more information, visit www.irs.gov.
International Fund
A fund that invests primarily in the securities of companies located, or with revenues derived from, outside of the United States.
Investment Advisor
A person or organization hired by an investment fund or an individual to give professional advice on investments and asset management practices.
Investment Company
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.
Investment Objective
The goal that an investment fund or investor seeks to achieve (e.g., growth or income).
Investment Return
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.
Investment Risk
The possibility of losing some or all of the amounts invested or not gaining value in an investment.
Investor
The owner of shares of securities such as stock, mutual funds, or bonds that have tangible exchange value.
Joint and Last Survivor Annuity
An annuity that provides periodic payments for the joint lives of two individuals with benefits payable upon the death of one individual to the surviving individual at, for example, 50%, 75%, or 100% of the original payment amount depending upon the terms of the contract.
Junk Bond
Another term for a high yield bond, which is a bond issued by a corporation that is deemed a high credit risk. These bonds offer the potential for higher returns because the issuing companies have a high risk of defaulting on the bonds.
Large Capitalization (Cap)
A reference to either a large company stock or an investment fund that invests in the stocks of large companies.
Large-Cap Fund
A fund that invests primarily in large cap stocks.
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 offer less potential for dramatic growth.
Life Annuity
An annuity that makes periodic payments only for the life of one individual. Also known as “single life annuity.”
Life Cycle Fund/Life Stages 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 “target date retirement” or “age-based” funds.
Lifestyle Fund
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.”
Liquidity
The ease with which 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.
Longevity Risk
The risk that an investor will live longer than expected with the potential result that they will run out of money before they die.
Management Fee
A fee or charge paid to an investment manager for its services.
Market
Usually refers to the stock market. As in: “the market went down today”, meaning that the value of the stock market dropped that day.
Market Capitalization
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.
Market Risk
The possibility that the value of an investment will fall because of a general decline in the financial markets.
Market Value Adjustment
A positive or negative adjustment (depending on the terms of the contract) to the value of the Fixed Account or Guaranteed Accumulation Account.
Maturity Date
The date on which the principal amount of a loan, bond, or any other debt becomes due and is to be paid in full.
Maximum Annual Withdrawal (MAW)
In certain retirement products, this is the maximum amount of money a participant can withdraw every year from the guaranteed withdrawal base without impacting the benefit base.
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.
Mid-Cap Stocks
Stocks of companies with a medium market capitalization. Mid caps are often considered to offer 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 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).
Money Purchase Plan
A defined contribution retirement plan that requires the employer to contribute a fixed percentage of each employee's salary every plan year no matter how well the company has done in that year.
Morningstar
A leading mutual fund research and tracking firm. Morningstar categorizes funds by objective and size, and then ranks fund performance within those categories.
Mortgage Backed Securities
Securities whose payments to the investor are based on payments of principal and interest of an underlying pool of mortgages.
MSCI ACWI ex USA, Ex China, Ex Hong Kong IMI
An index of large, mid, and small cap segments of developed and emerging markets, excluding the USA, China, and Hong Kong.
Municipal Bond
A bond issued by state, county, and city governments, with interest income that is exempt from federal taxes.
NASDAQ
The National Association of Securities Dealers Automated Quotations — an electronic stock market. The Nasdaq Composite Index includes over 2,500 Nasdaq listed companies (exact count varies).
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.
Nikkei Stock Average
A price-weighted index of 225 Japanese company stocks traded on the Tokyo Stock Exchange. The Nikkei has been called the Japanese equivalent of the Dow Jones Industrial Average.
NYSE American (formerly AMEX)
The American Stock Exchange joined NYSE Group in 2008; the venue now operates as NYSE American.
NYSE Arca Major Market Index (XMI)
A price-weighted index of 20 large U.S. industrial stocks, launched April 29, 1983 with a base of 200; formerly the AMEX Major Market Index.
Operating Expenses
The expenses associated with running or operating an investment fund. Operating expenses may include custody fees, management fees, and transfer agent fees. See Expense Ratio and Total Annual Operating Expenses.
Outstanding Shares
Shares that are currently owned by investors.
Passive Management
The process or approach to operating or managing a fund in a passive or non-active manner, typically with the goal of mirroring an index. These funds are often referred to as index funds and differ from investment funds that are actively managed.
Pension Plan
A retirement plan offered by an employer that provides a pre-determined benefit for employees at retirement.
Per Capita
Average per person.
Period Certain
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 for the longer of either: (1) the guaranteed period, to the individual or a beneficiary, or (2) the life of the individual.
Plan Sponsors
The organizations that establish retirement plans, including companies acting for their employees; state and local governing bodies operating on behalf of their employees; unions acting on behalf of their members; and individuals representing themselves.
Plan Type 457
A defined contribution retirement plan for employees of state and federal governments and agencies and certain tax-exempt charitable organizations.
Portfolio
A collection of investments such as stocks and bonds that are owned by an individual, organization, or investment fund.
Portfolio Manager
The individual, team or firm who makes 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.
Price Risk
The risk that the value of a stock, or a portfolio of stocks (and other investments) will decline in the future.
Prime Rate
The interest rate at which banks lend to their best (prime) customers. However, more often than not, a bank's most creditworthy customers borrow at rates below the prime rate.
Principal
The original dollar amount of an investment. The total amount of money being borrowed or lent.
Pro-Rata
In proportion to, as determined by a specific factor.
Qualified Investment
An investment that can be purchased on a pre-tax basis through a qualified retirement plan.
Qualified Retirement Plan
An employer-sponsored plan that meets the requirement of Internal Revenue Code Section 401(a) and thus qualifies for favorable tax treatment for both the employer and the employees.
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. A positive rate of return is a gain while a negative rate of return is a loss.
Real Estate Investment Trust (REIT)
A managed trust organized to invest in real estate or loans secured by real estate and issue shares in such investments.
Real Rate of Return
The rate of return on an investment adjusted for inflation.
Rebalance
The process of moving money from one type of investment to another to maintain a desired asset allocation.
Recordkeeper
A company or individual that tracks the status of your retirement benefits.
Redemption
To sell fund shares back to the fund or company. Redemption can also be used to mean the repayment of a bond on or before the agreed upon pay-off date.
Redemption Fee
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.
Return
The gain or loss on an investment. A positive return indicates a gain, and a negative return indicates a loss.
Risk
The potential for investors to lose some or all the amounts invested or to fail to achieve their investment objectives.
Risk Tolerance
An investor's ability and willingness to lose some or all of an investment in exchange for greater potential returns.
Round Trip Restriction
A policy that limits the number of times an investor can exchange into and out of a fund within a given time frame. This is intended to discourage frequent trading that increases the costs to all the fund’s investors.
Russell Indexes
A group of indexes that are widely used to benchmark investment performance. The most common Russell index is the Russell 2000 Index, an index of U.S. small-cap stocks, which measures the performance of the 2,000 smallest U.S. companies in the Russell 3000 Index.
Securities & Exchange Commission (SEC)
Government agency created by Congress in 1934 to regulate the securities industry and to help protect investors. The SEC is responsible for ensuring that the securities markets operate fairly and honestly.
Security
A general term for stocks, bonds, mutual funds, and other investments.
Separate Account
An insurance company account that is segregated or separate from the insurance company’s general assets. Also refers to a fund managed by an investment adviser for a single plan.
Share Class
Some investment funds and companies offer 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 different fees and expenses but all of the classes invest in the same pool of securities and share the same investment objective.
Shareholder
An owner of shares in an investment fund or corporation.
Shares
A representation of ownership in a company or investment fund.
Small and Mid-Cap Fund
A fund that invests primarily in small and mid-cap stocks.
Small Capitalization (Cap)
A reference to either a small company stock or an investment fund that invests in the stocks of small companies.
Small-Cap Fund
A fund that invests primarily in small-cap stocks.
Small-Cap Stocks
Stocks of companies with a smaller market capitalization. Small caps are often considered to offer more growth potential than large caps and mid caps but with more risk.
Social Security Administration
A U.S. government agency that pays income from payroll taxes to retirees, people with disabilities and dependent survivors. For more information, visit www.ssa.gov.
SPD
Summary Plan Description
Stable Value Fund
An investment fund that seeks to preserve principal, provide consistent returns and liquidity. Stable value funds include collective investment funds sponsored by banks or trust companies or contracts issued by insurance companies.
Standard & Poor's 500 Index (S&P 500)
An index comprised of 500 widely held common stocks considered to be representative of the U.S. stock market in general. The S&P 500 is often used as a benchmark for equity fund performance.
Stock
A security that represents an ownership interest in a corporation.
Stock Fund
A fund that invests primarily in stocks.
Stock Market
A market for trading shares or stock in a corporation.
Stock Symbol
An abbreviation using letters and numbers assigned to securities to identify them. Also see Ticker Symbol.
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.”
Tax-Deferred Compounding
A process where any taxes that would be owed on investment gains are postponed until actual withdrawal, allowing the gains to be reinvested to earn compound interest.
Tax-Deferred Investment
An investment where taxes on pre-tax contributions and earnings are postponed (or deferred) until withdrawal. 401(a), 401(k) 403(b), and 457 plans, along with traditional IRAs, are examples of tax-deferred investments.
Ticker Symbol
An abbreviation using letters and numbers assigned to securities and indexes to identify them. Also see Stock Symbol.
Time Horizon
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, expressed as a percentage of its assets, as 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.
Treasury (U.S. Department of)
Branch of the U.S. Government that issues Treasury bonds, notes, and bills.
Treasury Bill (T-Bill)
A fixed income debt obligation issued by the U.S. government with a maturity of one year or less.
Treasury Bond
A U.S. Treasury security that pays semiannual interest and matures in 20 or 30 years.
Treasury Notes
U.S. Treasury securities that pay semiannual interest and mature in 2, 3, 5, 7, or 10 years.
Trustee
A person or entity (e.g., bank, trust company, or other organization) that is responsible for the holding and safekeeping of trust assets. A trustee may also have other duties such as investment management. A trustee that is 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. Government Bonds
Direct debt obligations of the U.S. government. Government bonds include Treasury bonds, notes, bills, and savings bonds and they carry the highest safety ratings (the least amount of risk) of all bonds.
U.S. Treasury Securities
Debt securities issued by the U.S. government and secured by its full faith and credit. Treasury securities are the debt financing instruments of the U.S. Federal government, and they are often referred to simply as Treasuries.
Unit
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.
Unit Class
Investment funds that are divided into units (e.g., collective investment funds) instead of shares may offer 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 objective.
Unit Value
The dollar value of each unit on a given date.
Unitholder
An owner of units in an investment. See Shareholder.
Vested
A permanent right to benefits. In a qualified retirement plan, this means the plan participant is entitled to the full value of their plan account regardless of when they separate from employment.
Volatility
The amount and frequency of fluctuations in the price of a security, commodity, or a market within a specified 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.
Wrap Fee
A fee or expense that is added to or “wrapped around” an investment to pay for one or more product features or services.
Yield
The value of interest or dividend payments from an investment, usually stated as a percentage of the investment price.
