Glossary of Terms               A B C D E F G H I J K L M N O P Q R S T U V W X Y Z - Other - All 12b-1 Fee        This charge generally allows distributors to compensate broker/dealers for selling their funds, with a payment to the representative who sold the fund. It also can be a charge to cover marketing and distribution costs of the investment. Sometimes referred to as "Distribution Fees."   Source: 403bCompare.com A-Share        In a family of multi-class mutual funds, this is the class that is characterized by a front load structure. Not all fund companies follow this class structure; however, it is the prominent method of distinction.   Source: 403bCompare.com Accelerated Benefit Provision (Terminal Illness, Nursing Home)        A provision in many new policies which will allow the policy owner to receive a portion of the death benefit early if the insured person is diagnosed with a terminal illness or permanently confined to a nursing home.   Source: California Department of Insurance Account Fee        A fee that some funds separately impose on investors for the maintenance of their accounts. For example, accounts below a specified dollar amount may have to pay an account fee.   Source: United States Securities and Exchange Commission Active (Actively Managed)        Funds with an investment adviser who continually researches, monitors and actively trades the holdings of the fund to seek a higher return than the market.   Source: United States Department of Labor Administrative Fee        Charges to cover record-keeping and other administrative expenses. This may be charged as a flat account maintenance fee or as a percentage of account value.   Source: United States Securities and Exchange Commission Annual Rate of Return        Annual return on an investment. Rate of return may refer to the dividend yield or it may refer to the total return rate.   Source: National Association of Securities Dealers, Inc. Annual Reset (Rachet)        Compares the change in the index from the beginning to the end of each year. Any declines are ignored.   Source: United States Securities and Exchange Commission Annuitization        Choosing regular income payments for life or some other defined period.   Source: Ohio Department of Insurance Annuitization Bonus        An annuitization bonus encourages you to keep your funds with the company at maturity.   Source: Ohio Department of Insurance Annuity        There are two types of annuities:The first is when you pay a lump sum to a life insurance company, and they pay it out to you right away in periodic installments. This type is known as an immediate annuity - the payments to you start immediately. The second, and more common, is where money paid by you accumulates at interest over a period of time. If you choose, the accumulated amounts will then be paid out to you in periodic installments, usually when you retire, in order to supplement your retirement income. This type is known as a deferred annuity - the payments to you are deferred for a number of years. Currently, a deferred annuity may have tax advantages, in that the interest credited to your funds is deferred from current taxation. That is to say, income tax is not owed until you start receiving distributions from the annuity.   Source: California Department of Insurance Annuity Certain (Period Certain Annuity)        A type of annuity in which the insurance company will pay you an income for a specified amount of time (5 years, 10 years, 20 years, etc.). In a Life Annuity with Period Certain, the company will pay you an income for as long as you live, but if you die before the period certain that you choose, the income will be paid to a survivor you designate until the end of that period.   Source: California Department of Insurance Asset Allocation        The process of investing money in predetermined proportions in different types of assets to create a collection of assets with the desired expected return and the desired expected risk characteristics.   Source: LOMA's Glossary of Insurance and Financial Services Terms Copyright c 2002 LOMA (Life Office Management Association, Inc.). Used with permission from the publisher. All rights reserved. Asset Class        A group of similar investment instruments linked by related risk and return features.   Source: LOMA's Glossary of Insurance and Financial Services Terms Copyright c 2002 LOMA (Life Office Management Association, Inc.). Used with permission from the publisher. All rights reserved. Average Annual Return (AAR)        The most common basis for stating the historical return of a mutual fund, AAR is stated after expenses.   Source: American Stock Exchange Average Annual Yield        Average yearly income on an investment.   Source: Foundation for Investors Education B-Share        A class in a family of multi-class mutual funds. This class is characterized by a rear-end load structure that is paid only when selling the fund.   Source: 403bCompare.com Back-end Load (Deferred Sales Charge)        A sales charge investors pay when they redeem (or sell) mutual fund shares, generally used by the fund to compensate brokers.   Source: United States Securities and Exchange Commission Bailout Provision        Some fixed annuities include a bailout provision which waives the surrender charge if the contract's declared renewal interest rate falls below a point called the bailout rate.   Source: Ohio Department of Insurance Basis Point        One basis point equals 1/1OOth of one percent, or 0.01. For example, 50 basis points are equal to 1/2 percent. Basis points are frequently used to describe spreads or changes in yields of interest rates.   Source: 403bCompare.com Blend (Growth & Income)        These mutual funds invest in securities that provide a combination of growth and income. They generally funnel most of their assets into common stocks of well-established companies that pay regular dividends. They may also invest in high-rated bonds.   Source: National Association of Securities Dealers, Inc. Bond Funds (Fixed Income Funds)        A mutual fund that buys interest-bearing debt securities. Bond funds typically specify whether their holdings are corporate, U.S. Treasury, municipal, or government-sponsored enterprise bonds.   Source: National Association of Securities Dealers, Inc. Bonus Credit        Some insurance companies are now offering variable annuity contracts with "bonus credit" features. These contracts promise to add a bonus to your contract value based on a specified percentage of purchase payments.   Source: United States Securities and Exchange Commission Breakpoint        A mutual fund may offer you discounts, called breakpoints, on the front-end sales charge if you: want to make a large purchase; already hold other mutual funds offered by the same fund family; or commit to regularly purchasing the mutual fund's shares.   Source: National Association of Securities Dealers, Inc. Brokerage Window        Funds offered by a brokerage firm selected by your plan administrator. This is often referred to as a brokerage window, or a self-directed account.   Source: National Association of Securities Dealers, Inc. C-Share        In a family of multi-class mutual funds, the class that has a constant load structure throughout the life of the fund.   Source: 403bCompare.com Capped        A cap is a ceiling, or the highest level to which something can go.   Source: Foundation for Investors Education Cash Funds        In discussing financial instruments, generally used to include the value of assets that can be converted to cash immediately without a material price impact.   Source: American Stock Exchange Certified Financial Planner (CFP)        The CFP legal team has provided their official definition, along with trademarks: CFP, Certified Financial Planner, and marks are certification marks owned by the Certified Financial Planner Board of Standards, Inc. These marks are awarded to individuals who successfully complete the CFP Board's initial and ongoing certification requirements.   Source: 403bCompare.com Chartered Financial Consultant (ChFC)        A financial planning designation for the insurance industry awarded by the American College of Bryn Mawr. ChFCs must meet experience requirements and pass exams covering finance and investing. They must have at least three years of experience in the financial industry, and have studied and passed an examination on the fundamentals of financial planning, including income tax, insurance, investment and estate planning.   Source: 403bCompare.com Chartered Life Underwriter (CLU)        Designation granted by American College, Bryn Mawr, PA, the insurance and financial service industry's oldest and largest fully accredited institution of higher learning in the United States. Designation requires completion of ten college-level courses, three years of qualifying experience, and adherence to a strict code of ethics. All CLU may join the American Society of CLU and ChFC, a professional association also headquartered in Bryn Mawr, for continuing education opportunities and other member services. The American Society has chapters in all 50 states.   Source: 403bCompare.com Closed-End Fund (Closed-End Company)        A type of investment company that does not continuously offer its shares for sale but instead sells a fixed number of shares at one time (in the initial public offering) which then typically trade on a secondary market, such as the New York Stock Exchange or the Nasdaq Stock Market. Legally known as a "closed-end company."   Source: United States Securities and Exchange Commission Commission        A fee charged by a broker or agent for his/her service in facilitating a transaction, such as the buying or selling of securities or real estate. In the case of securities trading, brokers can be split into two broad categories depending on the commissions they charge. Discount brokers charge relatively low commissions, but provide no services beyond executing trades. Full service brokers charge higher commissions, but provide research and investment advisory services.   Source: 403bCompare.com Compound Interest        Interest computed on interest already assessed or accrued.   Source: Internal Revenue Service Manual Contract Fee        This is a flat dollar amount charged either once at the time of issue, or charged once each year.   Source: State of Wisconsin Office of the Commissioner of Insurance Contract Loans        Your contract may include a loan provision. In general, it allows you to borrow up to a specified amount of the annuity's accumulated value. Since it is a loan, interest will accumulate and it most likely will be to your advantage to repay it. Like the withdrawal privilege, a loan provision can give some liquid features to an annuity. A contract loan generally will be subject to current taxes.   Source: Ohio Department of Insurance Conversion        A feature some funds offer that allows investors to automatically change from one class to another (typically with lower annual expenses) after a set period of time. The fund's prospectus or profile will state whether a class ever converts to another class.   Source: United States Securities and Exchange Commission CUSIP Number        CUSIP stands for the Council on Uniform Securities Identification Procedures. A CUSIP number is a unique nine-character alphanumeric code appearing on the face of each stock or bond certificate that is assigned to a security by Standard & Poor's Corporation. CUSIP numbers are the property of the American Bankers Association (ABA) and are administered by Standard & Poor's. The number is used to expedite clearance and settlement.   Source: National Association of Securities Dealers, Inc. Custodial Fee        The charge for safekeeping or physically holding the securities in the fund.   Source: 403bCompare.com Death Benefit        If you die, a person you select as a beneficiary (such as your spouse or child) will receive the greater of: (i) all the money in your account, or (ii) some guaranteed minimum (such as all purchase payments minus prior withdrawals).   Source: United States Securities and Exchange Commission Deferred Sales Charge (Load)        The category "Deferred Sales Charge (Load)" in the fee table refers to a sales load that investors pay when they redeem fund shares (that is, sell their shares back to the fund). You may also see this referred to as a "deferred" or "back-end" sales load. When an investor purchases shares that are subject to a back-end sales load rather than a front-end sales load, no sales load is deducted at purchase, and all of the investors' money is immediately used to purchase fund shares (assuming that no other fees or charges apply at the time of purchase).   Source: United States Securities and Exchange Commission Digital (Digital Option, Binary Option)        An option with a fixed, predetermined payoff if the underlying instrument or index is at or beyond the strike at expiration. The value of the payoff is not affected by the magnitude of the difference between the underlying and the strike price.   Source: American Stock Exchange Dollar Cost Averaging        An investment strategy that involves investing a fixed dollar amount at regular intervals in one or more financial instruments.   Source: LOMA's Glossary of Insurance and Financial Services Terms Copyright c 2002 LOMA (Life Office Management Association, Inc.). Used with permission from the publisher. All rights reserved. Dow Jones Industrials        A price-weighted average of 30 actively traded blue chip stocks. It is the oldest and most traditionally quoted indicator of changes in the market.   Source: National Association of Securities Dealers, Inc. Equity Funds (Stock Fund)        An equity or stock fund is a type of mutual fund. Although a stock fund's value can rise and fall quickly (and dramatically) over the short term, historically stocks have performed better over the long term than other types of investments - including corporate bonds, government bonds, and treasury securities.   Source: United States Securities and Exchange Commission Equity Index Annuity        These products combine features of traditional insurance products (e.g., the reduced risk of a guaranteed minimum return) and traditional securities (whose return is linked to the equity market). The investor's return is based on changes in an equity index such as the S&P 500 Index. The insurer also guarantees a minimum return to the investor if the contract is held to maturity.   Source: United States Securities and Exchange Commission Exchange Fee (Transfer, Switch)        A fee that some funds impose on shareholders if they exchange (transfer) to another fund within the same fund group or "family of funds."   Source: United States Securities and Exchange Commission Expense Ratio        A fund's total expenses, including rule 12b-1 fees, divided by its average net assets.   Source: United States Securities and Exchange Commission Fee Based Financial Planning        Financial planning services which are paid for on a flat fee or an hourly basis, rather than on a commission basis, in order to eliminate potential conflicts of interest.   Source: 403bCompare.com Fee-only Investment Advisor        A newer type of investment professional who charges a flat hourly rate (or "a la carte" rate) for his or her services, instead of taking compensation from commissions on investment transactions. The fee-only advisor's services consist mainly of analyzing portfolios as a whole, so he or she is most likely schooled in many different asset classes, as well as other areas such as real estate, college financial aid, retirement and tax planning/preparation. Here we take a look at the fee-only investment advisor's place in the financial world and how this type of professional compares to those who are compensated by means of commissions.   Source: 403bCompare.com Fixed Annuity        Fixed Annuities guarantee that your money will accumulate at a minimum specified rate of interest.  However, the company will pay you a higher rate of interest if its investment experience is better than the minimum guarantee.   Source: California Department of Insurance Flat Dollar Amount        Total charges based upon the particular method of calculation.   Source: United States Department of Labor Floors (Floor Guarantee)        The guaranteed minimum return for a single premium product.   Source: United States Securities and Exchange Commission Free Look        Period of ten or more days, during which you can terminate the contract without paying any surrender charges and get back your purchase payments (which may be adjusted to reflect charges and the performance of your investment).   Source: United States Securities and Exchange Commission Free Withdrawal        Surrender charges are commonly deducted from withdrawals, but these charges often are eliminated for a 30 to 45 day window at the end of each index term. There may also be a limited free withdrawal privilege.   Source: United States Securities and Exchange Commission Fund Class        Many mutual funds offer more than one class of shares. For example, you may have seen a fund that offers "Class A" and "Class B" shares. Each class will invest in the same "pool" (or investment portfolio) of securities and will have the same investment objectives and policies. But each class will have different shareholder services and/or distribution arrangements with different fees and expenses. As a result, each class will likely have different performance results.   Source: United States Securities and Exchange Commission Fund Supermarket        A fund supermarket is a program offered by a broker-dealer or other financial institution through which its customers may purchase and redeem a variety of funds from different providers.   Source: United States Securities and Exchange Commission Global Funds        A mutual fund that invests in securities issued by companies from around the world, including the country where the fund is offered for sale.   Source: LOMA's Glossary of Insurance and Financial Services Terms Copyright c 2002 LOMA (Life Office Management Association, Inc.). Used with permission from the publisher. All rights reserved. Government Bonds        Obligations of the U.S. Government, regarded as the least risky, highest-grade securities issues. The major types of debt instruments issued by the U.S. government are: Treasury Bills, Saving Bonds, Treasury Notes, and Treasury Bonds.   Source: New York Stock Exchange Growth Funds        Growth funds focus on stocks that may not pay a regular dividend but have the potential for large capital gains.   Source: United States Securities and Exchange Commission Guarantees        Insurance companies issuing variable annuities provide a number of specific guarantees. For example, they may guarantee a death benefit or an annuity payout option that can provide income for life. A fixed deferred annuity always contains guarantees. For example, it might guarantee that the interest rate on the funds accumulating in your policy will be at least 4%.   Source: National Association of Securities Dealers, Inc., California Department of Insurance High Water Mark        Looks at the index value at various points during the contract, usually annual anniversaries. It then takes the highest of these values and compares it to the index level at the start of the term.   Source: United States Securities and Exchange Commission High Yield        A high-yield bond is by definition a "Non-Investment Grade" security under the Trade Reporting and Compliance Engine (TRACE) Rules. A high-yield bond is a corporate bond that is rated as speculative grade by a nationally recognized statistical rating agency.   Source: National Association of Securities Dealers, Inc. Income Funds        Income funds invest in stocks that pay regular dividends.   Source: United States Securities and Exchange Commission Index Funds        Index funds aim to achieve the same return as a particular market index, such as the S&P 500 Composite Stock Price Index, by investing in all - or perhaps a representative sample - of the companies included in an index.   Source: United States Securities and Exchange Commission Intermediate Term        Intermediate-term bonds mature in two to ten years from the date of issue. Typically, the interest on these bonds is greater than that on short-term bonds of similar quality but less than that on comparably rated long-term bonds.   Source: Foundation for Investors Education International Funds        This type of fund generally invests in stocks and bonds of companies located outside the United States.   Source: National Association of Securities Dealers, Inc. Joint and Survivor        A type of annuity in which the insurance company will pay an income to you during your life, and after your death will pay a percentage of that income (50% or 75%, for example) to a survivor you designate during his or her life.   Source: California Department of Insurance Lapse        The discontinuation of insurance without cash value when the required premium is not paid.   If cash value exists, there may be nonforfeiture provisions available.   Source: California Department of Insurance Large Cap        Stocks of bigger companies whose market value is above a designated minimum, such as $5 billion.   Source: National Association of Securities Dealers, Inc. Life Annuity        A type of annuity in which the insurance company will pay you an income for as long as you live.   Source: California Department of Insurance Life Income with Refund Annuity (Refund Annuity)        Guarantees benefits will at least equal the annuity's purchase price.   Source: Ohio Department of Insurance Life Insurance        A policy that will pay a specified sum to beneficiaries upon death of the insured.   Source: California Department of Insurance Lifecycle Funds        A highly diversified mutual fund designed to remain appropriate for investors in terms of risk throughout a variety of life circumstances. Accordingly, lifecycle funds offer different risk profiles that investors can shift invested funds between in order to manage risk effectively as they move from youth to middle age to retirement. Although lifecycle funds all share the common goal of first growing and then later preserving principal, they can contain any mix of stocks, bonds, and cash.   Source: 403bCompare.com Living Benefits        In some life insurance policies, benefits available before death, in such events as long-term, catastrophic or terminal illness. This benefit first became available when companies offering viatical settlements purchased the life insurance policies of terminally ill individuals from the insurance companies which issued the policies. After extracting a portion of the value of the policy for costs and profits, these companies offered the remainder of the death benefit to terminally ill policy holders. Insurance companies have different rules about how much money can be extracted and how close to death the holder must be to receive benefits early. The remainder of the value of the policy, minus interest charges, is awarded to the beneficiaries upon the death of the holder. Also called accelerated benefits.   Source: 403bCompare.com Load (Sales Charge)        The amount that investors pay when they purchase (front-end load) or redeem (back-end load) shares in a mutual fund, similar to a commission. The SEC's rules do not limit the size of sales load a fund may charge, but the NASD's rules state that mutual fund sales loads cannot exceed 8.5% and must be even lower depending on other fees and charges assessed.   Source: United States Securities and Exchange Commission Loan Fees        Loan fees can vary from a small percentage of the amount you borrow to a rather substantial percentage of the total value of what you'd be eligible to borrow.   Source: National Association of Securities Dealers, Inc. Loan Value        The amount which can be borrowed by the policy owner from the company using the value of the policy as collateral.  Usually the interest rate payable on the loan varies based on an index defined in the policy.   Source: California Department of Insurance Lump Sum        A single cash payment to the participant (or, under certain circumstances, to another designated party). The availability and payment of lump-sum distributions are subject to certain legal restrictions, and premature receipt of such distributions can have adverse tax consequences.   Source: American Savings Education Council (ASEC) Management Fee        Also called the investment advisory fee, this represents the company's cost for managing the money in the fund.   Source: 403bCompare.com Market Capitalization        The outstanding equity market capitalization of a given company computed by multiplying the company's current market price by current common shares outstanding.   Source: California Public Employees' Retirement System Market Index        A measurement of the performance of a specific "basket" of stocks considered to represent a particular market or sector of the U.S. stock market or the economy. For example, the Dow Jones Industrial Average (DJIA) is an index of 30 "blue chip" U.S. stocks of industrial companies (excluding transportation and utility companies).   Source: United States Securities and Exchange Commission Market-value Adjusted Annuity        In a contract of this type, your surrender value during an interest rate guarantee period is altered by both a surrender charge and a market value adjustment. The market value adjustment reflects changes in the interest rate level from the start of the period through the time you surrender the contract.   Source: Ohio Department of Insurance Medical Bailout (Waiver of Premium)        A rider added to policy that will waive the premium payments required by an insured during the total disability of the insured.   Source: California Department of Insurance Mid Cap        Stocks of mid-sized companies whose market value falls between a designated minimum and maximum, such as $1 billion to $5 billion.   Source: National Association of Securities Dealers, Inc. Minimum Guaranteed Interest        Equity-Indexed Annuities offer a minimum guaranteed interest rate combined with an interest rate linked market index.   Source: National Association of Securities Dealers, Inc. Minimum Required Distribution (MRD)        A minimum required distribution is the smallest amount you can take each year from your 401(k), 403(b), traditional IRA, or other retirement savings plan once you've reached the mandatory age for making withdrawals, usually 70 1/2. If you take less than the required minimum, you owe a 50% penalty on the amount you should have taken. You calculate your MRD by dividing your account balance at the end of your plan's fiscal year - usually but not always December 31 - using a divisor determined by your age.   Source: National Association of Securities Dealers, Inc. Money Market        Market for short-term debt securities, such as banker's acceptances, commercial paper, repos, negotiable certificates of deposit, and Treasury Bills with a maturity of one year or less and often 30 days or less. Money market securities are generally very safe investments which return a relatively low interest rate that is most appropriate for temporary cash storage or short-term time horizons. Bid and ask spreads are relatively small due to the large size and high liquidity of the market.   Source: 403bCompare.com Mortality and Expense        This charge is equal to a certain percentage of your account value, typically in the range of 1.25% per year. This charge compensates the insurance company for insurance risks it assumes under the annuity contract.   Source: United States Securities and Exchange Commission Mutual Fund        A mutual fund is a company that pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. The combined holdings the mutual fund owns are known as its portfolio. Each share represents an investor's proportionate ownership of the fund's holdings and the income those holdings generate.   Source: United States Securities and Exchange Commission Nasdaq 100        The NASDAQ (National Association of Securities Dealers Automated Quotation) Financial-100 Index includes 100 of the largest domestic and international financial organizations listed The Nasdaq Stock Market based on market capitalization. The Index contains bank and savings institutions and related holding companies, insurance companies, broker dealers, investment companies and financial services.   Source: NASDAQ No-load Fund        A fund that does not charge any type of sales load. But not every type of shareholder fee is a "sales load," and a no-load fund may charge fees that are not sales loads. No-load funds also charge operating expenses.   Source: United States Securities and Exchange Commission Offering Price        When a security, such as a stock, is offered for sale to the public for the first time, or a publicly traded company issues new shares, the initial price per share is set by the underwriter. That price is known as the offering price or the public offering price. When the stock begins to trade, its market price may be higher or lower than the offering price. In the case of open-end mutual funds, the offering price is the price per share of the fund that you pay when you buy. If it's a no-load fund, a back-end load Class B fund, or a level-load Class C fund, the offering price and the net asset value (NAV) are the same. If it's a front-end load Class A fund, the sales charge is added to the NAV to arrive at the offering price.   Source: Foundation for Investors Education Participation Rate        A participation rate determines how much of the gain in the index will be credited to the annuity.   Source: United States Securities and Exchange Commission Passively Managed        Passively managed funds seek to obtain the investment results of an established market index, such as the Standard and Poor's 500, by duplicating the holdings included in the index. Thus, passively managed funds require little research or trading activity.   Source: United States Department of Labor Persistency Bonus        Encourages you to keep your funds with the company regardless of annuitization.   Source: Ohio Department of Insurance Point to Point        Compares the change in the index at two discrete points in time, such as the beginning and ending dates of the contract term.   Source: United States Securities and Exchange Commission Portfolio Rebalancing        As you get closer to retirement, or as market performance alters the values of your asset classes, you may find that your asset allocation no longer guarantees the balance of growth and return that you want. In that case, you may want to consider adjusting your holdings and rebalancing your portfolio.   Source: National Association of Securities Dealers, Inc. Prospectus        A prospectus is a document given to potential investors in connection with a public offering of securities. It is intended to provide potential investors with a written statement of all relevant information about the company -- its history, operations, financial condition and key personnel. A prospectus is required by law; it provides information but not an endorsement.   Source: California Department of Corporations Purchase Fee        A purchase fee is another type of fee that some funds charge their shareholders when the shareholders purchase their shares. A purchase fee differs from, and is not considered to be, a front-end sales load because a purchase fee is paid to the fund (not to a broker) and is typically imposed to defray some of the fund's costs associated with the purchase.   Source: United States Securities and Exchange Commission Redemption Fee        A type of fee that some funds charge their shareholders when they sell or redeem shares. Unlike a deferred sales load, a redemption fee is paid to the fund (not to a broker) and is typically used to defray fund costs associated with a shareholder's redemption.   Source: United States Securities and Exchange Commission Registered Investment Advisor (RIA)        Investment advisor registered with the SEC. No certification is required.   Source: 403bCompare.com Registered Representative        An individual who is licensed to sell securities and has the legal power of an agent, having passed the Series 7 and Series 63 examinations. Usually works for a brokerage licensed by the SEC, NYSE, and NASD. Also called account executive.   Source: 403bCompare.com Return of Principals Guarantee (Principal Protected Funds, Principal Protection, Capital Preservation, or Guaranteed Funds)        There are several common characteristics shared by these investments: 1. Guarantee principal. Most principal-protected funds guarantee your initial investment minus any front-end sales charge even if the stock markets fall. In many cases, the guarantee is backed by an insurance policy. 2. Lock-up period. If you sell any shares in the fund prior to the end of the "guarantee period" - a period of anywhere from 5 to 10 years - you lose the guarantee on those shares and could lose money if the share price has fallen since your initial investment. 3. Hold a mixture of bonds and stocks. Most principal-protected funds invest a portion of the fund in zero-coupon bonds and other debt securities, and a portion in stocks and other equity investments during the guarantee period. To ensure the fund can support the guarantee, many of these funds may be almost entirely invested in zero-coupon bonds or other debt securities when interest rates are low and equity markets are volatile. Because this allocation provides less exposure to the markets, it may eliminate or greatly reduce any potential gains the fund can achieve from subsequent gains in the stock market. It also may increase the risk to the fund of rising interest rates, which generally cause bond prices to fall. 4. Higher fees. Many principal-protected funds carry an expense ratio (the total annual fees deducted from your holdings) that typically is higher than that of non-protected funds. Fees range from 1.5% to nearly 2%, of which .33% to .75% typically pays for the principal guarantee. In addition, many funds also impose sales charges, plus redemption/penalty fees for early withdrawals that may be significant.   Source: National Association of Securities Dealers, Inc. Rider        A provision added to a policy that provides additional benefits, usually accompanied by a corresponding premium increase or change.   Source: California Department of Insurance Rollover        A rollover occurs when you withdraw cash or other assets from one qualified employer retirement plan and contribute all or part of it within 60 days to another qualified retirement plan or traditional IRA.   Source: Internal Revenue Service Tax Topic 413 Roth 403(b)        Prior to January 2006, participants in a 403(b) plan could only make traditional elective contributions with pretax dollars - not subject to income taxes when made. Taxes on the accumulation are deferred until money is withdrawn from the account, at which time the withdrawn amount is subject to income taxes. Now participants may also make a "Roth" elective contribution, which is made after income taxes are withheld. The interest and earnings withdrawn from a Roth Account are tax-free if the distribution is considered "qualified."   Source: 403bCompare.com S & P 400        Measuring the performance of the mid-size company segment of the U.S. market, this index is used by over 95% of U.S. managers and pension plan sponsors. $20 billion is indexed to the S&P MidCap 400.   Source: NASDAQ S & P 500        A market-value weighted index that tracks the performance of 500 widely held large-cap stocks in the industrial, transportation, utility, and financial sectors. It is often looked to by experienced investors as a measure of changes in the broad market.   Source: National Association of Securities Dealers, Inc. Salary-Reduction Contribution        A cash- or deferred-contribution arrangement of an employer-sponsored retirement plan, under which participants can choose to set aside part of their pre-tax compensation as a contribution to the plan.   Source: 403bCompare.com Sales Load        Funds that use brokers to sell their shares must compensate the brokers. Funds may do this by imposing a fee on investors, known as a "sales load" (or "sales charge (load)"), which is paid to the selling brokers. In this respect, 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.   Source: United States Securities and Exchange Commission Sector Funds        Sector funds may specialize in a particular industry segment, such as technology or consumer products stocks.   Source: United States Securities and Exchange Commission Settlement Option        The manner in which the insured or beneficiary may choose to have the policy proceeds paid.   Source: California Department of Insurance Shareholder Service Fees        Fees paid to persons to respond to investor inquiries and provide investors with information about their investments.   Source: United States Securities and Exchange Commission Simple Interest        Interest computed on a principal amount only.   Source: Internal Revenue Service Manual Small Cap        Stocks of smaller companies whose market value is below a designated minimum, such as $1 billion.   Source: National Association of Securities Dealers, Inc. Spread        Some Equity Index Annuities use a spread, margin or asset fee in addition to, or instead of, a participation rate. This percentage will be subtracted from any gain in the index linked to the annuity.   Source: United States Securities and Exchange Commission Straight Life Annuity (Annuities for a single life)        You receive definite amounts at regular intervals for life. The payments end at death.   Source: Internal Revenue Service Publication 575 Surrender Charge        If you withdraw money from a variable annuity within a certain period after a purchase payment (typically within six to eight years, but sometimes as long as ten years), the insurance company usually will assess a "surrender" charge, which is a type of sales charge.   Source: United States Securities and Exchange Commission Surrender Period        The surrender charge is a percentage of the amount withdrawn, and declines gradually over a period of several years, known as the "surrender period."   Source: United States Securities and Exchange Commission Sweeps        While brokerage firms are required to send funds or certificates "promptly" to customers following the settlement of a trade, there are no deadlines imposed by federal law or regulations. Brokerage firms will credit your account with sale proceeds as soon as your trade settles. Some brokerage firms may immediately "sweep" your money into an account that earns interest. You should ask your broker about how you can assure that all funds and securities are delivered to you promptly.   Source: United States Securities and Exchange Commission Target Date Funds (also know as Lifecycle Fund):        A highly diversified mutual fund designed to remain appropriate for investors in terms of risk throughout a variety of life circumstances. Accordingly, lifecycle funds offer different risk profiles that investors can shift invested funds between in order to manage risk effectively as they move from youth to middle age to retirement. Although lifecycle funds all share the common goal of first growing and then later preserving principal, they can contain any mix of stocks, bonds, and cash.   Source: 403bCompare.com Temporary Life Annuity        With this type of annuity, you are to get annuity payments either for the rest of your life or until the end of a specified period, whichever period is shorter.   Source: Internal Revenue Service Publication 939 Ticker (Stock Symbol)        A unique four- or five-letter symbol assigned to a Nasdaq security that is used for identifying it on stock tickers, in newspapers, on on-line services, and in automated information retrieval systems. If a fifth letter appears, it identifies the issue as other than a single issue of common or capital stock.   Source: National Association of Securities Dealers, Inc. Total Annual Fund Operating Expense        The total of a fund's annual fund operating expenses, expressed as a percentage of the fund's average net assets. You'll find the total in the fund's fee table in the prospectus.   Source: United States Securities and Exchange Commission Transfer Fee        This is an amount charged by a fund to transfer either within the fund family or to another company.   Source: 403bCompare.com Value (Income)        Value stocks are those considered to be selling at lower prices or "undervalued" because the companies that issue these shares have had business setbacks or are out of favor with investors. Value stocks have been known to outperform growth stocks in slow markets - and vice versa. But there is still a risk with value stocks because not all companies recover from setbacks.   Source: National Association of Securities Dealers, Inc. Variable Annuity        Variable annuities differ from fixed annuities in that contract owners direct the distribution of their money among several different accounts and their accumulated funds reflect the experience of those accounts rather than that of the company.   Typical account choices are: common stock, bond, mortgage or money-market accounts.   If the value of the accounts increases or decreases, so will the amount accumulated.   Source: California Department of Insurance Withdrawal Charge        A fee charged by some annuities and funds when an investor takes money out of his or her account.   Source: 403bCompare.com Wrap Fee        Charge for an investment program that bundles or "wraps" a number of services (brokerage, advisory, research, consulting, management, etc.) together and covers them with a single fee based on the value of assets under management.   Source: National Association of Securities Dealers, Inc.