The total value of an account is determined by multiplying the most recent Net Asset Value by the number of shares owned for each asset held, plus any cash or cash instruments that may be held in the account.  

Dividends or interest earned by a security or mutual fund that has not been paid to the holder(s).

An investment approach that seeks to outperform benchmark returns through an aggressive investment/divestment strategy.

The organization employed by a mutual fund sponsor to manage a particular fund's assets, or the person hired to manage the investments for a company or individual.

A measure of the difference between a fund’s actual returns and its expected performance given its level of risk as measured by beta. A positive alpha indicates the fund has performed better than its beta would predict. In contrast, a negative alpha indicates the fund’s underperformance given the expectations established by the fund’s beta. It is often considered to represent the value an investment manager adds to or subtracts from a fund's returns.

Investment opportunities using non-traditional asset classes such as real estate and hedge funds.

An annual publication that public corporations must provide to shareholders to describe their operations and financial conditions. In the case of mutual funds, an annual report is a required document that is made available to fund shareholders on a fiscal year basis, disclosing certain aspects of a fund's operations and financial condition.

A measure of a fund’s trading activity which is computed by taking the lesser of purchases or sales (excluding securities with maturities of less than one year) and dividing by the average monthly net assets. A turnover ratio of 100% or more does not necessarily suggest that all securities in the portfolio have been traded. In practical terms, the resulting percentage loosely represents the percentage of the portfolio’s holdings that have changed over the past year. The ratio is published in the fund’s annual report.

Describes the return gained, on average, each year of a multi-year period rather than a cumulative return. A hypothetical rate of return that, if achieved annually, would have produced the same cumulative return, if performance had remained constant. (See also average annual return.)

A contract sold by insurance companies, or set up in conjunction with a donation to a charitable organization, that is designed to provide payments to the annuitant, or contract holder, at specified intervals. Fixed annuities guarantee a specific payment amount since the contract is based on a set interest rate. Variable-rate annuities do not guarantee a specific payment amount, but provide the potential for greater returns.

Any item of tangible value owned by an individual, institution, or business. Examples of personal assets include cars, houses, savings accounts and invested monies.

The diversification of investments across asset classes, such as short-term investments, mutual funds, stocks and bonds. An asset allocation strategy is utilized to balance risk and return while working to attain investment goals.

A distinction used to define different types of investments, such as stocks ( or equity securities), bonds (or fixed income investments), and cash (or money market mutual funds).

Asset-weighted average returns, where each fund’s return is weighted by its net assets, before comparison, is typically a better measure of investor experience.

The average performance of a portfolio over a period of years that accounts for the effects of compounding.

The credit quality of a fixed-income portfolio’s underlying securities as defined by Moody’s.

The length of time until the average security in a fixed income portfolio will mature or be redeemed by its issuer. It is used as a measure of the sensitivity of the portfolio to interest rate changes. In general, a longer average weighted maturity implies greater volatility in response to interest rate changes.

The weighted average internal rate of return of the bonds held in a portfolio, reflecting the reinvestment of interest received and the effects of embedded options.

A mutual fund, or the asset allocation of an individual account, that is invested in a combination of stocks, bonds, and short-term securities with the goal of high total return with reasonable risk. These funds are designed to provide income flow and some capital appreciation potential. These funds tend to offer less growth potential and are historically less volatile than funds that invest solely in stocks.

A predetermined set of securities, based on published indexes or customized to suit an investment strategy, that is used for performance comparison. This can be a hybrid, or combination, of multiple indexes, depending on the investment vehicles held by the account.

A measure of a fund’s sensitivity to market movement. By definition, the beta of the market is 1.00. Morningstar calculates beta by comparing a fund’s excess return over Treasury bills to the market’s excess return over Treasury bills, so a beta of 1.10 shows that the fund has performed 10% better than its benchmark in “up” markets and 10% worse in “down” markets, assuming all other factors remain constant. Conversely, a beta of 0.85 indicates that the fund’s excess return is expected to perform 15% worse than the market’s excess return during “up” markets and 15% better during “down” markets. A higher beta generally equates to a greater amount of risk.

A contract which commits a borrower, such as a company or municipality, to pay a bondholder (investor) scheduled interest payments on the debt incurred (in most cases), and to return the bondholder's principal amount by a specified maturity date. Bonds are useful ways for corporations, municipalities, states and the U.S. government to finance operations.

A mutual fund that purchases only bonds, also known as a fixed income fund. By diversifying the issuers and interest rates of the bonds, the fund can lower its level of risk. Bond funds generally pay regular distributions due to the interest received from the bonds held in the fund’s portfolio.

Identification numbers and codes assigned to securities for trading purposes. The Committee on Uniform Securities Identification Procedures (CUSIP) was formed to develop this standard.

A rise in the value of an asset based on a rise in market price. Essentially, the capital that was invested in the security has increased in value. Capital appreciation is often a stated investment goal.

These are payments by mutual funds to its shareholders resulting from the sale of assets within mutual funds’ portfolios. There are two types of capital gains distributions: short-term gain and long-term gain. Both are considered income by the IRS, and taxes may be owed on the amount received in the year the distributions are paid.

The total value of a publicly-traded corporation, calculated by multiplying the number of its outstanding shares by the current market price per share.

An asset that is valued as cash, such as a money market fund. Note: an investment in a money market fund is neither insured nor guaranteed by the U.S. government, and there is no assurance that money market funds will maintain a stable NAV of $1.00 per share.

Mutual funds are placed into one of six broad categories: domestic equity, domestic fixed income (taxable), domestic fixed income (tax-exempt), international equity, international fixed income, or money market.

A regulated investment company which issues a fixed amount of shares that are traded on a stock exchange.

Pooling the investment funds of individual accounts, with each client owning a share of the total fund. Similar to a mutual fund.

A stock represents partial ownership of a public corporation. Stocks usually carry corporate voting rights and pay dividends out of the company's profits, depending on the share class owned. In the event of liquidation of the firm, common stock shareholders are paid off after bank creditors, bond holders and preferred stock holders.

Interest that earns interest, as with the monies held in a savings account. The initial deposit will earn interest, and when the earned interest is credited to the account, the increased amount earns interest. For example, a deposit of $100,000 at a set rate of 4% results in a monthly interest payment of approximately $333. When deposited, the new savings account balance is $100,333, which begins accruing interest at 4%, increasing the interest payment for the following month. Compounding also occurs if income from bonds or dividends and capital gains from stocks or mutual funds are reinvested.

An independent company contracted to oversee an individual’s or organization’s accounts, including the selection of investment managers, the review of and recommendations for diverse investment strategies, and regular comparison of accounts’ performances to their investment peers and indexes.

This is the change in wages or pension benefits to keep pace with the change in the cost of living due to inflation.

The interest rate paid on a bond. A 6% coupon on a bond with a face value of $1,000,000 earns $60,000 in interest payments annually.

Formal evaluation of an individual’s or a company’s credit history and capability of replaying obligations.

The total performance return to date, not reported in annualized terms.

A technique used to offset the risks associated with the changing value of currency.

The investment objective for a moderately conservative portfolio of securities or mutual funds that provides high dividend and annuity payments to satisfy an investor's steady income requirements.

An investment strategy aimed at balancing risk and return by spreading investments across different securities or sectors, such as owning stocks, bonds and mutual funds, to reduce the risk of owning any single investment.

Payments made to security holders. In stock market terms, dividends are the payments to shareholders from profits earned by a company on a per-share basis. In mutual fund terms, dividends are paid from the income generated by a fund's investments.

The current annualized rate of dividends paid on a share of stock divided by its current share price. For an equity mutual fund, the Dividend Yield is generally the weighted average yield for the assets it holds as of a specific date. Yields will differ based on the share class held.

This is the strategy of investing a fixed amount of money at regular time intervals regardless of asset prices. It means that more shares are purchased when prices are low, and fewer shares are purchased when prices are high, thus increasing the buying power of a given investment.

A mutual or exchange-traded fund that invests only in companies located in the United States.

A permanent legal residence and the country in which taxes are paid.

The sensitivity of the price of a fixed-income investment to a change in interest rates, expressed as a number of years. Rising interest rates mean falling prices, while declining interest rates mean rising bond prices. The longer the duration, the greater the interest-rate risk or reward for bond prices.

The Morgan Stanley Capital International Europe, Australia and the Far East ("EAFE") Index is a generally-accepted benchmark for the developed country global stock markets’ performance, with a database of approximately 1,500.  The data are provided in several forms: calculated in US dollars, in local currency, without dividends, with net dividends, or with gross dividends reinvested.

The return on a fixed-income investment as computed using both the capital gain from price appreciation and the bond's current yield. This is a more accurate measure of return than using just the interest rate of the security.

The financial markets of developing economies. Many Latin American, Eastern European, and Asian countries are considered to be emerging markets.

The stock, or shared ownership, in a firm. The owners are called shareholders.

Returns in excess of a market measure, such as an index fund.

Exchange-traded funds are groups of securities selected to replicate the performance of an index (e.g., the S&P 500) that are traded on an exchange like an individual stock. Unlike regular open-end mutual funds, ETF’s may be bought and sold throughout the trading day.

The percentage of fund assets, per share, used to pay the operating expenses and management fees, including 12b-1 fees, administrative fees, and all other asset-based costs incurred by the fund except brokerage costs. Fund expenses are reflected in the fund’s NAV. Sales charges are not included in the expense ratio, which can be found in the fund’s annual report and its prospectus.

A regulatory body, the Financial Industry Regulatory Authority, created by the merger of the National Association of Securities Dealers (NASD) and the New York Stock Exchange’s (NYSE) regulation committee, responsible for governing business between brokers, dealers, and the public.

The registered trademark of FactSet Research Systems, Inc. and its affiliates.

The percentage of securities within a portfolio that has changed since the beginning of the portfolio’s fiscal year.

An investment strategy that invests in securities which pay a fixed rate of return.

Any security that pays a stated or predetermined rate of interest over time. Bonds, notes and money market funds are all considered fixed-income securities. Most income-oriented mutual funds include these kinds of securities in their portfolios.

A term used to designate all contracts covering the sale of financial instruments or physical commodities for future delivery on a commodity exchange.

The area in which an investment holds a concentration of securities, such as a country, region, or more broadly, globally.

A strategy of investing in securities of companies headquartered in developed nations.

A type of mutual or exchange-traded fund that can invest in companies located anywhere in the world, including the investor's own country.

A mutual fund that invests primarily in dividend-paying stocks, or a combination of stocks and bonds, offering the potential of both capital appreciation and dividend payments.

A mutual fund that invests in stocks whose primary objective is capital appreciation. Growth funds typically experience greater share price volatility than more conservative funds, such as growth and income funds, bond funds, or money market funds.

The stock of firms which give indications of "better-than-average" expansion potential. Growth stocks are generally less affected by economic factors than cyclical stocks and tend to plow earnings back into the company to finance future growth. For this reason, they tend to trade at higher prices relative to earnings than value stocks, and to have more growth potential and be more volatile than dividend-paying stocks.

An aggressively-managed portfolio of investments that uses advanced investment strategies with the goal of generating high returns, either in an absolute sense or over a specified market benchmark. Hedge funds are considered to be alternative investment vehicles, and unlike mutual funds, are unregulated because they cater to sophisticated investors. They are similar to mutual funds in that investments are pooled and professionally managed, but differ in that the fund has far more flexibility in its investment strategies.

The practice of attempting to reduce risk in an investment strategy.

A mutual fund composed primarily of lower-quality, lower-rated securities which offer higher than average income, or yield. They often are accompanied by greater price fluctuations and risks to principal than funds which invest in higher-rated, higher-quality securities.

A combination of indexes used to more accurately measure the performance of a portfolio. This may contain more than just two indexes, depending on the investments held by the account. For example, the returns on an account invested in 60% large cap core stocks and 40% fixed income investments may be measured against a 60/40 hybrid of the S&P 500 Index and the Lehman Brothers Aggregate Bond Index (60% S&P 500 and 40% LB Aggregate returns).

A mutual fund which emphasizes current income in the form of dividends or coupon payments from bonds and/or preferred stocks, as opposed to capital appreciation.

Indexes, prepared by independent companies, are broad statistical benchmarks designed to measure changes in segments of stock markets. Indexes are commonly used as standards against which fund managers and investors compare the performance of their investment portfolios.

A retirement account that enables individuals to set aside a specific amount of earned income each year. All dividends and capital gains earned on an IRA investment compound tax-free until they are withdrawn, usually at retirement, when the investor is often in a lower tax bracket. In addition, many people can fully or partially deduct IRA contributions from their federal income tax. Other types of IRAs are Rollover IRAs and Roth IRAs.

Rise in the prices of goods and services, as happens when spending increases relative to the supply of goods on the market – in other words, too much money chasing too many goods.

A measure of the consistency of excess return. This value is determined by taking the annualized excess return over a benchmark and dividing it by the standard deviation of excess return.

Organization that trades large volumes of securities. Some examples are mutual funds, banks, insurance companies, pension funds, college and endowment funds.

Money, like any other commodity, has a price. Money's price is called the interest rate, which represents the cost a borrower incurs for borrowing money, and the earnings a lender receives for lending money.

A type of mutual or exchange-traded fund that invests in companies located anywhere in the world except in the investor's home country.

An individual or organization who manages a portfolio and makes day-to-day investment decisions involving the purchases or sales of securities.

A company which, for a management fee, pools many investors' monies and determines an asset allocation/investment strategy consistent with published investment objectives. Benefits include professional management, diversification and liquidity.  Examples of investment companies include mutual funds and investment trusts.

According to commercial rating services, such as Standard & Poor's or Moody's, investment-grade bonds are those which carry higher credit ratings and are more unlikely to default. Investment-grade bond ratings range from AAA to BBB, with AAA being the highest rating.

The person responsible for managing individual investment accounts and/or mutual fund's assets.

The financial goal that an investor or mutual fund pursues. A growth fund, for example, typically seeks to provide growth of capital. There is no assurance that a product’s investment objective will be achieved.

Investment options that offer different levels of fees, service and minimums.

The tendency for small capitalization stocks to exhibit an upward bias in their price behavior. Some analysts believe this may be partially attributable to the influence of index funds buying stocks for various retirement plans. Such new contributions would be qualified to commence in January. Also, the marginal impact of such purchases would be greater on smaller capitalization issues as opposed to larger capitalization stocks.

Another name for non-investment grade debt securities. These bonds may also be called high yield securities.

A type of pension account in which taxes are deferred, available to those persons who are self-employed.

An acronym for the London Interbank Offered Rate, the rate that the most creditworthy international banks dealing in Eurodollars charge each other for large loans. The LIBOR is usually the base for other large Eurodollar loans to less creditworthy corporate and government borrowers.

Refers to a stock with a large market capitalization, generally a company that offers some growth potential with steady or growing dividends. These companies usually have a market capitalization of over $5 billion, and their stock prices tend to be less volatile than those of smaller companies. Most companies listed on the Dow Jones are large caps; examples include IBM and Coca-Cola.

These indexes, as all others, are not available for direct investment. They are unmanaged groups of specific securities as defined by the name of the index (such as the Lehman U.S. Government/Credit Index, which is comprised of government and corporate debt securities raised investment grade or better), and are commonly used as benchmarks for fixed-income securities.

The takeover of a company using borrowed funds. Most often, the target company’s assets serve as the security for the loans taken out by the acquiring firm(s), which repays the loans out of the cash flow of the acquiring company.

The average performance level of all mutual funds, as reported by Lipper Analytical Services of New York.

The ease with which an asset can be turned into cash.

The measure of a firm’s ability to meet maturing, short-term obligations.

Bonds with maturities of ten or more years, which typically pay investors higher yields to compensate for the longer time commitment. Long-term bond values tend to be more sensitive to interest rate changes, and therefore may have greater price fluctuations, than short-term bonds.

Maintaining firm bid and offer prices in a given security by standing ready to buy or sell round lots at publicly quoted prices. The dealer is called a market maker in the over-the-counter (OTC) market, and a specialist on the exchanges.

A brokerage account allowing customers to buy securities with money borrowed from the broker.

Adjusting the valuation of a security or portfolio to reflect current market values. For example, margin accounts are marked to the market to insure compliance with maintenance requirements.

The total value of a publicly-traded corporation, calculated by multiplying the number of its outstanding shares by the current market price per share. Analysts often compare this to a company’s book or accounting value for an indication of how investors value its future prospects.

The price agreed on by communities of buyers and sellers. In the case of investments, the last price of record multiplied by the number of outstanding shares.

The date on which a bond's principal is due to be repaid to its investors.

Identifies the median market capitalization of the assets in a fund.

These indexes, as all others, are not available for direct investment. They are unmanaged, market capitalization weighted groups of specific securities as defined by the name of the index (such as the ML 1-Year Treasury Index, which is comprised of U.S. Treasury securities raised investment grade or better), and are commonly used as benchmarks for fixed-income securities.

The stock of a company with a median market capitalization that may offer above-average growth potential. Because medium-sized companies have operated in the marketplace longer than smaller companies, their stocks generally have less price volatility. MidCap stock companies generally have a market capitalization between $500 million and $5 billion.

A mutual fund which is designed for current income and invests in very liquid assets such as federal securities, certificates of deposit, and commercial paper (very short-term bonds). Note:an investment in a money market fund is neither insured nor guaranteed by the U.S. government, and there is no assurance that money market funds will maintain a stable NAV of $1.00 per share.

A weekly publication that reports changes in corporate bond quality ratings for publicly traded companies and provides market commentary also known as "Moody's Credit Survey". It also covers assets such as preferred equity and commercial paper.

A Chicago-based investment research firm that compiles and analyzes fund, stock and general market data. Morningstar's comprehensive, one-page mutual and exchange-traded fund reports are widely used by investors to determine the investment quality of the more than 2,000 funds it covers. Its website includes free information on individual funds and stocks, while more complete data is available through subscription services and publications. Many public libraries are subscribers to Morningstar services.

An investment company which pools the money of many investors and determines an asset allocation strategy to pursue in accordance with the fund's stated investment objectives. Mutual funds sell shares to the public and offer the advantages of diversification and professional management.

A situation which occurs when yields on short-term securities are higher than those of longer-term securities of the same quality. Normally the short-term rates are lower than longer-term rates, since investors committing money for longer periods of time are exposed to more risk than short-term investors.

The value of one share of a mutual fund, computed on a daily basis. In general, it is calculated by adding the values of the fund's investments, subtracting its expenses and liabilities, and dividing the total by the number of shares outstanding.

A mutual fund that does not charge a fee, or "load", for the purchase or sale of its shares. The shares are distributed directly by the investment company instead of going through a secondary party. Note: other fees and expenses still apply and are described in the fund’s prospectus.

The annual dollar amount of income received from a fixed-income security divided by the par value of the security and stated as a percentage. For instance, a bond that pays $6,000 per year and has a par value of $100,000 has a nominal yield of 6%. This is the coupon or interest rate on a fixed-rate bond.

A regulated investment company which provides a commingled investment portfolio to shareholders and offers shares on a continuous basis. Liquidity is provided directly through the fund by the fund’s issuing or retiring of shares every day, depending on whether that day there was an overall net purchase or net sale. The number of shares outstanding may change daily.

The activities by which the Securities Department of the Federal Reserve Bank of New York, popularly called the “desk”, carries out the instructions of the Federal Open Market Committee which are designed to regulate the money supply. This is one of the three basic ways that the Federal Reserve implements monetary policy.

The highest price or rate of return an alternate course of action would provide.

A contract giving the holder the right, but not an obligation, to purchase or sell a security on or before a predetermined future date for a fixed price.

The nominal dollar amount assigned to a security by the issuer.

A strategic move by a takeover target company to make its stock less attractive to an acquirer, for example, issuing a new series of preferred stock that is redeemable at a premium price after a takeover.

A list of all investments owned. Shareholders can diversify their investments and build their own portfolios by investing in a number of securities or mutual funds.

The person responsible for managing a mutual fund's assets and/or the assets of a client's separate account.

Stock that represents partial ownership in the company, pledges a regular dividend payment schedule, has priority over common stock holders in the event of liquidation, but normally does not carry voting rights.

The weighted average of the price-to-book ratios of all securities held in a fund's portfolio, calculated by dividing the current market value (price) of each asset held by its original cost (book value).

The result of a comparison of the sum of the market values of the companies whose shares are held in a portfolio to their aggregated reported cash flow.

The price of a stock divided by its reported earnings, which serves as an indicator of how much investors are willing to pay for an opportunity to share in a firm's future earning potential. The price to prospective earnings yield for a mutual fund is the asset-weighted average of the prospective earnings yields of all domestic stocks in the fund’s portfolio.

The amount of money an individual invests in a mutual fund, also known as capital. It does not include the amount that the investment has earned.

A sale of stocks, bonds, or other investments directly to an institutional investor, such as an insurance company, that does not have to be registered with the Securities and Exchange Commission (SEC) if the securities are purchased for investment, not resale.

A formal legal document required by and filed with the Securities and Exchange Commission (SEC), which provides details about an investment offering for sale to the public. In the case of mutual funds, the prospectus contains details on its objectives, investment strategies, risks, performance, distribution policy, fees and expenses, and fund management.

Corporation that has shares available to the public at large. Publicly held companies are regulated by the Securities and Exchange Commission.

The credit rating given to an individual security by a rating agency such as Moody’s or Standard & Poor’s.

A retirement account or plan that meets tax law requirements which permit the deferment of taxes and the tax-free accumulation or appreciation of assets held within the plan.

The evaluation of important factors that cannot be precisely measured, such as the experience and character of management and the status of labor relations, prior to investing in a specific security.

The evaluation of measurable factors, such as the value of assets, the cost of capital, and the historical and projected pattern of sales, prior to investing in a specific security.

Assets held that are readily convertible to cash, often defined as current assets less inventory values.

A statistic that measures the degree to which a mutual fund's behavior is related to movements in its benchmark, known as systematic risk. The R-Squared will range between 0 and 100 percent, and, for example, if rated at 100%, the fund’s historical behavior would be completely (100%) attributable to movements in the benchmark.

The gain or loss on an investment over a specified period, expressed as a percentage increase or decrease over the initial investment cost. Gains on investments are any income received from the security plus realized capital gains. A rate of return measurement can be used to measure virtually any investment vehicle, from real estate to bonds and stocks to fine art, provided the asset is purchased at one point in time and then produces cash flow at some time in the future.

The income of an individual, group, or country, adjusted for changes in purchasing power caused by inflation.

The return on an investment, adjusted for inflation.

Mutual fund or unit investment trust eligible under Regulation M of the Internal Revenue Service to pass capital gains, dividends, and interest earned on investments directly to its shareholders to be taxed at the personal level.

An arrangement whereby distributions of mutual fund dividends or capital gains are used to purchase additional shares of the mutual fund.

All income which one receives during retirement. It can include Social Security, part-time employment, pension funds and amounts withdrawn from retirement accounts.

The change in value of an investment over time, calculated by dividing the current market value by the cost of the initial investment. This calculation assumes all income (dividends or interest) and capital gains are reinvested.

The last fiscal year’s earnings per share (EPS), divided by the last fiscal year’s net equity per share of common stock. ROE is used by shareholders to review how effectively their money is being employed.

The volatility of returns, sometimes expressed using Standard Deviation, associated with a given asset. Types of investment risk include currency risk, inflation risk, principal risk, capital risk, market risk and interest-rate risk. Investments can also be affected by market sentiment. Being "risk averse" means preferring lower degrees of risk and accepting possible lower rates of return. Being "aggressive" describes a tolerance for higher degrees of risk in pursuit of higher returns.

An individual retirement account that is established for the sole purpose of receiving a distribution from a qualified plan so that the assets can subsequently be rolled over into another qualified plan.

A personal retirement savings vehicle created by the Taxpayer Relief Act of 1997. A Roth IRA allows certain investors to make non-deductible, after tax contributions annually, and provided certain requirements are met, offers tax-free and penalty-free withdrawals for important financial needs in addition to its use as a retirement fund.

Issued by the Frank Russell Company, these indexes, as all others, are not available for direct investment. They are unmanaged groups of specific securities as defined by the name of the index (such as the Russell 1000, which measures the performance of the top 1,000 companies in Russell’s database), and are commonly used as benchmarks for equity securities.

General name for stocks, bonds, or ownership rights, such as options or futures, usually sold through a broker.

Federal oversight and enforcement agency created in 1934 for the purpose of regulating trading in the stock, bond and mutual fund industries and their sales staff. The SEC is responsible for insuring that the securities markets operate honestly and fairly.

A temporary loan of a security from an institutional investor’s portfolio to a broker/dealer, or dealer bank, to support that firm’s trading activities (such as short sales). Loaned securities are generally collateralized, reducing the lender’s credit exposure to the borrower. The lender retains entitlement to all benefits of owning the securities, including the receipt of dividends or interest, except for the right to vote proxies.

Different pools of the same security offered based on the type of investor and time of the purchase of the assets. Institutional investors invest in different classes than do retail, or individual, investors. Expense ratios and yields will often vary depending on the share class purchased.

This is calculated by dividing the returns in excess of the 90-day Treasury Bill rate by the standard deviation of those returns for a given time frame, resulting in a figure that determines reward per unit of risk. A high Sharpe Ratio reflects a strong historical risk-adjusted performance.

Generally, bonds whose maturity is between one and five years. The price and yield of short-term bonds will fluctuate, however both yields and volatility are normally lower than those of long-term bonds.

Small capitalization companies may grow faster than large cap companies and typically use any profits for expansion rather than for paying dividends. They may be more volatile than large cap companies, and tend to fail more often. These stocks have historically provided greater returns than the stocks of larger, more established companies, and are generally defined as companies whose market capitalizations are $500 million or less.

A closely-followed index of 500 leading publicly-held companies of the U.S. economy, including industrial, transportation, financial and utility stocks, used as an overall measure of stock market conditions and as a performance benchmark. S&P 500 options and futures are also used by financial professionals as hedging instruments.

The standard deviation of a mutual fund show how widely returns varied from an average over a given period of time. When a fund has a higher standard deviation calculated from its historical data, there is greater volatility because the predicted range of performance is high. The larger the standard deviation, the more volatile the returns, and the riskier the investment.

A mutual fund which predominately holds stocks and is designed for growth, or capital appreciation. While stocks funds have greater price volatility than more conservative investments, they offer the potential for higher returns.

A federal law, the “Labor Management Relations Act” was enacted in 1947. It returned to management in unionized industries some of the bargaining power lost in pro-union, pre-World War II legislation.

A retirement plan that allows the investor to postpone current income taxes on pre-tax money invested or any earnings in an account until it is withdrawn from the plan.

Research into the demand and supply for securities and commodities based on trading volumes and price studies. Charts or computer programs are used to identify and project price trends in a market, security, or commodity future. This analysis is not concerned with the price of the potential asset.

A short rise in securities or commodities futures prices within a general declining trend. This may occur because investors are bargain hunting, or because analysts have detected a support level from which securities typically bounce up.

Letters that identify a security for trading purposes. A security's ticker symbol also may be used in news and price-quotation services to identify the security.

A management style emphasizing the strength of various market sectors, industries, or countries. Individual securities are then selected from the favored sectors.

The annual return on an investment composed of two sources: income from dividends (stocks) or coupon payments (bonds), and appreciation or depreciation in the market price of the investment during a given time period.

The measurement of the standard deviation of the excess returns of a composite compared to its benchmark, indicating the volatility of a portfolio versus its benchmark. This measure does not show if a portfolio manager added value to the return of a portfolio versus that of the market.

A security selling below its liquidation value or the market value that analysts believe it deserves. This may occur if the industry is out of favor, or the company is not well known, or it has an erratic history of earnings. There could be many other reasons for undervaluation.

The amount of upward price movement an investor or analyst expects of a particular stock, bond, or commodity. This opinion may result from fundamental or technical analyses.

Value stocks tend to be inexpensive based on various measures of their intrinsic or private market value, such as current earnings or total assets. The market is not willing to pay more for them because they are from companies that are out of favor for some reason. The job of value managers is to identify companies poised for a turnaround, leading to rising earnings and higher stock prices.

The increase or decrease in an asset's price over time. High volatility means wide price changes that can occur in a relatively short period of time, while low volatility refers to smaller, or more gradual, fluctuations.

The weighted and adjusted arithmetic mean of the market cap.

The value at which half of the market cap weight falls above and the other half below.

The percentage rate of return of the annual dividends paid on a stock or mutual fund, or the interest received from a bond. In bond terminology, yield is the coupon payment divided by the bond's face value if held to maturity. Bond yields and bond prices are inversely related. For example, a bond with face value of $100,000 and coupon rate of 6% pays $6,000 per year and has a yield of 6%.

A graph showing the term structure of interest rates by plotting the yields of all bonds of the same quality with maturities ranging from the shortest to the longest available. The resulting curve shows whether short-term rates are higher or lower than longer-term rates. When long-term rates are higher, it is a “positive” yield curve, where little difference in the curve results in a “flat” yield curve.

A measure of a bond's yield which takes into account both the market price of the bond as well as any capital gains or losses on the bond when held to maturity.

A security that pays no interest but instead is sold at a deep discount from its face, or par, value. The bondholder receives a return by the gradual appreciation of the security, which is redeemable at full face value on its maturity date.