Glossary

3-Year Constant Maturity Treasury Index – An index published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a three-year maturity.

90 Day T-Bills – Short-term debt obligations backed by the U.S. Treasury Department with a maturity of 90 days.

Annual Return – The amount an investment changes in value over a one-year period.

Annualized Return – The amount an investment changes in value over a specified period of time, expressed in annual terms.

Bloomberg 1–10 yr. Government Inflation-Linked Bond Index – An Index that tracks the 1–10 year inflation-protected sector of the U.S. Treasury market.

Bloomberg Commodity Index – A broadly diversified commodity price index, including agriculture, energy, industrial metals, precious metals, and livestock sectors.

Bloomberg Gold Subindex – A commodity group subindex of the Bloomberg Commodity Index composed of futures contracts on gold.

Bloomberg Roll Select Commodity Index – A dynamic version of the Bloomberg Commodity Index that aims to mitigate the effects of higher expected future prices on index performance.

Bloomberg U.S. Aggregate Bond Index – Commonly used as a benchmark to measure investment performance relative to the U.S. dollar-denominated investment-grade, fixed-rate taxable bond market. The index currently includes U.S. Treasuries, government-related issues, corporate bonds, agency mortgage-backed passthroughs (MBS), consumer asset-backed securities (ABS), and commercial mortgage-backed securities (CMBS).

Bloomberg U.S. Treasury Inflation Protected Securities (TIPS) Index – Measures the performance of the inflation-protected public bonds issued by the U.S. Treasury. They are well-suited as a component of a diversified portfolio, particularly during inflationary times.

Bond – A debt security in which an investor loans money to an entity (corporate or governmental) for a defined period of time at a fixed interest rate. Bonds are used by companies, municipalities, states, and U.S. and foreign governments to finance a variety of projects and activities. Bonds are commonly referred to as fixed-income securities.

Credit Quality – A rating of a company’s ability to repay its obligations.

Diversification – The process of spreading your savings across more than one type of investment. Diversification helps reduce market risk and protects against the volatility that can result from putting your entire savings in one type of investment.

Dow Jones U.S. Select REIT Index – Measures the performance of publicly traded REITs and REIT-like securities.

Equity – A term that means having “ownership” in something. Stocks are considered equity investments because you, as an investor, have a stake in that company.

Expense Ratio – The amount of an investment option’s operating expenses compared with its total asset base, expressed as a percentage. Because these expenses are paid from plan assets, a lower expense ratio is desirable.

Guaranteed Investment Contract (GIC) – Designed specifically for use in employer-sponsored qualified retirement plans, the guaranteed investment contract is issued by a financial institution such as a bank or insurance company and provides for a specific rate of return over a specified period. The contract is backed by the financial resources of the bank or insurance company and, in certain cases, also by a portfolio of securities. The three common types of GICs (synthetic, insurance separate account, and traditional) share the common goal of providing withdrawals at contract value (principal plus accrued interest less expenses) but differ in contractual terms, asset ownership, and protection benefits.

ICE (Intercontinental Exchange) Bank of America Merrill Lynch High Yield Bond Index – Measures the performance of U.S. corporate debt rated below investment grade.

Index – A measurement of the performance of the overall bond or stock market or a particular market segment.

Inflation Risk – The likelihood that an investment’s growth will not keep pace with inflation. Inflation is the rate at which prices change. If the inflation rate grows faster than your investment’s rate of return, it can cause your savings — and your purchasing power — to erode substantially. To maintain your purchasing power, you need to earn a rate of return higher than the inflation rate.

JPMorgan Emerging Local Markets Index Plus (Unhedged) – An index that tracks total returns for local-currency-denominated money-market instruments in 24 Emerging Market (EM) countries.

Management Fees – Management fees are paid out of the investment option assets to investment managers who are responsible for the strategy and specific investment buying and selling decisions of their account.

Market Capitalization – The total value of a company’s outstanding shares in the stock market, calculated by multiplying the total number of shares by the price per share.

Market Risk – The likelihood that an investment will go up and down in value, especially over the short term. Funds with higher market risk tend to have more dramatic ups and downs in value than funds with lower market risk. Yet historically, funds with higher market risk offer the potential for greater returns.

MSCI (Morgan Stanley Capital International) All Country World ex. U.S. Investable Market Index (IMI) – An index of large-, mid- and small-cap stock securities from all non-U.S. Developed Market (DM) countries and 26 Emerging Market (EM) countries.

MSCI (Morgan Stanley Capital International) All Country World Investable Market Index (IMI) – An index of large-, mid- and small-cap stock securities from all 23 Developed Market (DM) countries and 26 Emerging Market (EM) countries.

Plan Administration Fees – Plan administration fees are paid out of the investment option assets for recordkeeping and check-writing services.

Principal – The original sum of money invested.

Rate of Return – The amount an investment changes in value over a period of time, expressed as a percentage of the amount invested.

Real Assets – Real assets are a separate asset class whose value is derived from the substance and properties of physical or tangible assets. Real assets include precious metals, commodities, real estate, and natural resources. They are well-suited as a component of a diversified portfolio, particularly during inflationary times.

Real Estate Investment Trust (REIT) – A REIT is an entity that invests in real estate either through commercial and multi-unit residential properties or through property mortgages. REITs are traded on major exchanges just like stocks and are highly liquid, unlike traditional real estate investments.

Russell 1000 Index – The Russell 1000 is an index of approximately 1,000 of the largest companies in the U.S. equity markets. It comprises over 90% of the total market capitalization of all listed U.S. stocks, and all the stocks in the index are considered highly liquid stocks.

Russell 2000 Index – Measures performance of the 2,000 smallest companies in the Russell 3000 Index.

Russell Small Cap Completeness Index – A popular standard for measuring the performance of U.S. small/mid-sized companies. The index contains all Russell 3000 U.S. companies not in the S&P 500.

Security – An instrument representing ownership (stocks), a debt agreement (bonds), or the rights to ownership (derivatives).

Stable Value – An investment that is meant to protect your principal and provide a consistent rate of return. This does not mean the investment will never experience a negative rate of return; however, it is managed with the intent of reducing this possibility.

S&P (Standard & Poor’s) 500 Index – A popular standard for measuring large company U.S. stock market performance. The index includes a representative sample of 500 leading companies in prominent industries.

S&P (Standard & Poor’s) Global LargeMidCap Commodity and Resources Index – Measures the performance of large- and mid-cap stocks that fall into three different natural resource buckets: energy, materials, and agriculture.

Stock – An ownership interest in a company. When you buy stock, you become part owner of the company that issued it. The price of the stock depends on what investors are willing to pay for it, based on such things as the company’s profitability, products, business environment, and projected future earnings. Stocks typically are volatile over the short term, but they historically offer greater returns over the long term than other types of investments.

Total Return – The return on an investment, including income from dividends and interest, as well as appreciation or depreciation in the price of the security, over a given time period, usually a year.

Turnover Ratio – Measures the option’s trading activity. The percentage represents the number of times the investment option’s holdings have changed over the past year.