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

A

Annual Yield
Annual Yield is the amount of Interest or Dividends paid over a year, usually calculated as a percentage of the Principal invested.

Appreciation
The increase in the price of currencies or shares, that are traded in some markets.

Asset Allocation
Asset Allocation is a systematic approach to investing among different categories of investments. It attempts to determine the best way to divide Investable Assets into the three main Asset Classes: Cash & Equivalents, Fixed Income, and Stocks. Asset Allocation is one type of Diversification. Diversification, investing in a number of different investments, which attempts to reduce the overall risk of your investments. The ideal Asset Allocation can vary by investor, depending on the investor's time frames, Risk Tolerance, overall financial position, and other factors.

Asset Allocation Funds
Asset Allocation Funds are generally differentiated by the way they allocate their investments between these asset classes. Relatively conservative funds tend to place a larger portion of their investments in asset classes with historically lower risk/lower return potential. Conversely, aggressive funds tend to place a greater emphasis on asset classes with higher risk/higher return potential.

Asset Classes
Asset Classes are categories of investments that offer differing levels of overall risk and return. The three main Asset Classes are: Cash & Equivalents, Fixed Income, and Stocks. Cash & Equivalents often offer liquidity and safety of Principal, but with the lowest expected return. Fixed Income assets can provide income, and generally involve a moderate degree of risk to Principal. Stocks can offer the best potential for growth, but also can carry the greatest risk.

See also Cash & Equivalents, Fixed Income, Stocks.

B

Bank Deposits
Bank Deposits include money invested in insured bank accounts such as Checking Accounts, Savings Accounts, Bank Money Market Accounts, and Certificates of Deposit.

Bond Funds
Bond Funds are Mutual Funds that invest primarily in Bonds. They provide Diversification by investing in a variety of Bonds according to guidelines set in the funds' Prospectuses. Bond Funds are usually categorised by the types of Bonds they invest in, for example: government Bond Funds, corporate Bond Funds, international Bond Funds, and municipal Bond Funds. As with individual Bonds, the value of Bond Funds typically falls when Interest Rates rise, and rises when Interest Rates fall. Also a Bond Fund's dividends will vary. Bond Funds are not insured, and involve risk to Principal.

Bonds
Bonds are debt securities issued by companies or government entities. Bonds represent promises by the companies or government entities to pay interest at specified rates on specified dates, and to redeem the Bonds on a specified date.
Bond values typically fall when Interest Rates rise, and rise when Interest Rates fall. Bonds involve risk to Principal.

See also International Bonds, Bond Funds.

C

Cac40
The Paris Stock Exchange Index, comprised of the 40 most frequently traded stocks on the Paris Market.

Capital Gain
An increase in the value of a stock due to the difference between the purchasing price and the higher selling value of a stock.

Capital Loss
A decrease in the value of a stock due to a difference between the purchasing price and the lower selling price.

Cash & Equivalents Asset Class
The Cash & Equivalents Asset Class includes assets that are readily convertible to cash. Examples include bank accounts such as Checking, Savings, and Money Market Accounts.
Other examples of Cash & Equivalents include Money Market Mutual Funds, Treasury Bills, and Commercial Paper. These investments are typically low risk, but are not insured and involve risk to Principal.

Checking Accounts
Checking Accounts are Bank Deposits which usually allow unlimited withdrawals by check, ATM, or transfer. Some Checking Accounts pay interest, but the rate is often lower than that paid on Savings Accounts or Bank Money Market Accounts.

Commercial Paper
Commercial Paper is short-term debt of a company, generally paying money market Interest Rates and having a maturity of 270 days or less. Investment grade Commercial Paper is typically a low risk investment, but involves risk to Principal.

Common Stock
See Stock.

Consumer Price Index
The Consumer Price Index is one of the government's official ways of measuring the general level of inflation. The CPI represents the cost of a basket of goods and services used by the average consumer. The annual percentage change in the value of this index is one way of measuring the annual inflation rate.

See also Inflation Rate.

Corporate Bonds
Corporate Bonds are debt securities issued by a corporation. Like all Bonds, their value typically falls when Interest Rates rise, and rises when Interest Rates fall. They involve risk to Principal.

Coupon Rate
Coupon Rate is the yearly payment an issuer promises to pay a bondholder during the life of a Bond expressed as a percentage of the Bond's face value. For example, a bond with a face value of $1000, which pays interest of $40 twice a year, has a Coupon Rate of 8%.

D

Defined Benefit Pension Plan
A pension plan, which is a traditional Defined Benefit Plan, provides a pre-determined monthly retirement benefit to an employee based on the employee's earnings history, years of service and age. The cost of these plans is generally funded by Employer Contributions into a trust fund.

Defined Contribution Plan
A Defined Contribution Plan is a retirement plan whose benefits depend on the accumulated value of an employee's accounts. There is no set formula for determining the employee's future benefits for planning purposes. Depending on the specific plan type, the employer makes annual contributions into the plan which may be mandatory or discretionary. Some plans may allow employees to make their own contributions into the plan as well. Earnings can grow Tax Deferred until the employee begins withdrawals, generally at retirement.

Diversification
Diversification is the investment strategy of putting your money into a number of different investments in order to reduce overall Investment Risk. The goal is that losses in one or more investments may be offset by gains in others.

Dividend
A Dividend is a payment distributed to shareholders at times and in amounts voted on by a company's (or a Mutual Fund's) board of directors. The Dividend may be in cash, in more shares of the company's Stock, or in shares of another company it owns.

Dow Jones
The New York Stock Exchange (NYSE) index, which reflects the movement of the world's first stock market. It is composed of the 32 most traded stocks of the NYSE. Currently there are three more Dow Jones Indexes. The Dow Jones Industrial Average (DJIA) which is composed of 30 industrial stocks. The Dow Jones Transport Average (DJTA) composed of 20 stocks belonging to the transport industry (by rail, land or air) and finally DJUA (Dow Jones Utility Average), which is composed of 15 stocks belonging to the electrical and gas sectors.

E

ECU
European unit of account. Its value is given by the weighted average of the currencies of the countries belonging to the European Union. This unit of account existed until January 1 1999, at which date it has been replaced by the euro.

Emerging Market
The market of a developing country with high growth expectations.

Employer Contributions
Employer Contributions are monies added to a retirement plan by an employer for the benefit of an individual employee.

Equities
The term "Equities" is generally used interchangeably with the term "Stocks".

See also Stock, Stocks Asset Class

Euro
Name of the European currency, agreed to by the European Council in the Madrid Summit. It has been launched on January 1st 1999 to replace the ECU.

Exchange Cover
A currency trading operation, the objective of which is to protect a future position against any fluctuation in the exchange rate.

F

Fixed Income Asset Class
The Fixed Income Asset Class includes Bonds, other income-producing debt securities, and bank Certificates of Deposit due in more than one year. Generally, they constitute a promise by the borrower (issuer of the security or bank) to pay the investor a specified amount of interest and to return the Principal at a specified period of time. Citibank divides the Fixed Income Asset Class into the following Sub-Asset Class categories: Long Term Government and Corporate Bonds and International Bonds.

FIAMM
See also Money Market Funds.

Fluctuations
Continuous ups and downs in markets.

FTSE 100
London Stock Exchange index which is composed of the first one hundred stocks listed therein.

Foreign Exchange Rate
The exchange relationship between two different currencies. It is the number of units of a national currency which can be exchanged for a unit of a foreign currency.

Future Dollars
The term Future Dollars is used in financial planning to indicate that the future cost of a specific goal, product or service has been adjusted to reflect projected increases in prices over time due to inflation.

Future Value
Future Value is the expected value of an account, security, investment, lump sum of money, or a series of payments, at a specific time in the future.

G

Guaranteed Funds
Those investment funds where the principal and a minimum return (which depends on the market they are invested in) are guaranteed

Global Investment Funds
Investment funds which seek opportunities in any organised market of the world. Their assets are invested and diversified in different currencies and international stock exchanges.

I

Ibex 35
The Spanish Stock Exchange Index which is composed of the top 35 stocks of the Spanish Market.

Indices
Indices are statistical measures of change in the economy or financial markets. A stock index, for instance, would measure change in selected stock prices.

Inflation Rate
The Inflation Rate is the rate of increase in the price of goods and services over a given period of time. The most generally used measure of inflation is the Consumer Price Index, which is calculated monthly by the National Statistics Institute in the United States. Other indices are available which help measure price increases for specific goods or services. In determining what inflation rate assumption to use when planning for a future goal, it is always a good idea to look at historical inflation rates over a long period, preferably a 20 or 30 year period.

Inflation Risk
See Purchasing Power Risk.

Interest Rate
The Interest Rate is the percentage of a deposit that a bank pays annually to the depositor in return for use of the depositor's money, the percentage of a loan that a borrower pays annually to the lender in return for use of the lender's money, or the percentage of a Bond's face value that the issuer pays.

International Bonds
International Bonds are usually issued by foreign governments or corporations. Like U.S. Bonds, the value of International Bonds typically falls when local Interest Rates rise, and rises when local Interest Rates fall. In addition, the value of International Bonds is also subject to fluctuations in foreign exchange currency rates.

Investable Assets
Investable Assets is the sum of money an investor has available to invest, or has already invested, including money invested in retirement accounts/plans. Citibank does not include Collectibles, Real Estate Investments and Business Interests in Investable Assets.

Investment Attitudes
Investment Attitudes are the requirements and beliefs of an investor regarding risk to Principal, return potential, and other factors that may influence their willingness to make a particular investment.

Investment Planning
Investment Planning is the process of determining how to invest current assets and future savings based on your financial goals, your attitude towards risk, your current financial position and your tax status.

Investment Risk
Investment Risk is the potential for fluctuation in the value of an investment, which could result in loss of Principal. Some causes of Investment Risk are: general market fluctuations, industry-specific market fluctuations, trends in Interest Rates and foreign exchange rates, company specific factors, and others. Higher Risk is usually associated with the potential for higher long-term rates of return.

See also Purchasing Power Risk.

L

Liquidity Need
Liquidity Need refers to the level of importance an investor places in the ability to convert investments to cash without a substantial loss of Principal.

Long-Term Government and Corporate Bonds
Long-Term Government and Corporate Bonds are issued by the government or corporations respectively, with maturities ranging from 10 to 30 years. Like all Bonds, their value typically falls when Interest Rates rise and rises when Interest Rates fall. In addition, the longer a Bond's maturity, the more sensitive it is to changes in Interest Rates. Since the price of Long-Term Bonds tend to be less stable than that of intermediate-term bonds, Long-Term Bonds tend to offer higher returns to compensate investors for the instability.

Long Term Time Horizon
See Time Horizon.

M

Market Risk
See Investment Risk.

Mixed Investment Funds of Fixed Income.
Investment funds with between 75% and 100% of their portfolio invested in Securities (Short and Long-Term Bonds as well as Commercial Paper).

Mixed Investment Funds of Equity Securities
Investment Funds with between 25% and 75% of their portfolio invested in Equities.

Money Assets
Monetary assets are those with total liquidity, i.e. immediate cash equivalents.

Money Funds
Those funds whose portfolios are made up of short-term financial assets with high liquidity (Treasury Bills, Commercial Paper etc).

Money Market
The market in which financial instruments with high liquidity and very short maturity are traded.

Money Market Funds
Funds whose assets have to be invested in short term securities. Due to the guarantee provided by them, they are almost equivalent to cash.

N

Nikkei
The Tokyo Stock Exchange Index, which has a substantial impact in the international markets due to the importance of the Japanese economy. It is composed of the country's top 225 stocks.

P

Pension Funds
Funds launched to meet pension plan requirements. Their management and custody is delegated to the management and depositary entities of pension plans. They offer fiscal bonuses.

Pension Plan
See Defined Benefit Plan, Defined Contribution Plan.

Portfolio Management
The aim of Portfolio Management is to achieve the maximum return from a portfolio which has been delegated to be managed by an individual manager or financial institution. The manager has to balance the parameters which define a good investment i.e. security, liquidity and return. The goal is to obtain the highest return for the client of the managed portfolio.

Present Value
Present Value is the current value of an account, security, investment, lump sum of money, or a future series of payments.

Principal
In general, Principal refers to the amount invested in a security. In the case of a loan or mortgage, Principal may refer to the remaining balance of debt.

Principal Risk

See Investment Risk.

Professional Management
Professional Management is the practice of having financial professionals invest money or monitor securities and returns on behalf of individual investors, investment companies, or institutions.

Promissory Note
A document which contains a written commitment to pay a certain amount of money in a fixed period of time.

Prospectus
For Mutual Funds, a Prospectus is the official document that describes the fund and must be provided to all investors. It contains information on such subjects as the fund's investment objectives, policies, services and fees. You should read it carefully before you invest.

Purchasing Power Risk
Purchasing Power Risk, or Inflation Risk, is the risk that the return on an asset will not exceed the rate of Inflation.

R

Rate of Return
The Rate of Return is the gain or loss generated from an investment over a specified period of time. It is also referred to as total return, and it includes the change in the value of a security plus all Interest, Dividends and capital gains distributions generated by holding that security.

Reimbursement
The return of funds back to an investor.

Reimbursement Fee
The fee which is paid to the management entity of the collective investment institutions due to the reimbursement of investment fund shares.

Retirement Planning
Retirement Planning is the process of establishing a retirement income goal and gathering information about your potential sources of retirement income. The information is then used to help determine if your projected retirement cash flow is adequate to fund your needs.

Return Expectations
Return Expectations are returns an investor hopes to realise from investments. Desire for returns must be weighed against other factors, such as concern for safety, liquidity, capital preservation and income.

Risk
The danger of a financial loss that the investor must take into consideration when investing. A high level risk investment means that the investor seeks higher returns to compensate the risk, and vice versa. The return level usually runs parallel to the risk level.

Risk Averse
Risk Averse describes an investor who has a low level of tolerance to possible loss of Principal through investing. This investor is willing to accept lower levels of expected return in order to avoid possible investment losses.

Risk Tolerance
Risk Tolerance is an investor's comfort level with fluctuations in the value of investments, and the potential for loss.

S

Settlement Date
The Settlement Date is the date on which you must pay for your securities (if you have purchased them), or the date on which you are paid (if you have sold them). This is often several days after your order to purchase or sell securities has been executed. Generally, you do not begin to earn interest on a bond that you have purchased or dividends on a stock until the Settlement Date.

Shareholders
Shareholders are owners of a particular company's Stock or of a Mutual Fund. The unit of ownership is called a share.

Short-Term Investments
Short-Term Investments are generally investments with maturities of less than one year.

Short-Term Time Horizon
See Time Horizon.

Standard & Poor
One of the most well-known indexes of the New York Stock Exchange.

Stock
The term "Stock" generally refers to shares of Common Stock. Each share of Common Stock represents a share of ownership in a company. The price of a Stock generally represents investor expectations about the future profitability or future value of the company, and may also be influenced by general economic and market conditions. Stock involves risk to Principal.

See also Stocks Asset Class.

Stock Funds
Stock Funds are Mutual Funds that invest primarily in Stocks. They offer Diversification by investing in a number of different companies or industries, according to guidelines set in the funds' Prospectuses. Stock Funds are usually categorised by the types of Stocks they invest in, for example: Growth Funds, Small Capitalisation Funds and International Funds. Stock Funds involve risk to Principal.

Stocks Asset Class
The Stocks Asset Class includes Common Stock and Stock Funds. Citibank divides the Stocks Asset Class into the following Sub-Asset Class categories: Large Capitalisation Stocks, Small Capitalisation Stocks, and International Stocks. Stocks involve risk to Principal, including possible loss of the amount invested.

Sub-Asset Class
Sub-Asset classes are a more in-depth classification of the general Asset Class categories. Examples of Stocks Sub-Asset Classes are: Large Capitalisation Stocks, Small Capitalisation Stocks, and International Stocks.

Subscription Fee
A fee given by a management entity of the collective investment institutions to a third party for the subscription of investment funds.

T

Taxable Profit
The profit which remains after applying all deductions on the results of the fiscal year. It also includes any deduction, exemption or fiscal bonus.

Time Horizon
Time Horizon is the amount of time an investor is willing, or able, to hold an investment. Generally, the longer one holds certain types of investments, the more likely it is that there will be a positive return. Citibank considers an investment Time Horizon of less than three years to be a short-term Time Horizon, and a time of three years or longer to be a long-term Time Horizon.

Today's Dollars
The term Today's Dollars is used in financial planning to indicate that the cost of a goal, product or service is expressed in terms of what it costs today, and not what it might cost in the future.

Treasury Bill
A Treasury Bill is a discounted financial asset issued by the government with maturities of 18 months or less. Like any government debt, the investment in Treasury Bills also has fiscal bonuses for those purchase them.

W

Win (to) the Market
The management of a portfolio which outperform's the market's index.