Active management – An investment approach that seeks to exceed the average returns of the financial markets. Active managers rely on research, market forecasts, and their own judgment and experience in selecting securities to buy and sell.

Asset allocation – The distribution of your funds among various investment alternatives or asset classes. Typically, asset allocation is expressed in percentages; for example, 40% equities, 40% fixed income, 20% cash.

Asset classes – Different types of investments. Equities (stocks), fixed-income (bonds) and money market (short-term investments) are examples of asset classes.

Balanced fund – A fund that seeks both growth and income, with stability of principal, through a portfolio that includes both stocks and bonds.

Capitalization – The market value of a company’s outstanding securities, excluding current liabilities. Under $3 billion is generally considered small-cap; $2 - $10 billion is mid-cap; and over $8 billion is large-cap.

Equities – Also called stocks. A security representing ownership rights in a company. A stockholder is entitled to share in the company’s profits, some of which may be paid out as dividends.

Extended markets – Comprised of small- and medium-sized U.S. companies and represents the S&P Completion Index. The S&P Completion Index contains all of the U.S. common stocks regularly traded on the New York and American Stock Exchanges and the NASDAQ over-the-counter market, except those stocks included in the Standard and Poor’s 500 Index.

Expense ratio –  Also called the Total Annual Asset-Based Fee. In CollegeAdvantage, it includes the underlying mutual fund expenses, an administrative/management fee, and OTTA's fee.

Fixed-income securities – Also called bonds. Essentially, these are loans that you make to a government or corporation (called the issuer) when it needs to raise the cash. They have a maturity date, which is the date the issuer is obligated to repay you the principal, or face amount, of the bond. Bonds also generally pay you interest until their maturity date.

Growth fund – A mutual fund that generally invests in stocks of companies believed to have above-average potential for growth in revenue and earnings. These stocks typically have low dividend yields and above-average prices in relation to such measures as earnings and book value.

High yield bond – A bond that has a rating of BB or lower and that pays a higher yield to compensate for its greater risk. Also known as junk bonds.

Index fund – A passively-managed mutual fund that seeks to match the performance of a particular market index.

Inflation-indexed securities – Bonds issued by the U.S. government, government agencies, or corporations, whose principal and interest payments—unlike those of conventional bonds—are adjusted over time to reflect inflation.

International stock fund – A mutual fund that invests in the stock of companies located outside of the United States.

Money market fund – A mutual fund designed to provide safety of principal and current income by investing in securities that mature in one year or less, such as bank certificates of deposit, commercial paper and U.S. Treasury bills. Money market funds seek to maintain a stable $1 net asset value. Money market funds have the lowest risk of any type of mutual fund, but may offer the lowest potential for gains.

Mutual fund – A diversified, professionally managed portfolio of securities that pools the assets of individuals and organizations to invest toward a common objective such as current income or long-term growth.

Net asset value (NAV) – The market value of a mutual fund’s total assets, minus liabilities, divided by the number of shares outstanding. The value of a single share is also called its share value or share price.

Passive management – A low-cost investment strategy in which a mutual fund attempts to match - rather than outperform - a particular stock or bond market index; also known as indexing.

Portfolio – A combination of securities.

Securities – The general name used to describe stocks, government obligations, corporate bonds, or ownership rights, such as options or futures.

Total return – A percentage change, over a specified time period, in a mutual fund’s net asset value, adjusted to reflect the reinvestment of all dividend and capital gain distributions.

Value fund – A mutual fund that emphasizes stocks of companies whose current market values are generally regarded as trading below their intrinsic market values. A value company often pays regular dividend income to shareholders and sells at relatively low prices in relation to its earnings or book value