Glossary
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Asset Allocation Funds:
Portfolios of diversified funds that represent several asset classes and investor styles. They are designed to make investing convenient. They provide fund participants with a balance of funds that emphasize capital growth and preservation consistent with investor styles ranging from conservative to aggressive.
Beneficiary
An individual entitled to a death benefit under the terms of a retirement plan.
Canada Pension Plan (CPP):
The Canada Pension Plan (CPP) Retirement Pension provides a monthly taxable benefit to retired contributors. You must apply to receive benefits. For more information please go to www.servicecanada.gc.ca
Capital Accumulation Plan (CAP) Guidelines:
The Capital Accumulation Plan (CAP) Guidelines were designed to provide plan sponsors with clear standard regarding plan governance and disclosure. The Guidelines apply to Group RRSP, DPSPs, Defined Contribution (DC) Pension Plans and Group RESPs. For the most part, the Guidelines reflect current best practices in the industry and define the rights and responsibilities of plan sponsors and members.
Capital
The money paid to purchase an asset - in this context an investment.
Compound Interest:
Interest paid on both the original investment, as well as on the interest the investment accumulates.
Consumer Price Index (CPI):
This is an indicator that measures the rate of inflation, which is the rise in the cost of a fixed basket of products and services such as housing, electricity, food, and transportation. An increase in the CPI signals an increase in the overall cost of living.
Deferred Profit Sharing Plan:
An employer sponsored savings plan to which employer contributions are made from profits, or determined in accordance with profits.
Diversification:
The practice of reducing investment risk by investing in funds from different asset classes, volatility and fund managers.
Dollar-cost averaging:
A technique whereby an investor contributes regular amounts on a fixed schedule, regardless of changes in the market. On average, the investor should end up buying more fund units at a lower price and fewer fund units at a higher price.
Employee Profit Sharing Plan (EPSP):
An Employees Profit Sharing Plan (EPSP) is a trust that allows an employer to share business profits with some or all of its employees. Amounts are paid to a trustee to be held and invested for the benefit of the employees who are members of the plan.
Equity:
A security representing a portion of ownership of a company. Also referred to as stocks or shares.
Fixed Income Securities:
Are typically more conservative investments that provide a return in the form of fixed periodic payments and eventual return of principal at maturity. Some examples are bonds, GICs and Term deposits.
Foreign Content:
The percentage of foreign investments in your portfolio. Any fund that invests more than 30% in companies from outside of Canada counts as "foreign content" in your portfolio. Foreign content is measured as the value of the fund when you purchased it, rather than its current value.
Funds:
Often described by the name of the fund, the objective states what the performance of the fund will be for a given time period. To fulfill the objective, the fund manager will select a certain mix of equities and stock.
Fund objective:
Often described by the name of the fund, the objective states what the performance of the fund will be for a given time period. To fulfill the objective, the fund manager will select a certain mix of equities and stock.
Fund manager:
The person who selects the investments that meet the fund's investment objective. A professional fund manager manages each fund in your plan.
Government Treasury Bills (TBills):
Short term government debt issued by the Government of Canada.
Gross return:
The rate of return for a fund before investment management fees has been deducted.
Group Retirement Savings Plan:
A plan or plans offered by a plan sponsor (employer) to help plan members (employees) save for retirement. The number and type of plans offered will differ by organization. Some common types of plans include Group Registered Retirement Savings Plans (Group RRSP), Registered Pension Plans (RPP), Deferred Profit Sharing Plans (DPSP) and Tax-Free Savings Account (TFSA).
Guaranteed Income Supplement (GIS):
The Guaranteed Income Supplement (GIS) provides a monthly non-taxable benefit to low-income Old Age Security (OAS) recipients living in Canada. For more information please go to www.servicecanada.gc.ca
Guaranteed Interest Account:
These accounts guarantee an interest rate from the date of contribution until maturity. When contributions are invested in these accounts, they earn the current interest rate at the time of the deposit. That interest is credited to the account monthly and is compounded annually..
Index fund:
A fund that is managed to track the performance of a specified market index such as the S&P/TSX Composite. With an index fund, the manager does not attempt to anticipate which companies will provide better returns. Rather, they manage the fund to provide a return as close to the index as possible.
Inflation:
An increase in the general prices for goods and services over a period of time as calculated by the Consumer Price Index.
Investment Management Fees (IMFs):
Collected by Manulife Financial to cover the costs associated with investment management and administrative expenses. The fee is deducted from the fund before calculation of unit values.
Investment Style:
The methodology a fund manager uses to decide which securities to buy and sell.
Management Expense Ration (MERs):
The equivalent to Investment Management Fees (IMFs) but is the term used by Mutual Fund Companies to cover the costs associated with investment management and administrative expenses.
Mutual Fund:
A type of pooled fund that pools investor's money and invests it in a variety of diversified securities. Mutual funds are governed by securities legislation. These funds are sold by banks, mutual fund companies and trust companies.
Net Return:
The rate of return of a fund after the investment management fees are deducted.
Non-Registered Savings Plan:
Non-Registered Savings Plans are designed to help individuals save for short-term and/or long-term goals (such as education, vacation or purchasing a home) or to supplement retirement income.
Old Age Security Pension (OAS):
The Old Age Security (OAS) Pension is a monthly benefit available to most Canadians 65 years of age who meet the Canadian legal status and residence requirements. You must apply to receive benefits. For more information please go to www.servicecanada.gc.ca
Plan Administrator:
The individual, group, or entity that is ultimately responsible for the oversight, management and administration of a retirement plan.
Plan Members:
Both current and former employees entitled to benefits under the retirement plan.
Plan Sponsor:
A designated party, usually a company or employer that sets up a retirement plan for the benefit of the organization's employees.
Portfolio:
The various investment holdings of an individual or institution.
Portfolio Rebalancing:
Manulife asset allocation funds are periodically re-balanced to maintain their long-term target asset mixes which ensures each fund's underlying composition fulfills its objectives.
Principal:
The original amount of a debt or investment before interest is calculated.
Quebec Pension Plan (QPP):
The Quebec Pension Plan (QPP) Retirement Pension provides a monthly taxable benefit to retired contributors. The province of Quebec administers its own program, similar to the Canada Pension Plan (CPP). For more information please go to www.servicecanda.gc.ca
Rate of Return:
To calculate the rate of return on your investment, you compare the original amount of the investment to the value of the investment at the end of a specified period of time.
Registered Retirement Savings Plan (RRSP):
An investment account that allows individuals to defer tax on contributions made to the plan. There maybe a variety of investment options available in the plan, some examples are investment funds, GICs, stocks or bonds. Income tax is deferred until the money (the amount originally deposited plus any investment earnings made on that money) is withdrawn.
Registered Pension Plan (RPP):
A pension plan is usually established by an employer on behalf of its employees to provide for their retirement. With a defined contribution plan, the amount of the employer and employee contributions is fixed while the savings are accumulating, and the actual value of the pension is not known until retirement.
Required Contributions:
Contributions that are required to be made by the employee and employer in accordance with the terms of the retirement plan.
Retirement Date Funds:
Retirement date funds offer a well-balanced investment portfolio inside a single fund. Each fund is identified by its year of maturity, and as the maturity date approaches the fund gradually rebalances to become more conservative.
Risk:
In investing, risk typically refers to the possibility that an investment will lose money. Risk also occurs when investments are too conservative to achieve financial goals.
Risk Tolerance:
An investor's ability to handle declines in the value of his or her portfolio.
Segregated Funds:
A type of pooled fund offered only by life insurance companies. Segregated funds are subject to the same regulatory provisions as other insurance products.
Tax Free Savings Account (TFSA):
A Tax-Free Savings Account is a flexible, registered general-purpose savings vehicle that allows Canadians to earn tax-free investment income to help meet their savings goals. A TFSA complements existing registered plans such as a Registered Pension Plan (RPP) or a Registered Retirement Savings Plan (RRSP).
Tax Sheltered Savings:
Investment earnings within a Registered savings plan that are not taxed.
Volatility:
The tendency of a fund's value to fluctuate up and down over time. The value of a fund with high volatility will go up and down more dramatically over time than the value of a fund with low volatility.