 Annual Return
Fund performance for a specific twelve-month period. Annuity
Contract purchased from an insurance company providing guaranteed regular payments, usually monthly, that continue to be paid for life or to age 90 (RRSP only). Asset Mix
Allocation of your contributions among the various investment categories offered, i.e., guaranteed term, balanced, equity, fixed income and specialty. 
Balanced Fund
Invests in a mix of Canadian and foreign equities, bonds and short-term investments whereby the fund manager adjusts the percentage held in each category depending on market conditions. The goal is to produce strong performance with moderate risk by combining the superior long-term growth potential of equities with the steady income of bonds. Benchmark
Performance of a predetermined set of securities used for comparison purposes. For example, the S&P/TSX (formerly the TSE 300) is often used as the benchmark for measuring Canadian equity fund performance. Beneficiary Designation
Written declaration by a plan member specifying who is to receive the proceeds from the plan in the event of the member's death. Blue Chip
Stock of a company that is generally known for its ability to make money, pay dividends and that is financially sound and secure. Bond Fund
Invests primarily in high quality government and corporate bonds and debentures. The focus of the fund is capital protection and maximization of income returns. Book Value
Original price paid for an investment, plus reinvested income earned. Bottom-up
Investment style based on the fundamental analysis of companies rather than on macro-economic evaluation.
Canada Pension Plan (CPP)
Government pension plan that provides benefits to workers and their families in the event of retirement, disability or death. CompCorp
Consumer Protection Plan for Canadian Life and Health Insurance Policyholders whereby investments in guaranteed funds are insured for up to $60,000 of registered savings plus $60,000 of non-registered savings. Group and individual policies have separate coverage. Compound Interest
Interest is paid on both the original investment and on the interest the investment accumulates. Compound Interest Accumulator (CIA)
Guaranteed fund with compound interest. Consumer Price Index (CPI)
An index that measures inflation.
Daily Interest Accumulator (DIA)
Short-term fund, similar to a bank savings account, which earns interest on the daily balance. Deferred Profit Sharing Plan (DPSP)
Tax-favoured arrangement whereby an employer distributes a portion of pre-tax profits or a percentage of income to designated employees. Employees do not contribute their own funds, but money is accumulated in a tax-sheltered account for them. Derivative
Financial instrument whose value is based on the value of other financial instruments or the level of a financial index. Futures, options and currency forward contracts are examples of derivatives. Diversification
Concept of reducing the risk of a portfolio by investing in different asset classes and with various fund managers. Diversified Fund
(See Balanced Fund) Dividend
Portion of a company's profits that is paid to shareholders. Dollar Cost Averaging
Investing fixed dollar amounts on a regular basis. Due to market fluctuations, the same amount will buy more units when the prices are low and fewer units when prices are high. The net result is that it can reduce the average cost of the units purchased.
Equity Fund
Invests in stock market instruments offering greater return potential than guaranteed or fixed income funds but with more volatility.
Fixed Income Fund
Invests in debt instruments issued by corporations, governments or government agencies. The objective is to provide attractive interest returns with lower volatility.
Foreign Investments
Stocks and bonds issued by non-Canadian companies.
Gross Rate of Return
Performance of a fund before investment management fees have been deducted. Group RRSP
Registered retirement savings plan (RRSP) administered by organizations so employees may delay paying current income taxes while saving for retirement. Guaranteed Term Fund
Term deposit, or GIC-type instrument, which fully guarantees interest and the return of capital at maturity.
Home Buyers' Plan (HBP)
HBP lets you withdraw up to $20,000 from your RRSPs to buy or build a qualifying home for yourself, a related disabled person, or to help such a person buy or build a qualifying home. Normally you have a period of up to 15 years to repay your RRSP withdrawals.
Income Splitting
Method of making RRSP contributions on behalf of your spouse, whereby you can reduce your combined taxes after retirement. This is advantageous if your spouse is in a lower income tax bracket at retirement since the income received in your spouse's name will be taxed at your spouse's lower rate. Index
Benchmark against which financial or economic performance is measured, such as the S&P/TSX or the S&P 500. Index Fund
Managed to track the return of a specified market index like the S&P 500. Inflation
Refers to the rising prices of goods and services within an economy as measured by the Consumer Price Index (CPI). Investment Management Fee (IMF)
The IMF is collected by the fund manager to cover investment management and administrative costs and is deducted from the fund before calculation of unit values.
Lifelong Learning Plan (LLP)
Lets you make withdrawals from your RRSP to finance training or education for you, your spouse or common-law partner. You have to repay these withdrawals over a period of no more than 10 years. Life Income Fund (LIF)
Similar to a RRIF, a LIF is a payout vehicle for pension plan assets under which you must withdraw a minimum amount each year up to a maximum prescribed by the pension legislation. You may also have to use the balance of the LIF funds to purchase a life annuity when you turn 80, as per applicable legislation. Locked-in Funds
Funds that cannot be cashed out and must be used at retirement to provide a lifetime retirement income. Locked-in RRSP
Type of registered retirement savings plan (RRSP) where the funds are subject to pension legislation. These funds must be used to purchase a life annuity or be transferred to a LIF by the end of the year during which the owner of the Locked-In RRSP reaches age 69, at the latest. The Locked-In RRSP is available in the following jurisdictions: British Columbia, Nova Scotia and the Federal (PBSA).
Market-related Funds
Invest in publicly traded securities such as stocks, bonds and money-market instruments. Unit values are not guaranteed and fluctuate with movements in the price of the securities held in the portfolio. Market Value
Sale price of an investment at a particular date. Market Value Adjustment (MVA)
Applied to a guaranteed term fund if it is withdrawn before maturity. The MVA is based on interest rate changes that have occurred since the fund was purchased. Money Market Fund
Invests in short-term debt securities maturing in one year or less and is generally the least risky of the market-related funds. Mortgage Fund
Invests in commercial and industrial mortgages, diversified by type and location. While less liquid than many other fixed income funds, this fund offers the potential for superior long-term returns. MSCI EAFE Index
Morgan Stanley Capital International (MSCI) maintains an index of stocks that provides a good measure of the overall performance of the major stock markets in the economies of Europe, Australia and the Far East (EAFE).
Net Rate of Return
Return of a fund after investment management fees have been deducted. Non-registered Funds
Deposits made with after-tax dollars and not invested in registered tax-sheltered vehicles such as RRSPs. Income earned by the funds is taxed annually even if the investment earnings are not actually withdrawn.
Old Age Security (OAS)
Monthly government pension paid to Canadians who are aged 65 and over.
Pension Adjustment
Amount that reduces the RRSP contribution limit based on the benefits earned from the employee's Registered Pension Plan or a Deferred Profit Sharing Plan. Pension Adjustment Reversal (PAR)
Amount that re-establishes lost RRSP contribution room for individuals that change jobs or move in and out of the workforce. It is calculated for all members who cease to participate in a Registered Pension Plan or a Deferred Profit Sharing Plan and for whom a benefit was paid before retirement (through a transfer or reimbursement).
Québec Pension Plan (QPP)
Similar to the Canada Pension Plan, the QPP provides benefits to workers and their families in the event of retirement, disability or death.
Rate of Return
Gains (or losses) you earn from an investment divided by the initial amount invested. This can come from dividends paid on shares, interest paid on bonds, or capital gains or losses due to market appreciation or depreciation. Real Estate Fund
Invests in income-generating properties such as commercial and industrial buildings. This fund is considered a specialized equity fund requiring a long-term investment approach. Registered Pension Plan (RPP)
Formal arrangement whereby an employer provides retirement income to employees. Registered Retirement Income Fund (RRIF)
Prescribed payout vehicle for RRSP assets that allows for regular payments to you until the funds are exhausted or applied to buy an annuity. RRIFs require you withdraw a minimum amount each year. Registered Retirement Savings Plan (RRSP)
Government registered vehicle that allows investors to postpone paying current income taxes while saving for retirement. Retirement Allowance
Severance package, termination pay, court settlement or award for wrongful dismissal. It may also be a payment by an employer for long service on retirement. Risk Tolerance
Investor's ability to handle fluctuations in the value of their portfolio.
Scotia Capital Markets Universe Bond Index
Daily index that gauges performance in the Canadian fixed income market. All publicly issued domestic bonds rated BBB or above and with a maturity greater than one year are eligible. Simple Interest
Amount of interest paid out on a term deposit, periodically or at the end of the term. S&P 500
Representative index of 500 common stocks that trade on the New York and American Stock Exchanges and over-the-counter stocks. S&P/TSX Composite
Formerly the TSE 300, this index represents the value of the top Canadian companies in terms of size and liquidity traded at the Toronto Stock Exchange. Spousal RRSP
Registered retirement savings plan (RRSP) owned by one spouse, but with contributions (and tax deductions) linked to the other spouse. Also see Income Splitting. Structured RRSP
Provides a systematic method of allocating employer and plan member contributions in separate accounts under the umbrella of a single registered retirement savings plan.
Top-Down
Investment style based on the assessment of the economy as a whole rather than by a fundamental analysis of companies.
Unit Value
Total market value of an investment fund divided by the number of units outstanding.
Vesting
Your entitlement to the pension rights prescribed under a retirement plan. This is often granted after a number of years of plan participation or service with the employer, or sometimes the attainment of a certain age. Volatility
Fluctuation of an investment fund's value over time.
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2025/04/15
