GCPA Glossary

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Consumer Price Index
The index is compiled by the U.S. Bureau of Labor, a governmental agency, which follows the cost of living by tracking the changes in the price of basic goods and services over time. This index measures inflation.

Contrafund
A fund with an investing strategy that seeks the stock of out-of-favor companies which have good fundamentals, such as low debt or good potential earnings, in the belief that the stock will increase in value. Refer to the fund's prospectus for complete information on risks, fees and expenses.

Corporate bonds
Debt instruments issued by a private corporation, as distinct from those issued by a government agency or a municipality. Corporates typically have four distinguishing features: (1) they are taxable; (2) they have a par value of $1,000; (3) they have a term maturity ? which means they come due all at once; (4) they are traded on major exchanges.

Cost of living rider
A benefit that can be added to a disability policy that increases the monthly benefit annually during a claim.

Credit quality
Credit quality is a measure of the likelihood that a debt (i.e., bond) issuer will make interest payments on schedule, as well as repay the principal on the promised date. A high quality rating indicates that the debt issuer may be in a good position to meet interest payments and repay the principal as scheduled.

Credit risk
The risk of default, in which a bond issuer may not make the complete payments. Any bond mutual fund may risk loss from credit risk.

Currency risk
Variability in return caused by change in foreign exchange rates.

Custodial care
Custodial care consists primarily of attention to personal needs, such as help in walking, bathing and eating.

Deferred compensation plan
A plan established by an employer to provide benefits to an employee at a later date, such as after retirement.

Depreciation
The decrease in the value of a security.

Disability income insurance coverage
Health insurance under which benefits are payable in regular installments designed to replace some of the insured's income when he or she is totally disabled as defined in the policy.

Distributions
The amount of money per share of a mutual fund that is paid to shareholders, coming from the income or the interest earned by the securities contained in the portfolio.

Diversification
Within a fund, diversification is owning securities from a wide variety of unrelated businesses or industries. It allows the investor to help reduce the risk associated with a single security. For example, if one security experiences a price decline, it may be that another security's price will rise, off-setting the decline in the first security. Diversification cannot eliminate the risk of investment losses. Refer to the fund's prospectus for complete information on risks, fees and expenses.

Dividends
Income distributed to shareholders. Dividends can be received from the ownership of stock or from mutual funds.

Dollar-cost averaging
A system of investing in which an individual deposits or contributes money into the same investments or mutual fund on a regular basis; usually monthly. This strategy may help lower the average share price of the investment. Using dollar cost averaging does not assure a profit and does not protect against loss in a declining market. Also, using this investment method involves continuous investment in securities regardless of fluctuating price levels of securities. Therefore, an investor should consider his/her financial ability to continue purchasing through periods of low price levels.

Dow Jones Industrial Average
The Dow Jones Industrial Average is considered representative of the general state of the stock market. It is a price-weighted index computed by summing the prices of the 30 companies and then dividing that total by an adjusted value to reflect stock splits over the years.

EAFE International
EAFE(R) International is one of the most widely used benchmarks by international portfolio managers. This is an index created by Morgan Stanley Capital International to track the devlopment markets of Europe, Australia and the Far East. It is widely used as the target to beat for global investing. An index is unmanaged and you cannot invest directly in an index.

Earnings growth
Earnings growth is the increase in the annual net income of a company. Companies whose earnings are growing at a higher than average rate possess greater potential for an increase in stock share price.

Elimination period
The policy deductible, or the amount of time (usually a number of days) the insured elects to wait before disability or long term care benefits are paid. Typically, the longer an individual can wait before receiving funds from the insurance company, the lower the price of the policy.

Endorsement
An endorsement is an addition to your policy.

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