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Investment Products Glossary

Investment Products Glossary

We can help you understand some of today's most popular investment options.

Overview

Owning a diversified mix of investments may be appropriate to help you work toward your most important long-term goals. The good news is that you have more choices than ever before to help you round out your portfolio. But that also creates challenges, especially if you have little experience managing your own investments. A good starting point is to understand basic investment options.

Investment products and financial services are provided through U.S. Bank and/or its affiliate, U.S. Bancorp Investments, Inc..

  • Shares of stock provide an investor an ownership position in a specific corporation and represent a claim on the corporation’s earnings and assets. As an equity position, investors who purchase stock in a company seek to benefit from its continued growth and ability to generate profits, just as other owners of the company would receive. Common stock typically entitles shareholders to vote in the election of a board of directors and other matters presented for voting. Preferred stock typically does not include voting rights, but has priority on claims (such as dividend payments) compared to common stock. Corporations across the world and of all different sizes offer shares of their stock on the public market, giving all individuals an opportunity to own stock in their firms. Stock prices fluctuate throughout the day as they are bought and sold on public exchanges such as the New York Stock Exchange.

    Equity securities are subject to stock market fluctuations that occur in response to economic and business developments. Investments in small and mid-sized companies may be more volatile than securities issued by larger companies. Investments outside of the USA have risks such as currency fluctuations, economic or financial instability, lack of timely or reliable information or unfavorable political or legal developments. These risks increase for investments in emerging markets.

  • A bond is an interest-bearing security issued by a government entity or corporation. The issuer is obligated to pay the bondholder a specified amount, usually at specific intervals (interest payments) and to repay the principal amount when the bond matures. Fixed income securities are normally issued in maturities ranging from 30 days to 30 years. The ratings of bonds by various rating agencies can vary based on the reliability of the issuer and the potential risk that the issuer could default on the timely payment of interest and principal. Bonds can be traded on the open market and their principal value can fluctuate in large part due to changes in the interest rate environment or in the financial stability of the issuer.

    Investing in fixed income securities (debt securities) is subject to various risks, including changes in interest rates, credit quality, market valuations, liquidity, prepayments, early redemption, corporate events, tax ramifications and other factors. Investment in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer term debt securities. Investments in lower rated and non rated securities present a greater risk of loss to principal and interest than higher rated securities.

  • A pool of money collected from shareholders that is invested in stocks, bonds, money market securities and other types of assets. Professional managers oversee a fund’s investment decision-making process and execute trades. Mutual funds allow individuals to gain access to a diversified group of assets for a relatively modest investment. Each fund has a stated investment objective that specifies how the underlying portfolio should be structured. Investors can choose from funds that are focused on owning stocks, bonds, specialty investments such as commodities, or a mix of different types of assets. Because funds are available across a broad range of asset classes, they may be an effective instrument to use in implementing an asset allocation strategy. Mutual funds are priced at the end of each trading day based on a fund’s Net Asset Value (NAV), which represents the combined worth of all underlying securities held in the portfolio.

    Mutual fund investing involves risk; principal loss is possible. Investing in certain funds involves special risks, such as those related to investments in small- and mid-capitalization stocks, foreign, debt and high-yield securities, and funds that focus their investments in a particular industry. Mutual funds are sold by prospectus only. Before investing, read the prospectus carefully to consider the investment objectives, risks, charges and expenses. Past performance is no guarantee of future results. The current value of a collective investment fund share is calculated by dividing the total value of all securities in its portfolio, less any liabilities by the number of fund shares outstanding.

  • Securities that track a specific index, commodity or basket of assets. They are similar to a mutual fund, but trade like a stock on an exchange. The value of individual ETFs fluctuates in price throughout the day as it is bought and sold on the open market. Investors in ETFs can trade it as they would a stock, including the use of techniques such as short selling and margin buying. ETFs tend to have lower costs than the average mutual fund.

    Exchange Traded Funds (ETFs) are baskets of securities that are traded on an exchange like individual stocks at negotiated prices and are not individually redeemable. ETFs are designed to generally track a market index – broad stock or bond market, stock industry sector or international stock. Shares of ETFs may trade at a premium or a discount to the net asset value of the underlying securities. The current value of a collective investment fund share is calculated by dividing the total value of all securities in its portfolio, less any liabilities by the number of fund shares outstanding. Because ETFs and closed-end funds trade like stocks, their shares trade at market value which price can be at a premium or discount to NAV. Exchange-traded funds are sold by prospectus. Please consider the investment objectives, risks, charges and expenses carefully before investing. The prospectus, which contains this and other information, can be obtained by calling your financial advisor. Read it carefully before you invest.

  • A Unit Investment Trust (UIT) is a type of investment company that offers shares as “units” usually redeemable by the investor with the company. A UIT does not actively trade its investment portfolio so there is usually little to no portfolio turnover. UITs typically invest in stocks or bonds, which are selected as part of an overall investment strategy. UITs may adopt a variety of strategies designed for income or capital appreciation. The investment minimums are usually low, often $1,000 for nonqualified accounts ($100 for IRAs). A UIT does not have a board of directors and does not employ an investment adviser to render advice during the life of the trust.

  • A personalized account for individual investors where a professional manager selects investments designed to work toward specific goals. The investor can count on a professional to monitor the account and make appropriate changes as necessary. Typically, a simple annual fee is charged for the account, and there are no charges for individual transactions. Managed accounts tend to have the flexibility to own a broad range of assets, including stocks, bonds, mutual funds, ETFs and other vehicles.

  • A contract between an individual and an insurance company designed to allow for tax-deferred accumulation of investment earnings. Fixed annuities come with a rate of return that is guaranteed by the claims-paying ability of the insurance company. An annuity contract can be annuitized, providing the individual with a guarantee (from the insurance company) of a fixed or variable payment at a future date.

    A deferred variable annuity is a long-term financial product designed for retirement purposes. Before investing, read the prospectus carefully to consider the investment objectives, risks, charges, expenses and other important information. Early withdrawals may be a subject to surrender charges, and if taken prior to age 59 1/2, a 10% federal income tax penalty may apply. All guarantees are back by the claims-paying ability of the issuing insurance company.

How to Get Started

Whether you’re new to investing or an experienced investor looking to diversify your portfolio, our knowledgeable financial professionals can help you choose the asset allocation strategy suited to your unique investment objectives.

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We offer investment products and services to help you work toward your goals and simplify your financial life.

Investment products are:

Not a Deposit Not FDIC Insured May Lose Value Not Bank Guaranteed Not insured by any Federal Government Agency

For U.S. Bank:

U.S. Bank is not responsible for and does not guarantee the products, services or performance of its affiliates or third party providers.

For U.S. Bancorp Investments, Inc.:

Investment products and services are available through U.S. Bancorp Investments, Inc., member FINRA and SIPC, an investment adviser and a brokerage subsidiary of U.S. Bancorp and affiliate of U.S. Bank.

Insurance products including annuities are available through U.S. Bancorp Insurance Services, LLC, and U.S. Bancorp Investments, Inc.; in Montana, U.S. Bancorp Insurance Services of Montana, Inc.; and in Wyoming, U.S. Bancorp Insurance & Investments, Inc. All are licensed insurance agencies and subsidiaries of U.S. Bancorp and affiliates of U.S. Bank. Policies are underwritten by unaffiliated insurance companies and may not be available in all states. CA Insurance License # OE24641.

Before investing, read the prospectus carefully to consider the investment objectives, risks, charges and expenses. Past performance is no guarantee of future results. Asset allocation and diversification does not ensure a profit or protect against a loss.

The Financial Industry Regulatory Authority (FINRA) Rule 2267 provides for BrokerCheck to allow investors to learn about the professional background, business practices, and conduct of FINRA member firms or their brokers. To request such information, contact FINRA toll-free at 1.800.289.9999 or via www.finra.org. An investor brochure describing BrokerCheck is also available through FINRA.

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