Common Terms

Below are definitions to common terms used in discussions about retirement planning and investments:

Asset Allocation
Bonds
Cash
Diversification
Dollar-Cost Averaging
Investments
Market Volatility
Risk Tolerance
Stocks

Asset Allocation: The process of reducing risk by spreading your investments between the various asset classes such as stocks, bonds and cash. Asset allocation can potentially reduce the risk for an investor because it balances out the differing market volatilities of the various kinds of businesses in today’s market. Allocating assets among differing types of businesses can help create a strong portfolio that may prevent large swings in overall account value and potentially boost overall performance. Asset allocation does not assure a gain and does not protect against a loss in declining markets.

Bonds: A bond is a debt instrument. It is an interest-bearing certificate that represents a public or private debt. The issuer promises to pay the holder a specific amount of interest for a specific length of time. Upon maturity of the bond, the borrower repays the loan principal. Bonds are issued to raise money and can be sold by corporations pledging corporate assets as security for the loan. Bonds can also be issued by federal, state and municipal governments.

Cash: Cash is the most liquid of assets. Cash equivalents can be defined as any security with a maturity of one year or less that can be converted to cash quickly because it is highly liquid and virtually has no risk. Money market funds are one example of a cash equivalent.

Diversification: The basic concept of diversification is "not putting all your eggs in one basket." Wise investors use asset allocation to diversify their portfolios among investments within the three broad categories of stocks, bonds and cash. Diversification, however, does not assure a profit or protect against a loss in a declining market.

Dollar-Cost Averaging: An investment strategy that helps take the edge off of market cycles by investing a fixed-dollar amount at regular intervals. Therefore, an investor buys more shares when prices are low and fewer shares when prices are high. The key is to keep purchasing at regular intervals. By analogy, your 401(k) plan takes advantage of the dollar-cost averaging strategy by using payroll deductions to make your investments on a regular basis. (Although this method does not guarantee a profit or protect against losses in a declining market, dollar-cost averaging, in time, could result in reducing the overall purchase cost of the shares.) Also, participants should consider their ability to continue investing through periods of market volatility and low price levels.

Investments: Investments within your retirement plan can be classified as either stocks, bonds or money market investments. Your investment funds are invested in a chosen portfolio option and are pooled with investment funds from other investors, which are all managed by a professional portfolio manager. Portfolios offer a simple way to diversify your retirement plan, as each investment option offers different levels of risk and return. You are purchasing “units” of that portfolio for your own retirement account.

You have the ability to invest in the following portfolio options through your retirement plan with Ohio National:

Money Market funds – These portfolios primarily invest in vehicles that generally do not fluctuate in market value and pay a nominal interest rate.
Bond funds – These portfolios primarily invest in debt securities issued by a corporation, the U.S. Government or other governmental agencies.
Large-cap funds – These portfolios invest primarily in equity securities (stocks) of the largest of U.S. corporations. Large-cap companies account for the top 70 percent of U.S. stock market capitalization (currently, companies with approximately $8.5 billion or greater market capitalization).
Mid-cap funds – These portfolios invest primarily in stocks of mid-sized U.S. corporations. This group of companies accounts for 20 percent of U.S. stock market capitalization (currently, companies with a market capitalization of approximately $1.5 billion to $8.5 billion).
Small-cap funds – These portfolios invest primarily in the stocks of small companies. This group of companies accounts for the bottom 10 percent of U.S. stock market capitalization (currently, companies with approximately $1.5 billion or less market capitalization).
International/Global Emerging Markets funds – These portfolios invest primarily in the equity securities (stock) of foreign companies.

Market Volatility: Up and down movements in the prices of investments.

Risk Tolerance: Your ability to tolerate short term declines in the value of your investments based on your personal investment time horizon. Different asset classes fluctuate more than others, so it is important to invest in a portfolio with your own level of comfort. Take a short quiz to determine your risk profile.

Stocks: Stocks represent a proportional share of ownership in a company. A share in a corporation gives the owner of the stock a stake in the company and its profits without the risk of personal liability for the corporation's debt and obligations.

Group variable annuities are issued by The Ohio National Life Insurance Company. Product availability varies by state. Issuer not licensed to conduct business and products not distributed in AK, HI or NY.

With respect to non-registered group variable annuities, your representative can provide you with a participant disclosure form for more complete information about the contract.

Group variable annuities are long-term investment vehicles designed to accumulate money on a tax-deferred basis for retirement purposes. Premature distributions may be subject to withdrawal charges or a market value adjustment. Distributions may also be subject to ordinary income tax and, if taken prior to age 59½, a 10 percent federal tax penalty may apply. Upon retirement, group variable annuities may pay out an income stream of a series of payments or a lump sum. If you die during the accumulation or payout phase, your beneficiary may be eligible to receive any remaining account value.

There is no additional tax-deferral benefit for annuities purchased in a tax-qualified plan, which is already afforded tax-deferred status. An annuity should only be purchased in a qualified plan if you value some of the other features of the annuity and are willing to incur any additional costs associated with the annuity.

As with any investment, investing in variable portfolios involves risk, including possible loss of principal.


	Common Terms Below are definitions to common terms used in discussions about retirement planning and investments: Asset Allocation Bonds Cash Diversification Dollar-Cost Averaging Investments Money Market funds Bond funds Large-cap funds Mid-cap funds Small-cap funds International/Global Emerging Markets Funds Market Volatility Risk Tolerance Stocks Asset Allocation: The process of reducing risk by spreading your investments between the various asset classes such as stocks, bonds and cash. Asset allocation can potentially reduce the risk for an investor because it balances out the differing market volatilities of the various kinds of businesses in today’s market. Allocating assets among differing types of businesses can help create a strong portfolio that may prevent large swings in overall account value and potentially boost overall performance. Asset allocation does not assure a gain and does not protect against a loss in declining markets. Bonds: A bond is a debt instrument. It is an interest-bearing certificate that represents a public or private debt. The issuer promises to pay the holder a specific amount of interest for a specific length of time. Upon maturity of the bond, the borrower repays the loan principal. Bonds are issued to raise money and can be sold by corporations pledging corporate assets as security for the loan. Bonds can also be issued by federal, state and municipal governments. Cash: Cash is the most liquid of assets. Cash equivalents can be defined as any security with a maturity of one year or less that can be converted to cash quickly because it is highly liquid and virtually has no risk. Money market funds are one example of a cash equivalent. Diversification: The basic concept of diversification is "not putting all your eggs in one basket." Wise investors use asset allocation to diversify their portfolios among investments within the three broad categories of stocks, bonds and cash. Diversification, however, does not assure a profit or protect against a loss in a declining market. Dollar-Cost Averaging: An investment strategy that helps take the edge off of market cycles by investing a fixed-dollar amount at regular intervals. Therefore, an investor buys more shares when prices are low and fewer shares when prices are high. The key is to keep purchasing at regular intervals. By analogy, your 401(k) plan takes advantage of the dollar-cost averaging strategy by using payroll deductions to make your investments on a regular basis. (Although this method does not guarantee a profit or protect against losses in a declining market, dollar-cost averaging, in time, could result in reducing the overall purchase cost of the shares.) Also, participants should consider their ability to continue investing through periods of market volatility and low price levels. Investments: Investments within your retirement plan can be classified as either stocks, bonds or money market investments. Your investment funds are invested in a chosen portfolio option and are pooled with investment funds from other investors, which are all managed by a professional portfolio manager. Portfolios offer a simple way to diversify your retirement plan, as each investment option offers different levels of risk and return. You are purchasing “units” of that portfolio for your own retirement account. You have the ability to invest in the following portfolio options through your retirement plan with Ohio National: Money Market funds – These portfolios primarily invest in vehicles that generally do not fluctuate in market value and pay a nominal interest rate. Bond funds – These portfolios primarily invest in debt securities issued by a corporation, the U.S. Government or other governmental agencies. Large-cap funds – These portfolios invest primarily in equity securities (stocks) of the largest of U.S. corporations. Large-cap companies account for the top 70 percent of U.S. stock market capitalization (currently, companies with approximately $8.5 billion or greater market capitalization). Mid-cap funds – These portfolios invest primarily in stocks of mid-sized U.S. corporations. This group of companies accounts for 20 percent of U.S. stock market capitalization (currently, companies with a market capitalization of approximately $1.5 billion to $8.5 billion). Small-cap funds – These portfolios invest primarily in the stocks of small companies. This group of companies accounts for the bottom 10 percent of U.S. stock market capitalization (currently, companies with approximately $1.5 billion or less market capitalization). International/Global Emerging Markets funds – These portfolios invest primarily in the equity securities (stock) of foreign companies. Market Volatility: Up and down movements in the prices of investments. Risk Tolerance: Your ability to tolerate short term declines in the value of your investments based on your personal investment time horizon. Different asset classes fluctuate more than others, so it is important to invest in a portfolio with your own level of comfort. Take a short quiz to determine your risk profile. Stocks: Stocks represent a proportional share of ownership in a company. A share in a corporation gives the owner of the stock a stake in the company and its profits without the risk of personal liability for the corporation's debt and obligations. Group variable annuities are issued by The Ohio National Life Insurance Company. Product availability varies by state. Issuer not licensed to conduct business and products not distributed in AK, HI or NY. With respect to non-registered group variable annuities, your representative can provide you with a participant disclosure form for more complete information about the contract. Group variable annuities are long-term investment vehicles designed to accumulate money on a tax-deferred basis for retirement purposes. Premature distributions may be subject to withdrawal charges or a market value adjustment. Distributions may also be subject to ordinary income tax and, if taken prior to age 59½, a 10 percent federal tax penalty may apply. Upon retirement, group variable annuities may pay out an income stream of a series of payments or a lump sum. If you die during the accumulation or payout phase, your beneficiary may be eligible to receive any remaining account value. There is no additional tax-deferral benefit for annuities purchased in a tax-qualified plan, which is already afforded tax-deferred status. An annuity should only be purchased in a qualified plan if you value some of the other features of the annuity and are willing to incur any additional costs associated with the annuity. As with any investment, investing in variable portfolios involves risk, including possible loss of principal.