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GLOSSARY

1

1-DAY YIELD

An annualized net yield for the day listed.  It is calculated by multiplying the daily dividend factor by 36,500 and dividing by the NAV.

3

30-DAY YIELD

Calculated by dividing the net income per share for the 30 days ended on the date of the calculation by the offering price per share on that date. The figure is compounded and annualized.

7

7-DAY DISTRIBUTION YIELD

The 7-Day Distribution yield is the average total return over the previous seven days. It is the Fund's total income of next expenses, divided by the total number of outstanding shares. The yeld includes capital gain / loss distribution.

A

AAA-RATED

Money Market Funds rated AAA are judged to be of an investment quality similar to AAA-rated fixed income obligations, meaning they are considered to be of the highest quality. The highest MMF ratings by the top three ratings agencies are: AAA/V1+ with Fitch, AAAm with Standard & Poor's, and Aaa/MR1+ with Moody's.

ACCOUNT POSITION

The balance of an account. This title refers to a client's current position in a miney market fund.

ACCRUAL

The amount of income earned in a mutual fund. Dividends are considered accrued from ex-dividend date to receipt. The accrual is tracked in "daily accrual" funds which typically pay out the accrued dividend to shareholders at the end of each month.

AGENCY MORTGAGE-BACKED SECURITY (MBS)

An Agency Mortgage-Backed Security is a financial investment instrument that is created by securitizing the underlying asset, such as a loan provided to individuals or companies to fund a purchase of a home or building, and is guaranteed by a government agency, such as Fannie Mae, Freddie Mac or Ginnie Mae.

AGENCY SECURITIES

Debt obligations guaranteed or issued and guaranteed by the U.S. or other government-sponsored entities. In the U.S., government-sponsored entities issue discount notes (with maturities ranging from overnight to 360 days) and bonds (e.g., Ginnie Mae). Agency securities are exempt from SEC registration and, in some cases, from state and local income taxes.

ASSET-BACKED SECURITY (ABS)

A security that is backed by a loan, lease or receivables against assets other than real estate and mortgage-backed securities. For investors, asset-backed securities are an alternative to investing in corporate debt.

B

BLOOMBERG

Bloomberg L.P. is an information services, news and media company that provides broker/dealers with financial news and data, analytics, electronic trading, straight-through processing tools, and real-time historical financial data.

BLUE SKY LAWS

Laws enacted by various states to protect investors. Although the specifics of these laws can vary from state to state, they generally require sellers of new stock issues or mutual funds to register their offerings. In addition, sellers are required to provide financial details on each issue so that investors can base their judgments on relevant data. In the case of sales outside the U.S., this term refers to the ability to promote a security in the relevant jurisdiction.

BOND

Debt issued for a period of more than one year, that requires the issuer to pay the purchaser a specified interest rate, usually at specific intervals (i.e. every six months), and to repay the principal amount at maturity. Bondholders have an "IOU" from the issuer; however they have no corporate ownership privileges, such as voting rights, as stockholders do.

BOND ANTICIPATION NOTES (BANS)

Similar to TANs, RANs and TRANs, BANs are fixed rate securities which typically have a maturity of 397 days or less. BANs are sold in anticipation of receiving proceeds from another bond issue to be sold at a later date. BANs can also be secured by the full faith and credit of the issuer (i.e. the issuer's taxing power). BANs are typically used for interim financing.

C

CASH MANAGMENT

A strategy for investing cash and liquid assets to find the optimal combination of security, risk diversification, liquidity and returns.

CERTIFICATES OF DEPOSIT

A debt instrument issued by a bank that will pay interest — periodically or at a maturity — and principal when it reaches maturity. A bank’s creditworthiness is rated by impartial agencies such as Moody’s and Standard & Poor’s.

COLLATERALIZED MORTGAGE OBLIGATIONS (CMO)

A type of mortgage backed security. Investors in a CMO buy bonds issued by the entity, and receive payments according to a defined set of rules. The mortgages themselves are called the collateral, the bonds are called tranches (also called classes), and the set of rules that dictates how money received from the collateral will be distributed is called the structure.

COMMERCIAL PAPER

Issued by a corporation, a commercial paper is an unsecured, short-term debt instrument, typically used for the financing of accounts receivable, inventories and meeting short-term liabilities. Maturities on such securities rarely range any longer than 270 days. This type of debt is traditionally issued at a discount, reflecting prevailing market interest rates.

COMMODITY INVESTMENTS

Investments in commodities provides investors with access to “real assets” such as oil, agriculture goods, and precious metals.  The returns on commodity investments are generally tied to different economic factors and, therefore, can by less correlated to the returns of traditional stocks and bonds.

CORE AND SATELLITE

A portfolio construction strategy that separates an investment portfolio into two components to seek additional return opportunities. Investors achieve their desired exposure to equity and bond markets through Core investments — typically US large cap equities and fixed income put to work through passive, structured and/or actively-managed strategies. They then pursue alpha opportunities through less correlated Satellite strategies such as emerging markets, high yield and/or private equity investments.

CORPORATE BOND

A corporate bond is a debt security issued by a corporation backed by the payment ability of the company, which is typically money to be earned from future operations. In some cases, the company's physical assets may be used as collateral for bonds. Corporate bonds are considered higher risk than government bonds and hence interest rates are generally higher.

CREDIT DEFAULT SWAPS (CDS)

A financial instrument designed to transfer the credit exposure of fixed income securities between parties. It is essentially an insurance contract that enables a seller to protect against the risk of default on debt obligations for a specific issuer.

CREDIT-ADJUSTED DURATION (YRS)

A bond's option adjusted duration, adjusted for the bond's spread and the impact this may have on the bond's sensitivity to changes in interest rates.

CUMULATIVE TOTAL RETURN

Actual, non-annualized performance over a given period of time. (Ending NAV - Beginning NAV + Distributions) / Beginning NAV.

CURRENT YIELD

The annual return on the amount paid for a bond. Derived by dividing the bond’s interest payment by its purchase price.

CUSIP

The Committee on Uniform Securities Identification Procedures (CUSIP) assigns a number identifying stocks, registered bonds and mutual funds. Brokers and dealers will use a security's CUSIP number to get further information about that security. The CUSIP number will also be listed on any trading confirmation tickets. The CUSIP system makes it easier to settle and clear trades

CUT-OFF TIMES

The deadline by which a trade may be made or a transaction initiated. These times can differ based on such variables as the type of transaction, the firm making the transaction, etc. For example, a foreign exchange can have a different cut-off time than a domestic swap because of time zone differences.

D

DAILY DIVIDEND FUND

An investment in which dividends are earned each day and, generally, paid monthly.

DAILY FACTOR

The annual interest rate of a specific money market instrument divided by 365.

DISTRIBUTION RATE

The Distribution Rate is the net annualized distribution rate for the month, based on the average daily income dividend during the period and the ending NAV per unit.

DIVIDEND FACTOR

The annual interest rate of a specific money market instrument divided by 365. When multiplied by the account balance of each client, will show the daily dividend accrued for each client.

DURATION

The method of determining a bond's price sensitivity given a change in interest rates. The duration for fixed income securities is calculated by determining the price movement due to a 100 basis point change in market interest rates. This calculation incorporates the change in value of any embedded options that exist.

E

ENHANCED CASH PRODUCTS

Cash management vehicles that are not genuine money market funds but may refer to “money markets” in their naming conventions, often using different instruments and targeting different risk and return profiles than bona fide MMFs. Enhanced cash products typically have longer maturities (1-5 years), do not adhere as strictly as MMFs to the highest quality guidelines, and are suitable for investors with longer investing time horizons willing to incur greater risk for the expectation of higher returns.

EXPENSE RATIO

The operating costs of a Money Market Fund expressed as a percentage of the fund’s average net assets for a given time period.

F

FEDERAL FUNDS RATE

The interest rate at which banks with excess federal funds lend to other banks. This rate is generally seen as one of the primary indicators of the direction of interest rates as it is reset daily.

FITCH AAA/V1+ RATINGS

Money market funds have the highest credit quality and safety of principal. Fund management's experience, coupled with fund policies and procedures, indicates safety is extremely strong. The V1+ rating is Fitch's highest volatility rating and is reserved exclusively for stable NAV funds. Ratings are subject to change and do not eliminate the risks of investing.

FLOATING RATE NOTES (FRNS)

Debt instruments with variable interest rates. The coupon rate of these notes is pegged to a benchmark floating rate, typically LIBOR, and refixed quarterly to three-month LIBOR or semiannually to six-month LIBOR rates.

FUND POSITION

A reflection of the toal balance for the underlying fund or account positions within a particular money market fund.

FUND SYMBOL

A "short-hand" abbreviation established for each fund that is used universally when referring to the fund. These symbold can be found in the prospectus.

G

GOVERNMENT PAPER

Government Paper includes debt securities that are issued or guaranteed by a sovereign government. Because of government paper of a nation is generally perceived as the least risky debt securities in that country it will offer investors lower yields compared with debt of a similar maturity issued by other entities in that nation.

GOVERNMENT SECURITY

A government debt obligation (local or national) backed by the credit and taxing power of a country with very little risk of default.

GOVERNMENT-BACKED SECURITIES

Debt instruments issued by government and supra-natural agencies, offering investors an additional degree of safety.

I

INSTITUTIONAL MONEY MARKET FUNDS ASSOCIATION (IMMFA)

A trade body representing European providers of AAA-rated money market funds. IMMFA was established on 14 June 2000 and launched its Code of Practice in February 2003 to ensure members offer high quality products and service to investors.

INVESTMENT GRADE BOND

A relatively safe bond with a credit rating of BBB or above from an independent rating service such as Standard and Poor's.

ISIN

International Securities Identification Number. A unique international code which identifies a securities issue. Each country has a national numbering agency which assigns ISIN numbers for securities in that country.

L

LETTERS OF CREDIT (LOC)

Obligates the provider of the letter of credit to pay the holder par plus accrued interest in the event that VRDNs are tendered and cannot be remarketed (i.e. the LOC is drawn upon). The letter of credit provider is also obligated to pay principle and interest in the event the issuer defaults. The rating of the security reflects the rating of the LOC and not that of the underlying issuer. The guarantee is unconditional.

LEVERAGE

Using borrowed funds, or debt, in an effort to increase the returns to equity. The reversal of the leveraging process is known as deleveraging.

LIPPER TOTAL RETURN RANKINGS

Lipper Analytical Services, Inc. is an independent publisher of mutual fund rankings, records rankings for these and other Goldman Sachs Funds for one-year, three-year, five-year, and ten-year total returns. Lipper compares mutual funds within a universe of funds with similar investment objectives, including dividend reinvestment. Lipper rankings are based on total return at net asset value and do not reflect sales charges. Lipper rankings do not imply that the fund had a high total return.

LIQUIDITY

The ability of an asset to be easily converted through an act of buying or selling without causing a significant movement in the price and with minimum loss of value.

LIQUIDITY FACILITY

Obligates the provider to pay the holder par plus accrued interest in the event that a VRDN is tendered and cannot be remarketed. The obligation is not unconditional. Typically the liquidity provider is a bank or the issuer itself. If the liquidity facility is drawn upon and the provider cannot pay this is an event of default.

LONDON INTERBANK OFFERED RATE (LIBOR)

One of the most important financial benchmarks in the world, LIBOR is a daily reference rate based on the rate at which banks borrow unsecured funds from one another in the London wholesale money market. LIBOR and other short-term indicative interest rates—such as the Fed Funds rate in the US—are typically used to benchmark the performance of Money Market Funds.

M

MATURITY DATE

The date on which the final parment of a debt instrument is due and payable.

MONEY MARKET INSTRUMENT

A highly liquid short-term debt instrument with a high credit rating. Examples include certificates of deposit, commercial paper, banker's acceptances and Treasury bills.

MONEY MARKETS

Money market funds trade in short-term debt and monetary instruments.  Money markets are viewed as lower risk (but not risk free) investments that historically have provided a better return to investors than cash.

MONTHLY AVERAGE YIELD

The average daily return over the course of one month.

MOODY'S AAA-MF RATING

Very strong ability to meet the dual objectives of providing liquidity and preserving capital.

MUNICIPAL PUT BONDS

A security which has an effective maturity of 397 days or shorter. The coupon is fixed over a predetermined amount of time. Primarily used to manage duration and yield.

N

NASDAQ

National Association of Securities Dealers Automated Quotation System. NASDAQ is a computerized system that provides brokers and dealers with price quotations for securities and mutual funds traded over the counter as well as New York Stock Exchange listed securities.

NATIONAL ASSOCIATION OF INSURANCE COMMISSIONERS (NAIC)

An organization of insurance regulators from the 50 states, Washington D.C. and the four U.S. territories that provide a forum for the development of uniform insurance policies.

NET ASSET VALUE (NAV)

A money market fund's per-share value. This amount is derived by dividing the total value of all the securities in the fund's portfolio, less any liabilities, by the number of fund shares outstanding.

NON-AGENCY MORTGAGE-BACKED SECURITY

Unlike the Agency MBS, this type of financial investment instrument is generally issued by private issuers and is not guaranteed by a governmental agency.

NRSRO

Nationally Recognized Statistical Rating Organization. The formal term describes credit rating agencies that provide ratings used by the U.S. government and financial services firms in several regulatory and investment areas. Ratings provided by NRSROs are used frequently by investors and as benchmarks by federal and state agencies. 

O

OPTION-ADJUSTED DURATION (YRS)

 

A measure of the sensitivity of a bond's price to interest-rate changes, assuming that the expected cash flows of the bond may change with interest rates.

 

P

PRINCIPAL

The amount of money invested in a bond.  The principal does not equate to the face value of the bond as they are bought and sold on the secondary market at prevailing prices.

PROSPECTUS

A formal written offer to sell securities. A prospectus contains material information for a particular fund, including performance history, manager(s), objectives, risk factors, financial data, associated costs and fees, etc. A prospectus should be read carefully before investing.

PROXY

Authorization, whether written or electronic, that shareholders' votes may be cast by others in connection with a shareholder meeting. Shareholders have the option to vote "yes" or "no" on any proposal. However, they can, and often do, give management their proxies, delegating the right and responsibility to vote their shares as indicated on the proxy.

R

REPO (OVERNIGHT) RATE

The rate of a repurchase agreement in which securities are sold provided that they will be purchased the next day.

REPURCHASE AGREEMENTS (REPOS)

An agreement between a seller and a buyer whereby the seller agrees to repurchase the securities at an agreed price and, usually, at a stated time. Repos are, in essence, short-term loans—usually for terms of less than two weeks and often as short as one day.

S

SEC 30-DAY YIELD

This is calculated by dividing the net investment income per share (as defined by the SEC) earned by the fund over a 30 day period (ending on the stated month-end date) by the maximum POP (price-of-purchase) per share of the fund on the last day of the period. This yield does not necessarily reflect income actually earned and distributed by the fund. This yield does not allow for the inclusion of capital gains or losses.

SOVEREIGN BOND

A bond issued by a national government and denominated in a foreign currency.

SPREAD DURATION (YRS)

A measure of the sensitivity of a bond’s price to spread changes.

STANDARD & POOR'S AAAM OR AAAM-G RATINGS

Safety is excellent. Superior capacity to maintain principal value and limit exposure to loss. The G designation following the rating indicates that the portfolio is invested in direct obligations of the U.S. Government. Ratings are subject to change and do not eliminate the risks of investing.

STANDARD DEVIATION - 3 YEAR

Measures the historical total risk of a portfolio by assessing the probable range within which a portfolio’s return could deviate from its average return over a defined historical period of time.

STANDARDIZED 7-DAY CURRENT YIELD

The Standardized 7-Day Current Yield is the average income return over the previous seven days. It is the Fund's total income net of expenses, divided by the total number of outstanding shares. The yield may differ slightly from the actual distribution rate of a given portfolio because of the exclusion of distributed capital gains or losses which are non-recurring. The SEC Yield is a required yield to quote to clients. This yield does not allow for the inclusion of capital gains or losses.

STANDARDIZED 7-DAY EFFECTIVE YIELD

The Standardized 7-Day Effective Yield is the average income return over the previous seven days, assuming the rate stays the same for one year and that dividends are reinvested. It is the Fund's total income net of expenses, divided by the total number of outstanding shares. The yield may differ slightly from the actual distribution rate of a given portfolio because of the exclusion of distributed capital gains or losses which are non-recurring. The SEC Yield is a required yield to quote to clients. This yield does not allow for the inclusion of capital gains or losses.

T

TAX-EXEMPT COMMERCIAL PAPER (CP)

Short-term obligations with maturities ranging from 1 to 270 days issued by tax-exempt issuers. Tax-exempt commercial paper is issued at par but can trade above or below par after issuance. Tax-exempt commercial paper has a fixed coupon over a set period of time which the issuer, remarketing agent and purchaser agree upon. Interest is paid at maturity. CP is primarily used to manage duration and yield.

TAX-EXEMPT FUNDS

Funds designed to maximize current income, preserve capital and maintain liquidity, by investing in municipal obligations issued by or on behalf of states, territories and possessions of the U.S. The interest is exempt from regular federal income tax.

TAX-FREE MUNI BONDS

Unlike taxable municipal bonds, tax-free Municipal bonds are exempt from federal taxes and from most state and local taxes, especially if the investor live sin the state in which the bond has been issued.

TAX/REVENUE ANTICIPATION NOTES (TANS/RANS/TRANS)

A tax-exempt fixed rate security which typically has a maturity of 397 days or shorter. These notes are sold by the issuer in anticipation of tax and/or revenue generated from the borrowed monies.

TAXABLE MUNI BONDS

A debt obligation of a US state or local government that generally supports governmental needs or special projects. A taxable Municipal Bond is a debt security whose returns are subject to taxes at the local, state or federal level, or some combination thereof.

TENDER OPTION BONDS (TOBS)

A tender option bond is a type of VRDN where a long term bond is placed into a trust. Floating rate securities are created from the trust. These floating rate securities function like a VRDN in that the coupon resets every 1-7 days. Additionally, there is a liquidity feature which allows these securities to be tendered on a 1-5 business day settlement. A unique feature of TOBs is that when the trust is unwound and the underlying bonds are sold a gain may be generated. This gain is distributed to the TOB holder on a pro rate basis.

TIME DEPOSITS

A deposit in an interest-paying account that requires the money to remain in the account for a specific length of time, often overnight.

TREASURY BILL (T-BILL)

Debt obligations of the U.S. Treasury, backed by the full faith and credit of the federal government, having original maturities of 1 year or less.

TREASURY BOND

Debt obligations of the U.S. Treasury, backed by the full faith and credit of the federal government, having original maturities of greater than 10 years.

TREASURY NOTE

A marketable US government debt security with a fixed interest rate and a maturity between two and 10 years that is backed by the full faith and credit of the federal government. Treasury notes can be bought either directly from the US government or through a bank.”

TRI-PARTY REPURCHASE AGREEMENT (TRI-PARTY REPO)

This involves a custodian bank acting as an intermediary between the two parties in a repurchase agreement. The tri-party agent is responsible for the administration of the transaction including allocation, marking to market, and substitution of collateral.

U

U.S. COMMERCIAL PAPER

Unsecured, short-term obligations issued by a corporation with maturities of 270 days or less, usually issued at a discount reflecting current market interest rates.

V

VARIABLE RATE DEMAND NOTES (VRDN)

A debt instrument where a long term bond has a coupon which resets every 1-7 days. These securities have a shortening feature which allows the holder to put (i.e. sell) the security at par plus accrued interest for either same day or 5 business day settlement. The liquidity feature can be provided by the issuer itself or a bank and can be in the form of a liquidity facility or letter of credit. These securities generally trade at par.

VOLATILITY

The level of risk associated with an investment as measured by the standard deviation from the expected return.

W

WEIGHTED AVERAGE LIFE (WAL)

The money market fund’s weighted average life (WAL) is an average of the final maturities of all securities held in the portfolio, weighted by each security’s percentage of net assets. This must not exceed 120 days by SEC Rule 2a-7.

WEIGHTED AVERAGE MATURITY (WAM)

The money market fund's weighted average maturity (WAM) is an average of the effective maturities of all securities held in the portfolio, weighted by each security's percentage of net assets. This must not exceed 60 days if the fund is rated.

WEIGHTED MEDIAN MARKET CAP

The midpoint of market capitalization (market price multiplied by the number of shares outstanding) of the stocks in a portfolio. Half the stocks in the portfolio will have higher market capitalizations, half will have lower.

Y

YIELD CURVE

A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity dates. The most frequently reported yield curve compares the three-month, two-year, five-year and 30-year U.S. Treasury debt. This yield curve is used as a benchmark for other debt in the market, such as mortgage rates or bank lending rates. The curve is also used to predict changes in economic output and growth.

YIELD-TO-MATURITY

The rate of return anticipated on a bond if it is held until the maturity date. YTM is considered a long-term bond yield expressed as an annual rate. The calculation of YTM takes into account the current market price, par value, coupon interest rate and time to maturity. It is also assumed that all coupons are reinvested at the same rate. Sometimes this is simply referred to as "yield" for short.