R2 - R-Squared Measure of diversification that determines how closely a particular fund's performance parallels an appropriate market benchmark over a period. The market is understood to have an R2 of 100%. Therefore, a fund with an R2 of 85% contains 85% of the market's diversification and risk. The remaining 15% is unique to the fund manager's actions.

Realized The appreciation or depreciation of a security after it has been redeemed. If a stock price increases by $50 to $100 and the shares are sold, the appreciation is realized and the investor receives his or her money. If the shares are not sold, the appreciation is Unrealized because it exists only on paper. A security that loses value is said to have depreciated, and the loss may be realized or unrealized in the same manner.

Record Date Date by which a shareholder must be registered on an investment company's books in order to receive a dividend.

Redemption-in-Kind Redemption of investment company shares in forms other than cash, such as other securities. Permissible for many mutual funds and tax-free exchange funds.

Redemption Price Price at which an investor sells securities, i.e. redeems securities for cash. See Bid Price as applicable to open-end investment companies.

Registrar Banking institution that maintains the list of the shareholders and the number of shares they hold.

Registration Statement Document detailing a security's vital information which must be filed with and approved by the Securities and Exchange Commission before sale to the public.

Registered Investment Company An investment company that has filed a registration statement with the Securities and Exchange Commission under the requirements of the Investment Company Act of 1940.

Regulated Investment Company Investment company that has elected to qualify for the special tax treatment provided by Subchapter M of the Internal Revenue Code; not to be confused with registration under Investment Company Act of 1940.

Reinvestment Privilege Service offered by most mutual funds and some closed-end investment companies in which distributions may be automatically reinvested for additional full and fractional shares.

Repurchase Agreement Temporary transfer of a security to another person, based on the understanding that ownership will revert at a future time and price. This "renting" of a debt security fixes the yield while held by the purchaser and insulates the return from market fluctuations during the temporary ownership.

Repurchases In closed-end companies, the companies' voluntary open-market purchases of their own securities. For open-end companies, the stock taken back at approximate asset value.

Restricted Security Portfolio security not available to the public at large, which requires registration with the Securities and Exchange Commission before it may be sold publicly; frequently referred to as a private placement or letter stock.

Revenue Bond Municipal bond backed by a designated stream of money. The revenue securing the bond usually emanates from a project funded by that bond sale

Rollover Movement of funds from one qualified retirement investment to another while avoiding tax liabilities. The investor receives money in hand and must move it to another qualified account within 60 days or be assessed a 20% withholding tax plus a 10% penalty for early withdrawal. If the investor does not touch the money but has it move from custodian to custodian, it is called a Direct Transfer. See Pension Rollover, Qualified Plan.

Round Lot Fixed unit of trading (usually 100 shares) which forms the basis for prevailing commission rates on a securities exchange.

Securities and Exchange Commission (SEC) Independent agency of the U.S. Government which administers securities transaction laws.

Selling Charge or Sales Commission Fee paid at the time of purchase to the broker or financial advisor for the service of selling the fund; generally stated as a percentage of the offering price. See Load.

Senior Capital See Senior Securities.

Senior Securities Notes, bonds, debentures, or preferred stocks whose claim on earnings and assets ranks ahead of common stock. Should a company liquidate, the claims of a senior security holders ranks above those of junior security holders because the company's creditors receive recompensation before the owners.

Separate Account Account completely separated from the General Account of the insurance company, since its assets are generally invested in common stocks.

Shareholder Experience Measure of the investment returns, usually expressed in terms of a hypothetical $10,000 investment and including sales charges.

Sharpe Ratio Sharpe is a measure of the portfolio returns compared to total risk. A higher value indicates greater return per unit of risk. Risk in this calculation is provided by the portfolio's Standard Deviation. Sharpe ratios cannot stand alone, and can only be effective when used in comparison to other portfolio's or securities.

Short Sale Sale of a security which is not owned in the hope that the price will go down so that it can be repurchased at a profit. The person making a short sale borrows stock in order to make delivery to the buyer, and must eventually repurchase the stock in order to return it to the lender.

Small Cap Fund that holds stocks with an average market capitalization between five hundred million and one billion dollars. Considered a high risk investment.

Special Situation Investments in distressed or undervalued securities, including restructuring firms, venture capital, mergers, reorganizations, etc.

Specialty or Specialized Fund Investment company concentrating its holdings in specific industry groups, such as technology, natural resources, gold, etc.

Split Funding Arrangement which combines investment in mutual fund shares and purchase of life insurance contracts, such as under an individual Keogh Plan.

Standard Deviation Statistical measure of the month-to-month volatility of a fund's returns . Higher numbers indicate greater variation from a benchmark. If the standard deviation for Fund A and Fund B were 8.0 and 4.0, respectively, then Fund A has experienced twice as much variability as Fund B. Money market funds, which have stable asset values and low risk, have standard deviations near zero.

Standardized Return Return net of all fees that is calculated according to form N-4 as required by SEC rule 482.

Subchapter M Section of the International Revenue Code that provides special tax treatment for regulated investment companies. (See Chapter VII.)

Surrender Charge Expressed as a percentage of assets, this is the charge that the insurance company assesses clients when they surrender all or part of their contract; is similar to a CDSC.

Swap Fund See Tax-Free Exchange Fund.

Tax-Free Exchange Fund Investment company permitting investors with appreciated securities to exchange them for shares of the fund while avoiding capital gains taxes.

Total Return Investment category that strives for both capital appreciation and current income. Also, performance calculated assuming reinvestment of all income and capital gains distributions.

Treasury Bill Debt securities sold by U.S. Treasury. Treasury bills usually mature in three months to one year, Treasury notes mature in one to ten years, Treasury bonds mature in ten to thirty years.

Trustee Party with responsibility to delegate and administer assets for the benefit of others.

Turnover Ratio Measure of change in portfolio holdings; extent to which an investment company's portfolio changes during a year. A rough calculation can be made by dividing the lesser of portfolio purchases or sales (to eliminate the effects of net sales or redemption's of fund shares) by average assets.

12b-1 Fee Fee covering marketing and distribution costs, named after the 1980 Securities and Exchange Commission rule that permits them.

Uncertified Shares Ownership of fund shares credited to a shareholder's account without the issuance of actual stock certificates.

Underwriter, Principal See Distributor.

Unit Refund Monthly payments made to an annuitant during his or her lifetime. At death, a lump sum payment of remaining equity is made to the designated beneficiary.

Unit Trust Investment company or contractual plan which has a fixed portfolio, as opposed to the changeable portfolio available in open-end or closed-end funds.

Valuation Date Day on which the value of a Separate Account is determined.

Value Investing Policy of an investor to buy securities believed to have a market price below their actual or potential worth

Variable Annuity Annuity contract under which the dollar payments received are not fixed but fluctuate more or less in line with average common stock prices.

Variable Life Insurance Contract or plan under which the death benefit and cash fluctuate in tandem with the investment performance of a Separate Account generally composed of common stock.

Volatility Price fluctuation of a security. This can be measured in various was, most commonly by standard deviation and beta.

Voluntary Plan Accumulation plan without any stated duration or specific requirements as to total amount to be invested, although conditions may be set on the minimum amount invested at each instance. Sales charges are applicable to each purchase made.

Warrant Option to buy a specified number of shares of the issuing company's stock at a specified price, often in the form of put or call options. Warrants become tradable securities with values determined by the performance of the underlying security.

Withdrawal Plan Option of an open-end shareholder to receive periodic payment from his or her account. The payment may be more or less than investment income during that time period and therefore may imply the selling of shares.

Yankee Bond Foreign bond issued in the U.S. market, payable in dollars, and registered with the Securities and Exchange Commission.

Yield For stocks, the percentage income return, derived by comparing income dividends to market price and capital gains. For bonds, this is the interest rate.

Yield-to-Maturity Rate of return on a debt security held to maturity, including appreciation and interest.

Zero-Coupon Bond Debt security which is sold at a deep discount from face value and which does not pay periodic interest. Upon maturity, the bond is redeemed at face value.

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