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Investment Terms


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R-Squared. This number indicates what percentage of fluctuation in a fund's performance can be explained by movements in the benchmark index. R-squared is quoted in a range from 0 to 100. An R-squared of 100 would mean that the fund is tracking its benchmark exactly. A low R-squared indicates that very few of the fund's movements are explained by movements of its benchmark. R-squared can also help determine the significance of a fund's beta. A higher R-squared generally indicates a more statistically significant beta. A lower R-squared means a fund's beta is less meaningful.

Real yield. A bond's yield, adjusted for inflation. In other words, if the rate of inflation was 3% and a bond was yielding 10%, the real yield would be 7%.

Recipient. A nonprofit organization recommended to receive a grant by a donor of a donor-advised fund.

Record date. Date on which a shareholder must officially own shares in order to be entitled to a dividend. After the record date, shares are sold ex-dividend, or without the dividend.

Regional mutual funds. Funds that limit their investments primarily to a specific country or geographic region, such as California, Europe, Asia, or Latin America. Regional mutual funds tend to be more volatile than funds with more geographically diverse holdings.

REIT (Real Estate Investment Trust). A company, usually traded publicly, that manages a portfolio of real estate to earn profits for shareholders

Return of capital distribution. A distribution in excess of a fund's current and accumulated earnings and profits. A return of capital distribution is generally a nontaxable distribution that reduces a shareholder's cost basis in shares of a fund. Mutual fund return of capital distributions are reported on Form 1099-DIV.

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