A B C D E F G H I J K L M N O P Q R S T U V W X Y Z
A statement issued by the mutual fund, giving details
of transactions and holdings of an investor. This is normally issued in lieu of
a unit certificate. ------------------------------------------------------------------------------- Adjusted NAV (Total Return) The notional net asset value of a unit assuming
reinvestment of distributions made to the investors in any form. This is
relevant to calculate the total returns from the fund. -------------------------------------------------------------------------------- Age Of Fund The time elapsed since the launch of the fund. -------------------------------------------------------------------------------- Annual Return The percentage of change in net asset value over a
year's time, assuming reinvestment of distribution such as dividend payment and
bonuses. -------------------------------------------------------------------------------- Annualized Returns Absolute returns over a period (which could be larger
or smaller than a year) aggregated to a period of one year. Used for the purpose
of comparing returns over different periods. -------------------------------------------------------------------------------- Applicable NAV The NAV at which a transaction is effected. A cut-off
time is set by the fund and all investments or redemptions are processed at that
particular NAV. This NAV is relevant if the application is received before that
cut-off time. If the application is received thereafter, it will be treated as
the next day's application and allotted the relevant NAV. -------------------------------------------------------------------------------- Application Form Form prescribed for investors to make applications for
subscribing to the units of a fund. Some funds also accept applications on plain
paper. -------------------------------------------------------------------------------- Asset Allocations Allocation of the funds held by the mutual fund to
various categories of assets such as equity, debt and others. This is based on
the investment objective of the scheme. -------------------------------------------------------------------------------- Asset Management Company
(AMC) The company vested with the responsibility of managing
investments of the schemes of a fund in line with the stated investment
objective of each scheme. -------------------------------------------------------------------------------- Automatic Investment Plan Under these plans, the investor mandates the mutual
fund to allot fresh units at specified intervals (monthly, quarterly) against
which the investor provides post-dated cheques. On the specified dates, the
cheques are realized by the mutual fund and on realization; additional units at
the prevailing NAV are allotted to the investor. This inculcates a healthy and
disciplined saving habit. -------------------------------------------------------------------------------- Average cost method This is the average price of units purchased by the
investor calculated by adding up all the costs involved in purchasing all the
units of investment and then dividing the sum by the total number of units. . -------------------------------------------------------------------------------- Average Maturity Average time to maturity of all fixed-period
investments in the portfolio of a scheme. ------------------------------------------------------------------------------- Automatic
debit: Saves
the hassle of writing a cheque when making an investment. Your account is
debited automatically for the amount invested. -------------------------------------------------------------------------------- Automatic credit: The reverse of Automatic Debit. Saves the hassle of
enchasing a cheque when withdrawing an investment. Your account is credited
automatically with the amount withdrawn.
Back End Load The difference between the NAV of the units of a
scheme and the price at which they are redeemed. The difference is charged by
the fund. ------------------------------------------------------------------------------ Balance Maturity Tenure Of A Scheme In the case of close-ended schemes, the time remaining
until the redemption of the scheme. -------------------------------------------------------------------------------- Balanced Funds Funds that invest in equity and debt instruments in
varying proportions. These funds supplement capital appreciation from equities
with a steady return from debt instruments. To a large extent, the returns
depend on the performance of the equity portion in the portfolio. There is some
flexibility in changing the asset composition between equity and debt and fund
managers exploit this to buy the best asset class at each time. ------------------------------------------------------------------------------- Benchmark A parameter with which some thing can be compared
with. For example, the performance of an equity scheme can be benchmarked
against the BSE Sensex. In this case, the BSE Sensex will be known as the
benchmark index. ------------------------------------------------------------------------------- Beta It shows the sensitivity of the fund to movements
measured against the benchmark. A beta of more than 1 indicates an aggressive
fund and the value of the fund is likely to rise or fall more than the
benchmark. A beta of less than 1 implies a defensive fund that will rise or fall
less than the benchmark. A beta of 1 indicates that the fund and the benchmark
will react identically. -------------------------------------------------------------------------------- Bond A debt instrument issued either by a company, the
government or its agencies. It carries a fixed interest and promises return of
principal on a specified date. -------------------------------------------------------------------------------- Bonus Additional units allotted to investors on the basis of
their existing holdings. Basically, there is a split of existing units into more
than one unit resulting in the reduction of the NAV per unit. -------------------------------------------------------------------------------- BSE Index An index reflecting the stock prices of 30 companies
listed on the Bombay Stock Exchange (BSE), which is taken to be representative
of the stock market movement. -------------------------------------------------------------------------------- TOP
Capital Gains As per the Income Tax Act, the gains made on sale of
securities and certain other assets (including units of mutual funds) are
charged to capital gains tax. The gains can be long-term or short-term depending
on the period of holding of the asset and are charged to tax at different rates.
Gains on mutual fund units held for a period of 12 months or more are long-term
gains. ------------------------------------------------------------------------------- Close-ended schemes Schemes, which have a fixed date of redemption. ------------------------------------------------------------------------------- Corpus The total amount of money invested by all the
investors in a scheme. ------------------------------------------------------------------------------- Cost Of Churning The portfolio of a scheme changes from time to time.
The rate of change depends on the style of the fund manager (whether he follows
the buy-and-hold philosophy or aggressively churns the fund) and on the type of
investors (whether the fund constantly receives fresh subscriptions and
redemption requests). Such portfolio changes have associated costs of brokerage,
custody fees, transaction fees and registration fees which lower the returns.
These costs comprise the cost of churning. -------------------------------------------------------------------------------- Current Load Load structure applicable currently. Funds keep
revising the load structures prospectively from time to time. -------------------------------------------------------------------------------- Custodian Agencies, which have custody of all the securities
purchased by the mutual fund. The service can be provided only by a person who
has been granted a certificate of registration to carry on the business of
custodian of securities under the SEBI regulations. -------------------------------------------------------------------------------- Cut-off Time In respect of all mutual funds regulated by SEBI,
fresh subscriptions and redemptions are processed at a particular NAV. Every
fund specifies a standard / uniform cut-off time in respect of fresh
subscriptions and redemption of units. All requests received before the cut-off
time are processed at that day's NAV and thereafter the request is treated as
received on the next day. -------------------------------------------------------------------------------- TOP
Debenture
A debt obligation that is not backed by
collateral, but usually rated by a credit rating agency. ------------------------------------------------------------------ Date Of Redemption The date specified for the redemption of a scheme. No
such date is specified for an open-ended scheme. ---------------------------------------------------------------------------------- Debt / Income Funds Funds that invest in income bearing instruments such
as corporate debentures, PSU bonds, gilts, treasury bills, certificates of
deposit and commercial papers. Although these funds are less volatile, the
underlying investments carry a credit risk. Comparatively, these funds are less
risky and are preferred by risk-averse investors. ------------------------------------------------------------------------------------------- Dividend Portion of profits that a company or a mutual fund
distributes to its shareholders or unit holders. Diversification Investing in separate asset classes (stocks, bonds,
cash) and/or stocks of different companies in an attempt to lower overall
investment risk. ------------------------------------------------------------------------------------------------ Dividend Frequency The periodicity of dividend payout of a scheme. This
is especially valid in the case of an income/debt scheme. ----------------------------------------------------------------------------------------------- Dividend History The past track record of dividends declared by a fund
till date. ------------------------------------------------------------------------------ Dividend Per Unit Total amount of dividend declared by a fund for a
scheme divided by total number of units issued to all the investors. -------------------------------------------------------------------------------- Dividend Period The period for which the dividend is declared -------------------------------------------------------------------------------- Dividend Payout In a dividend payout option, the fund pays out
dividend from time to time as and when a dividend is declared. -------------------------------------------------------------------------------- Dividend Reinvestment In a dividend reinvestment option, the dividend is
reinvested in the scheme itself. Hence instead of receiving dividend, the unit
holders receive units. Thus the number of units allotted under the dividend
reinvestment option would be the dividend declared divided by the ex-dividend
NAV. -------------------------------------------------------------------------------- Dividend Stripping The mechanism under which an investor invests in a
scheme with the motive of withdrawing the funds immediately after the dividend
is paid. Typically one enters just before the record date for payment of
dividend and withdraws the funds immediately after the dividend payment. The
mechanism is used for receiving tax-free income and booking capital loss to be
set off against other capital gains. -------------------------------------------------------------------------------- Dividend Yield The dividend earned per unit of a scheme at the
prevailing per unit price. -------------------------------------------------------------------------------
Entry Load The fee charged at the time of investment. It amounts
to the difference between the NAV of the units of a scheme and the price at
which new units are allotted on fresh investments. The fee has to fall within
the overall limit laid down by SEBI. ------------------------------------------------------------------------------ Equity Linked Savings Scheme A special product offered by mutual funds. As per the
proposal put forth in the Union Budget 2005, subject to necessary parliamentary
approvals, investments to the tune of Rs. 1 lakh in specified instruments are
eligible as a deduction from gross total income under section 80 C. One of the
instruments that is eligible for this deduction is an Equity Linked Savings
Scheme (ELSS). Tax deduction for this investment is available at the marginal
rate of taxation of the investor. The product therefore offers an investor the
opportunity to invest in equity markets (which offer potentially higher returns)
and at the same time avail of tax benefits. -------------------------------------------------------------------------- Equity Schemes Schemes where more than 50% of the investments are
done in equity and equity related securities of various companies. These funds
tend to provide maximum returns over a long-term horizon. However, the returns
from these funds are directly linked to the stock market and are volatile as
compared to those from debt funds. -------------------------------------------------------------------------------- Ex-dividend Date In respect of any distribution of dividend, the date
from which the holders are not entitled to the dividend. The NAV is accordingly
reduced to the extent of the dividend declared. -------------------------------------------------------------------------------- Earnings Per Share (EPS) A company's earnings, also known as net income or net
profit, divided by the number of shares outstanding. ------------------------------------------------------------------------------ Exit Load The fee charged at the time of redemption. It amounts to the difference between the NAV of the units of a scheme and the price at which existing units are redeemed. The fee has to fall within the overall limit laid down by SEBI. -------------------------------------------------------------------------- TOP
The original issue price of one unit of a scheme. -------------------------------------------------------------------------------- First In First Out Method (FIFO) The method under which for the purpose of computing
capital gains on sale of units, the units sold are assumed to be those in stock
which were purchased first. This method is followed for the purpose of computing
tax on capital gains. If the units purchased are in different folios, then the
option of considering the sale of units on a one-to-one basis is available but
one can still opt for FIFO method. -------------------------------------------------------------------------------- Front-end Load The service charge collected by the fund from the
investor. This is charged through a markup on the NAV for purchase by new
investors. The load has to fall within an overall limit laid down by SEBI. -------------------------------------------------------------------------------- Fund A mutual fund is a trust under the Indian Trust Act.
Each fund manages one or more schemes. -------------------------------------------------------------------------------- Fund Category Classification of a scheme depending on the type of
assets in which the corpus is invested by the mutual fund company. It could be a
growth, debt, balanced, gilt or liquid scheme. ------------------------------------------------------------------------------- Fund Family All the schemes which are managed by one mutual fund. -------------------------------------------------------------------------------- Fund Management Costs The charge levied by an AMC on a mutual fund for
managing their funds. ------------------------------------------------------------------------------- Fund Manager The person who makes all the final decisions regarding
investments of a scheme. --------------------------------------------------------------------------------
Fiscal
Year A 12-month accounting period. From April 1st to
March 31st. -------------------------------------------------------------------------------------- TOP
Funds which invest only in government securities of
different maturities with virtually no default risk. While returns are steady
and secure, they are generally lower than those from other debt funds. ------------------------------------------------------------------------------- Growth Option A scheme where the fund ploughs back the dividend
announced. The fund allots as many units of the scheme as are arrived at on
dividing the dividend amount by the ex-dividend NAV. -------------------------------------------------------------------------------- Guaranteed Returns The return assured by the mutual funds as a minimum
return in certain schemes, subject to meeting the conditions stipulated by SEBI.
-------------------------------------------------------------------------------- TOP
Income / Debt Funds Funds that invest in income bearing instruments such
as corporate debentures, PSU bonds, gilts, treasury bills, certificates of
deposit, commercial papers etc. Although these funds are less volatile, the
underlying investments carry a credit risk. Comparatively, these funds are less
risky and are preferred by risk-averse investors. ------------------------------------------------------------------------------- Index Funds A class of equity funds that invest in equity shares
of various companies in the same proportion in which they appear in the
composition of any popular index, such as the BSE Sensex, S&P 500 or NASDAQ
composite. The performance of such funds closely tracks the performance of the
index. -------------------------------------------------------------------------------- Indexation The central government specifies an index linked to
the wholesale price index. The indices of two years (year of purchase and the
year of sale) are used for the purpose of computing capital gains tax. The
purchase price is multiplied by the index of the year of sale and the product is
divided by the index of the year of purchase. This benefit is available only if
the security has been held for more than 12 months (long-term). Since capital
gains on long-term equity mutual fund investments are tax free, indexation
benefits are applicable only to investments in debt mutual fund schemes. On sale
of any debt mutual fund scheme, one can opt for paying tax at the rate of a flat
10% of capital gains or go in for paying 20% of capital gains after taking the
benefit of indexation. This benefit of indexation is available only to investors
who are resident under the Act. -------------------------------------------------------------------------------- Initial Offer Price The price at which units of a scheme are offered in
its Initial Public Offer (IPO). ------------------------------------------------------------------------------ Investment objective The declared purpose of investment of a mutual fund
scheme. ------------------------------------------------------------------------------- Investment strategy The internal guidelines that a fund follows in
investing the money received from the investors ------------------------------------------------------------------------------- TOP
Liquid Funds / Money Market Funds Funds investing in short-term money market instruments
including treasury bills, commercial paper and certificates of deposit. -------------------------------------------------------------------------------- Liquidity The cash and cash equivalent assets available with a
fund to meet expenses and immediate redemption requirements of the investors. -------------------------------------------------------------------------------- Listing The process of registration with the stock exchanges
after which the stock qualifies for trading on a stock exchange. All close-ended
schemes, with few exceptions, of a mutual fund are generally listed on a stock
exchange. There are also a few open-ended schemes which have been listed on the
stock exchange. -------------------------------------------------------------------------------- Load The fee charged by the fund either at the time the
investor buys into the fund (entry load) or when he redeems his units (exit
load). Funds that charge these loads at the time of entry or exit are called
load funds. It amounts to the difference between the NAV of the units of a
scheme and the price at which new units are allotted on fresh investments or
existing units are redeemed. Though the load is decided by the AMC, it has to
fall within the overall limit laid down by SEBI. Schemes that do not charge any
load and are called "no-load" schemes. -------------------------------------------------------------------------------- Lock In Period The period after investment in fresh units during
which the investor cannot redeem the units. ------------------------------------------------------------------------------- Liabilities
------------------------------------------------------------------------------------ LIBOR (London Interbank Offer Rate) This is the rate of interest at which banks
borrow funds from other banks, in marketable size, in the London interbank
market ----------------------------------------------------------------------------------- TOP
Management Fee / Expense Fee, within the limits laid down by SEBI, charged by
the AMC for managing of the mutual fund scheme. -------------------------------------------------------------------------------- Maturity The specified date on which the units of a close-ended
scheme are due for redemption. -------------------------------------------------------------------------------- Maximum Repurchase / Withdrawal A time frame decided by the fund beyond which the fund
will not entertain any application for redemption of units. This could be a day
or a week or any other period. -------------------------------------------------------------------------------- Minimum Subscription The minimum amount required to be invested to purchase
units of a scheme of a mutual fund. -------------------------------------------------------------------------------- Minimum Withdrawal The smallest sum that an investor can withdraw (get
redeemed) from the fund at one time. -------------------------------------------------------------------------------- Money Market Instruments As defined under the SEBI (MF) Regulations 1996
including Commercial paper, treasury bills, GOI securities with an unexpired
maturity up to one year, call money, certificates of deposit and any other
instrument specified by the Reserve Bank of India. -------------------------------------------------------------------------------- Money Market Mutual Funds/ Liquid Funds These funds invest only in money market instruments
including treasury bills, commercial paper or certificate of deposits of a very
short-term maturity. -------------------------------------------------------------------------------- Mutual Funds A mutual fund is a collection of stocks or bonds. This
happens when a large number of people give their money to professionals, to
manage and invest, with the aim of achieving a return. These qualified and
experienced professionals invest in instruments according to the objective of
the fund. ------------------------------------------------------------------------------
Net asset value (NAV) The value of a unit of a scheme on any given business
day. NAV reflects the market value of the fund's investments that day after
accounting for all expenses. -------------------------------------------------------------------------------- No Load Schemes Schemes where the mutual fund does not charge either
an entry or exit load. ----------------------------------------------------------------------------- Non Performing Investments Part of the portfolio investment of a debt fund, which
is not making interest payment or principal amount repayments in time. ------------------------------------------------------------------------------- Nifty An index of prices of a group of fifty specified
stocks listed on the NSE. ------------------------------------------------------------------------------- TOP
Objective
Of Investment The purpose statement consisting of the goal and the
avenues of investment specified by the fund in its offer document. ------------------------------------------------------------------------------- Offer Document Document by which a mutual fund invites the public for
subscription to units of a scheme, and informs them of the terms &
conditions for management of the scheme on a day to day basis thereafter. The
document contains information about the scheme to enable a prospective investor
make an informed investment decision. -------------------------------------------------------------------------------- Offering period The period during which the initial offer to subscribe
for the units of a scheme is open. ---------------------------------------------------------------- Open-ended Schemes Schemes for which a fixed date of redemption is not
specified. The fund offers to sell and buy units at any time at prices
linked to
the prevailing NAV. ---------------------------------------------------------------- TOP
Performance Performance of an investment indicates the returns
from an investment. The returns can come by way of income distributions as well
as appreciation in the value of the investment. ------------------------------------------------------------- Portfolio The basket of investments in which the funds of a
scheme are deployed. ------------------------------------------------------------ Portfolio Churning Switches between different stocks in the market,
keeping in view the market conditions, in order to give unit holders a better
yield. ------------------------------------------------------------- Price Of Units Price offered by a mutual fund for repurchase or sale
of a unit on a daily basis. ----------------------------------------------------------------- Prospectus An offer document by which a mutual fund invites the public for subscription to units of a scheme, and informs them of the terms & conditions for management of the scheme on a day to day basis thereafter. The document contains information about the scheme to enable a prospective investor make an informed investment decision. ------------------------------------------------------------------ Portfolio All the securities held by an individual, institution, or mutual fund. ----------------------------------------------------------------- Preferred Stock Preferred stock pays a dividend on a regular
schedule and is given preference over common stock in regard to the payment of
dividends or -- heaven forbid -- any liquidation of the company. Their share
prices tend to remain stable, and will generally not carry the voting rights
that common stock does. ----------------------------------------------------------------- Premium The difference between the higher price paid for
a security and the security's face amount at issue. ------------------------------------------------------------------ Price-To-Earnings Ratio (P/E) The share price of a stock, divided by its
per-share earnings over the past year. ----------------------------------------------------------------- TOP
Rating An evaluation of a scheme in relation to a parameter.
The rating could be done in respect of the creditworthiness of debt instruments,
risk of loss in an investment or the performance of an investment. -------------------------------------------------------------------- RBI Reserve Bank of India, established under the
Reserve Bank of India Act, 1934, is the Central Bank in India. ---------------------------------------------------------------------- Record Date The date considered as a cut-off date for taking into
account the unit holders of a fund who would be entitled to any benefit or who
would be considered for any other purpose. ---------------------------------------------------------------------- Redemption Of Units / Repurchase Buying back/cancellation of the units by a fund on an
on-going basis or on maturity of a scheme. The investor is paid a consideration
linked to the NAV of the scheme. ------------------------------------------------------------------------ Refund The act of returning money to an investor by the fund.
This could be on account of rejection of an application to subscribe units or in
response to an application made by the investor to the fund to redeem units held
by him. ----------------------------------------------------------------------- Registrar An agent appointed by the trustees of a mutual fund in
consultation with the AMC or by the companies for the purpose of handling the
records of the unit holders or shareholders. ----------------------------------------------------------------------- Repurchase Date /Period In the case of close-ended schemes, the specified date
on which or period during which the investor can redeem units held by him in the
scheme before the maturity of the scheme. ------------------------------------------------------------------------ Redemption / Repurchase price The price of a unit (net of exit load) that the fund
offers the investor to redeem his investment. -------------------------------------------------------------------------- Rate
of Return The difference between the prices paid for a security
and the security's sale price including any cash distribution expressed as a
percentage. ------------------------------------------------------------------------------ Record Date The date on which a company's books are closed
in order to identify share owners and distribute quarterly dividends, proxies,
or other financial documentation. ------------------------------------------------------------------------------ Risk Tolerance The measurement of an investor's willingness to suffer
a decline (or repeated declines) in the value of investments while waiting and
hoping for them to increase in value. Generally investors are risk averse. ------------------------------------------------------------------------------- Rupee Cost Averaging Strategy of making regular investments into a
mutual fund and having earnings automatically reinvested. This way, when the
share price drops, more shares are bought at lower prices. ------------------------------------------------------------------------------ TOP Sales charge A charge added on to the price of a mutual fund when
you buy it. -------------------------------------------------------------------------------- SEBI Securities and Exchange Board of India established
under Securities and Exchange Board of India Act, 1992. -------------------------------------------------------------------------------- Sector funds Schemes of mutual funds that invest
predominantly in a particular industry or sector of the economy such as
information technology, pharmaceuticals, FMCG etc. These funds tend to be more
volatile than funds holding a diversified portfolio of securities across many
industries, but may offer greater potential returns. These funds should be
considered only if one has a relatively higher risk appetite. -------------------------------------------------------------------------------- Securities The holdings of a mutual fund, such as stocks or
bonds. Stocks are securities representing ownership shares. Bonds are securities
representing a contractual debt obligation of the issuer to repay the holder,
with interest. -------------------------------------------------------------------------------- Shareholder The owner of shares of stock or shares of a mutual
fund. ------------------------------------------------------------------------------- Shares |