A

Account Statement
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 realised by the mutual fund and on realisation, 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.

B

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.

C

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 tenor of maturity.

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.

• Back to top

D

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.

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.