P

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.

R

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.

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.

S

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, fast moving consumer goods 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
units of ownership in a corporation or a mutual fund. in a mutual fund, the value of each unit is calculated by dividing net assets by the number of shares.

share ratio
statistical measure of a portfolio's historic "risk-adjusted" performance. calculated by dividing a fund's excess return by the standard deviation of those returns. this is a measure of return of a portfolio given the risk taken by it. the higher the ratio, the better the portfolio.

s & p 500 stocks (standard & poor, composite index of 500 stocks)
market value-weighted index that measures stock market price movements, based on the aggregate performance of 500 widely held common stocks.

standard deviation
this is a measure of deviation or historic volatility of a portfolio. it measures the dispersion of a fund's periodic returns from its mean value. the wider the dispersion, the higher the standard deviation and thus higher the risk. lower standard deviation is therefore preferred.

stocks
stocks represent a part equity ownership of a corporation. when someone holds stocks of a certain company, it means that he/she owns shares of that company and therefore becomes a part owner of that company in proportion to his/her holding. these securities generally have the most potential for capital appreciation, but their rights are subordinated in the event of a company liquidation or bankruptcy.

switching
it is the transfer of one's investment from one scheme to another.

systematic investment plan (sip)
a systematic investment plan allows an investor to buy units of a mutual fund scheme on a regular basis by means of periodic investments into that scheme in a manner similar to instalments paid on purchase of normal goods. the investor is allotted units on a predetermined date specified in the offer document of the scheme. here the plan allows the investor to take advantage of the rupee cost averaging methodology.

Systematic encashment/Withdrawal plan (SEP/SWP)
a systematic encashment / withdrawal plan permits the investor to receive a pre-determined amount / units from his investment in a mutual fund scheme on a periodic basis. retirees in need of a regular income often opt for this.

systematic transfer pan (stp)
an stp allows the investor to transfer a pre-determined amount from his investment in a mutual fund scheme to another mutual fund scheme (of the same company) on a periodic basis. this plan is generally used to transfer sums from a money market / liquid / cash scheme to another scheme.

securities transaction tax (STT)
tax levied on your equity mutual fund investment, equity shares and derivatives.

T

total return
the performance of an investment, including yield (dividends, interest, capital gains) as well as changes in per unit price, calculated over a designated period of time expressed in percentage terms. simply put, it is the return one gets on his investment taking all factors into account.

trade date
the actual date on which your units were purchased or sold. the transaction price is determined by the closing net asset value on that date.

transfer agent / registrar
an agent appointed by the trustee 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 share holders.

trustees (of a mutual fund)
sebi requires all mutual funds to appoint a board of trustees. they appoint and oversee the operations of the asset management companies to ensure that the interest of investors is always safeguarded.

Tax deducted at source (TDS)
no tax is withheld or deducted at source, where any income is credited or paid by a mutual fund, as per the provisions of section 194k and 196a of the act.

top-down investing
the top-down style of investment management places primary importance on country or regional allocation. top-down managers generally focus on global economic and political trends in selecting the countries or regions where they expect to find investment opportunities. only then do they employ a more fundamental analysis of individual stocks in order to make their final selections.

transaction costs
the costs incurred by the buying and selling of securities including broker commissions and the difference between dealer buying and selling price.

treasury bills (t-bills)
a short-term debt instrument issued by the government with a maturity period of one year or less.