A statement issued by the mutual fund house, giving details of transactions and holdings of an investor in different mutual fund schemes.

ADJUSTED NAV (TOTAL RETURN)
The net asset value of a unit assuming reinvestment of distributions made to the investors in any form.

AGE OF FUND The time elapsed since the launch of the fund.

ALPHA COEFFICIENT
It is the excess return generated by the fund over and above its expected risk adjusted return, given its level of risk as measured by beta. An investment with a positive alpha indicates that the fund has performed better than expected, given its beta i.e. risk associated with the market movements. Consequently, a negative alpha indicates that the fund has under performed the markets on the risk adjusted levels.

ANNUAL REPORT
A yearly report given to shareholders containing the yearly record of a mutual fund's performance. The report informs the investor about the fund's earnings and operations as well.

ANNUAL RETURN
It is the percentage change in net asset value over a year's time, assuming reinvestment of distributed income such as dividend payment and bonuses back into the fund.

APPLICABLE NAV
It is the price, at which a mutual fund transaction is executed. A cut-off time is set by the fund and all investments or redemptions are processed at a particular NAV. This NAV is relevant if the application is received before that cut-off time in a day. A different NAV holds if received thereafter.

APPRECIATION
It is the increase in the value of an investment. For example, an equity share whose price rises from Rs. 20/- to Rs. 25/- has appreciated by Rs. 5/-.

APPLICATION FORM
Form prescribed for investors to make applications for subscribing to the units of a fund.

ARBITRAGE
The practice of buying and selling a listed stock on different exchanges in order to profit from minute differences in price between the two markets.

ASSET
Property and resources, such as cash and investments, comprise a person's assets; i.e., anything that has value and can be traded. Examples include stocks, bonds, real estate, bank accounts, and jewellery.

ASSET ALLOCATION
Allocation of the portfolio of a mutual fund in various categories of assets such as equity, debt and others on the basis of the investment objective of the scheme. It is the process of diversifying investments among different types of assets like stocks, bonds and cash in order to optimize risk / return tradeoff based on a person's financial situation and goals.

ASSET MANAGEMENT COMPANY / AMC
The trustee delegates the task of floating schemes and managing the collected money to a company of professionals, usually experts who are known for smart stock picks. This is an asset management company (AMC). AMC charges a fee for the services it renders to the MF trust. Thus the AMC acts as the investment manager of the trust under the broad supervision and direction of the trustees. The AMC must have a net worth of at least Rs. 10 crores at all times and it can not act as a trustee of any other mutual fund.

ASKED OR OFFERING PRICE
The price at which mutual fund units are offered for sale to the public.. The asked or offering price means the current net asset value (NAV) per unit plus sales charge, if any. For a no-load fund, the asked price is the same as the NAV.

AUTOMATIC INVESTMENT PLAN
Under these plans, the investor mandates the mutual fund to allot fresh units at specified intervals (monthly, quarterly, etc.) 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 are allotted to the investor at the prevailing NAV.

ASSET ALLOCATION FUND
A fund that spreads its portfolio among a wide variety of investments, including domestic and foreign stocks and bonds, government securities, gold bullion and real estate stocks. This gives small investors far more diversification than they could get allocating money on their own. Some of these funds keep the proportions allocated between different sectors relatively constant, while others alter the mix as market conditions change.

AUTOMATIC REINVESTMENT PLAN
Periodic investment of a fixed amount by a unit holder, either directly from his bank account or by issuing post-dated cheques, into his mutual fund account.On the specified dates, the cheques are realized by the mutual fund and on realization; additional units are allotted to the investor at the prevailing NAV.

AUTOMATIC WITHDRAWAL PLAN
Allows an investor to receive periodic payments of fixed amount or units from his investment in a mutual fund scheme. Retirees who want a regular income supplement often choose this.

AUTOMATIC REINVESTMENT
A service offered by most mutual funds whereby income, dividends and capital gain distributions are automatically invested into the fund by buying additional shares and thus building up holdings through the effects of compounding.

ANNUALISED RETURN
Absolute returns over a period (which could be larger or smaller than a year) aggregated to a period of one year. .

AVERAGE COST METHOD
A method of finding out the cost per unit 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.

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 SHEET
A financial statement showing the nature and amount of a company's assets, liabilities and shareholders' equity.

BALANCED FUND
A mutual fund scheme with an investment objective of both long-term growth and income, through investment in stocks and bonds. Generally, 60% is invested in stocks and 40% in bonds, in order to obtain the highest returns consistent with a low risk strategy.

BALANCE MATURITY TENURE OF A SCHEME
In the case of close-ended schemes, the balance period until the redemption of the fund.

BASIS POINT
The smallest measure used in quoting yields on fixed income securities. 100 basis points are equal to one percentage point.

BEAR MARKET
Period during which investors are on a selling spree and the share prices in general are going down.

BENCHMARK
A standard used for comparison. The investment performance of the scheme needs to be compared in relative terms against some indicator, which is called as the benchmark for the scheme. The common benchmarks for equity-oriented funds are the BSE 200 index or the BSE Sensex.

BETA
A measure of a fund's volatility in relation to the stock market is measured by a stated index. By definition, the beta of the stated index is 1; a fund with a higher beta is more volatile than the market, and a fund with a lower beta is less volatile than the market. Based on past historical records, a beta higher than 1.0 indicates that when the market rises, the stock will rise to a greater extent than that of the market; likewise, when the market falls, the stock will fall to a greater extent. A beta of lower than one indicates that the stock will usually change to a lesser extent with respect to the market. The higher the beta, the greater the investment risk.

BID OR SELL PRICE
The price at which a mutual fund's units are redeemed (bought back) by the fund house. The bid or redemption price means the current net asset value per unit, less any redemption fee or back-end load.

BLUE CHIP
Stock of a nationally known company that has a long record of profit, growth, and dividend payment, and a reputation for quality management, products, and services.

BOARD OF DIRECTORS
A committee elected by the shareholders of a company, empowered to act on their behalf in the management of company affairs. Directors are normally elected each year at the annual meeting.

BOND
A debt instrument issued by a company, state or the central government (or its agencies), with a promise to pay a stated rate of interest at regular intervals and return the principal amount on a specified date. Unlike stockholders, bondholders do not have corporate ownership privileges.

BOND FUNDS
Registered investment companies whose assets are invested in diversified portfolios of bonds, primarily fixed income securities

BOND RATING
An evaluation of the possibility of default by a bond issuer, based on an analysis of the issuer's financial condition and profit potential. Bond rating services are provided by, among others, CRISIL, ICRA and CARE. Ratings range from AAA (extremely unlikely to default) to D (likely to default). Mutual funds generally restrict their bond purchases to issues of certain quality ratings, which are specified in their prospectus.

BONUS
Additional units allotted to the 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.

BROKER
A broker is a licensed person authorized to receive commissions. Brokers are always affiliated with a brokerage company, or broker-dealer network. He is basically a salesman who sells stocks, bonds, or mutual funds.

BROKERAGE
The fee payable to a broker for acting as an intermediary in a transaction. For example, brokerage is payable by a fund for getting fresh investments from investors.

BSE INDEX
An index reflecting the stock prices of 30 companies listed on the Bombay Stock Exchange (BSE) that is taken to be representative of the stock market movement.

BULL MARKET
Period during which the prices of stocks in the stock market keep continuously rising for a significant period on the back of sustained demand for the stocks.

A bond in which the issuer is permitted or required to redeem before the stated maturity date at a specified price, usually at or above par, by giving notice of redemption in a manner specified in the bond contract.

CAPITAL
Initial amount of money invested, excluding any subsequent earnings.

CAPITAL APPRECIATION
Increase in the value of an asset such as a stock, bond, commodity or real estate.

CAPITAL APPRECIATION FUND
A mutual fund that seeks maximum capital appreciation through the use of investment techniques involving greater than ordinary risk, such as borrowing money in order to provide leverage and high portfolio turnover.

CAPITAL GAINS /LOSSES
Net profit or losses arising from the sale of securities in the fund's portfolio. Short-term gains or losses are generated on securities held for one year or less; long-term gains or losses pertain to securities held for more than one year.

CAPITAL GROWTH
A rise in the market value of a mutual fund's securities, reflected in its NAV per share. This is a specific long-term objective of many mutual funds.

CAPITAL MARKET
The market where capital funds, debt (bonds) and equity (stocks) are traded.

CASH & OTHER CATEGORY
A mutual fund asset allocation category that includes net cash, short-term securities, and any other securities (such as options) not included in other asset allocation categories.

CERTIFICATE OF DEPOSIT
Short-term debt instrument issued by scheduled commercial banks excluding regional rural banks. They are unsecured instruments that mature between three months to one year.

CLOSED-ENDED FUND/SCHEME
A type of fund that offers a fixed number of shares and is usually listed on a major stock exchange. Price is determined by supply and demand. Unlike open-ended mutual funds, closed-ended funds do not stand ready to issue and redeem their shares on a continuous basis.

COLLATERAL SECURITY
This is an extra security provided by a borrower to back up his/her intention to repay a loan

COMMERCIAL PAPER
These are short-term unsecured instruments issued by a company that needs to raise money; and is willing to pay an interest rate. These are included in portfolios of some mutual funds. Such instruments have maturities ranging from 3 months to 1 year.

COMMISSION
The broker's or agent's fee for buying or selling securities for a client. The fee is usually based as a percentage of the transaction's market value.

COMPLIANCE OFFICER
Officer appointed by the AMC to comply with regulatory requirements and to redress investor grievances.

COMPOUNDING
Interest earned not only on the initially invested principal but also on the accumulated interest during the period.

CONSIDERATION
The 'consideration' is the total purchase or sale amount associated with a transaction i.e the amount you 'pay' or 'receive'. It may also be the basis for working out the commission, taxes and any other charges, which are paid.

CONSUMER PRICE INDEX (CPI)
TThe index compiled by a governmental agency which follows the cost of living by following the changes in price of basic goods and services over time. This index measures inflation.

CONTINGENT DEFERRED SALES CHARGE (CDSC)
A type of exit sales load which is charged when units are redeemed within a specific time period following their purchase. These charges reduce as the duration of holding units increase.

CONTINUOUS OFFER
Offer of the Units when the Scheme becomes open ended, after closure of the initial offer. .

CONVEXITY
A mathematical concept that measures the sensitivity of the market price of interest- bearing bonds to changes in interest rate levels. See also Duration.

CORPUS
The total amount of money invested by all the investors in a scheme.

CORRELATION MEASURES
A Measure that shows the validity of a comparison to a benchmark index based on the historical relationship between portfolio returns and index returns. See also Volatility Measures.

COST OF CHURNING/TURNOVER COST
The portfolio of a scheme changes from time to time. The rate of change depends on the style of the fund manager. 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.

COUPON
The term is used colloquially to refer to a security's interest rate.

COUPON RATE
The annual rate of interest payable on a debt security expressed as a percentage of the principal amount.

CURRENCY FLUCTUATION
Changes in the value of a currency in relationship to other major currencies. Currency fluctuations can have a significant effect on the value of international mutual funds.

CURRENCY RISK
The possibility that fluctuating currency exchange rates will affect the rupee value of an investment.

CURRENT INCOME
Monies paid during the period an investment is held. Examples include bond interest and stock dividends.

CURRENT LOAD
Load structure applicable currently. Funds keep revising the load structures from time to time.

CURRENT MARKET VALUE
The amount, a willing buyer will pay for a bond today, which may be at a premium (above face value) or a discount (below face value).

CURRENT YIELD
The ratio of interest to the actual market price of the bond stated as a percentage

Annual interest
---------------------------- = Current yield
Current market value

CUSTODIAN
The organization (usually a bank) that keeps and safeguards the custody of securities and other assets of a fund.

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 cut-off time in respect of fresh subscriptions and redemption of units. All requests received before the cut-off times are processed at that day's NAV and thereafter at the next day's NAV.

CYCLICAL STOCK
Stock of a company whose performance is generally related (or thought to be related) to the performance of the economy as a whole. Paper, steel, and the automotive stocks are thought to be cyclical because their earnings tend to be hurt when the economy slows and are strong when the economy turns up. Food and drug stocks, on the other hand, are not considered "cyclicals," as consumers pretty much need to eat and care for their health regardless of the performance of the economy.

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 predominantly in fixed 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 the least risky and are preferred by risk-averse investors.

DEBENTURE
A debt obligation that is not backed by collateral, but usually rated by a credit rating agency.

DEFICIT
The shortfall between government revenues and budgetary spending in any given year. A surplus occurs when annual revenues exceed expenditures.

DERIVATIVE
A financial contract whose value is “derived” from another underlying asset such as stocks, bonds, commodities or a market index such as NSE 50. The most common type of derivative is an option contract, which involves the right to buy or sell the underlying instrument at an agreed price. Future contracts are also derivatives.

DESIGNATED INVESTOR SERVICE CENTRES
Any location, as may be defined by the Asset Management Company from time to time, where investors can tender the request for subscription, redemption, switching of units, or any other request.

DISCOUNT
The difference between the lower price paid for a security and the security's face amount at issue.

DIVERSIFICATION
The investment strategy which spreads investments among securities in different industries, with different risk levels, and in different companies, potentially lowering risk by reducing the impact of any one security. Mutual funds are the best method of diversification because their portfolios consist of a variety of securities, unless otherwise noted. Mutual funds are a diversified investment by nature.

DIVIDEND
Portion of profits that a company or a mutual fund distributes to its shareholders or unit holders.

DIVIDEND DISTRIBUTION TAX
A tax payable by a debt oriented mutual fund (a mutual fund that invests more than 50% of its portfolio in the debt market) before dividend is distributed to the unit holders. The DDT rates for different category of funds is different, and investors must check for the same.

DIVIDEND FREQUENCY
It is the periodicity of dividend payout of a scheme. This is especially valid in the case of an income/debt scheme.

EPS is a company's net income or net profit per share. Mathematically it is arrived by dividend a company’s total earnings by the number of outstanding common shares.

ENTRY LOAD
It is the load charged by the fund when one invests into the fund. Entry Load increases the price of a unit i.e. NAV and is expressed as a percentage of the NAV. For example, a 1 % entry load will increase the NAV from Rs 10 to Rs 11 and therefore the number of units allotted will be lesser to that extent.

EQUITY FUNDS
Equity Funds are funds, where more than 65% of the corpus is invested in equity shares of various companies.

EXCHANGE PREVILEGE
The right to transfer investments from one fund into another, generally within the same fund group, at nominal cost.

EXCHANGE RATE
It is the price at which one currency trades for another

EX-DIVIDEND DATE
It is the effective date of a dividend distribution. When the dividend is paid, the NAV of the fund drops by the amount of the dividend.

EXPENSE RATIO
The Expenses of a mutual fund include management fees and all the fees associated with the fund's daily operations. Expense Ratio refers to the annual percentage of fund's assets that is paid out in expenses.

EXIT LOAD
It is the load charged by the fund when one redeems the units from the fund. Exit Load reduces the price of a unit i.e. NAV and is usually expressed as a percentage of NAV.

The value printed on the face of a stock, bond or other financial instrument or document.

FII
FII means an institution established or incorporated outside India, which proposes to make investment in Indian securities and is registered with SEBI.

Fiscal Year
An accounting period consisting of 12 consecutive months

FLOATING RATE FUND
These are short to medium term interest bearing instruments issued by financial intermediaries and corporates. These bonds carry variable interest rates and adjustments to the interest rate are usually made every 6 months. Generally, the interest rates on these bonds are tied to a money-market index such as MIBOR, the most commonly used index.

FUND CATEGORY
It is a classification of a fund based on the type of assets in which the mutual fund company invests the fund’s corpus. The classification can be growth, debt, balanced, gilt, liquid, etc depending upon the objective of the fund.

FUND FAMILY
All the Funds managed by one Asset Management Company are identified as part of that Fund Family.

FUND MANAGEMENT COSTS
The charge levied by an AMC on a mutual fund for managing their funds.

FUND MANAGER
Appointed by the AMC, he is the person who makes all the final decisions regarding investments of a scheme.

Gilt Funds are those funds who invest only in government securities of different maturities. With virtually no default risk, they are very secure. While returns are steady and secure, they are lower than those from other debt funds.

GROWTH FUND
A mutual fund whose primary investment objective is long-term growth of capital. It invests principally in common stocks with significant growth potential. Growth Stocks Stocks of companies that have shown or are expected to show rapid earnings and revenue growth. Growth stocks have relatively more risk than other conventional forms of investment.

GOVERNMENT SECURITIES
Securities created and issued by the Central Government that are sold to the public.

GROWTH FUNDS
Funds with primary investment objective of long-term capital growth are generally called growth funds. Most of the investments under these funds are made in equity shares and convertible debentures.

GUARANTEED RETURNS
The return assured by the mutual funds as a minimum return in certain income plans. The launch of plans offering guaranteed returns is now subject to certain restrictions imposed by the SEBI.

Securities held in an investor’s portfolio.

Mutual funds that primarily seek current income rather than growth of capital are known as Income Funds. These funds normally invest in fixed income securities, which pay regular interest.

INDEX FUNDS
Mutual Funds in which the portfolios are constructed to mirror a specific market index. Index funds are expected to provide a rate of return that will over time approximate or match, but not exceed, returns generated by the index, they are mirroring.

INFLATION
It is the rate at which the general level of prices for goods and services are rising

INFLATION RISK
The chance that the value of assets or income will be diminished as inflation shrinks the value of a currency.

INSTITUTIONAL INVESTOR
An institutional investor is a professional money manager whose job is to put money into shares and other assets on behalf of private investors who entrust money to these investors via their pension and life insurance funds.

INTEREST
The amount paid by a borrower as compensation for the use of borrowed money.

INTEREST RATE
The annual rate, expressed as a percentage of principal, payable for use of borrowed money.

INTERNATIONAL FUNDS / EMERGING MARKET FUNDS
Funds investing in assets such as bonds or shares of companies belonging to emerging economies. These funds have been recently approved for launch in the domestic markets.

IN THE MONEY SECURITIES
An option contract on a stock is called in the money when the current market price is above the striking price for a call option and below the striking price for a put option. For example, a call option on ABC fund at a striking price of Rs. 100 would be "in the money" if ABC fund was selling at Rs. 102, and a put option with the same striking price would be "in the money" if ABC fund was selling at Rs. 98.

INVESTMENT GRADE BOND
Bonds that are rated AAA or higher by a rating agency are called investment grade bonds. Investment grade bonds are considered safe; however, the interest rates on these high rated bonds are lower.

INVESTMENT ADVISER
Any person or group that makes an investment recommendation or conducts security analysis in return for a fee, whether through direct management of client assets or via written publications, is called an investment advisor.

INVESTMENT OBJECTIVE
The declared purpose of investment of a mutual fund scheme

ISSUE DATE
The date on which a security is deemed to be issued or originated.

ISSUER
A state, political subdivision, agency or authority that borrows money through the sale of bonds or notes.

ISSUED SHARE CAPITAL
Issued Share Capital is the funds raised by a company by issuing shares in return for cash or other considerations. Mathematically it is total number of shares a company has made publicly available multiplied by the total nominal value of the shares. For e.g., a company with 10 million issued shares, each with a nominal value of Re. 1, will have an issued share capital of Rs. 10 million.

A speculative bond with higher credit risk.

KYC is an acronym for “Know your Customer” or “Know your Client”, a term commonly used for Client Identification Process. Pursuant to PMLA, SEBI has prescribed the certain requirements relating to KYC norms for Financial Institutions and Financial Intermediaries (such as Mutual Funds) to 'know' their clients. This could be in the form of personal meetings or verification of identity and address, financial status, occupation and such other personal information.

The date on which a scheme is first made open to the public for subscription.

LIABILITIES
Liabilities simply refer to any money or service that is currently owed to another party. One form of liability would be the property taxes that a homeowner owes to the municipal government.

LIBOR (London Interbank Offer Rate)
This is the rate of interest at which banks borrow funds from other banks, in a marketable size, in the London interbank market..

LIEN
A type of security instrument (i.e., a tax lien), placed against property, making it security for the payment of a debt, judgment, mortgage, or taxes. If the lien is not paid, the lien holder has the right to confiscate the property in order to recover the money that was loaned.

LIQUIDITY
Liquidity is generally used for, the cash and cash equivalent assets available with a fund to meet expenses and immediate redemption requirements of the investors. It refers to the ability to buy or sell an asset quickly or the ability to convert to cash quickly.

LIQUID FUNDS /MONEY MARKET FUNDS
Funds investing only in short-term money market instruments including treasury bills, commercial paper and certificates of deposit. The objective is to provide liquidity and preserve the capital.

LOAD
A charge that may be levied as a percentage of NAV at the time of entry into the Scheme/Plans or at the time of exiting from the Scheme/Plans.

LOCAL CHEQUE
A Cheque handled locally and drawn on any bank, which is a member of the banker's clearing house located at the place where the application form is submitted.

LOCK IN PERIOD
The period, after investment, during which the investor cannot redeem his units.

The charge made to a mutual fund for supervision of the portfolio usually expressed as percentage of assets.

MARKET
A public place where the buying and selling of all types of bonds, stocks and other securities takes place. A stock exchange is a market.

MARKET PRICE
The price at which the units of a fund are quoted on a stock exchange.

MARKET RISK
The risk that the price of a security will rise or fall due to changing economic, political, or market conditions, or due to a company's individual situation.

MARKETABLITY
The ease or difficulty with which securities can be sold in the market.

MATURITY DATE
The date upon which the principal of a security becomes due and payable to the security holder.

MATURITY VALUE
The amount (other than periodic interest payment) that will be received by the investor at the time of redemption of securities. For most of the securities, the maturity value equals the par value.

MIBOR (Mumbai Interbank Offer Rate)
This is the rate of interest at which banks borrow funds from other banks, in marketable size, in the Mumbai interbank market.

MINIMUM ADDITIONAL INVESTMENT
The minimum amount, which an existing investor should invest for purchasing fresh units.

MINIMUM BALANCE
Minimum amount specified by a fund that should remain invested in a scheme after any redemption.

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 (redeem) from the fund at one time.

MONEY MARKET FUNDS
Mutual funds that aim to pay money market interest rates are generally called as money market funds. The objective of these funds is accomplished by investments in safe, liquid securities, including certificates of deposit, commercial paper, and Government securities.

MONEY MARKET INSTRUMENTS
Refers to Commercial Papers, Treasury Bills, GOI Securities, etc. with an unexpired maturity of less than or up to one year, Call Money, Certificates of Deposit and any other instrument specified by the Reserve Bank of India.

MORTGAGE
A legal instrument given by a borrower to the lender entitling the lender to take over pledged property if conditions of the loan are not met.

MOVING AVERAGES
The average price of a mutual fund calculated periodically over some designated period of time and plotted on a chart against actual price. The effect of a moving average is to minimize short-term price fluctuations and highlight long-term price fluctuations.

MUTUAL FUND
An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. A mutual fund's portfolio is structured and maintained to match the investment objectives stated in its prospectus.

MUTUAL FUND REGULATIONS
Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 as amended up to date and such other Regulations, as may be in force from time to time, to regulate the activities of the Mutual Fund.

MONEY LAUNDERING
Money laundering broadly means the conversion or laundering of money that is illegally obtained, to make it appear to originate from a legitimate source. It was originally used in the context of terrorist, criminal, smuggling and drug-dealing activities. In a wider context, tax-evaded money is also covered. As part of the global initiative, a Financial Action Task Force ("FATF") was created to help member countries draw up Anti-Money Laundering ("AML") legislation which would help implement the policies, techniques and counter-measures to combat money laundering.

NAV is the price at which a mutual fund investment is valued. Mathematically it is the value of fund's portfolio at market value less current liabilities divided by the number of units outstanding. Net asset value is normally computed daily or weekly and can be found in the financial section of the daily newspaper.

NAV Formula :

It is the official document issued by mutual funds prior to the launch of a fund describing the characteristics of the proposed fund to all its prospective investors. It contains information required by SEBI pertaining to issues such as investment objective and policies, services, and fees.

OFFERING PERIOD
The period during which the initial offer to subscribe for the units of a scheme is open.

OFFER PRICE
The lowest price that a seller is willing to accept from a prospective buyer. In the case of a mutual fund with a sales charge, this price is the net asset value (NAV) plus the sales charge. In the case of no-load funds, it is the NAV.

OFFERING DATE
The date on which a distribution of stocks or bonds will first be available to the public.

OPEN-ENDED SCHEMES/ FUNDS
Open ended fund’s units can be bought or sold on any business day by the investors. These funds works in a manner similar to that of any traded security, which could be bought or sold at any time, the only difference, is price which for mutual funds doesn’t fluctuate based on demand and supply. Units of open ended funds are not listed on any stock exchange but are bought from and sold to the mutual fund.

OPENING NAV
The NAV disclosed by the fund for the first time after the closure of an IPO.

OPERATING EXPENSE
Operating expenses are the day-to-day costs, such as maintenance of office, staff and equipment, which a mutual fund incurs for conducting its business. These expenses are paid from the fund's assets before any earnings are distributed to the investors.

OPTION
Options are extremely versatile securities that can be used in many different ways. Traders use options to speculate, which is a relatively risky practice, while hedgers use options to reduce the risk of holding an asset.

OPPORTUNITY RISK
The risk that a better opportunity may present itself after you have already committed your money elsewhere.

Person of Indian Origin

PORTFOLIO
Portfolio is a term generally used to represent a pool of individual investments owned by an investor or mutual fund. Portfolios may include a combination of stocks, bonds, and money market instruments.

PLANS
Generally mutual funds in India offer two main plans viz. growth and dividend for investments to the investors. Dividend plan is further segregated depending upon the fund’s stated objective and mostly four dividend plans viz. monthly, quarterly, half yearly and annual are offered to the investors.

PORTFOLIO CHURNING
It refers to the changes made to the portfolio keeping in view the market conditions. It includes both buying and selling of holdings and is aimed at giving a better yield to the investor.

PREMIUM
The amount by which a bond/ or a stock sells above its par (face) value.

PREFERRED STOCK
Preferred stock is a class of ownership in a company that has a higher claim on the assets and earnings than the common stock. Preferred stock generally has a dividend that must be paid out before dividends to common stockholders and the shares usually do not have voting rights.

PRICE-EARNING RATIO
It is a valuation ratio of a company's current share price compared to its per-share earnings.

PRICE STABILITY
Price stability is a term generally used to describe lower fluctuations in a fund’s NAV.

PRIMARY MARKET (NEW ISSUE MARKET)
Primary market is a reference to a hypothetical place where new securities, may it be government or private enterprise, are sold. This place is made by underwriters who subscribe to the new issues which they latter sell in the secondary market.

PRICE OF UNITS
Price offered by a mutual fund for repurchase or sale of a unit on a daily basis. This is the price of a stock divided by its earnings per share. This ratio gives an investor an idea of how much they are paying for a particular company's earning power. A trailing P/E refers to a ratio that is based on earnings from the latest year, while a forward P/E uses an analyst's forecast of next year's earnings. For instance, a stock selling for Rs. 20 a share that earned Re. 1 last year has a trailing P/E of 20. If the same stock has projected earnings of Rs. 2 next year, then it has a forward P/E of 10.

PURCHASE PRICE
The price at which a mutual fund's units are purchased. The purchase price for a mutual fund is made up of the current net asset value plus sales charge, if any.

Rate of return is the percentage that an investor achieves from his investment in any asset class. To calculate the rate of return, total proceeds derived from the investment are divided by the investment made and than to arrive at percentage the resultant figure is multiplied by 100.

RATINGS
The rating is a symbolic indicator of the current opinion of the relative capability and timely servicing of debts and obligations. Ratings are based on an objective analysis of the information. 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 on which a company's books are closed in order to identify share owners and distribute quarterly dividends, proxies, or other financial documentation.

REDEMPTION
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.

REDEMPTION FEE
It is a kind of sales charge, also referred to as a back-end load, imposed when an investor redeems, or sells back units of the fund.

REDEMPTION PRICE
It is the price at which a mutual fund's units are redeemed or bought back by the fund. The redemption price is usually equal to the current NAV per unit.

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 OR TRANSFER AGENT
The institution that maintains a registry of unit holders of a fund and their unit ownership. Normally the registrar also distributes dividends and provides periodic statements to unit holders.

REINVESTMENT DATE
The date on which a fund's dividend and/or capital gains are reinvested back into the fund and additional fund units are issued.

REINVESTMENT PRIVILEGE
A service that most mutual funds offer whereby a shareholder's dividend income and capital gains are automatically reinvested in the fund and additional fund units are issued

REPATRIATION
It is the process of converting a foreign currency into the currency of one's own country. The amount that the investor will receive depends on the exchange rate between the two currencies traded at the settlement time.

RUPEE COST AVERAGING
It is an investment strategy based on investing equal amount of money in a fund at regular intervals. As more units are bought at lower prices and fewer units at higher prices, eventually the average cost of the total units turns out to be lower than the higher price over the period. This way investor in bearish times saves themselves from higher losses on high prices and in bullish times helps themselves with higher profit on average prices.

REPO
Repo is an abbreviation for repurchase obligation, in this transaction one party sale worthy securities with an obligation to buy back them later. The purchase of this transaction is to meet short term money requirement mostly overnight requirements.

REPURCHASE
Buying back/ cancellation of the units by a fund on an ongoing basis or for a specified period or on maturity of a fund. The investor is paid a consideration linked to the NAV of the scheme

REPURCHASE DATE /PERIOD
In the case of close-ended funds, the specified date on which or period during which the investor can redeem units held by him in the fund before the maturity of the fund.

REPURCHASE PRICE
The price at which open-ended funds repurchase their units and close-ended funds redeem their units on maturity. Such prices are NAV related.

REVERSE REPO
Reverse Repo is the opposite leg of the Repo transaction and is related with the lender. In this transaction, a party lends money, in lieu of worthy securities, at a predetermined interest rate known as Reverse Repo Rate.

RISK ADJUSTED RETURNS
The expected returns from an investment depend upon the risk involved in the investment. For comparing returns from different investments classes, a standard measure is required and this is where risk adjusted returns work. These returns standardize the absolute returns generated, by an investment class, with the risk involved in achieving these returns. So, a single number is achieved which can be used for ranking of mutual funds.

It is same as purchase price as the mutual funds are outside the effects of demand and supply, there isn’t any difference between purchase and sale price.

SALES CHARGE
It is the fee charged on the purchase of new units of a mutual fund; it is also called load.

SCHEME
A mutual fund can launch more than one scheme. With different schemes, in spite of there being a common trust, the assets contributed by the unit holders of a particular scheme are maintained and managed separately from other schemes and any profit/loss from the assets accrue only to the unit holders of that scheme

SEBI
Securities and Exchange Board of India is a regulatory body established under Securities and Exchange Board of India Act, 1992.

SECONDARY MARKET
The market where the securities are traded i.e. purchased and sold regularly based on demand and supply is termed as secondary market. After the initially public offering most of the equity shares are listed on stock exchanges for investors to realize the value of their investments. No secondary market exists for mutual funds. market.

SECTOR ALLOCATION
It refers to the portion of assets of a fund which is invested in a particular well-defined segment of the economy, like Information Technology, pharmaceuticals, utilities, media, telecommunications, etc.

SECTOR FUNDS
Sector Funds are mutual funds that are established to focus and invest in the stocks of specific sectors of the economy, such as pharmaceuticals, chemicals, or information technology.

SECURITY
Generally, an instrument evidencing debt or equity of a corporation in which a person invests. The term includes notes, stocks, bonds, debentures or other forms of negotiable and non-negotiable evidences of indebtedness or ownership.

SHARE PRICE
It is the traded value in the secondary market of a listed company’s single share. Unlike mutual fund’s NAV, share price of a stock is dependent on demand & supply and most of the time trades at a premium or discount to its fair value.

SHARE HOLDER
The owner of one or more shares of stock in a corporation. Shareholders’ rights can vary according to the articles of incorporation of the by-laws of a particular company.

SHARPE RATIO
Sharpe ratio is one of the risk-adjusted returns measure, which is used to standardize absolute returns generated by a fund..Mathematically, the ratio is measured by dividing the access returns generated by a fund, arrived by subtracting risk free return from the fund’s absolute return, with the volatility i.e. standard deviation, of the fund.

SPREAD
The difference between the rates at which money is deposited and the rate at which it is borrower from a financial institution. Spread in context of capital markets relates to the difference between the sale price and the buy price for a security.

SYSTEMATIC INVESTMENT PLAN (SIP)
A program that allows an investor to provide post-dated cheques to the mutual fund to allot fresh units at specified intervals (usually monthly or quarterly). On the specified dates, the cheques are realized by the mutual fund and additional units at the prevailing NAV are allotted to the investor. This enables him to invest as little as Rs 1000 a month and take advantage of rupee cost averaging

SYSTEMATIC WITHDRAWAL PLANS (SWP)
A plan offered by some funds under which post-dated cheques of fixed amounts (as may be fixed by the fund) are issued to the investors for monthly, bi-monthly or quarterly withdrawals. The withdrawals are as per the requirements of the investor specified by him/ her at the time of investment.

SYSTEMATIC TRANSFER PROGRAM (STP)
A plan that allows the investor to give a mandate to the fund to periodically and systematically transfer a certain amount from one fund to another.

STANDARD DEVIATION
It is a risk measure, which is used to understand the degree to which a fund's return fluctuates around its mean returns. It is also referred as the volatility of the fund and is the most common risk measure used in arriving at risk-adjusted returns.

SWITCHING
It is the movement of investment from one fund to another usually part of the same fund family. An investor may switch funds as per his reasoning of market conditions.

It is the time duration, during which interest payments will be made on a bond or certificate of deposit to the holders.

TAXABLE EQUIVALENT YIELD
It is a term used for the rate of return which must be achieved on a taxable security by the holder to equate the after-tax return earned on taxable security with those earned on a tax-exempt security.

TOTAL ASSETS UNDER MANAGEMENT
The market value of the total investments of a fund as on a particular date

TOTAL RETURN
It is the aggregate return on an investment arrived after summing capital appreciation, dividends, interest, bonus and other distributed income.

TRACKING ERROR
It is the divergence between the price behavior of a position or portfolio and the price behavior of a benchmark. It is generally used to measure risk on an index fund, since index funds mirror their respective benchmark any substantial deviation in the returns of the two defeats the purpose of having an index fund.

TRADE DATE
It is the actual date on which any security is purchased or sold.

TRANSACTION DAY
A Transaction day ( Day 'T' commences after the previous working day's cut off time to the following working day's cut off time.

TRANSACTION SLIP
It is a brief form to be filled at the time of additional purchases or redemption or switch.

TRUSTEE
A person or a group of persons having an overall supervisory authority over the fund managers. They ensure that the managers keep to the trust deed that the unit prices are calculated correctly and the assets of the funds are held safely.

TURNOVER
It is a term used in lieu of the buying and selling activity of a fund manager during an year.

TURNOVER RATE
A measure of the fund's trading activity calculated by dividing total purchases or sales of portfolio securities (whichever is lower) by the fund's net assets over a period of time.

An organization or any legal entity that acts as a distributor of an initial public offering of any security to brokers, dealers or investors; underwriter also undertakes to subscribe any under-subscription of the offer.

UNIT
A unit represents one undivided share in the assets of a fund

UNIT HOLDER
Unit holder is a person who holds the unit(s) of any mutual fund.

The process of determining the current worth of an asset or a company. There are many techniques that can be used to determine value, some are subjective and others are objective.

VALUE DATE
The date on which a foreign exchange transaction or a cash movement takes place. It can be used interchangeably with settlement date.

VALUE STOCKS
Stocks that are considered undervalued based upon such ratios as price-to-book or price-to-earnings (P/E). These stocks generally have lower price-to-book and price-earnings ratios, higher dividend yields and lower forecasted growth rates than growth stocks.

VOLATILITY
It is a risk measure used to measure the fluctuation in the price or returns or any other parameter of an asset class.

VOLUNTARY PLAN
A flexible plan for capital accumulation, involving no specified time frame or total sum to be invested.

VOLATILITY MEASURES
Volatility measures the variability of historical returns. Relative Volatility, Beta, and R"2" compare a portfolio's total return to those of a relevant market, represented by the benchmark index. Standard Deviation is calculated independent of an index.

Any day, provided such day is not a Saturday or a Sunday or an AMC Head Office holiday or any day on which Banks in Mumbai and / or The Stock Exchange, Mumbai and National Stock Exchange are closed for transactions or a day on which sale and repurchase of units is suspended by the AMC or a day on which normal business could not be transacted due to storms, floods, bandhs, strikes etc., subject to modifications by AMC from time to time.

52 WEEK HIGH
The highest market value of a unit (in terms of NAV) during the immediately preceding 52 weeks.

WEEK LOW
The lowest value of a unit (in terms of NAV) during the immediately preceding 52 weeks

The annual rate of return based on the purchase price of an investment, it is usually expressed in percentage.

YIELD CURVE
Yield curve is a graph depicting yield on a bond vis-à-vis the maturity of the bond. It indicates the interest rates levels of any interest bearing asset class and helps investor understand the applicable returns for different time horizons.

YIELD TO MATURITY
It is used to determine the rate of return an investor will receive if a long-term, interest-bearing investment, such as a bond is held to its maturity date. It takes into account purchase price, redemption value, time to maturity, coupon yield and the time between interest payments.

As the name suggests these bonds do not pay regular coupon to the investors, instead these bonds are issued at discount to their maturity value. Therefore, an investor in these bonds realizes value of his investment only at the end of the maturity term or by selling these bonds in the secondary market, if any exists.