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Glossary on Mutual Funds: Account Statement A physical document, similar to a bank account statement, representing the mutual fund units owned. Issued to the unit holder every time he/she carries out a transaction. Annual Report Unabridged financial results that comprise historical per unit statistics and complete portfolio of schemes of a mutual fund for a certain period. It is sent to unit holders once in a year. Appreciation An increase in an investments value. Asset Allocation 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 persons financial situation and goals. Asset Class Different types of investments such as stocks, bonds, real estate and cash. Asset Management Company A firm that invests the pooled funds of retail investors in securities in line with the stated investment objectives. For a fee, the investment company provides more diversification, liquidity, and professional management service than is normally available to individual investors. Asset-Backed Security A debt instrument backed by loan paper or accounts receivable from banks, companies or other providers of credit. Assets An item of value owned by an individual or an organization. It could be stocks, cash, house or a car. Automatic Investment Plan Periodic investment of a fixed amount by a unitholder, either directly from his bank account or by issuing post-dated cheques, in his mutual fund account. It allows the investor to benefit from rupee cost averaging. 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. Average Portfolio Maturity The average maturity of all the bonds in a bond funds portfolio.
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Consumer Price Index The 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. Convertible security Corporate security (usually preferred stock or bond) that is exchangeable for another form of security (usually common stock) at a predetermined price. Coupon Interest rate on a debt security that the issuer promises to pay to the holder until maturity. Usually expressed as a percentage of the face value of the security. Credit Rating A measure of a bond issuer's creditworthiness or the ability to repay the loan as rated by an independent rating agency, such as CRISIL, ICRA and CARE.
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Derivative Financial instrument whose value is based on the value of another underlying security. Depreciation A decline in an investment's value. Discount Refers to the selling price of a bond when its price is below its maturity value. Distribution The payment of dividends to unit holders by a mutual fund. Diversification The strategy of spreading investments among different securities to reduce risk. By nature, mutual funds are a diversified investment. Dividend When companies pay part of their profits to the shareholders those profits are called dividends. A mutual funds dividend is money paid to shareholders from investment income the fund has earned. The amount of each shares dividend depends on how well the company does. Dividend Reinvestment A unitholder service that allows dividend distributions to be reinvested automatically to purchase more fund units. Dow Jones Industrial Average The oldest and most quoted measure of stock market price movements, an indicator showing how the market is going. It is a price-weighted average of 30 actively traded blue chip stocks. Earnings (per share)
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Repatriable
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