1. Fund Management Company : It is the investment manager for the mutual fund. It is a company set up primarily for managing the investment of mutual funds and makes investment decisions in accordance with the scheme objectives.
2. Offer Document (Bibaran Pustika) : It is the official document issued by mutual funds prior to the launch of a fund describing the characteristics of the proposed scheme/fund to all its prospective investors. It contains information required by SEBON pertaining to issues such as investment objective and policies, services, and fees.
3. 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.
4. Unit : A Unit represents one undivided share in the assets of the Schemes.
5. Unit Holder : A person who holds Unit(s) under any plan of the Scheme.
6. Sale Price : The price at which a fund offers to sell one unit of its scheme to investors. This NAV is grossed up with the entry load applicable, if any.
7. Entry Load : It is the load charged by the fund when one invests into the fund. It increases the price of the units to more than the NAV and is expressed as a percentage of NAV. For example a 1 % entry load will increase the NAV from Rs 11 to Rs 11.11 and therefore the number of units allotted will be lesser to that extent.
8. Exit Load : It is the load charged by the fund when one redeems the units from the fund. It reduces the price of the units to less than the NAV and is expressed as a percentage of NAV.
9. Expense Ratio : The Expenses of a scheme include management fees and all the fees associated with the scheme's daily operations. Expense Ratio refers to the annual percentage of fund's assets that is paid out in expenses and can effect the performance of the scheme.
10. Net Asset Value (NAV) : The value of fund's portfolio at market value less current liabilities and other accrued expenses divided by the number of units outstanding. Net asset value is normally computed daily.
11. Adjusted NAV : The Net Asset Value after adjusting for all changes caused due to dividend declaration, bonus etc. assuming reinvestment of distributions made to the investors at the prevailing NAV.
12. Asset Allocation : The distribution of total funds available with the scheme into instruments of various types such as stocks, bonds etc. based on the scheme's investment objective as detailed in the offer document.
13. Asset Under Management : Total market value of all the assets being managed by the mutual fund.
14. Portfolio : It refers to the total investment holdings of the fund.
15. Redemption : An investor wishing to withdraw his/her investment from a scheme/fund gives a redemption transaction. The investor is paid a NAV linked price.
16. Lock-in period : The cooling period after investment in fresh units during which the investor cannot redeem the units.
17. Risk Adjusted Returns : For the purpose of comparing returns across schemes involving varying levels of risk, the returns are adjusted for the level of risk before comparison. Such returns (reduced for the level of risk involved) are called risk-adjusted returns.
18. Market Risk : It refers to the risk posed by the market in itself i.e. the risk that the price of a security will rise or fall due to changing economic, political, or market conditions.