MUTUAL FUND: An investment company that continually offers new shares and buys existing shares back at the

request of the shareholder and uses its capital to invest in diversified securities of other companies.Mutual funds have become extremely popular over the last 20 years. What was once just another obscure financial instrument is now a part of our daily lives. More than 80 million people, or one half of the households in America, invest in mutual funds. That means that, in the United States alone, trillions of dollars are invested in mutual funds.In fact, to many people, investing means buying mutual funds. After all, it's common knowledge that investing in mutual funds is (or at least should be) better than simply letting your cash waste away in a savings account, but, for most people, that's where the understanding of funds ends. It doesn't help that mutual fund salespeople speak a strange language that is interspersed with jargon that many investors don't understand. Originally, mutual funds were heralded as a way for the little guy to get a piece of the market. Instead of spending all your free time buried in the financial pages of the Wall Street Journal, all you had to do was buy a mutual fund and you'd be set on your way to financial freedom. As you might have guessed, it's not that easy. Mutual funds are an excellent idea in theory, but, in reality, they haven't always delivered. Not all mutual funds are created equal, and investing in mutual fund isnt as easy as throwing your money at the first salesperson who solicits your business.

AMC:
A company that invests its clients' pooled fund into securities that match its declared financial objectives. Asset management companies provide investors with more diversification and investing options than they would have by themselves.Mutual funds, hedge funds and pension plans are all run by asset management companies. These companies earn income by charging service fees to their clients. AMCs offer their clients more diversification because they have a larger pool of resources than the individual investor. Pooling assets together and paying out proportional returns allows investors to avoid minimum investment requirements often required when purchasing securities on their own, as well as the ability to invest in a larger set of securities with a smaller investment.

NAV:
A mutual fund's price per share or exchange-traded fund's (ETF) per-share value. In both cases, the pershare dollar amount of the fund is calculated by dividing the total value of all the securities in its portfolio, less any liabilities, by the number of fund shares outstanding. In the context of mutual funds, NAV per share is computed once a day based on the closing market prices of the securities in the fund's portfolio. All mutual funds' buy and sell orders are processed at the NAV of the trade date. However, investors must wait until the following day to get the trade price.Mutual funds pay out virtually all of their income and capital gains. As a result, changes in NAV are not the best gauge of mutual fund performance, which is best measured by annual total return.Because ETFs and closed-end funds trade like stocks, their shares trade at market value, which can be a dollar value above (trading at a premium) or below (trading at a discount) NAV.

LOAD:
A sales charge or commission charged to an investor when buying or redeeming shares in a mutual fund. The fee may be a one-time charge at the time the investor buys into the mutual fund (front-end load), when the investor redeems the mutual fund shares (back-end load), or on an annual basis as a 12b-1 fee.A large number of mutual funds carry sales charges. These are paid directly by the investor in the case of the front-end and back-end variety, and indirectly through a deduction to the net assets of the investor's fund if of the 12b-1, or level-load, variety.Oftentimes, these sales charges will be waived if a load mutual fund is included as an investment option in an employer-sponsored retirement plan.Unlike 12b-1 fees, front-end and back-end loads are not included in the calculation of a fund's operating expenses.

CORPUS:
The original amount invested, separate from earnings. The face value of a bond. The owner of a private company. The main party to a transaction, acting as either a buyer or seller for his/her own account and risk. Be sure to take into account the context in which this term is used, as the exact meaning of the term has many variations. Also referred to as "corpus". The amount borrowed or the amount still owed on a loan, separate from interest.

AUM:
The market value of assets that an investment company manages on behalf of investors. An asset under management (AUM) is looked at as a measure of success against the competition and consists of growth/decline due to both capital appreciation/losses and new money inflow/outflow. There are widely differing views on what "assets under management" refers to. Some financial institutions include bank deposits, mutual funds and institutional money in their calculations; others limit it to funds under discretionary management, where the client delegates responsibility to the company.

CUSTODIAN:
A financial institution that has the legal responsibility for a customer's securities. This implies management as well as safekeeping. Also known as "custody".There are additional fees associated with this special attention.

NFO:
A security offering in which investors may purchase units of a closed-end mutual fund. A new fund offer occurs when a mutual fund is launched, allowing the firm to raise capital for purchasing securities.A new fund offer is similar to an initial public offering. Both represent attempts to raise capital to further operations. New fund offers are often accompanied by aggressive marketing campaigns, created to entice investors to purchase units in the fund. However, unlike an initial public offering (IPO), the price paid for shares or units is often close to a fair value. This is because the net asset value of the mutual fund typically prevails. Because the future is less certain for companies engaging in an IPO, investors have a better chance to purchase undervalued shares.

EQUITY FUND:
A mutual fund that invests principally in stocks. It can be actively or passively (index fund) managed. Also known as a "stock fund".Stock mutual funds are principally categorized according to company size, the investment style of the holdings in the portfolio and geography.Size is determined by a company's market capitalization, while the investment style, reflected in the fund's stock holdings, is also used to categorize equity mutual funds.Stock funds are also categorized by whether they are domestic (U.S.) or international. These can be broad market, regional or single-country funds.There are so-called "specialty" stock funds that target business sectors such as healthcare, commodities and real estate.

DEBT FUND:
An investment pool, such as a mutual fund or exchange-traded fund, in which core holdings are fixed income investments. A debt fund may invest in short-term or long-term bonds, securitized products, money market instruments or floating rate debt. The fee ratios on debt funds are lower, on average, than equity funds because the overall management costs are lower.The main investing objectives of a debt fund will usually be preservation of capital and generation of income. Performance against a benchmark is considered to be a secondary consideration to absolute return when investing in a debt fund. OPEN ENDED FUND: A type of mutual fund that does not have restrictions on the amount of shares the fund will issue. If demand is high enough, the fund will continue to issue shares no matter how many investors there are. Open-end funds also buy back shares when investors wish to sell.The majority of mutual funds are openend. By continuously selling and buying back fund shares, these funds provide investors with a very useful and convenient investing vehicle. It should be noted that when a fund's investment manager(s) determine that a fund's total assets have become too large to effectively execute its stated objective, the fund will be closed to new investors and in extreme cases, be closed to new investment by existing fund investors.

CLOSE ENDED FUND:

A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange. Also known as a "closed-end investment" or "closed-end mutual fund."Despite the name similarities, a closed-end fund has little in common with a conventional mutual fund, which is technically known as an open-end fund. The former raises a prescribed amount of capital only once through an IPO by issuing a fixed number of shares, which are purchased by investors in the closed-end fund as stock. Unlike regular stocks, closed-end fund stock represents an interest in a specialized portfolio of securities that is actively managed by an investment advisor and which typically concentrates on a specific industry, geographic market, or sector. The stock prices of a closed-end fund fluctuate according to market forces (supply and demand) as well as the changing values of the securities in the fund's holdings.

PURCHASE PRICE:
The price that an investor pays for a security. This price is important as it is the main component in calculating the returns achieved by the investor. Essentially, it can be thought of as the price that is paid for anything that is bought.For example, if an investor buys Ford stock at $15, then this would be the purchase price. When looking at the return on the investment, the investor would compare the purchase price of $15 to the price the investment was sold at or the current market price for Ford. Purchase price can also refer to the price that a company pays for an item, such as another company. For example, if Ford bought Kia for $3.5 billion, this would be Ford's purchase price.

RE PURCHASE PRICE:
Repurchase price is different from redemption price and refers to the price at which a close-ended scheme repurchases its units. Repurchase can either be at NAV or can have an exit load.

REDEMPTION PRICE:
redemption price is the price received by the customer on selling units of an open-ended scheme to the fund. If the fund does not levy an exit load, the redemption price will be same as the NAV. The redemption price will be lower than the NAV in case the fund levies an exit load.

SWITCH:
Some Mutual Funds provide the investor with an option to shift his investment from one scheme to another within that fund. For this option the fund may levy a switching fee. Switching allows the Investor to alter the allocation of their investment among the schemes in order to meet their changed investment needs, risk profiles or changing circumstances during their lifetime.

TRUSTEE:
An individual who holds or manages assets for the benefit of another.For example, an indenture trustee is the agent of a bond issuer who handles all the administrative aspects of a loan, including ensuring that the borrower complies with the terms in the indenture.

LOCK IN PERIOD:
Time period, usually 30 to 60 days, a mortgage lender agrees to hold the mortgage rate and points payable by the borrower to the rate quoted when the application was taken. Also called rate lock. It is not the same as a loan Commitment although some commitments may contain a lock-in provision. This protects the borrower against rate increases if interest rates rise before the loan closing takes place. Lenders may charge a flat fee or a percentage of the mortgage loan, or add a fraction of a percentage point to the loan's interest rate.Period of time in which a mortgagor cannot refinance a mortgage without paying a penalty to the lender.

DIVERSIFICATION:
A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique contends that a portfolio of different kinds of investments will, on average, yield higher returns and pose a lower risk than any individual investment found within the portfolio. Diversification strives to smooth out unsystematic risk events in a portfolio so that the positive performance of some investments will neutralize the negative performance of others. Therefore, the benefits of diversification will hold only if the securities in the portfolio are not perfectly correlated.For example, an economic downturn in the U.S. economy may not affect Japan's economy in the same way; therefore, having Japanese investments would allow an investor to have a small cushion of protection against losses due to an American economic downturn.Most non-institutional investors have a limited investment budget, and may find it difficult to create an adequately diversified portfolio. This fact alone can explain why mutual funds have been increasing in popularity. Buying shares in a mutual fund can provide investors with an inexpensive source of diversification.

SIP:
This is a plan where investors make regular, equal payments into a mutual fund, trading account or retirement account, such as a 401k. By using a systematic investment plan (SIP), investors are benefitting from the long-term advantages of dollar-cost averaging and the convenience of saving regularly without taking any actions except the initial setup of the SIP.Dollar-cost averaging involves buying a fixed-dollar amount of a security regardless of its price. Therefore, shares are bought at various prices over time and the average cost per share of the security will decrease over time. Dollar-cost averaging lessens the risk of investing a large amount of money into a security. In addition to SIPs, many investors reinvest dividends received from their holdings back into purchasing more stock, called dividend reinvestment plans (DRIPs).

BALANCE FUND:
A fund that combines a stock component, a bond component and, sometimes, a money market component, in a single portfolio. Generally, these hybrid funds stick to a relatively fixed mix of stocks and bonds that reflects either a moderate (higher equity component) or conservative (higher fixed-income component) orientation. A balanced fund is geared toward investors who are looking for a mixture of safety, income and modest capital appreciation. The amounts that such a mutual fund invests into each asset class usually must remain within a set minimum and maximum. Although they are in the "asset allocation" family, balanced fund portfolios do not materially change their asset mix. This is unlike life-cycle, target-date and actively managed asset-allocation funds, which make changes in response to an investor's changing riskreturn appetite and age, or overall investment market conditions.