The Equitydesk:glossary,BETA (STOCKS),BEAR,BULL,BLUE CHIP,CAPITAL GAINS ,Loss and more...

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

ADVISOR
Your financial consultant who gives professional advice on the fund's investments and who supervise the management of its assets.

ALPHA Alpha is the incremental return generated by an investors when viewed in line with the market return. For instance an alpha of 0.74 means the portfolio outperformed the market-based return estimate by 0.74 %. –0.26 means that a fund's monthly return was 0.6 % less than what could have been generated by profiting from the change in the market alone.

ALPHA COEFFICIENT
It is the excess return of the fund above risk adjusted market 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. And a negative alpha indicates that the fund has under performed.

ALPHA EQUATION The alpha of a fund is expressed as: [ (sum of y) - ((b)(sum of x)) ] / n

AMERICAN DEPOSITARY RECEIPTS (ADR). These are certificates issued by a U.S. Depositary Bank, representing foreign shares held by the bank, usually by a branch or correspondent in the country of issue. One ADR may represent a portion of a foreign share, one share or a bundle of shares of a foreign corporation. If the ADR's are "sponsored," the corporation provides financial information and other assistance to the bank and may subsidize the administration of the ADR's. "Unsponsored" ADR's do not receive such assistance. ADR's carry the same currency, political and economic risks as the underlying foreign share; the prices of the two, adjusted for the SDR/ordinary ratio, are kept essentially identical by arbitrage. American Depositary Shares (ADS) are a similar form of certification.

AMERICAN STOCK EXCHANGE (AMEX) The second-oldest U.S. exchange, which trades in stocks that fail to meet the New York Stock Exchange (NYSE) listing norms. Located in Wall Street in New York City the AMEX originated on the curb outside the NYSE. The stocks that are traded at the AMEX are significantly smaller in market capitalization and trading volume to the NASDAQ and the NYSE. It conducts trading through a centralized specialist system and is home primarily to small and medium-sized companies.

AMERICAN-STYLE OPTION An option contract that can be exercised at any time between the date of purchase and the expiry date. Most of the exchange-traded options are American style.

AMORTIZATION
A method of equated monthly payments over the life of a loan. Payments usually are paid monthly but can be paid annually, quarterly, or on any other schedule. In the early part of a loan, repayment of interest is higher than that of principal. This relationship is reversed at the end of the loan.

ANALYST Employee of a brokerage or fund management house who analysis companies before making a buy or sell recommendation on their stocks. Generally Analysts specialize themselves within specific countries or sectors within that country.

ANNUAL REPORT A yearly record reflecting the financial and other critical details of a publicly held company. It includes a description of the firm's operations, its management, balance sheet, income statements etc.

ANNUAL RETURN
The percentage of change in net asset value over a year's time, assuming reinvestment of distribution such as dividend payment and bonuses.

ANNUALISED RETURN
This is the hypothetical rate of return, if the fund achieved it over a year's time, would produce the same cumulative total return if the fund performed consistently over the entire period. A total return is expressed in a percentage and tells you how much money you have earned or lost on an investment over time, assuming that all dividends and capital gains are reinvested.

APPLICATION FORM
Form prescribed for investors to make applications for subscribing to the units of a fund or for an Initial Public Offering (IPO) of stocks, bonds etc..

APPRECIATION
When an investment increases in value, it appreciates. For example, an equity share whose price goes from Rs. 20/- to Rs. 25/- has appreciated by Rs. 5/-.

ARBITRAGE Profiting from differences in the price of a single security that is traded on more than one market. As markets get efficient this arbitrage opportunity will diminish. Also the difference between the spot and the future price of a security that generates a certain level of risk free income.

ARMS INDEX Also known as Trading Index (TRIN): = #advancing issues/#declining issues Total up volume/total down volume. An advance/decline market indicator. Less than 1.0 indicates bullish demand, while above 1.0 is bearish. The index often is smoothed with a simple moving average.

ASKED OR OFFERING PRICE
The price at which a share or units in a mutual fund' can be purchased. The asked or offering price means the current net asset value (NAV) per share plus sales charge, if any. For a no-load fund, the asked price is the same as the 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.

ASSET ALLOCATION
When you divide your money among various types of investments, such as stocks, bonds, and short-term investments (also known as "instruments"), you are allocating your assets. The way in which your money is divided is called your asset allocation.

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.

ASSIGNMENT The receipt of an exercise notice by an options writer that requires the writer to either sell (in the case of a call option) or purchase (in the case of a put option) a certain number of the underlying security at the specified strike price.

AT THE MONEY An option is at-the-money if the strike price of the option is equal to the market price of the underlying security. For example, if Company A is trading at Rs 100, then the Company A option at a strike price of Rs 100 at-the-money.

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.

AUTOREGRESSIVE The mechanics of predicting future course of events by looking at previous data.

AVERAGE An arithmetic mean of selected stocks intended to represent the behavior of the market or some component of it. One good example is the widely quoted Dow Jones Industrial Average, which adds the current prices of the 30 DJIA's stocks, and divides the results by a predetermined number, the divisor.

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.

AVERAGE CREDIT QUALITY
The composite indicator of the credit quality of the Scheme's portfolios. It is an average of each debt instrument's credit rating, weighted by the instruments relative weight in the portfolio. For these calculations, Government of India securities, cash and call money instruments are taken as AAA credit quality and non-rated debt instruments are taken as having BBB credit quality.

AVERAGE MATURITY The average time to maturity of securities held by a mutual fund. Rise (fall) in interest rates generally cause bond prices to fall (rise). The impact is usually higher on bonds having a longer average life.

BACK OFFICE The clerical operations of a brokerage house that facilitate and assist in carrying out the various regulatory compliances. These include carrying out the written confirmation, settlement of trades and record keeping. It does not how ever include the trading of stocks and other securities.

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

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

BALANCED FUND
A mutual fund that maintains a balanced portfolio, generally 60% bonds and 40% equity or vice versa.

BANKER'S ACCEPTANCE A short-term credit investment created by a non-financial firm and guaranteed by a bank as to payment. Acceptances are traded at discounts from face value in the secondary market. These instruments have been a popular investment for money market funds.

BARTER
The exchange of goods and services for other goods and services without the use of money.

BASIS POINT
A phrase used to describe differences in bond yields, with one basis point representing one-hundredth of a percentage point. Thus if Bond X yields 8.5 per cent and Bond Y 8.75 per cent, the difference is 25 basis points.

BASIS POINTS Refers to yield on bonds. Each percentage point of yield in bonds equals 100 basis points. If a bond yield changes from 6.45% to 6.75%, that's a rise of 30 basis points.

BASIS The price an investor pays for a security plus any out-of-pocket expenses. It is used to determine capital gains or losses for tax purposes when the stock is sold.

BEAR An investor who believes a stock or the overall market will decline. A bear market is a prolonged phase of falling stock prices, usually by 20% or more.

BEAR HAMMERING A situation in which large traders sell positions with the intention of driving prices down.

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

BENCHMARK
A parameter with which a scheme can be compared. For example, the performance of a scheme can be benchmarked against an appropriate index.

BETA (STOCKS) Measure of a stock's risk in relation to the market. 0.7 means a stock price is likely to move up or down 70 % of the market change; 1.3 means the stock is likely to move up or down 130 % the market.

BETA
A measure of the relative sensitivity of a stock or mutual fund to the market. The higher the beta, the more volatile (or more sensitive) the stock or fund is considered to be relative to the market as a whole. The BSE sensex is assigned a beta of 1.

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

BLOW-OFF TOP A steep, fast and rapid increase in price followed by a steep, fast and a rapid drop in price.

BLUE CHIP
A share in a large, safe, prestigious company, of the highest class among stock market investments. A blue-chip company would be called thus by being well-known, having a large paid-up capital, a good track record of dividend payments and skilled management.

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

BOND RATING
System of evaluating the probability of whether a bond issuer will default. CRISIL, ICRA, CARE and other rating agencies analyze the financial stability of both corporate and state government debt issuers. 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.

BOND
An interest-bearing promise to pay a specified sum of money -- the principal amount -- due on a specific date.

BONUS
Additional units allotted to 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.

BREAKOUT The rise in the price of a security above a resistance level (commonly its previous high price) or drop below a level of support (commonly the former lowest price.) A breakout is taken to signify a continuing move in the same direction. Can be used by technical analysts as a buy or sell indication.

BROKER
One who guides the investors on one or more investments and facilitates the process of investment. A broker is a member of a recognized stock exchange who buys and sells or otherwise deals in securities.

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
A index reflecting the stock prices of 30 companies listed on the Bombay Stock Exchange (BSE) which 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 of time on the back of sustained demand for the stocks.

BUYOUT Purchase of a controlling interest (or percent of shares) of a company's stock. A leveraged buyout is done with borrowed money.

CALL OPTION An option contract that gives the holder of the option the right (but not the obligation) to purchase, and obligates the writer to sell, a specified number of shares of the underlying stock at the given strike price, on or before the expiration date of the contract.

CALLABLE BOND
A bond 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 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 APPRECIATION
As the value of the securities in a portfolio increases, a fund's Net Asset Value (NAV) increases, meaning that the value of your investment rises. If you sell units at a higher price than you paid for them, you make a profit, or capital gain. If you sell units at a lower price than you paid for them, you'll have a capital loss.

CAPITAL EDPENDITURE, Amount used during a particular period to acquire or improve long term assets such as property, plant, or equipment. All items that either decrease liabilities or increase assets e.g. Disinvestments of Government holding in companies

CAPITAL GAIN When a stock is sold for a profit, it's the difference between the net sales price of securities and their net cost, or original basis. If a stock is sold below cost, the difference is a capital loss.

CAPITAL GAINS DISTRIBUTERS
Payments (usually annually) to mutual fund shareholders of gains realized on the sale of portfolio securities.

CAPITAL GAINS
The difference between an asset's purchased price and selling price, when the difference is positive. A capital loss would be when the difference between an asset's purchase price and selling price is negative.

CAPITAL GROWTH
A rise in 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 Loss Loss realized when an instrument or asset is sold at a price below its cost.

CAPITAL LOSS The difference between the net cost of a security and the net sale price, if that security is sold at a loss.

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

CAPITAL: This is the amount of money you have invested. When your investing objective is capital preservation, your priority is trying not to lose any money. When your investing objective is capital growth, your priority is trying to make your initial investment grow in value.

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

CASH AND EQUIVALENTS The value of assets that can be converted into cash immediately, as reported by a company. Usually includes bank accounts and marketable securities, such as government bonds and Bankers' Acceptances. Cash equivalents on balance sheets include securities (e.g., notes) that mature within ninety days.

CASH DIVIDEND A dividend paid in cash to a company's shareholders. The amount is normally based on profitability and is taxable as income. A cash distribution may include capital gains and return of capital in addition to the dividend.

CASH FLOW In investments, it represents earnings before depreciation amortization and non-cash charges. Sometimes called cash earnings. Cash Flow from operations (called Funds From Operations (FFO) by real estate and other investment trusts, is important because it indicates the ability to pay dividends.

CDSC
Contingent Deferred Sales Charge (CDSC), a charge imposed when the units are redeemed within the first four years of unit ownership. The SEBI (Mutual Funds) Regulations, 1996, direct that a CDSC may be charged only for the first four years after purchase and mandates the maximum amount that can be charged in each year.

CERTIFICATE OF DEPOSIT
Interest-bearing, short-term debt instrument mainly issued by Financial institutions.

CHANGES IN FINANCIAL POSITION Sources of funds internally provided from operations which alter a company's cash flow position: depreciation, deferred taxes, other sources, and capital expenditures.

CHURNING Excessive trading of a client's account in order to increase the broker's commissions.

CLOSED-ENDED MUTUAL FUND
A mutual fund that offers a limited number of shares. They are traded in the securities markets. Price is determined by supply and demand. Unlike open-ended mutual funds, closed-ended funds do not redeem their shares.

CLOSING PURCHASE A transaction in which the purchaser's intention is to reduce or eliminate a short position in a stock, or in a given series of options.

CLOSING SALE A transaction in which the seller's intention is to reduce or eliminate his long position in a stock, or a given series of options.

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

COMISSION The fee paid to a broker to execute a trade, based on number of shares, bonds, options and/or their dollar value. Full service brokers offer advice and usually have a full staff of analysts who follow specific industries. Discount brokers simply execute a client's order.

COMMERCIAL PAPER
Short-term, unsecured promissory notes with maturities shorter than 3 months. They are issued by corporations to fund short-term credit needs.

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

COMMON STOCK/OTHER EQUITY Value of outstanding common shares at par, plus accumulated retained earnings. Also called shareholders' equity.

COMMON STOCKS
Stocks represent a share in the ownership of a particular company. If the company does well, the value of each share generally goes up. Although common stocks have a history of long-term growth, their prices fluctuate based on changes in a company's financial condition and on overall market and economic conditions.

COMPLIANCE OFFICER
Officer appointed by the AMC to comply with regulatory requirement and to redress investor grieviences

COMPOUNDING
When you deposit money in a bank, it earns interest. When that interest also begins to earn interest, the result is compound interest. Compounding occurs if bond income or dividends from stocks or mutual funds are reinvested. Because of compounding, money has the potential to grow much faster.

CONFIDENCE INDICATOR A measure of investors' faith in the economy and the securities market. A low or deteriorating level of confidence is considered by many technical analysts as a bearish sign.

CONFIDENCE LEVEL The degree of assurance that a specified failure rate is not exceeded.

CONFIRMATION The written statement that follows any "trade" in the securities markets. Confirmation is issued immediately after a trade is executed. It spells out settlement date, terms, commission, etc.

CONSENSUS RATING The average of analysts recommendations for a single entity. As many brokers have different ratings systems, their recommendations must be standardized so that a consensus can be calculated. The I/B/E/S ratings are calculated using a standard set of recommendations, maintained by I/B/E/S, each with an assigned numeric value: 1. Strong Buy 2. Buy 3. Hold 4. Underperform 5. Sell Each recommendation received from the analysts is mapped to one of the I/B/E/S standard ratings. Assigning a numeric value to the broker text enables I/B/E/S to calculate a consensus recommendation. This consensus recommendation appears as the mean (average) of the assigned values.

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

CONSUMER PRICE INDEX (CPI): This is the rate of increase in consumer prices. The base index is considered 100.

CONTINUOUS OFFER
Offer of the Units when the Scheme becomes open ended, after closure of the initial offer. The Scheme became open ended on January 1, 1998

CONVERGENCE The movement of the price of a futures contract toward the price of the underlying cash commodity. At the start, the contract price is higher because of the time value. But as the contract nears expiration, the futures price and the cash price converge.

CONVERTIBLE BOND
A corporate bond, usually a junior subordinated debenture, which can be exchanged for shares of the issuer's common stock.

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.

CORNER A MARKET To purchase enough of the available supply of a commodity or stock in order to manipulate its price.

CORRELATION MEASURES
Measures that show the validity of a comparison to a benchmark index based on the historical relationship between portfolio returns and index returns. See R"2". 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 RATE
The annual rate of interest payable on a debt security expressed as a percentage of the principal amount.

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

COVERED CALL A short call option position in which the writer owns the number of shares of the underlying stock represented by the option contracts. Covered calls generally limit the risk the writer takes because the stock does not have to be bought at the market price, if the holder of that option decides to exercise it.

COVERED PUT A put option position in which the option writer also is short the corresponding stock or has deposited, in a cash account, cash or cash equivalents equal to the exercise of the option. This limits the option writer's risk because money or stock is already set aside. In the event that the holder of the put option decides to exercise the option, the writer's risk is more limited than it would be on an uncovered or naked put option.

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 risk that shifts in foreign exchange rates may undermine the dollar or any other foreign currency value of overseas investments.

CURRENT ASSETS Value of cash, accounts receivable, inventories, marketable securities and other assets that could be converted to cash in less than 1 year.

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

CURRENT LIABILITIES Amount owed for salaries, interest, accounts payable and other debts due within 1 year.

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 RATIO Indicator of short-term debt paying ability. Determined by dividing current assets by current liabilities. The higher the ratio, the more liquid the company.

CURRENT YIELD For bonds or notes, the coupon rate divided by the market price of the bond.

CUSTODIAN The bank or trust company that maintains a mutual fund's assets, including its portfolio of securities or some record of them. Provides safekeeping of securities but has no role in portfolio management. For Reliance Capital Asset Management, Deutsche Bank AC, Mumbai, is Custodian to the Schemes, or any other custodian who is appointed by the Trustee.

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.

DATE OF REDEMPTION The date specified for the redemption of a scheme. No such date is specified for an open-ended scheme.

DAY ORDER An order to buy or sell stock that automatically expires if it can't be executed on the day it is entered.

DEBT /INCOME FUNDS Funds that invest in 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.

DEBT/EQUITY RATIO Indicator of financial leverage. Compares assets provided by creditors to assets provided by shareholders. Determined by dividing long term debt by common stockholders' equity.

DECLARATION DATE The date on which a firm's directors meet and announce the date and amount of the next dividend.

DEFERRED TAXES A non-cash expense that provides a source of free cash flow. Amount allocated during the period to cover tax liabilities that have not yet been paid.

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

DEPOSITORY Depository as defined in the Depositories Act, 1996 (22 of 1996). They are Institutions that facilitate investors to hold shares in electronic form.

DEPRECIATION A non-cash expense that provides a source of free cash flow. Amount allocated during the period to amortize the cost of acquiring long term assets over the useful life of the assets.

DERIVATIVE SECURITY A financial security, such as an option, or future, whose value is derived in part from the value and characteristics of another security, the underlying security.

DERIVATIVE An investment contract based on an underlying investment called an "instrument." 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. Futures 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.

DISINVESTMENTS : When the Govt. sells a part of its stake to private parties and also retains control. ONGC, GAIL

DISTRIBUTIONS Payments from fund or corporate cash flow. May include dividends from earnings, capital gains from sale of portfolio holdings and return of capital. Fund distributions can be made by check or by investing in additional shares. Funds are required to distribute capital gains (if any) to shareholders at least once per year. Some Corporations offer Dividend ReinvestmentPlans (DRP).

DIVERGENCE When two or more averages or indices fail to show confirming trends.

DIVERSIFICATION Diversification is the concept of spreading your money across different types of investments and/or issuers to potentially moderate your investment risk.

DIVIDEND Distribution of a portion of a company's earnings, cash flow or capital to shareholders, in cash or additional stock.

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 current Dividend Distribution Tax is 20% plus the 10% surcharge

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

DIVIDEND HISTORY The track record of dividends declared by a fund till date.

DIVIDEND PER UNIT Total amount of dividend declared by a fund for a scheme divided by total number of units issued to all the investors.

DIVIDEND PLAN In a dividend plan, the fund pays dividend from time to time as and when the dividend is declared.

DIVIDEND REINVESTMENT PLAN Automatic reinvestment of shareholder dividends in more shares of a company's stock, often without commissions. Some plans provide for the purchase of additional shares at a deiscount to market price. Dividend reinvestment plans allow shareholders to accumulate stock over the long term using dollar cost averaging.

DIVIDEND REINVESTMENT
In a dividend reinvestment plan, the dividend is reinvested in the scheme itself. Hence instead of receiving dividend, the unit holders receive units. Thus the number of units allotted under the dividend reinvestment plan would be the dividend declared divided by the ex-dividend NAV.

DIVIDEND WARRANT An instrument issued by companies/ mutual funds to an investor for the purpose of payment of dividends

DIVIDEND YIELD (FUNDS) Indicated Yield represents return on a share of a mutual fund held over the past 12 months. Assumes fund was purchased 1 year ago. Reflects effect of sales charges (at current rates), but not redemption charges.

DIVIDEND YIELD (STOCKS) Indicated Yield represents annual dividends divided by current stock price.

DIVIDENDS PER SHARE Dividends paid for the past 12 months divided by the number of common shares outstanding, as reported by a company. The number of shares often is determined by a weighted average of shares outstanding over the reporting term.

DOWNGRADE A classic negative change in ratings for a stock, and or other rated security.

DURATION Duration estimates how much a bond's price fluctuates with changes in comparable interest rates. If rates rise 1.00%, for example, a fund with a 5-year duration is likely to lose about 5.00% of its value. Other factors also can influence a bond fund's performance and share price. A bond fund's actual performance may differ.

EARNINGS PER SHARE (EPS) Also referred to as Primary Earnings Per Share. Net income for the past 12 months divided by the number of common shares outstanding, as reported by a company. The company often uses a weighted average of shares outstanding over reporting term.

EARNINGS YIELD The ratio of Earnings Per Share after allowing for tax and interest payments on fixed interest debt, to the current share price. The inverse of the Price/Earnings ratio. It's the Total Twelve Months Earnings divided by number of outstanding shares, divided by the recent price, multiplied by 100. The end result is shown in percentage.

ENDORSEMENT Assigning or transferring a lien to another person is accomplished through the use of an endorsement. The words "PAY TO THE ORDER OF" and then the name of the person to whom the lien is being assigned to, is written. If there is not enough space on the original note to write an endorsement, it is written on a separate piece of paper that is permanently affixed to the original note. This is called an allonge.

EQUITY OPTIONS Securities that give the holder the right to buy or sell a specified number of shares of stock, at a specified price for a certain (limited) time period. Typically one option equals 100 shares of stock.

EQUITY SCHEMES Schemes where more than 50% of the investments are done in equity shares of various companies. The objective is to provide capital appreciation over a period of time.

EQUITY The value of the common stockholders' equity in a company as listed on the balance sheet.

EUROPEAN-STYLE OPTION An option contract that can only be exercised on the expiration date.

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

EXCHANGE The marketplace in which shares, options and futures on stocks, bonds, commodities and indices are traded.

EX-DIVIDEND DATE The first day of trading when the seller, rather than the buyer, of a stock will be entitled to the most recently announced dividend payment.

EX-DIVIDEND RATE The day that a fund's Board of Directors declares the amount of income or capital gain to be distributed to shareholders and deducts that amount from the fund's net asset value.

EXECUTION The process of completing an order to buy or sell securities. Once a trade is executed, it is reported by a Confirmation Report; settlement (payment and transfer of ownership) occurs between 1 (mutual funds) and 3 (stocks) days after an order is executed.

EXERCISE To implement the right of the holder of an option to buy (in the case of a call) or sell (in the case of a put) the underlying security.

EXIT (BACK END) LOAD 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.

EXPENSE RATIO The percentage of the assets that were spent to run a mutual fund (as of the last annual statement). This includes expenses such as management and advisory fees, overhead costs and 12b-1 (distribution and advertising ) fees. The expense ratio does not include brokerage costs for trading the portfolio, although these are reported as a percentage of assets to the SEC by the funds in a Statement of Additional Information (SAI). the SAI is available to shareholders on request. Neither the expense ratio or the SAI includes the transaction costs of spreads, normally incurred in unlisted securities and foreign stocks. These two costs can add significantly to the reported expenses of a fund. The expense ratio is often termed an Operating Expense Ratio (OER).

EXPENSE RATIO Annual percentage of fund's assets that is paid out in expenses. Expenses include management fees and all the fees associated with the fund's daily operations.

EXPIRATION CYCLE An expiration cycle relates to the dates on which options on a particular security expire. A given option will be placed in 1 of 3 cycles, the January cycle, the February cycle, or the March cycle. At any point in time, an option will have contracts with 4 expiration dates outstanding, 2 in near-term months and 2 in far-term months.

EXPIRATION DATE The last day (in the case of American-style) or the only day (in the case of European- style) on which an option may be exercised. For stock options, this date is the Saturday immediately following the 3d Friday of the expiration month; however, brokerage firms may set an earlier deadline for notification of an option holder's intention to exercise. If Friday is a holiday, the last trading day will be the preceding Thursday.;

FACE VALUE The face value is the term used to describe the value of a bond in terms of what the company which issued the bond will actually repay when the loan matures. It's sometimes described as nominal or par value.

FII Foreign Institutional Investors, registered with SEBI under the Securities and Exchange Board of India (Foreign Institutional Investors) Regulations, 1995.

FISCAL DEFICIT : This is the net shortfall in govt. expenditure and is normally made up by borrowings

FISCAL YEAR An accounting period consisting of 12 consecutive months. FUND A mutual fund is a trust under the Indian Trust Act. Each fund manages one or more schemes.

FUND CATEGORY Classification of a scheme depending on the type of assets in which the mutual fund company invests the corpus. It could be a growth, debt, balanced, gilt or liquid scheme

FUND FAMILY The management company that runs and/or sells shares of the fund. Fund families often offer several funds with different investment objectives.

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

FUND MANAGER The person who makes all the final decisions regarding investments of a scheme

FUNDS FROM OPERATIONS (FFO) Used by real estate and other investment trusts to define the cash flow from trust operations. It is earnings with depreciation and amortization added back. A similar term increasingly used is Funds Available for Distribution (FAD), which is FFO less capital investments in trust property and the amortization of mortgages.

Funds investing in assets or bonds/shares of companies from emerging economies. These are not permissible in India due to regulations against investing abroad. Most of the schemes of Foreign Institutional Investors (FII's) investing in India are funds of this type.

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

FUTURES CONTRACT Agreement to buy or sell a set number of shares of a specific stock in a designated future month at a price agreed upon by the buyer and seller. The contracts themselves are often traded on the futures market. A futures contract differs from an option because an option is the right to buy or sell, whereas a futures contract is the promise to actually make a transaction.

GDP GROWTH RATE : This is the rate at which the country's GDP grows year on year. It excludes the inflation effect. For instance a country that grows at 7% with an inflation of 5% is in effective growing at 7%+5%=12%. GDP growth rates in excess of 5% are considered very good. The developed economies grow at around 2 to 3% per year since the base effect retards growth.

GILT FUNDS Funds, which 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

GOOD 'TIL CANCELED Sometimes simply called "GTC", it means an order to buy or sell stock that is good until you cancel it.

GROSS DOMESTIC PRODUCT (GDP): This is the sum total of the final value of goods and services produced in an economy.

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.

GROWTH RATES Compound annual growth rate for the number of full fiscal years shown. If there is a negative or zero value for the first or last year, the growth is NM (not meaningful).

GROWTH Fund's Growth funds are designed to pursue capital appreciation over the long-term. Some growth funds are broad-based, meaning that they have a wide range of stocks and industries in which they can invest. Others have a narrower focus - for example, they may invest in a particular type of stock, such as small-cap or cyclical stocks, or use a specialized approach to stock selection, such as investing only in stocks that are currently underpriced. Growth funds are more volatile than more conservative income or money market funds and generally reflect changes in market conditions and other company, political, and economic news.

HEAD & SHOULDERS In technical analysis, a chart formation in which a stock price reaches a peak and declines, rises above its former peak and again declines and rises again but not to the second peak and then again declines. The first and third peaks are shoulders, while the second peak is the formation's head. Technical analysts generally consider a head and shoulders formation to be a very bearish indication.

HEDGING A strategy designed to reduce investment risk using "call" options, "put" options, "short" selling, or futures contracts. A hedge can help lock in existing profits. Its purpose is to reduce the potential volatility of a portfolio, by reducing the risk of loss.

HIGH PRICE The highest (intraday) price of a stock over the past 52 weeks, adjusted for any stock splits.

HOLDING COMPANY A corporation that owns enough voting stock in another firm to control management and operations by influencing or electing its board of directors

IN THE MONEY SECURITIES
An option contract on a stock whose current market price is above the striking price of a call option or below the striking price of a put option. For example, a call option on ABC fund at a striking price of 100 would be "in the money" if ABC fund were selling at 10"2", and a put option with the same striking price would be "in the money" if ABC were selling at 98.

INCOME FUND A mutual fund that primarily seeks current income rather than growth of capital. It will tend to invest in stocks and bonds that normally pay high dividends and interest.

INDEX FUND A passively managed, limited-expense (advisor fee no higher than 0.50%) fund designed to replicate the performance of an unmanaged stock index on a reinvested basis.

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

INFLATION When the price of goods and services rises, the result is called inflation. This means that things you buy today at one price are likely to cost more in the future.

INITIAL OFFER PERIOD The dates on or the period during which the initial subscription to units of the Scheme can be made i.e. December 20, 1997 to December 27, 1997 in the case of Reliance Income Fund.

INITIAL OFFER PRICE The price at which units of a scheme are offered in its Initial Public Offer (IPO).

INITIAL OFFER/INITIAL ISSUE Offer of Reliance Income Fund units during the initial offer period.

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

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

INTEREST
The amount paid by a borrower as compensation for the use of borrowed money. This amount is generally expressed as an annual percentage of the principal amount.

INVESTMENT GRADE OR INVESTMENT GRADE BOND The broad credit designation given to corporate and municipal bonds which have a high probability of being paid and minor, if any, speculative features. Bonds rated Baa and higher by Moody's Investors Service or BBB and higher by Standard & Poor's are deemed by those agencies to be "investment grade."

INVESTMENT MANAGEMENT AGREEMENT (IMA) The Agreement entered into between Reliance Capital Trustee Co. Limited and Reliance Capital Asset Management Limited by which Reliance Capital Asset Management Ltd. has been appointed the Investment Manager for managing the funds raised by RCMF under the various schemes, and all amendments thereof.

INVESTMENT OBJECTIVE The identification of attributes associated with an investment or investment strategy, designed to isolate and compare risks, define acceptable levels of risk, and match investments with personal goals.

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

ISSUED SHARE CAPITAL This is the total number of shares a company has made publicly available multiplied by the total nominal value of the shares. A company may have 10 million shares in issue, each with a nominal value of Re. 1. So the issued share capital is Rs. 10 million.

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

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

LESSEE The person who makes lease payments. He has right of possession and use of a property under the terms of a lease.

LIBOR stands for London Inter Bank Offer Rate. It's the rate of interest at which banks offer to lend money to one another in the so-called wholesale money markets in the City of London . Money can be borrowed overnight or for a period of in excess of five years. The most often quoted rate is for three month money. '3 month LIBOR' tends to be used as a yardstick for lenders involved in high value transactions. They tend to quote rates as 'points above LIBOR'. So if 3 month LIBOR were (say) six per cent, a bank may choose to lend to another bank at (say) 6 and a quarter per cent. e.g. a quarter per cent above 3 month LIBOR.

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
The ability to buy or sell an asset quickly or the ability to convert to cash quickly

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 Cheques 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 in fresh units during which the investor cannot redeem the units.

MANAGEMENT FEE Money paid by a mutual fund to its investment manager or advisor for overseeing the portfolio. A management fee is usually between one-half and one percent of the fund's net asset value.

MARKET PRICE The price at which the units of a scheme 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.

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/Fair Value of Scheme's investments (+) Receivables (+) Accrued Income (+) Other Assets (-) Accrued Expenses (-) Payables (-) Other Liabilities
----------------------------------------------------------------------------------------------------
Number of Units Outstanding

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

MATURITY OR 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 at the time a security is redeemed at its maturity. On most securities the maturity value equals the par value.

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 (get redeemed) from the fund at one time.

MONEY MARKET FUND A mutual fund that aims to pay money market interest rates. This is accomplished by investing in safe, highly liquid securities, including certificates of deposit, commercial paper, and Government securities. Money funds make these high interest securities available to the average investor seeking immediate income and high investment safety.

MONEY MARKET INSTRUMENTS Commercial paper, treasury bills, GOI securities with an unexpired maturity up to one year, call money, certificates of deposit and any other instrument specified by the Reserve Bank of India.

MONEY SUPPLY This is the total supply of money in an economy and includes cash currency, bank deposits and time (fixed) deposits with banks.

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 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.

MUTUAL FUND An investment that pools shareholders money and invests it toward a specified goal. The funds are invested by a professional investment manager usually called the AMC ( Asset Management Company).

NAV Change %
The percentage change between today's closing net asset value (NAV) and the previous day's closing net asset value (NAV)

NAV Net Asset Value of the Units in each plan of the Scheme is calculated in the manner provided in this Offer Document or as may be prescribed by Regulations from time to time. The NAV will be computed upto four decimal places. NAV Formula :

NET WORTH A person's net worth is equal to the total value of all possessions, such as a house, stocks, bonds, and other securities, minus all outstanding debts, such as mortgage and revolving credit lines.

NET YIELD Rate of return on a security net of out-of-pocket costs associated with its purchase, such as commissions or markups.

NON-PERFORMING INVESTMENTS Part of the portfolio investment of a debt fund which is not making interest payment or principal amount repayments in time.

NON-PLAN ESPENDITURE Expenditures not forming part of 5-year plans is known as non-plan expenditure. For instance India goes to war with China , an earthquake occurs in the western part of India etc.

OCB Overseas Corporate Bodies, firms and societies which are held directly or indirectly, but ultimately, to the extent of at least 60% by NRls and trusts in which at least 60% of the beneficial interest is held irrevocably by NRls.

OFFER DOCUMENT OR PROSPECTUS 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 the Securities and Exchange Board of India, such as investment objective and policies, services, and fees. Individual investors are encouraged to read and understand the fund's prospectus.

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 A fund whose units are redeemable at any time at asset value, Except for funds that no longer accept new unitholder, new units are offered continuously.

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

OPTION A device used to speculate or hedge in securities markets. Buying a "call" option gives an investor the right to buy 100 shares of a stock at a certain price within a specified time; buying a "put" option allows an investor to sell a stock under the same conditions.

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

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

PAYMENT DATE Date on which a declared stock dividend or a bond interest payment is scheduled to be made.

PER CAP[ITA INCOME: This is the GDP divided by the population. Per capita Income of countries like Switzerland , Canada , Singapore etc are the highest in the world

PHONE SWITCHING In mutual funds, the ability to transfer shares between funds in the same family by telephone request. There may be a charge associated with these transfers. Phone switching is also possible among different fund families if the funds are held in street name by a participating broker/dealer.

PIVOT Price level established as being significant by market's failure to penetrate or as being significant when a sudden increase in volume accompanies the move through the price level.

PLAN EXPENDITURE: The Govt. normally makes 5 year plans any expenditure that is listed there is known as a plan expenditure

PLANS The Scheme offers five Plans, Growth Plan and four Dividend Plans viz. Monthly, quarterly, Half Yearly and Annual Dividend Plans.

PIO Person of Indian Origin

PORTFOLIO The list of securities owned by the mutual fund. This list may be long, for example, Fidelity Magellan, with over 2000 stocks, or relatively short, for example, Sequoia, with only 16 stocks.

PORTFOLIO CHURNING Switches between different stocks in the market, keeping in view the market conditions, in order to give unit holders a better yield.

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

PRICE OF UNITS Price offered by a mutual fund for repurchase or sale of a unit on a daily basis. Price/Earnings Ratio 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.

PRICE STABILITY Price stability protects the original amount you put into an investment. A mutual fund's price stability is seen in changes in its net asset value over time.

PRIMARY MARKET(NEW ISSUE MARKET) The market on which newly issued securities are sold, including government security auctions and underwriting purchases of blocks of new issues, which are then resold.

PROSPECTUS An official document that each investment company must publish, describing the mutual fund and offering its shares for sale. It contains information that has been mandatorily required by SEBI.

PURCHASE PRICE Purchase Price to the investor of Units of any of the plans computed in the manner indicated in this Offer Document.

POINT AND FIGURE CHART A price-only chart that takes into account only whole integer changes in price, i.e., a 2-point change. Point and figure charting disregards the element of time and is solely used to record changes in price.

PREFERRED STOCK A security that shows ownership in a corporation and gives the holder a claim, prior to the claim of common stockholders, on earnings and also generally on assets in the event of liquidation. Most preferred stock pays a fixed dividend, stated in a dollar amount or as a percentage of par value. This stock does not usually carry voting rights.

PREMIUM The price of an option contract, determined on the exchange, which the buyer of the option pays to the option writer for the rights to the option contract.

PRICE/BOOK RATIO Compares a stock's market value to the value of total assets less total liabilities (book). Determined by dividing current price by common stockholders' equity per share (book value), adjusted for stock splits. Also called Market-to-Book.

PRICE/EARNINGS RATIO Shows the "multiple" of earnings at which a stock sells. Determined by dividing current price by current earnings per share (adjusted for stock splits). Earnings per share for the P/E ratio is determined by dividing earnings for past 12 months by the number of common shares outstanding. Higher "multiple" means investors have higher expectations for future growth, and have bid up the stock's price.

PRICE/SALES RATIO Determined by dividing stock's current price by revenue per share (adjusted for stock splits). Revenue per share for the P/S ratio is determined by dividing revenue for past 12 months by number of shares outstanding.

PRICES Price of a share of common stock on the date shown. Highs and lows are based on the highest and lowest intraday trading price.

PRIMARY DEFICIT : This is the fiscal deficit as reduced by interest payments. A higher difference between the fiscal and the primary deficit shows that the country is making higher provision for interest payments.

PRIMARY MARKET The first buyer of a newly issued security buys that security in the primary market. All subsequent trading of those securities is done in the secondary market.

PRIVATISATION: When the Govt. sells its stake to private parties and also transfers ownership control. e.g. BALCO, VSNL, CMC

PROFIT MARGIN Indicator of profitability. Determined by dividing net income by revenue for the same 12-month period. Result is shown as a percentage.

PROGRAM TRADING Trades based on signals from computer programs, usually entered directly from the trader's computer to the market's computer system and executed automatically.

PROSPECTUS Formal written document to sell securities that describes the plan for a proposed business enterprise, or the facts concerning an existing one, that an investor needs to make an informed decision. Prospectuses are used by Mutual Funds to describe the fund objectives, risks and other essential information.

PROXY Document intended to provide shareholders with information necessary to vote in an informed manner on matters to be brought up at a stockholders' meeting. Includes information on closely held shares. Shareholders can and often do give management their proxy, representing the right and responsibility to vote their shares as specified in the proxy statement.

PUT OPTION An option contract that gives the holder the right to sell (or "put"), and places upon the writer the obligation to purchase, a specified number of shares of the underlying stock at the given strike price on or before the expiration date of the contract.

QUICK RATIO Indicator of a company's financial strength (or weakness). Calculated by taking current assets less inventories, divided by current liabilities. Also called Acid Test.

RATE OF RETURN The total proceeds derived from the investment per rupee initially invested. Proceeds must be defined broadly to include both cash distributions and capital gains. The rate of return is expressed as a percentage.

RATINGS Designations given by credit rating agencies indicating relative credit quality as compared to other funds.

RECORD DATE The date the fund determines who its unitholders are; "unitholders of record" who will receive the fund's income dividend and/or net capital gains distribution.

REDEMPTION The paying off or buying back of units of a mutual fund / bond by the issuer.

REDEMPTION FEE A fee charged by a limited number of funds for redeeming, or buying back, fund units.

REDEMPTION PRICE The price at which a mutual fund's units are redeemed (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 The Institution that takes care of all back office work in case of issue of shares/ mutual fund units etc and also carries out such activities that are incidental and necessary to the objects of the issue.

REINVESTMENT DATE The date on which a share's dividend and/or capital gains will be reinvested (if requested) in additional fund shares.

REINVESTMENT PRIVILEGE A service that most mutual funds offer whereby a shareholder's income dividends and capital gains distributions are automatically reinvested in additional shares. See Automatic Reinvestment.

RELATIVE VOLATILITY A ratio of a portfolio's standard deviation to the standard deviation of a benchmark index. See Volatility Measures.

REPATRIATION CONVERSION OF FOREIGN CURRENCY TO AN INVESTOR'S BASE CURRENCY

RUPEE COST AVERAGING With rupee-cost-averaging, you invest a fixed amount on a regular basis - regardless of the current market trends. The investor buys more shares when the price is low and fewer shares when the price is high; the overall cost is lower than it would be if a constant number of shares were bought at set intervals. Rupee-cost-averaging does not assure a profit or protect against a loss in a declining market. You must continue to purchase shares both in market ups and downs. The goal of rupee-cost-averaging is to attain a lower average cost per share.

REPO Sale of Securities with simultaneous agreement to repurchase them at a later date.

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

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.

REPURCHASE PRICE The price of a unit (net of exit load) that the fund offers the investor to redeem his investment.

RETURNS The dividend and capital appreciation accruing to the investor on the investment held by him.

REVERSE REPO Purchase of securities with simultaneous agreement to sell them at a later date.

RISK ADJUSTED RETURNS Generally, the expected returns from an investment are dependent on the risk involved in the investment. For the purpose of comparing returns from investments 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.

REDEMPTION CHARGE The commission charged by a mutual fund when redeeming shares. For example, a 2 % redemption charge (also called a "back end load") on the sale of shares valued at 1000 will result in payment of 980 (or 98 % of the value) to the investor. This charge may decrease or be eliminated as shares are held for longer time periods.

RELATIVE STRENGTH A stock's price movement over the past year as compared to a market index (i.e. the NIFTY). Value below 1.0 means the stock shows relative weakness in price movement (under performed the market); a value above 1.0 means the stock shows relative strength over the 1-year period. Equation for Relative Strength: [current stock price/year-ago stock price] [current S&P 500/year-ago S&P 500]

RETRACEMENT A price movement in the opposite direction of the previous trend.

RETURN ON ASSETS (ROA) Indicator of profitability. Determined by dividing net income for the past 12 months by total assets. Result is shown as a percentage.

RETURN ON EQUITY (ROE) Indicator of profitability. Determined by dividing net income for the past 12 months by common stockholders' equity (adjusted for stock splits). Result is shown as a percentage.

RETURN The percentage gain or loss for a mutual fund in a specific time period. This number assumes that all distributions are reinvested.

REVENUE DEFICIT : This is the excess of revenue expenditure to revenue income

REVERSE STOCK SPLIT A proportionate decrease in the number of shares, but not the value of shares of stock held by shareholders. Shareholders maintain the same percentage of equity as before the split. For example, a 1-for-3 split would result in stockholders owning 1 share for every 3 shares owned before the split. A firm generally institutes a reverse split to boost its stock's market price and attract investors.

RIGHTS OFFERING Issuance of "rights" to current shareholders allowing them to purchase additional shares, usually at a discount to market price. Shareholders who do not exercise these rights are usually diluted by the offering. Rights are transferable, allowing the holder to sell them on the open market to others who may wish to exercise them.

SALES CHARGE The fee charged by a mutual fund when purchasing shares, usually payable as a commission to a marketing agent, such as a financial advisor, who is thus compensated for his assistance to a purchaser. It represents the difference, if any, between the share purchase price and the share net asset value.

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.

SALES CHARGE Fee on the purchase of new shares of a mutual fund. A sales charge is similar to paying a premium for a security in that the customer must pay a higher offering price. Sometimes called a 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 The Securities and Exchange Board of India.

SEBI REGULATIONS Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 or such other SEBI (MF) Regulations as may be in force from time to time and would include Circulars, Guidelines etc., unless specifically mentioned to the contrary.

SECONDARY MARKET The market where the securities are traded i.e purchased or sold after they have been initially offered to the public through a public offer in the primary market.

SECTOR ALLOCATION That portion of a fund which invests in narrowly defined segments of the economy, i.e. utilities, healthcare services, telecommunications, etc.

SECTOR FUNDS Sector funds invest in the stocks of one specific sector of the economy, such as health care, chemicals, or information technology.

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

SHARE PRICE The value of one share in a listed company fund. With most funds, the NAV is calculated every day, because the value of a fund's securities changes every day in response to the movements of the stock, bond and money markets. For some funds, share price is calculated on an hourly basis.

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

SHARPE RATIO The Sharpe ratio measures the risk-adjusted return of a fund. Simply put, the ratio measures the variability of ' excess returns' (defined by returns of the fund over the 'risk less' 91 day T-bill). Mathematically, the formula takes a fund's return in excess of a risk-free investment and divides this by the standard deviation of the returns. The higher the Sharpe ratio, the better the fund

SPREAD The difference between the rates at which money is deposited in a financial institution and the higher rates at which the money is lent out. Also, the difference between the bid and ask price for a security.

SUBSIDY A financial contribution by government (including any form of income or price support) that also confers a benefit to the recipient (i.e., producers of goods or services or buyers of goods). Many types of government practices constitute a financial contribution, including traditional forms of subsidies such as grants and loans, as well as foregone revenues such as tax credits.

SYSTEMATIC INVESTMENT PLAN Many mutual funds offer investment programs whereby unit holders can invest. The Unit holders of the scheme can benefit by investing specific Rupee amounts periodically, for a continuous period. The SIP allows the investors to invest a fixed amount of Rupees every month or quarter for purchasing additional units of the scheme at NAV based prices.

SYSTEMATIC WITHDRAWAL PLANS Many mutual funds offer withdrawal programs whereby unitholders receive payments from their investments. These payments are usually drawn from the fund's dividend income and capital gain distributions, if any, and from principal only when necessary.

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 scheme to another.

STANDARD DEVIATION A statistical measurement of the dispersion of a fund's return over a specified time period. Investors may examine historical standard deviation in conjunction with historical returns to decide whether a fund's volatility would have been acceptable given the returns it would have produced. A higher standard deviation indicates a wider dispersion of past returns and thus greater historical volatility. Standard deviation does not indicate the absolute performance, but merely indicates the volatility of its returns over time.

SECONDARY MARKET A market that provides for the purchase or sale of previously owned securities. Most trading is done in the secondary market. The New York Stock Exchange, as well as all other stock exchanges, the bond markets, etc., are secondary markets.

SELLING SHORT If an investor thinks the price of a stock is going down, the investor could borrow the stock from a broker and sell it. Eventually, s/he must buy the stock back on the open market. For instance, you borrow 1000 shares of XYZ on July 1 and sell it for 8 per share. Then, on Aug 1, you purchase 1000 shares of XYZ at 7 per share. You've made 1000 (less commissions and other fees) by selling short.

SERIES Options: All option contracts of the same class that also have the same unit of trade, expiration date, and exercise price. Stocks: shares which have common characteristics, such as rights to ownership and voting, dividends, par value, etc. In the case of many foreign shares, one series may be owned only by citizens of the country in which the stock is registered.

SETTLEMENT DATE The date on which payment is made to settle a trade. For stocks traded on exchanges, settlement is currently 3 business days after the trade. For mutual funds, settlement usually occurs the day following the trade. In some regional markets, foreign shares may require months to settle.

SHARE REPURCHASE Program by which a corporation buys back its own shares in the open market. It is usually done when shares are undervalued. Since it reduces the number of shares outstanding and thus increases earnings per share, it tends to elevate the market value of the remaining shares held by stockholders.

SHARES Certificates or book entries representing ownership in a corporation or similar entity.

SHORT POSITION (OPTIONS) A position wherein a person's interest in a particular series of options is as a net writer (ie, the number of contracts sold exceeds the number of contracts bought).

SHORT POSITION (STOCKS) Occurs when a person sells stocks he does not yet own. Shares must be borrowed, before the sale, to make "good delivery" to the buyer. Eventually, the shares must be bought to close out the transaction. This technique is used when an investor believes the stock price is going down.

SHORT SALE Selling a security that the seller does not own but is committed to repurchasing eventually. It is used to capitalize on an expected decline in the security's price.

SIC Abbreviation for Standard Industrial Classification. Each 4-digit code represents a unique business activity.

SLIPPAGE The difference between estimated transaction costs and actual transaction costs. The difference is usually composed of revisions to price difference or spread and commission costs.

STOCK DIVIDEND Payment of a corporate dividend in the form of stock rather than cash. The stock dividend may be additional shares in the company, or it may be shares in a subsidiary being spun off to shareholders. Stock dividends are often used to conserve cash needed to operate the business. Unlike a cash dividend, stock dividends are not taxed until sold.

STOP (-LOSS) ORDER An order to sell a stock when the price falls to a specified level.

STRIKE PRICE The stated price per share for which underlying stock may be purchased (in the case of a call) or sold (in the case of a put) by the option holder upon exercise of the option contract.

SYSTEMATIC (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.

TAKEOVER A change in the controlling interest of a corporation. A takeover may be a friendly acquisition or a hostile bid. A hostile takeover is usually attempted through a public tender offer.

TAXABLE EQUIVALENT YIELD The interest rate return which must be received on a taxable security to provide the holder the same after-tax return as that earned on a tax-exempt security.

TERM The time during which interest payments will be made on a bond or certificate of deposit.

TOTAL RETURN Return on an investment, taking into account capital appreciation, dividends or interest, and individual tax considerations adjusted for present value and expressed on an annual basis.

TRADE DATE The actual date on which your shares were purchased or sold. The transaction price is determined by the closing Net Asset Value on that date.

TRANSACTION CUTOFF TIMINGS Currently 2 P·m· on all working days

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. Presently 'T' day commences after 2 p.m. of the previous working day and ends at Z p.m. of the following working day for Reliance Income Fund.

TRANSACTION SLIP A brief form to be filled at the time of additional purchases or redemption.

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.

TRUST DEED The Trust Deed entered into on April 24, 1995 between the Sponsor and the Trustee, and any amendment thereof.

TRUST FUND The corpus of the Trust, unit capital and all property belonging to and i or vested in the Trustee.

TURNOVER The extent to which the fund's portfolio is turned over during the course of a year. High turnover results in greater investment expenses and therefore in an erosion of the value of share assets.

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.

The ration of interest to the actual market price of the bond stated as a percentage:

TICK INDICATOR A market indicator based on the number of stocks whose last trade was an uptick or a downtick. Used as an indicator of market sentiment or psychology to try to predict the market's trend.

TIME VALUE The portion of the premium that is based on the amount of time remaining until the expiration date of the option contract, and that the underlying components that determine the value of the option may change during that time. Time value is generally equal to the difference between the premium and the intrinsic value.

TRADE A verbal (or electronic) transaction involving one party buying a security from another party. Once a trade is consummated, it is considered "done" or final. Settlement occurs 1-5 business days later.

TRADE DATE The date on which a trade occurs. Trades generally settle (are paid for) 1-3 business days after a trade date.

TRADING RANGE The difference between the high and low prices traded during a period of time; with commodities, the high/low price limit established by the exchange for a specific commodity for any one day's trading.

TURNOVER Mutual Funds: A measure of trading activity during the previous year, expressed as a percentage of the average total assets of the fund. A turnover ratio of 25 % means that the value of trades represented one-fourth of the assets of the fund. Finance: The number of times a given asset, such as inventory, is replaced during the accounting period, usually a year. Corporate: The ratio of annual sales to net worth, representing the extent to which a company can growth without outside capital. Markets: The volume of shares traded as a percent of total shares listed during a specified period, usually a day or a year.

UNCOVERED CALL A short call option position in which the writer does not own shares of underlying stock represented by his option contracts. Also called a "naked" call, it is much riskier for the writer than a covered call, where the writer owns the underlying stock. If the buyer of a call exercises the option to call, the writer would be forced to buy the stock at market price.

UNCOVERED PUT A short put option position in which the writer does not have a corresponding short stock position or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put. Also called "naked" puts, the writer has pledged to buy the stock at a certain price if the buyer of the options chooses to exercise it. The nature of uncovered options means the writer's risk is unlimited.

UNDERLYING SECURITY Options: the security subject to being purchased or sold upon exercise of an option contract. For example, IBM stock is the underlying security to IBM options. Depositary receipts: The class, series and number of the foreign shares represented by the depositary receipt.

UNDERWRITER The organization that acts as the distributor of an initial offer share to broker/dealers and investors and undertakes to subscribe to any under-subscription of the offer.

UNIT The interest of the investors in any of the plans of the Scheme which consists of each Unit representing a share in the assets of the corresponding plan of the Scheme.

UNIT HOLDER A person who holds Unit(s) under any plan of the Scheme.

UNIT HOLDER OF RECORD Unit holders whose names appear on the unit holders register of the concerned plan/ (s) on the date of determination of dividend, subject to realization of the proceeds towards subscription

VALUATION Calculation of the market value of the assets of a mutual fund scheme at any point of time.

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

VALUE STOCKS Stocks that are considered to be 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.

VERTICAL INTEGRATION This is where a company merges or takes over other companies in the same supply chain. If a shoe manufacturer, takes over his supplier it would be vertical integration.

VOLATILITY In investing, volatility refers to the ups and downs of the price of an investment. The greater the ups and downs, the more volatile the investment.

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.

WALLFLOWER Stock that has fallen out of favor with investors; tends to have a low P/E.

WANTED FOR CASH A statement displayed on market tickers which indicates that a bidder will pay cash for same day settlement of a block of a specified security.

WARRANT A security entitling the holder to buy a proportionate amount of stock at some specified future date at a specified price, usually one higher than current market. This "warrant" is then traded as a security, the price of which reflects the value of the underlying stock. Warrants are usually issued as a "sweetener" bundled with another class of security to enhance the marketability of the latter.

WASTING ASSET An asset which has a limited life and thus, decreases in value (depreciates) over time. Also applied to consumed assets, such as gas, and termed "depletion.

WATCH LIST A list of securities selected for special surveillance by a brokerage, exchange or regulatory organization; firms on the list are often takeover targets, companies planning to issue new securities or stocks showing unusual activity.

Wholesale Price Index(WPI) : This is the rate of increase in consumer prices. The base index is considered 100

WITHDRAWAL PLAN The ability to establish automatic periodic mutual fund redemptions and have proceeds mailed directly to the investor.

WORKING DAY Any day, provided such day is not a Saturday or a Sunday or a Reliance Capital Asset Management Limited 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 Reliance Capital Asset Management Ltd. from time to time.

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

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

YIELD The percentage rate of return paid on a stock in the form of dividends, or the rate of interest paid on a bond or note.

YIELD TO CALL The percentage rate of a bond or note, if your were to buy and hold the security until the call date. This yield is valid only if the security is called prior to maturity. Generally bonds are callable over several years and normally are called at a slight premium. The calculation of yield to call is based on the coupon rate, length of time to the call and the market price.

YIELD TO MATURITY The percentage rate of return paid on a bond, note or other fixed income security if you buy and hold it to its maturity date. The calculation for YTM is based on the coupon rate, length of time to maturity and market price. It assumes that coupon interest paid over the life of the bond will be reinvested at the same rate

YIELD The percentage of return an investor receives, based on the amount invested or on the current market value of holdings.

YIELD CURVE The relationship at a given point in time between yields on a group of fixed-income securities with varying maturities -- commonly, Treasury bills, notes, and bonds. The curve typically slopes upward since longer maturities normally have higher yields, although it can be flat or even inverted.

YIELD TO MATURITY 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.

ZERO-COUPON BOND A bond where no periodic interest payments are made. The investor purchases the bond at a discounted price and receives one payment at maturity. The maturity value an investor receives is equal to the principal invested plus interest earned compounded semiannually at the original rate to maturity. Interest income from zero-coupon bonds is subject to taxes annually even though no payments will be made.