Bonds issued by a corporation with a fixed interest rate typically payable half a year on specific dates and a repayable principal amount on a particular debenture repayment date.

Debt Fund

The fund invests in instruments of fixed income such as debentures, treasury bills, etc. Preferred by investors who want a steady income and who do not want to take a great deal of risk.

Default risk

Default risk refers to the probability of a creditor failing to pay its financial obligations under a contract. For example, if a person who has taken a home loan from a bank fails to make monthly EMI payments, we conclude that the consumer has failed in payment obligations. The bank is vulnerable to default threat, or danger of failing to make timely payment of its loans to its customers.

In the case of a bond, which is a debt obligation for the bond issuer, the creditor (bond issuer) may find it unbalanced to make regular interest payments or it is unbalanced to refund the principal to the bond holders when the bond matures. If such a scenario happens, the bond issuer is said to have lost. If investors invest their money in bonds issued by different entities, they are subject to default risk, i.e. the probability of defaulting bond issuer in their payments.

Deferred Sales Charge � Schedule of Decline

The actual percentage charged or amount you pay for the corresponding periods of time. As time goes on, this amount or percentage your pay goes down. (The longer the fund is held, the lower the sales fee).


The method of transforming certificates of physical share into electronic form.


(1)A security derived from a debt instrument, a share, a loan, whether secured or not, a risk instrument or a differences contract or any other form of security;
(2)A contract that derives its value from the underlying securities ' prices or indices or premiums


If a security is quoted below its nominal or face value at a price, it is said to be at a discount.


An individual or a corporation that serves as the principal underwriter of the shares of a mutual fund, buys shares directly from the fund, and resells them to other investors.


Spreading the threat by building a portfolio that contains several different assets with fairly uncorrelated returns. Without a corresponding reduction in returns, risk rates can be reduced.


Payment made to investors from a company's profit after tax, usually once or twice a year. Dividend payments do not share a company's entire net profit, some or much of which is held back as funds for the growth of the company. Dividend is based on a share's face value or par value, not its market price.

Dividend Distribution Tax

When a corporation decides to pay dividend to its investors or a bond mutual fund scheme decides to pay dividend to its shareholders, they must deduct and pay tax before the dividend is distributed.

Dividend Frequency

This is the number of times the dividend is distributed to shareholders / unit holders in a year.

Dividend History

The track record of a company / mutual fund scheme's amount of dividend paid to date.

Dividend payout

In the case of Dividend Payout option, you will earn every dividend declared by the companies included in your scheme's portfolio. You can either choose to collect the dividend payouts or reinvest the allocated dividend back into the scheme. Dividend Payout options require you to earn any profit / surplus reported by the scheme as long as you stay in the scheme. Although there is no guarantee that the scheme will continue to pay you dividend at regular intervals, the dividend payout option provides a regular cash flow.

A scheme for the Mutual Fund invests in a securities basket such as stocks, bonds, gold and even international securities. Some of these bonds pay dividends while others pay interest while others pay bonuses. At the discretion of fund managers, the profit / surplus made by the scheme in the form of dividends, benefits, profits or incentives can be distributed among the shareholders of the scheme.Fund managers decide when to distribute the scheme's profits to investors. When the fund manager wants to distribute this benefit to investors, you will collect the profits made by the scheme in the case of a dividend payout option. A dividend scheme's NAV drops to the sum of the dividend paid on the ex-dividend date i.e. the next business day after the dividend is announced.

If the scheme makes a loss at any point, or if the fund manager wants to reinvest the profit back into the scheme by buying more property, dividends the stop coming.

Dividend Plan

Occasionally, as and when the dividend is announced, the fund pays dividend in a dividend schedule.

Dividend reinvestment option

Within a Mutual Fund scheme, there are three options to grow your money, namely growth, dividend reinvest and dividend payout. In case of Dividend Reinvestment option, you can reinvest the dividend made by the scheme during the intermediate period back into the scheme. A Mutual Fund scheme invests in a basket of securities like stocks, bonds, gold and even international securities. Some of these bonds pay dividends while others pay interest, while others pay bonuses. At the discretion of the fund managers, the profits made by the scheme in the form of dividends, royalties, gains or incentives can be distributed among the shareholders of the scheme. Fund managers decide when to allocate the scheme's gains to investors.

If a fund manager decides to distribute the profits, the declared profits in the form of dividends are not paid to investors if they opt for a dividend reinvestment option but instead are reinvested in the purchase of more units of the fund.Unlike a growth choice where the holding's price or NAV rises, here the number of units owned by you increases as the sum of dividend is used to acquire further units from the scheme.

Dividend Stripping

When an investor invests immediately after the dividend is paid with the idea of leaving the fund.


The longer a fund's duration, the more prone the fund is to fluctuations in interest rates, the average duration offers a measure of the interest rate sensitivity of a fund.The correlation between funds of different lengths is straightforward: a 10-year fund is twice as volatile as a five-year fund.

Duration also shows how the NAV of a fund will change as interest rates change.If interest rates rise by one percentage point or gain 5 percent if interest rates dropped by one percentage point,a five-year fund would be expected to lose 5 percent from its NAV.