Net Profit

Means gross profit minus deduction of tax payments and depreciation provisions.

NAV (Net Asset Value)

The value of a fund’s investment. For a mutual fund, the net asset value per share usually represents the fund’s market price.

Near Money

Assets which are readily convertible into money e.g. deposit accounts, deposit with savings banks and building societies, and certain short-term agreement securities.

Assured return scheme

Assured return schemes are those schemes that assure a specific return to the unitholders irrespective of performance of the scheme.
A scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or AMC and this is required to be disclosed in the offer document.
Investors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. Some schemes assure returns one year at a time and they review and change it at the beginning of the next year.

Sale or repurchase/redemption price

The price or NAV a unitholder is charged while investing in an open-ended scheme is called sales price. It may include sales load, if applicable.
Repurchase or redemption price is the price or NAV at which an open-ended scheme purchases or redeems its units from the unitholders. It may include exit load, if applicable.

Load or no-load Fund

A Load Fund is one that charges a percentage of NAV for entry or exit. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution expenses. Suppose the NAV per unit is ` 10. If the entry as well as exit load charged is 1%, then the investors who buy would be required to pay ` 10.10 and those who offer their units for repurchase to the mutual fund will get only ` 9.90 per unit. The investors should take the loads into consideration while making investment as these affect their yields/returns. However, the investors should also consider the performance track record and service standards of the mutual fund which are more important. Efficient funds may give higher returns in spite of loads.
A no-load fund is one that does not charge for entry or exit. It means the investors can enter the fund/scheme at NAV and no additional charges are payable on purchase or sale of units.

Fund of Funds (FoF) scheme

A scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a FoF scheme. An FoF scheme enables the investors to achieve greater diversification through one scheme. It spreads risks across a greater universe.

Rules

Rules are rigid and definite plans that specify what is to be done or not done in a given situation. A rule provides no scope for discretion and judgment.

Repo

Repo is a short term for repurchase agreement for RBI selling a government security at a competitive rate in the market to absorb what it considers is excess liquidity. The buyers are either banks or registered primary dealers.

Rate of Return

Refers to the basis of earnings from the investment of capital, where earnings are expressed as a proportion of the outlay.