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Glossary D

Dated Security

A debt instrument that is long term in nature and has a fixed date of redemption.

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. These funds are the least risky and are generally preferred by risk-averse investors.

Dematerialization

The process of converting the physical /paper shares in Electronic form. SEBI had made it compulsory to get the shares of some companies dematerialized. In this process the investor opens an account with a Depository Participant (DP) and the number of shares the investor holds is shown in this account.

Depository Participant

An authorized body who is involved in dematerialization of shares and maintaining of the investors accounts.

Discount

When the market price of a listed scheme is less than the actual NAV of the units, then it is said to be trading at a discount. It is the difference between the unit price and NAV. If the price is higher than the NAV, the units are trading at premium: if the price is lower, the units are trading at a discount.

Diversification

Mutual funds spread investments among a number of different securities to reduce the risk inherent in investing. By diversifying a portfolio across different industries, overall risk of the portfolio is reduced.

Dividend

Mutual fund dividends are paid out of income from the scheme's investments and can be announced out of the realized gains only.

Dividend Distribution Tax

A tax payable by a debt oriented mutual fund before dividend is distributed to the unit holders. There is no such tax applicable on equity oriented schemes.

Dividend Frequency

The periodicity of dividend payout of a scheme. This is especially valid in the case of an income/debt schemes like monthly income plans that normally have a regularity in such distributions.

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 distributes its accumulated income from time to time as and when the dividend is declared.

Dividend Reinvestment

In a dividend reinvestment plan, the dividend is reinvested in the scheme itself and is not paid out to the investors. i.e. instead of receiving dividend in cash, the unit holders receive units allotted to them at the Ex-dividend NAV.

Dividend Warrant

It is an instrument issued by companies/ mutual funds to an investor for the purpose of payment of dividends.

Dividend Yield

It refers to the dividend earned per unit of a scheme at the prevailing per unit price.

Dollar Cost Averaging

The strategy of dividing the investible amount into a number of equal parts and buying at regular intervals to take advantage of lower prices. This strategy is more beneficial in a bear phase.