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The driving force of mutal fund->safety ofprincipal guarenteed +CapitalAppreciation+Income earned with interest or

dividend Why people preferring MF than Bank deposit

or LIC?

Bcoz with a little money ,they can get into theinvestment game

Thus MF acts as a gateway between companies& investors with his small investment.

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As per SEBI definition,A fund established inthe form of a trust by a sponsor,to raise moneyby the trustees thru the sale of units to the

public,under one or more schemes ,forinvesting in securities in accordance with thesebi regulations.

In simple words,a mutual fund collects thesavings from the small investors,invest them inGovt or corporate securities & earn incomethru interest or dividend ,besides capital gain

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Investment in equity share representsinvestments in a particular company alone.Butin MF investment refers to parts of shares of a

large number of companies. If a particular company fails ,then share holder

will suffer a lot,ButMF holders are able towithstand that risk by means of their

diversified companies. Equity investment is a vehicle for

speculators,But MF is a vehicle for genuine &conseravtive investor.

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Professional Management

Diversifications

Convenience Return potential

Low costs

Liquidity

Transparency

Flexibility

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Choice of schemes

Tax benefits

Governemnt regulation

Shareholders services

Safety from loss due to unethical practices

Product structure

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Market value of each unit of a particular scheme inrelation to all the assets of the scheme.

Otherwise called as intrinsic value

True indicator of the performance of the fund.

If Nav> face value->the fund is appreciated

NAV=Total funds in a scheme/no of units

Eg:If the scheme size is 100crores,value of one unitis Rs.10,current market value of the scheme is 200crors,then NAV(now)=200/100*value of one unit

i.e RS.20

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On the basis of Operation ->

1. Open ended

2. closed ended

3. Interval funds On the basis of Geographical->

1. Offshore MF

2. Domestic MF On the basis of Structure

1. Capital Market

2. Money market

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1. Sponsor->The company which sets that MF iscalled sponsor.

2. Trustees->Safeguarding the interest ofinvestors.They monitor the operations of various

schemes they can even dismiss the AMC with theapproval of SEBI

3. AMC

Success of mF depends upon the performance ofAMC.

Manages the funds of various schemes. They submits quarterly report on the functioning

of MF to the trustees who will guide & control theAMC

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Investment objective

Past performance

Equity research

Global linkages(Fund managers expertise inglobal markets)

Transparency in fund accounting(should

disclose NAV periodically & fact sheet) Investor services

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Stability

Liquidity

Growth

Credibility of the issuer

Returns

Management approach

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Equity Diversified Funds Hybrid Funds

Gilt Funds

Income Funds

Liquid Funds

Liquid Plus Funds

Money Market funds

Arbitrage Funds

Index Funds

Exchange Traded Funds

Equity Linked Savings Scheme

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Association of Mutual Funds in India (AMFI)incorporated in Aug 1995 is the Umbrella body of allthe mutual fund registered with SEBI.

It is non profit organization committed to developedthe Indian mutual fund industry on professional,healthy & ethical lines & to enhance and maintainstandards in all areas with a view to protecting &promoting the interests of Mutual Funds and their

unit holders. AMFI is an industry association,not an SRO, so it can

just issue guidelines to members. It cannot enforceregulations.

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Objectives of AMFI :- To promote the interests of mutual funds and unit holders.

To set ethical, commercial and professional standards inthe industry.

To increase public awareness of the mutual fund industry. AMFI is governed by a board of directors elected from

mutual funds and is headed by a full time chairman.

AMFI has therefore prepared guidelines for intermediaries

called AMFI Guidelines & Norms for Intermediaries(AGNI).

Chairman-Mr.P.Kurian

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Should be managed by AMC Money markets schemes regulated by RBI &

capital markets schemes regulated by SEBI 50% of Board of directors must be independent

directors (no connection with sponsoringcompany)

Directors should have atleast 10years of experiencein financial services industry

Minimum AMC networth should be RS.10 crores SEBI has the power to withdraw the powers of

AMC if they fail to keep the interest of investors An AMC can not act as a AMC for other MF

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AMCs are allowed to do other business such asmanagement services to offshore funds,venturecapital funds & Insurance companies

Minimum amount to be raised with open endedscheme Rs.50 crores & closed ended scheme Rs.20crores

Each scheme should be registered with SEBIbefore floating in the market

Initial issue expenses should not exceed 6% of thefunds raised

For violating laws SEBI can impose penalty