A Mutual Fund is a trust that pools the savings of a number of

investors who share a common financial goal.

The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities.
The income earned through these investments and the capital
appreciation realised are shared by its unit holders in
proportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for the
common man as it offers an opportunity to invest in a
diversified, professionally managed basket of securities at a
relatively low cost.
< Net Asset VaIue (NAV)
et Asset Value is the market value of the assets of the scheme minus its
liabilities. The per unit AV is the net asset value of the scheme divided by
the number of units outstanding on the Valuation Date.
< $aIe Price
s the price you pay when you invest in a scheme. Also called Offer Price.
< #epurchase Price
s the price at which a close-ended scheme repurchases its units.This is
also called Bid Price.
< $ponsor: Establishes a MF, obtains Certificate of
Registration from $EB, forms a trust, appoints board of
trustees & AMC, appoints Custodian
< Trustees: MF managed by body of individuals or a trust
company (corporate body). Guardians of assets of Unit
holders. Responsible.
< AMC: nvestment Manager of Trust. Under the supervision
of Board of Directors, Trustees, $EB. Floats & manages
different schemes.
< Mutual Fund: Formed under ndian Trusts Act, 1982. nvites
subscriptions to units.
< Transfer agents: ssue and Redemption of units
< Custodian: For safekeeping of securities, participating in
clearing system
< Professional Management
< Diversification
< Convenient Administration
< Return Potential
< Low Costs
< Liquidity
< Transparency
< Flexibility
< Choice of schemes
< Tax benefits
< Well regulated
< By $tructure
Open Ended $chemes
Close Ended $chemes
nterval $chemes
< By nvestment Objectives
Growth $chemes
ncome $chemes
Balance $chemes
Money Market $chemes
< Other $chemes
Tax $aving $chemes
< $pecial $chemes
ndex $chemes
$ector $pecific $chemes
< There is no fixed maturity period
< The PO is open for a period of 30 days and then
reopen as an open ended scheme after a period
not exceeding 30 days from the date of closure of
PO.
< ot listed and hence not traded in stock market.
< The capitalisation of the fund constantly changes
since it is always open for the investors to buy and
sell.
< Open for subscription only for a limited period.
< The capitalisation of the scheme is fixed for a
specified period
< Fixed maturity period.
< Listed in stock exchange and traded
< Trading in stock exchange at current market
price.
und Objective What the fund wiII invest in
Equity (Growth) - Only in stocks
Debt (ncome) - Only in fixed-income securities
MoneyMarket - n short-term money market
instruments
(including government
securities)
Balanced - Partly in stocks and partly
in
fixed- income securities,
('balance' in returns and
risk)
< Governed by SEBI (Mutual Fund) Regulation 1996
ll MFs registered with it, constituted as trusts ( under Indian
Trusts ct, 1882)
< Bank operated MFs supervised by RBI too
< MC registered as Companies registered under Companies
ct, 1956
< SEBI- Very detailed guidelines Ior disclosures in oIIer
document, oIIer period, investment guidelines etc.
V to be declared everyday Ior open-ended, every week Ior
closed ended
Disclose on website, MFI, newspapers
HalI-yearly results, annual reports