1. IFS Talk Show
on
MUTUAL FUNDS
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2. INTRODUCTION
 Mutual Fund is an investment vehicle that is made up of a
pool of funds collected from many investors for the
purpose of investing in securities such as stocks, bonds,
money market instruments and similar assets.
 When an investor subscribes for the units of a mutual
fund, he becomes part owner of the assets of the fund in
the same proportion as his contribution amount put up
with the corpus (the total amount of the fund). Mutual
Fund investor is also known as a mutual fund shareholder
or a unit holder.
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3. Flow / Process of Mutual Funds
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4. Organization of a Mutual Fund
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5. SEBI Regulations
The mutual funds are registered and regulated
under the SEBI (MF) regulation, 1996
These regulations deal with
Launching of schemes
Disclosures in the offer documents
Advertisement
Investment objectives
Pricing of units
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6. The SEBI (Mutual Fund) Regulation 1996, contains
11 schedules.
No. Of schedule Particular
First schedule Proforma of various forms to be used
Second schedule Various fees payable by mutual funds
Third schedule Content of the trust deed
Fourth schedule Content of investment management agreement
Fifth schedule Code of conduct
Sixth schedule Advertisement code
Seventh schedule Restriction on investment
Eighth schedule Investment valuation norms
Ninth schedule Accounting policies and standards
Tenth schedule Initial issue expenses
Eleventh schedule Annual report
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7. Registration of Mutual Fund
Every mutual fund shall be registered with SEBI through an
application to be made by the sponsor in the prescribed
profoma, accompanied by a non refundable application fee of
Rs.2500.
Every mutual fund shall pay Rs.25 lakh towards registration fee
and Rs.2,50,000 p.a. as service fees
Registration will be granted by the Board on fulfilment of
conditions such as
Sponsor having a sound track-record of five years
The net worth of the immediately preceding year being more
than the capital contribution of the sponsor in AMC and the
sponsor showing profits after providing for depreciation
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8. Regulations as to the Trust
A mutual fund shall be constituted in the form of a
trust under the provision.....
Indian Registration Act, 1908(U/S 16 of 1908) and
trust deed containing the provisions laid down by
SEBI.
What percent of the trustees shall be independent
trustees
At least two-third of the trustees shall be
independent trustees(who are not associated
with an associate, subsidiary or sponsor in any
manner).
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9. Regulations as to AMC
The AMC shall have a minimum net worth of....
Rs.10 crore
What percent of the directors of the Board of
Management of the AMC should not be associated
with the sponsor or its subsidiaries or the trustees
At least 50 percent
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10.  Borrowings
It shall not borrow more than 20% of the NAV of
the scheme and for a maximum period of 6
month
 Income distribution
All Mutual Funds must distribute a minimum of 90%
of their profits in a given year.
 Underwriting of securities
Mutual Funds are permitted to enter into an
underwriting agreement after obtaining a Certificate
of Registration from SEBI. The underwriting
obligation of a Mutual Fund shall not exceed the
total NAV of the scheme.
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11. Pricing of units
Particular Open end scheme Close end scheme
Repurchase Not less than 93% of Not higher than
price NAV 107% of NAV
Sale price Not less than 95% of The difference
NAV between repurchase
and sales price
should not exceed
7%
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12. Mutual Fund Concepts
Net Asset value
Net Asset Value is the market value of
the assets of the scheme minus its
liabilities on day of valuation. The per
unit NAV is the net asset value of the
scheme divided by the number of units
outstanding on the valuation date.
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13. Expense Ratio
It is ratio of expenses incurred by a mutual
fund for managing a fund to net assets of the
fund. The expense represent the proportion of the
fund’s assets that means the expense of the
running fund. Expense ratio is charged as a
percentage of net assets & subtracted from the
investor’s investment every year.

14.  Entry and Exit Load
Mutual fund incur certain expenses such as
brokerage, marketing expenses, communication
expenses.These expenses are known as “Load”
and are recovered by fund when it sells the unit
to the investors or repurchases units from with
holders.
Front • When
investors enter
End into scheme
Load
Back • When investor
get out of the
End scheme
Load
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15. Assets Under Management (AUM)
 Total market value of the assets managed by
the investment company on behalf of the
investors is known as Assets Under
Management.
 AUM of a scheme is calculated by multiplying
the net assets value of scheme by the number
of units issued by the scheme.
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16. Mutual Fund Classification
By Structure By Investment Objective
 Open-Ended schemes  Growth / Equity Oriented
Schemes
 Closed-Ended schemes
 Income / Debt Oriented
 Interval schemes
Schemes
 Balanced Funds
 Money Market / Liquid
Schemes
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17. Special Schemes
 Index Fund Schemes
 Sector Specific Fund Schemes
 Tax saving Schemes, for ex: ELSS
Other Schemes
 Fixed Maturity Plans (FMP)
 Exchange Traded Funds (ETF)
 Capital Protection Oriented Schemes
 Gold Exchange Traded Funds (GETF)
 Quantitative funds
 Fund of Funds (FOF)
 Funds Investing Abroad
 Real Estate Mutual Funds
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18. Return & Risk in different type of
Mutual Funds
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19. ADVANTAGES
 Professional Management
 Diversification
 Convenient Administration
 Potential of giving handsome returns
 Liquidity
 Flexibility
 Well Regulated
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20. Cont…
 Low Costs
 Variety of Schemes
 Transparency
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21. DISADVANTAGES
 Management Risk
 Too Much Diversification
 Taxes
 Fees & Commissions
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22. Distribution Channel
Banks
Direct Customer Organised
Selling Distributors
Financial
Advisors
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23. Association of Mutual Funds in India
(AMFI)
 AMFI was established in 1993, realising the demand for a
common forum for Mutual Fund Industry.
 It follows the principle of both protecting and promoting
the interests of mutual funds as well as their unit holders.
 AMFI interacts with SEBI and works according to SEBIs
guidelines in MF industry.
 AMFI represent the Government of India, the RBI and
other related bodies on matters relating to the Mutual
Fund Industry.
 AMFI undertakes investor awareness programme to
promote proper understanding and working of MFs.
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24. Investment Strategies
 Systematic Investment Plan (SIP): Under this a fixed sum is
invested each month on a fixed date of a month.
 Systematic Transfer Plan (STP): Under this plan an investor
invest in debt oriented fund and give instructions to transfer a
fixed sum, at a fixed interval, to an equity scheme of the same
mutual fund.
 Systematic Withdrawal Plan (SWP): As opposed to the
Systematic Investment Plan, the Systematic Withdrawal Plan
allows the investor the facility to withdraw a pre-determined
amount / units from his fund at a pre-determined interval.
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25. Advantages of SIP
 Habit of investing regularly
 Power of Compounding
 Rupee Cost Averaging (RCA)
 Convenience
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26. Power of Compounding in SIP
Started At the Investment Total Amount Corpus at
Investing age of Period Invested the age of
60
Person A 1000/month 30 30 3,60,000 14,17,613
Person B 1000/month 35 25 3,00,000 9,14,839
Note: Rate of return of 8% compounded has been assumed.
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27. HDFC Growth Fund
 Investment Objective: To provide long term capital
appreciation
 Investment Pattern:
 80-100% in Equity
 0-20% in Debt & Money Market
 Benchmark Index: SENSEX
 Past performance:
PERIOD Returns (%) Benchmark returns
(%)
Last 1 Year 18.04 10.94
Last 5 Years 16.35 11.50
Since Inception 22.87 14.41
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28. HDFC Arbitrage Fund
 Investment Objective: To generate income through arbitrage
opportunities between cash and derivative market
 Investment Pattern:
Type of instruments Asset allocation Asset allocation
(Arbitrage available) (Arbitrage not available)
Equity 65-90 0-65
Derivatives (Futures & 65-90 0-65
Options)
Debt Securities & Money 10-35 35-100
market instruments
 Benchmark Index: CRISIL Liquid Fund Index
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29. Cont…
 Benchmark Index: SENSEX
 Past performance:
PERIOD Returns (%) Benchmark returns
(%)
Last 1 Year 7.80 6.21
Last 3 Years 6.48 6.22
Since Inception 6.89 6.28
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30. HDFC Monthly Income Plan
 Investment Objective: To generate regular returns
through investing in Debt & money market instruments
 Investment Pattern:
 25% in Equity
 75% in Debt & Money Market Instruments
 Benchmark Index: CRISIL MIP Blended Index
 Past performance:
PERIOD Returns (%) Benchmark returns
(%)
Last 1 Year 9.11 6.17
Last 5 Years 11.06 7.41
Since Inception 12.18 7.09
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31. THANK
YOU
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