The document discusses mutual funds in India. It defines a mutual fund as a trust that pools savings from investors who share common financial goals. The money is invested in stocks, bonds, and other securities. It then discusses the history of mutual funds in India, from the formation of UTI in 1963 to the current phases of growth. It also outlines the various types of mutual fund schemes, including by structure (open-ended and closed-ended) and investment objective (growth, income, balanced). The document concludes by discussing the advantages and disadvantages of investing in mutual funds in India.

2. INDEX
Mutual fund
Flow Chart
Myths of mutual fund
History of mutual fund
Types of mutual fund
Organization of mutual fund
SEBI Guidelines
Advantage of mutual fund
Disadvantage of mutual fund
Reason to invest
How to invest
NAV

3. WHAT IS MUTUAL FUND ?
A Mutual Fund is a trust that pools the savings of a
number of investors who share a common financial
goals.
 The money thus collected is then invested in capital
market instruments ( shares, debentures and other
securities)
Anybody with an investible surplus can invest in
Mutual funds.

5. MYTHS OF MUTUAL FUND
Mutual funds invest in shares.
Mutual funds are prone to very high risk/ actively traded.
Mutual funds are very new in the financial market.
It is for short term and long term.
One need a large sum to invest in mutual fund.
The good thing about mutual funds is that don't need to pay
attention to them.

6. HISTORY OF INDIAN MUTUAL FUNDS INDUSTRY
The mutual fund industry in India started in 1963
with the formation of Unit Trust of India at the
initiative of the government of India and reserve
bank.
The mutual fund industry can be broadly put into
four phases according to the development of the
sector.

7. Phases of Mutual Funds
First Phase – 1963-1987
Unit Trust of India (UTI) was established in 1963 by an Act of
Parliament. It was set up by the RBI and functioned under the
Regulatory and administrative control of the RBI.
Second Phase – 1987- 1993 (Entry of Public Sector
funds)
SBI Mutual Fund was the first followed by Canbank Mutual fund
(Dec 1987), Punjab National Bank Mutual Fund (Aug 1989), Indian
Bank Mutual Fund (nov 1989), Bank of India (june 1990), Bank of
Baroda Mutual Fund (Oct 1992).
The LIC established its mutual fund in 1989 and GIC in 1990.
At the end of 1993, the mutual fund industry had assets under
management of Rs. 47,004 ccrroorreess

8. CONTINUED...................................
Third Phase – (1993-2003) Entry of Private Sector
Funds)
In 1993, with the creation of SEBI and better regulation, transparency
and liberalization of capital markets (which included the creation of
the NSE and the NSDL), the private sector was allowed to enter the
mutual fund industry.
Kothari Pioneer Mutual Fund (now merged into Franklin Templeton
Investment) was the first private sector mutual fund to be registered in
July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised in 1996. The industry now functions under
the SEBI ( Mutual fund) Regulations 1996.

9. Continued.....................................
Fourth Phase – Since February 2003
UTI was bifurcated into two seperate entities. One is the
“Specified Undertaking of the Unit Trust of India “ with Rs.
29,835 crores.
The second is the UTI Mutual Fund Ltd, sponsored by
SBI,PNB, BOB and LIC. It is registered with SEBI and
functions under the Mutual Fund Regulations.
*** As the end of September, 2004, there were 29
funds, which manage assets of Rs. 153108 crores
under 421 schemes.

11. TYPES OF MUTUAL FUND SCHEMES
BY STRUCTURE
Open – Ended Schemes
Close – Ended Scheme
BY INVESTMENT OBJECTIVE
Growth Schemes
Income Schemes
Balanced Schemes
OTHER SCHEMES
Money Market Schemes
Tax Saving Schemes
Special Schemes
Index Schemes

12. ON THE BASIS OF STRUCTURE
i) Open – Ended Schemes
Open – ended schemes allows investors to buy or sell units at any point
in time. This does not have a fixed maturity date.
ii) Close – Ended Schemes
Close – ended schemes issue the Mutual Funds under many
restrictions. The fund is open for subscription only during a
specified period at the time of launch of the scheme.

13. ON THE BASIS OF INVESTMENT OBJECTIVE
i) Growth Schemes:
In the growth Scheme, all profits made by the fund are re-invested into the
scheme. This money increases the Net Asset Value (NAV). This scheme is
not good one for the investor who wishes to receive regular cash payouts
from his/her investments.
ii) Income or Dividend Schemes
The dividend option does not re- invest the profits made by the fund through its
investments. Instead, it is given to the investor from time to time.
iii ) Balanced Schemes
The aim of Balanced schemes is to provide both growth and regular
income. Such schemes invest both in equities and fixed income
securities in the proportion indicated in their offer documents.

14. Other Mutual Funds Schemes
 i) Money Market Schemes
It is open ended mutual funds whose amount will be only invested in
money market. These funds invest in short term ( one day to one year)
debt obligation such as Treasury bills, certificates of deposit, and
commercial paper.
ii) Tax Saving Schemes
Tax Saving schemes of mutual funds which saves the tax of investors.
Tax benefits to be mentioned under the “objects of the offering”
column.

15. Continued.............................
iii) Special Schemes
This is the mutual funds which has something special
and mutual funds provider will mention this in
invitation form.
iv) Index Schemes
In this schemes, the funds collected by mutual funds
are invested in shares forming the stock Exchange
index. Eg- Nifty Scheme of UTI Mutual fund and
Sensex Index Scheme of Tata Mutual Fund.

16. ORGANIZATION OF MUTUAL FUND IN INDIA

17. SEBI Guidelines on Mutual Funds
* The M.F company must be a registered company.
* M.F shall be established in the form of Trusts under the Indian Trust
Act to be authorized for business by the SEBI
* SEBI has power to withdraw the authorization given to any AMC if it
found to be not serving the interest of investor as well as the capital
market.
* Both AMC & trustees should be treated as 2 seperate legal entities.
* Each Scheme of M.F. Must be compulsory registered with the SEBI
before it is floated in the market.

18. ADVANTAGES OF MUTUAL FUNDS
Professional management
Minimization of risk
Return of potential
Liquidity
Choices of schemes
Tax benefits

19. DISADVANTAGES OF MUTUAL FUNDS
Costs control not in the hands of an investor
Delay in redemption of the units and the money
Difficulty in selecting a suitable fund scheme

20. REASON TO INVEST IN MUTUAL FUND
Expert on your side
Limited risk
Convenience
Investor protection
Quick access to your money
Transparency
Low transaction costs
Tax benefits

21. HOW TO INVEST IN MUTUAL FUNDS
Step 1: Identify the investment need
Step 2: Choose the right mutual fund
Step 3: Select the ideal mix of schemes

22. VALUATION OF NAV
Total Market Value of the Assets – All Liabilities
NAV = -------------------------------------------------------
Number of fund’s units outstanding

23. VARIOUS M.F IN INDIA

24. Conclusion
Mutual fund industry is one of the fastest
growing industry in India and it has already
established in foreign countries. Investing in
Mutual Funds is more safe as compared to
equity as well as it give handsome returns.

25. MOST IMPORTANT THINGS
Mutual Fund investment are subject to
market risks. Please read the Statement of
Additional Information (SAI) and
Scheme Information Document (SID)
carefully before investing.