The document discusses the concept, role, advantages, disadvantages and history of mutual funds in India. It covers the different phases of growth of the MF industry in India. It also summarizes the types of mutual funds, their structure and constituents like trustees, AMC, custodian and various regulations governing them.

1. CONCEPT AND ROLE OF MUTUAL FUND

29. Legal and Regulatory Environment

37. OFFER DOCUMENT

52. Fund Distribution & Sales Practices

53. Investor Community Institutional Investors Individual Investors HNIs Retail

56. Role of the Distribution Channels “ MFs are primarily vehicles for large collective investments , based on the principle of pooling the funds from a large number of investors” Hence, “ Majority of schemes are targeted at the retail level, from where a substantial portion of investment takes place” So, “ Distribution network becomes critical in view of the spread of investor community”

57. Types of Distribution Channels: 1.Individual Agents 2. Distribution Companies 3. Banks / NBFCs 4. Direct Marketing ( By the Sales Officers) 5.Current Distribution patterns - Non UTI funds rely on the 2&3 above.

67. Accounting, Valuation and Taxation

78. Provision for NPAs 3 months after classification as NPA : 10% 6…………………………………… : 30% 9…………………………………… : 50% 12………………………………….. : 75% 15………………………………….. : 100%

116. Face value : Rs. 1000 Coupon : 10% Tenure : 5 years Interest payment : Yearly Price : 1050 Cashflows are as under: 100 100 100 100 (100 + 1000) 1050 = + + + + (1 + r) 1 (1 + r) 2 (1 + r) 3 (1 + r) 4 (1 + r) 5 Solve for ‘r’ r = 8.72% = Yield to maturity Yield calculation

117. Face value : 1000 Coupon : 10% Tenure : 5 years Interest Payment : Yearly Yield : 8.72% Cashflows are as under: Price : 100 100 100 100 (100 + 1000) + + + + (1+8.72%) (1+8.72%) 2 (1+8.72%) 3 (1+8.72%) 4 (1+8.72%) 5 Solving for Price : Rs. 1050 Valuing (Pricing) the securities

130. Performance Measurement (cont’d) Sharpe Ratio measure fund performance in terms of total risk Sharpe index = r t - r * / sd t r t = average return on portfolio t r * = risk less rate of return sd t = standard deviation of the returns of the portfolio t

131. Treynor Ratio measure the fund performance in term of market risk : Treynor index = r n - r * / beta n r n = average return on portfolio n r * = risk less rate of return beta n = beta coefficient of portfolio

133. Price/Earning multiple is also another risk measure: Fund P/E ratio = Weighted average of P/E ratio of all the stock held in the portfolios P/E = Market price per share / Earning per share

138. Principles of financial planning and investment advisory

139. Classification of investment products

140. Investment Products are classified on the basis of: 1. ASSETS: Physical Assets and Financial Assets 2. FINANCIAL GUARANTEE: Guaranteed and Non - Guaranteed Investments

141. Examples of Physical Assets: Gold and Real Estate Examples of Financial Products by Issuer: Banks, Corporates, Government, Financial Institutions, Mutual Funds and Insurance Companies

144. Financial Products Available

147. Investor Perspective of Mutual Funds Vs. Other Products

148. Contd…...

173. Investors rights and services The rights of investors under the scheme Access to information Investor friendly services SEBI stipulation regarding despatch of dividend/repurchase/maturity /cheques

191. Wishing You all the success