Final Mutual Fund
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Transcript of Final Mutual Fund
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C O N C E P T, O R G A N I Z AT I O N S T R U C T U R E , A D VA N TA G E S A N D T Y P E S
MUTUAL FUND
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ConceptOrganisation of a Mutual Fund Advantages of Mutual Funds
Types of Mutual Fund SchemesFrequently Used Terms
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Concept
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 marketinstruments such as shares, debentures and other securities.
The income earned through these investments and the capitalappreciation realised are shared by its unit holders inproportion to the number of units owned by them.
Thus a Mutual Fund is the most suitable investment for thecommon man as it offers an opportunity to invest in adiversified, professionally managed basket of securities at arelatively low cost.
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LEGAL STRUCTURE
FUND SPONSPOR/SETTLOR
TRUSTEE INVESTMENTMANAGER &
ADVISOR
UNITHOLDERS
Contd
TRUST
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LEGAL STRUCTURE
INVESTMENT MANAGER & ADVISOR
APPOINTS
CUSTODIANS
REGISTRARS
BANKS
DISTRIBUTORS
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Mutual Fund OperationFlow Chart
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Advantages of Mutual Funds
Professional ManagementDiversificationConvenient AdministrationReturn PotentialLow CostsLiquidity Transparency Flexibility Choice of schemesTax benefits Well regulated
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Types of Mutual Fund Schemes
Wide variety of Mutual Fund Schemes exist to caterto the needs such as financial position, risk toleranceand return expectations etc.
The figure in the next slide gives an overview into theexisting types of schemes in the Industry.
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TYPES OF MUTUAL FUNDS
Type ofMutual Fund
Schemes
Structure Investment
Objective
SpecialSchemes
Open EndedFunds
Close EndedFunds
Interval Funds
Growth Funds
Income Funds
Balanced Funds
Money MarketFunds
Industry SpecificSchemes
IndexSchemesSectoralSchemes
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WHY INVEST IN MUTUAL FUNDS? SAVE THROUGH MUTUAL FUNDS INVEST THROUGH MUTUAL
FUNDSPark surpluses
Short term investment
Easy liquidity
Tax benefits
Have a long term objective
Profile your risk
Select appropriate MFscheme, based on risk return
requirement
Mix of equity and debt
Invest regularly/withflexibility
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RIGHTS AS A MUTUAL FUNDUNITHOLDER
Receive statement of accounts within 6 weeks from the date yourrequest is received by the Mutual Fund
Receive information about the investment policies, objectives,financial position and general affairs of the scheme
Receive dividend within 30 days of their declaration, receiveredemption proceeds within 10 days from the date of the validredemption
Vote in accordance with the Regulations to:- change the Asset Management Company
- wind up the schemes.
To receive communication from the Trustee about change in the
fundamental attributes of any scheme
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Frequently Used Terms
Net Asset Value (NAV) Net Asset Val ue is the market value of the assets of thescheme minus its liabilities. The per unit NAV is the netasset value of the scheme divided by the number of unitsoutstanding on the Valuation Date.
Sale PriceIs the price you pay when you invest in a scheme. Alsocalled Offer Price. It may include a sales load.
Repurchase PriceIs the price at which a close-ended scheme repurchasesits units and it may include a back-end load. This is alsocalled Bid Price.