mutual fund mfs

7/28/2019 Mutual Fund Mfs

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Leading asset management Companies


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MUTUAL FUNDA mutual fund is a special type of investment

institution that acts as an investment conduit.

It pools the savings, particularly of the relatively smallinvestors, and invests them in a well diversifiedportfolio of sound investment.

Mutual funds issue securities(units)to the

investors(unit-holders) in accordance with thequantum of money invested by them.


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HISTORY The Evolution

The formation of Unit Trust of India marked theevolution of the Indian mutual fund industry in the year

1963. The government of India set up Unit Trust of India in 1963

by an act on parliament.

UTI functioned under the regulatory and administrativecontrol of the Reserve Bank of India till 1978.

The Industrial Development Bank of India took over theregulatory and administrative control that year.

UTI continued to be the sole mutual fund until 1987.


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The first scheme launched by UTI was Unit Scheme 1964 orthe infamous Unit 64.

The second phase of the mutual fund industry began withthe public sector banks and Life Insurance Corporation ofIndia and General Insurance Corporation of India settingup their own mutual funds in 1987.

It was only in 1993 that private players were allowed to open

shops in the country Finally, in 1993 Kothari Pioneer (now merged with

Franklin Templeton) became the first private sector mutualfund to start operations in the country.


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A host of private sector as well as foreign funds set upshop after that.

In 1996, a comprehensive and revised Mutual Fundregulation was put in place.

The industry now functions under SEBI (MutualFund) regulations, 1996.

Today, 32 mutual funds collectively manage Rs6713575.19 cr under hundreds of schemes.


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MeaningDefinition

A mutual fund is a trust that pools the savings of a

number of investors with common financial goals. Thecollected money is invested in various instruments likedebentures, shares, etc. The income generated fromthese instruments and the capital appreciation is

shared by the investors in proportion to the number ofunits owned by them


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A mutual fund is set up by a sponsor.

However, the sponsor cannot run the fund directly.

He has to set up two arms: a trust and AssetManagement Company.

The trust is expected to assure fair business practice,while the AMC manages the money.

The mutual fund collects money directly or throughbrokers from investors. The money is invested invarious instruments depending on the objective of thescheme.


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The income generated by selling securities or capitalappreciation of these securities is passed on to theinvestors in proportion to their investment in the scheme.

The investments are divided into units and the value of theunits will be reflected in Net Asset Value or NAV of theunit.

NAV is the market value of the assets of the scheme minus

its liabilities. The per unit NAV is the net asset value of the scheme

divided by the number of units outstanding on thevaluation date.


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Various Mutual Fund schemes Mutual fund schemes are classified on the basis of its

structure and investment objective.1. By Structure

Open-ended funds:Investors can buy and sell units of open-endedfunds at NAV-related price every day.

Open-end funds do not have a fixed maturity andit is available for subscription every day of the year.

Close-ended funds:These funds have a stipulated maturity period, which

may vary from three to 15 years. They are open forsubscription only during a specified period.


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Investors have the option of investing in the schemeduring initial public offer period

Interval Funds:

These funds combine the features of both open andclose-ended funds. They are open for sale and repurchaseat a predetermined period.

2. By Investment objective

Growth funds: They normally invest most of their corpusin equities, as their objective is to provide capitalappreciation over the medium-to-long term. Growthschemes are ideal for investors with risk appetite


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Income funds:The aim of these funds is to provide regular and steady

income to investors. They generally invest in fixed incomesecurities like bonds, corporate debentures, and government

securities.. Balanced funds:

The objective of balanced funds is to provide growth alongwith regular income. They invest in both equities and fixedincome securities as indicated in the offer documents.

Money market funds:These funds strive to provide easy liquidity, preservation

of capital and modest income. MMFs generally invest in safershort-term instruments like treasury bills, certificates of deposit,commercial paper and inter-bank call money.


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3. Other schemes Tax saving schemes:

They generally have a lock-in period of three years.

They are ideal for investors looking to exploit tax rebates aswell as growth in investments. Special schemes:

These schemes invest only in the industries specifiedin the offer document. Examples are InfoTech funds, FMCG

funds, pharmacy funds, etc. Index funds:

Index Funds invest their corpus on the specifiedindex such as BSE Sensex, NSE index, etc. as mentioned inthe offer document.


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Why invest through a Mutual Fund1. Affordability:

Mutual funds allow you to start with small

investments. For example, if you want to buy a portfolio of blue

chips of modest size, you should at least have a fewlakh of rupees. A mutual fund gives you the same

portfolio for meagre investment of Rs 1,000-5,000.


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2. Professional management:

The major advantage of investing in a mutual fund is

that you get a professional money manager for a smallfee.

You can leave the investment decisions to him andonly have to monitor the performance of the fund at

regular intervals


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3. Diversification:

Considered the essential tool in risk management,mutual funds makes it possible for even small

investors to diversify their portfolio.A mutual fund can effectively diversify its portfolio

because of the large corpus.

4) Convenience:

5) Mutual funds offer tailor-made solutions likesystematic investment plans and systematicwithdrawal plans to investors, which is veryconvenient to investors.


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Investors also do not have to worry about theinvestment decisions or they do not have to deal withtheir brokerage or depository, etc. for buying or sellingof securities.

5) Cost effectiveness:

A small investor will find that a mutual fund route is

a cost effective method. AMC fee is normally 2.5% and they also save a lot of

transaction costs as they get concession frombrokerages


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6) Liquidity:

You can liquidate your investments anytime you want.Most mutual funds dispatch checks for redemptionproceeds within two or three working days.

7) Tax breaks:

You do not have to pay any taxes on dividends issued

by mutual funds.8) Transparency: Mutual funds offer daily NAVs of

schemes, which help you to monitor yourinvestments on a regular basis.


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Different agencies involved in MFA mutual fund is set up in the form of a trust, which

has the following members

1. Sponsor

2. Trustee

3. Asset Management Company(AMC)

4. Custodian


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Sponsor Who is/are like promoters of the company. Sponsor must contribute at least 40% of the net worth of the

Investment Managed and meet the eligibility criteria prescribed under

the SEBI(Mutual Funds) Regulations, 1996. The Sponsor is not responsible or liable for any loss or shortfall

resulting from the operation of the Schemes beyond the initialcontribution made by it towards setting up of the Mutual Fund.

Trustee The trustee of the MF hold its property for the benefit of the unit

holders. The Mutual Fund is constituted as a trust in accordance with the

provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.


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AMC (ASSET MANAGEMENT COMPANY) It manages the funds by making investments in various types of

securities. The AMC is appointed by the Trustee as the Investment Manager

of the Mutual Fund. The AMC is required to be approved by the Securities and

Exchange Board of India (SEBI) to act as an asset managementcompany of the Mutual Fund.

At least 50% of the directors of the AMC are independentdirectors who are not associated with the Sponsor in anymanner.

The AMC must have a net worth of at least 10 crore at all times


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Custodian

They holds the securities of various schemes ofthe fund in its custody . The bank or trust companythat maintains a mutual fund's assets, including itsportfolio of securities or some record of them Providessafe keeping of securities but has no role in portfoliomanagement.


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What is NAV?

NAV or Net Asset Value of the fund is the cumulativemarket value of the assets of the fund net of itsliabilities. NAV per unit is simply the net value of assetsdivided by the number of units outstanding. Buying

and selling into funds is done on the basis of NAV-related prices.

NAV is calculated as follows:

NAV=

Market value of the fund's investments + Receivables+Accrued Income- Liabilities-Accrued Expenses

________________________________Number of Outstanding units


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How often is the NAV declared?

Declared at least once a week. Many Mutual Funddeclare NAV for their schemes on a daily basis.

As per SEBI Regulations, the NAV of a scheme shall becalculated and published at least in two dailynewspapers at intervals not exceeding one week.

However, NAV of a close-ended scheme targeted to a

specific segment or any monthly income scheme(which are not mandatorily required to be listed on astock exchange) may be published at monthly orquarterly intervals.


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What is Entry Load?

The non refundable fee paid to the Asset ManagementCompany at the time of purchase of mutual fund unitsis termed as Entry Load.

Entry Load is added to the NAV (purchase price)when you are purchasing Mutual Fund units.


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Latest Circular

The Securities Exchange Board of India (SEBI), hasinstituted a new regulation which will take effect fromAugust 1, 2009, which has an immediate impact on

what you pay whenever you buy a mutual fundscheme.

Technically speaking what all buyers of mutual fundschemes were paying the distributors, in industry

jargon is called entry load. Typically this is 2.25% ofthe total amount taken from the amount you investedin most Equity based mutual fund schemes.


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To illustrate this better by way

of an example Iet us say you invested Rs. 1,00,000/- in an equity based mutual

fund scheme. Out of this Rs. 1,00,000, an amount ofRs. 2,250/- (i.e. 2.25%) was earmarked as sales commission to the

distributor of the scheme. What this means is the amount thatyou invested is actually Rs. 97,750/-(i.e. Rs. 1,00,000/- minus Rs. 2,250/-).

With effect from August 1, 2009, your entire Rs. 1,00,000/- will beinvested in the mutual fund scheme that you choose. This will

immediately improve your return by 2.25% from this investmentin the first year itself.


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How will the distributor get his

revenue In accordance with the new SEBI regulations, the

distributor will now have to communicate to investorsany upfront commission payable to distributors by the

investor. Such fees will be based on investorassessment of various factors including servicesrendered by the distributor.

While each distributor will have his own charges thathe has to mandatorily communicate to his customers


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What is Exit Load?

The non refundable fee paid to the Asset ManagementCompany at the time of redemption/ transfer of unitsbetween schemes of mutual funds is termed as exit

load. It is deducted from the NAV(selling price) at thetime of such redemption/ transfer. Exit Load varies fordifferent schemes and is generally charged as apercentage of NAV. The Exit load normally variesbetween 0.25% to 2% of the redemption value. Somemutual funds however do not charge any exit load.Such mutual funds are referred to as 'No Load Funds'.


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What is Purchase price? Purchase price is the price paid by you to purchase a

unit of a mutual fund scheme. If the fund levies anentry load, then the purchase price would be equal to

the sum of the NAV and the entry load levied.


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What is redemption price? Redemption price is the price received on selling units

of open-ended scheme. If the fund does not levy anexit load, the redemption price will be same as the

NAV. The redemption price will be lower than the NAVin case the fund levies an exit load.


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What is repurchase price? Repurchase price is the price at which a close-ended

scheme repurchases its units. Repurchase can either beat NAV or can have an exit load.


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What is a Switch? Some Mutual Funds provide the investor with an

option to shift his investment from one scheme toanother within that fund. For this option the fund may

levy a switching fee. Switching allows the Investor toalter the allocation of their investment among theschemes in order to meet their changed investmentneeds, risk profiles or changing circumstances during

their lifetime.


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What is Shut-Out Period? After the closure of the Initial Offer Period, the Trustee reserves a right to declareShut-Out period not exceeding 5 days at the end of each month/quarter/half-year, asthe case may be, for the investors opting for payment of dividend under the respectiveDividends Plans.

To facilitate the AMC/the Registrar to determine the Units of the unitholders eligible

for receipt of dividend under the various Dividend Options. Further, the Shut-Outperiod will also help in expeditious processing and despatch of dividend warrants. During the Shut-Out period investors may make purchases into the Scheme but the

Purchase Price for subscription of units will be calculated using the NAV as at the endof the first Business Day in the following month/quarter/half-year as the case may be,depending on the Dividend Plan chosen by the investor.

If investments are made during the Shut -Out period, Units to the credit of theUnitholder's account will be created only on the first Business Day of the followingmonth/ quarter/half year, as the case may be, depending on the dividend plan chosenby the investor.

The Shut-Out period applies to new investors in the Scheme as well as to Unitholdersmaking additional purchases of Units into an existing folio.

The Trustee reserves the right to change the Shut-Out period and prescribe new Shut-Out period, from time to time


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REGULATORY MECHANISM The RBI had issued a set of guidelines in 1987 for bank

sponsored MF.

In 1991, the government of India initiated the process

of creating a common regulation for all MF and topermit the entry of private mutual funds.

In October 1991, the SEBI issued guidelines for theformation of AMCs for MFs.

In 1993, the SEBI issued comprehensive mutual fundregulations.

This was replaced by another framework in 1996 bySEBI


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The main elements of the SEBI regulatory mechanismof mutual funds are:

1. Registration of MF with SEBI

2. Constitution and management of MF & operation oftrusts

3. Constitution and management of AMC(asset mgt

company) and custodian4. Schemes of MFs.

5. Investment objectives and valuation policies,


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6) General obligations

7) Inspection and audit

8) Procedure for action in case of default.


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1.Registration of MF The MF must be registered with SEBI .

The application for registration, together with a nonrefundable fee of Rs 25000 should be made in theprescribed form .

The procedure prescribed by the SEBI is out lined


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SEBI MF regulation Registration of MFConstitution and

mgt of MF &operation of trusts

Constitution and

mgt of AMC andcustodian

Schemes of MFs.Investment objectives andvaluation policies,

General obligationsInspection and auditProcedure for action incase of default

SEBI MF GuidelinesResponsibilities of AMCs &trustees participation by MF inderivative trading, stocklending schemeAdvertisement by MF valuation of securitiesIntroduction ofbenchmarkCode of conduct for MF

intermediariesInvestment in unlistedEquity sharesInvestment in foreignsecuritiesRisk mgt for MF

MF

schemes/products


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ELIGIBILITY CRITERIA The eligibility criteria for registration of sponsors who can

establish MF are given below:

1. Carrying on business in financial services for at least 5

years2. Positive net worth in all the immediately preceding 5

years

3. Net worth in the immediately preceding year should bemore than the capital contribution of the sponsor in theasset mgt company &

4. Profit after providing for depreciation , interest and tax inthree out of the immediately proceeding 5 years,including the fifth year


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2) The sponsor should contribute at least 40 % of thenet worth of the net worth of the AMC

3) The sponsor to be employed by the MF should not

have been guilty of any fraud f an offence involvingmorale guilty of any economic offence

4) Appointment of trustee company to act as trustee forthe Mf who hold the property of the MF in trust for

the benefit of the unit holders5) Appointment of AMC set up under the provision of

the companies act to manage the MF and perate itsscheme.


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Terms and conditions of

registration1. The trustee/custodian/sponsor/AMC/would have to

comply with the SEBI regulations

2. MF would immediately inform the SEBI if any info.Submitted were misleading which have been bearingon the registration granted by it

3. Payment of registration fee of Rs 25 lakh.


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2.Constitution and mgt of MF and

operation of trustsA MF can be constituted in the form of a trust should

be in the form of a deed duly registered

The trust deed should not contain

1. Limiting the obligations of the trust in relation toany MF

2. Indemnifying the trustees for loss caused to the unit

holders by their acts of negligence/omission


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Appointment of trusteeAny person can be appointed as trustee if he

1. He is a person of ability, integrity and standing

2. He has not been guilty of moral turpitude3. He has not been convicted of any economic

offence/violation of any securities laws such as theSEBI act 1992

4. He has furnished the particulars specified in form C.


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An AMC or employer are not eligible to at as trustee. Atrustee of one MF is eligible to be appointed as trusteeof another MF only if:

1. Such person is an independent trustee

2. The MF of which he is a trustee gives approval forsuch an appointment.


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Rights & obligations of trustee. The trustee and the AMC should with the prior

approval of the SEBI, enter into investment mgtagreement containing, in addition to the clauses

specified below. Content of investment mgt agreement

The AMC appointed by the trustee, with the priorapproval of the SEBI , would be responsible for

floating schemes of MF after approval of the same bythe trustees, and for managing the funds mobilizedunder various schemes, in accordance's with theprovision of the trust deed & the SEBI regulation.

3 Constitution And Management


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3.Constitution And Management

OF An Asset Management

Company Sponsors of mutual funds or trustees would appoint

the AMC with the prior approval of SEBI.

Its appointment can be terminated by a majority of

trustees or by 75% of the unit holders of the scheme.

Any change in appointment requires prior approval ofSEBI as well as unit holders.


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Cont

Eligibility Criteria:

For approval of the AMC by the SEBI , the applicanthas to fulfill the following conditions:

An existing AMC should have sound trackrecord/general reputation and fairness in transactionsand should be a fit and proper person.


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Cont. The directors of the AMC should have adequate professional

experience in finance and financial service related fields andhave not been found guilty of moral turpitude or convicted ofany economic violence or violation of secruities laws.

The key personnel of the AMC have not been found guilty ofmoral turpitude or been convicted of economic offence or

violation of secruities laws or mutual fund or any intermediaryduring the period when its registration has been cancelled at anytime by SEBI.


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Cont

The board of directors of such AMC has at least 50%directors who are not associated in any manner withthe sponsor or any of its subsidiaries or the trustees.

The chairman of AMC is not a trustee of any mutualfund.

The AMC has a net worth of not less than Rs 10 crore.


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Terms and Conditions:

The approval granted by SEBI to the AMC is subject to followingconditions:

Any director of AMC would not hold the office of the director inanother AMC unless he is an independent director and theapproval of the Board of AMC.

The AMC should forwith inform the SEBI of any material changein the information or particulars

previously furnished.


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The appointment of director of an AMC can be made only withprior approval of the trustees.

The AMC undertakes to comply with these regulations.No change can be made in controlling interest of the AMCunless(1)prior approval of trustees and SEBI isobtained(2)written communication about proposed change sentto each unit holder and an advertisement is given in newspaperhaving nationwide circulation(3)unit holders are given an optionto exit prevailing NAV.


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The AMC would furnish such information anddocuments to the trustees as and when required bythem.


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Restrictions on Business Activities:

The AMC cannot act as trustee of any mutual fund .

The AMC cannot undertake any other business activities except

activities in nature of portfolio management services,management and advisory services to offshore funds, pensionfunds, financial consultancy and exchange of research oncommercial basis if any of such activities are not in conflict withthe activities of the mutual fund.


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The AMC should meet capital adequacy requirementsseparately for each activity and obtain separateapproval.

The AMC is not permitted to invest in any of itsschemes unless full disclosure of its intention to investhas been made in the offer document .

The AMC is not entitled to charge any fees on its

investment to such scheme.


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Obligations: AMC must take reasonable steps and exercise due diligence to ensure

that investment of funds pertaining to any scheme is not contrary toprovisions of regulations and trust deed.

It should (1) exercise due diligence and care in all its investmentdecisions as would be exercised by other engaged in samebusiness.(2)be responsible for the acts of commission or omission by itsemployees or persons whose services has been procured.(3)submit tothe trustees quarterly reports of each year of its activities.


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The trustees at the request of the AMC may terminate its assignmentsat any time which would become effective only after trustees haveaccepted the termination of assignments and communicated theirdecision in writing.

The chief executive officer of the AMC should ensure that (1)mutualfund complies with all provisions of SEBI mutual fund regulations/circulars issued from time to time.(2)investment made by the fundmanagers are in interest of unit holders. He would also be responsiblefor overall risk management function of the mutual fund.

The fund managers should ensure that funds of the scheme are

invested to achieve the objectives of the scheme and interest of the unitholders.


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Mutual fund discloses at the time of declaring half yearlyresults(1)any underwriting obligations with respect to issue ofsecurities of associate companies.(2)development if any(3)description in issue lead managed by associatecompanies(4)subscription to any issue of equity /privateplacement basis where the sponsor /its associates companieshave acted as arranger /manager. It has to file with trustees thedetails of transactions in securities by its key personnel in theirown name or on behalf of AMC and also report to SEBI as and

when required.


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The AMC is required to file with trustees and SEBI (a) detailedbio-data of all its directors along with their interest in othercompanies within fifteen days of their appointment. (b) anychange in the interest of directors every six months (c) quarterlyreport to the trustees giving details and adequate justificationabout purchase /sale of securities of the group companies ofsponsor /AMC by the mutual fund, during relevant quarter.


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Appointment Of Custodian The mutual fund should appoint a custodian to carryout the custodial services for the scheme and sendintimation of the same to the SEBI within fifteen days

of appointment. In case of gold exchange traded fund scheme ,the

assets may be kept in custody of bank registered as acustodian with SEBI.


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Agreement with custodian:

The mutual fund should enter into custodianagreement should contain the clauses that are

necessary for the efficient and orderly conduct of theaffairs of custodian.


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4. Schemes of Mutual Fund The stipulation of SEBI regulations pertaining to

mutual fund schemes are outlined below:

Procedure:

An AMC can launch a scheme after its approval by thetrustees and filing of the document with the SEBItogether with filing fee of Rs 25,000.


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Disclosure in the offer document:

The offer document should contain adequate disclosure to enable theinvestors to make an informed investment decision includingdisclosure regarding maximum investment proposed to be made by the

scheme in the listed securities of the group company of the sponsor. The SEBI can suggest modification in the offer document ,in the

interest of the investors which would be binding on the AMC.

If no modifications are suggested within 21 working days from the dateof filing, it may issue offer document to the public.


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No one should issue form of application for units of amutual fund unless the form is accompanied by thememorandum containing such information as

specified by SEBI.The AMC should provide an option to unit holders to

nominate a person in whom the units held by himwould vest in the event of his death.


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In case of joint holding ,the joint unit holders maytogether make such nomination in the event of deathof all joint unit holders.


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Advertisement Material:

An advertisement includes every form of advertisingwhether in publication ,by display of notices, signs,

labels or by means of circulars, catalogues or otherdocuments by an exhibition of pictures orphotographic films ,by way of sound broadcasting oron television or in any other manner.


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All advertisement pertaining to mutual fund scheme shouldconfirm to advertisement code and should be submitted to SEBI

within 7 days from the date of issue.Advertisement for each scheme should disclose investment

objectives.All advertisement issued by a mutual fund or its sponsor or AMC

should state all investments in mutual and securities are subjectto market risk and the net asset value of the scheme may go upor down depending upon the factors and forces affecting thesecurities market.


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They should also disclose prominently the risk factorsas stated in the offer document along with warningdocument such as:

Is only the name of the scheme and

does not in any manner indicate either the quality ofthe scheme ,its future prospects or returns.


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Please read the offer document before investing.

No advertisement should state that the scheme has beensubscribed or over subscribed during period it is open forsubscription.

Advertisement on the performance of a mutual fund or its AMCshould compare the past performance only on the basis of perunits of statistics as per the regulations.

The offer document and advertisement should not bemisleading.


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Close ended schemes

A close-ended scheme is a scheme of a mutual fund inwhich the maturity period is specified.Every close-ended scheme has to be listed on a

recognized stock exchange within six months from theclosure of the subscription.

However, listing of a closed-ended scheme is notmandatory if:

a) It provides for periodic repurchase facility to all theunit holders, with restriction, if any, on the extent ofsuch repurchase;


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b) It provides for monthly income or caters to specialclasses of persons like senior citizens, women,children, widows or physically handicapped or any

special class of persons, providing for repurchase ofunits at regular intervals.

c) The details of such repurchase facility are clearlydisclosed in the offer document &

d) It opens for repurchase within a period of six monthsfrom the closure of subscription.

Repurchase of Close-ended


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p

Schemes

The AMC may at its option repurchase or reissue therepurchased units of a close-ended scheme.

The units of such schemes may be open for sale or

redemption at fixed predetermined intervals if themaximum and minimum amount of sale orredemption of the units and the periodicity of suchsale or redemption have been disclosed in the offer

document.All the close-ended schemes should be fully redeemed

at the end of the maturity period.


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The units of such scheme may be converted into anopen-ended scheme if:

a) The offer document of such scheme discloses the

option and the period of such scheme discloses theoption & the period of such conversion; or

b) The unit-holders are provided with an option toredeem their units in full, &

c) The initial issue expenses have been amortized fully.


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Offering Period

No scheme of a mutual fund, other than the initialoffering period of any equity linked savings scheme,can be open for subscription for more than 45 days.


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Computation of Net Asset Value

Every mutual fund should computed the NetAsset Value (NAV) of each scheme by dividing the net

asset of the scheme by the number of unitsoutstanding on the valuation of date.


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Pricing of units

The price at which the units may be subscribedor sold and repurchased by the mutual fund

should be made available to the investors. In case of an open-end scheme that offer units for

ale without specifying any duration of redemption, it should publish the sale and purchase price of

units , at least once a week,in a daily newspaperwith all India circulations.


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6. General obligations Maintain proper book of accounts and recordsEvery AMC should keep , maintain and preerve

proper book of accounts, records and documents for

eight years, for each scheme so as to explain itstransactions and disclose at any point of time thefinancial possion.


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Financial Year

The financial year for all the schemes should endas of March 31st of each year. However, for a newscheme commencing during a financial year , thedisclosure and reporting requirements wouldapply for the period beginning from the date of its

commencement and ending on March 31st

of thatfinancial year.


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Limitations of fee and expenses on Issue ofschemes

All expenses should be clearly identified and

appropriated in the individual schemes The AMC may charge the mutual fund with

investment and advisory fee that should be fullydisclosed in the offer document.

Any excess over the 6% initial issue expenseswould have to be borne by the AMC.


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Cont

The total expenses of the scheme,excluding issue orredemption expenses , whether initially borne by themutual fund or the AMC, but including the investmentmanagement and advisory fee, are subjected to the

following limits : (1) on the first Rs 100 crore of the average weekly net asset

,2.5% (2) on the next Rs 300 crore of the average weekly net

asset,2.25%

(3) On the next Rs 300 crore of the average weekly netasset,2% (4) On the balance sheet of the assets, 1.75%


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Declaration of dividends

A mutual fund may declare dividends inaccordance with the offer document are subject to any

guidelines specified by the SEBI.

Annual Report


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Annual Report Every mutual fund or AMC must prepare in respect

of each financial year an annual report and annualstatement of accounts of the schemes and themutual fund.

some of the basic things to examine:

Performance. Since the fund is required to compareits return on your investment with an appropriatebenchmark, you will see if your fund did better orworse than its peers.

New Management.If the funds manager haschanged, this may be good or bad. If the track recordof the old manager was part of your reason forchoosing the fund, you might want to check out the

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mutual fund mfs

Documents