Contents

PAGE

Foreword

I-3

Acknowledgement

I-5

About NISM Certifications

I-7

About the Certification Examination for Mutual Fund Distributors

I-9

CHAPTER 1
CONCEPT AND ROLE OF A MUTUAL FUND

1.1
1.2
1.3

Introduction
Types of Funds
Key Developments over the Years

1
8
21

CHAPTER 2
FUND STRUCTURE AND CONSTITUENTS

2.1
2.2
2.3

Legal Structure of Mutual Funds in India

Key Constituents of a Mutual Fund
Other Service Providers

I-11

25
27
32

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Contents
PAGE

CHAPTER 3
LEGAL AND REGULATORY ENVIRONMENT

3.1
3.2
3.3
3.4
3.5
3.6

Role of Regulators in India

Investment Restrictions for Schemes
Investors Rights & Obligations
Can a Mutual Fund Scheme go bust?
Appendix 1: AMFI Code of Ethics
Appendix 2 : AMFIs Code of Conduct for Intermediaries of Mutual
Funds

37
42
44
49
51
57

CHAPTER 4
OFFER DOCUMENT

4.1
4.2
4.3
4.4

Offer Document NFO, SID, SAI

Key Information Memorandum
Appendix 3: Format of Scheme Information Document (SID)
Appendix 4: Key Information Memorandum

63
71
73
93

CHAPTER 5
FUND DISTRIBUTION AND CHANNEL MANAGEMENT PRACTICES

5.1
5.2

Distribution Channels
Channel Management Practices

99
106

CHAPTER 6
ACCOUNTING, VALUATION AND TAXATION

6.1
6.2
6.3

Accounting and Expenses

Valuation
Taxation

113
125
126


ContentsI-13
PAGE

CHAPTER 7
INVESTOR SERVICES

7.1
7.2
7.3
7.4

Mutual Fund Investors

KYC Requirements for Mutual Fund Investors
PAN Requirements and Micro-SIPs
Additional Documentation Requirements applicable for
Institutional Investors
7.5 Demat Account
7.6 Transactions with Mutual Funds
7.7 Transactions through the Stock Exchange
7.8 Investment Plans and Services
7.9 Appendix 5 : KYC Form for Individuals
7.10 Appendix 6 : KYC Form for Non-individuals
7.11 Appendix 7 : KYC Change Form for Individuals

135
137
139
140
141
142
151
152
161
163
166

CHAPTER 8
RETURN, RISK & PERFORMANCE OF FUNDS

8.1
8.2
8.3
8.4
8.5
8.6

Drivers of Returns and Risk in a Scheme

Measures of Returns
Drivers of Risk in a Scheme
Measures of Risk
Benchmarks and Performance
Quantitative Measures of Fund Manager Performance

169
177
183
192
194
198

CHAPTER 9
SCHEME SELECTION

9.1
9.2

How to choose between Scheme Categories?

How to select a Scheme within a Scheme Category?

204
213

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9.3
9.4

Which is the Better Option within a Scheme?

Sources of Data to track Mutual Fund Performance

216
218

CHAPTER 10
SELECTING THE RIGHT INVESTMENT
PRODUCTS FOR INVESTORS

10.1
10.2
10.3
10.4
10.5
10.6

Financial and Physical Assets

Gold Physical or Financial?
Real Estate Physical or Financial?
Using Mutual Funds to Meet Investor Goals
National Pension System (NPS)
Other Financial Products

221
224
225
226
229
230

CHAPTER 11
HELPING INVESTORS WITH FINANCIAL PLANNING

11.1 Introduction to Financial Planning

11.2 Alternate Financial Planning Approaches
11.3 Life Cycle and Wealth Cycle in Financial Planning

233
238
238

CHAPTER 12
RECOMMENDING MODEL PORTFOLIOS
AND FINANCIAL PLANS

12.1 Risk Profiling

12.2 Asset Allocation
12.3 Model Portfolios
List of Abbreviations
Reading List

245
247
248
251
253