Mutual Fund is an organisation,which collects the small savings from general public with the aim to invest the

same in the securities. The profit resulting from the investment is distributed among the contributors called as unit holders.

1.Sponsor 2.Mutual Fund Organization(Trust) 3.Asset Management Company(AMC) 4.Custodian

1.Sponsor:It is the organisation which set up the mutual fund organisation, formulation of mutual fund is according to the rules laid down by SEBI. 2.Trust:This is established by the sponsor, and it function as Mutual fund', mutual fund organization in the form of a Trust'. This trust has the task of launching mutual fund schemes, through which savings of investors are collected and pooled with the objective of making investment in the stock market/money market. The fund so collected are called CORPUS 3.Asset Management Company (AMC):It is a team of professionals and experts having knowledge about the investment activities. An AMC is responsible for investment of the funds collected by the mutual fund trust. Every mutual fund has its own AMC.

CUSTODIAN :Custodian is an organization ,which keeps the securities in safe custody on the behalf of mutual fund organization. Following functions are generally performed by a custodian 1.Post trading activities 2.Safe keeping of the securities 3.Collection of dividends and benefits on the behalf of mutual fund. 4.Maintaining the account of holding.

OPEN ENDED FUNDS: An open end fund is one that is available for subscription all through the year. These do not have a fixed maturity. Investors can conveniently buy and sell units that Net Asset Value (NAV )related prices. The key feature of open ended schemes is liquidity. Sale price = NAV + Entry Load Re-purchase price = NAV Exit Load

CLOSE ENDED FUNDS : A close end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specific period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or the sell the units of the scheme on the stock exchanges where they are listed , or investors can sell these if repurchase option is provided.

The aim of growth funds is to provide capital appreciation over the medium to long term. Such schemes normally invest a majority of their corpus in equities. Growth schemes are ideal for investors having a long term outlook seeking growth over a period of time.

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in fixed income securities such as bonds, corporate debentures and Government securities. Income funds are ideal for capital stability and regular income.

The aim of balanced funds is to provide growth and regular income. Such schemes periodically distribute a part of their earnings and invest both in equities and fixed income securities in the proportion indicated in their offer documents.

The aim of money market funds is to provide easy liquidity, preservation of capital and moderate income. These schemes generally invest in safer short term instruments such as treasury bills, certificates of deposit, commercial paper and inter bank call money. Returns on these schemes may fluctuate depending upon the interest rates prevailing in the market. These are ideal for Corporate and individual investors as a means to park their surplus funds for short periods.

Load funds is one that charges a commission for entry or exit. That is ,each time you buy or sell units in the fund ,a commission will be payable.

A taxation fund is basically a growth oriented fund.But,it offers tax rebates to the investors. It is suitable to salaried people who want to enjoy tax rebates particularly during the month of February and March.

Index funds refer to those funds where the portfolios are designed in such a way that they reflect the composition of some broad based market index. This is done by holding securities in the same proportion as the index itself. The value of these index linked funds will automatically go up whenever the market index goes up and vice versa.

Off shore mutual funds are those funds which are meant for non residential investors. The sources of investments for these funds are from abroad. So, they are regulated by the provisions of the foreign countries where those funds are registered.

The repurchase price is always linked to the Net Asset Value be called (NAV).The NAV is nothing but the market price of each unit of a particular scheme in relation to all the assets of the scheme. It can otherwise be called the intrinsic value of each unit. This value is a true indicator of the performance of the fund. If the NAV is more than the face value of the unit, it clearly indicates that the money invested on that unit has appreciated and the Fund has performed well.

NAV = Market value of cash investment under the scheme + Cash and Bank Balance + Receivable Payables divided by Number of units under the scheme.

Online Trading System has been introduced in the Indian Stock Market in 1995-96.National Stock Exchange of India was the first to introduce online trading through internet and stock exchange, Mumbai was the second in the line.

Step one: The investor approaches the brokers office and sees the current quotation as displayed on the computer system(traders workstation).The computer always displays the best buy and best sell quotation for each share/debenture. The best buy quotation(price) from among all the buying orders in the system is the one, which has the highest price. On the contrary ,the best selling quotation from among all the sales orders in reflected on the computer screen is the one which has lowest price.

Step two: The clients order is entered by the boker on the computer, which is communicated to the main frame of the stock exchange. Back ground processing in the main frame allows only one data set either to enter or exit the main frame. Every order entering the system is given a unique time and serial number, called order number.

Step Three: The system(mainframe) does the automatic matching of orders. As soon as the price quotations are matched, orders get converted into trade. Step four: Upon automatic matching , trades are communicated to respective brokers immediately on the computers of the brokers.

Special Features of online trading: 1.Order can be modified or cancel until these are not matched and become trade 2.System does not display the identification of another broker who has entered the order, or with whom trade is taking place. 3.Special condition for the execution of trades can be specified like All or None',' Fill or Kill', validity date etc.

Confirmation of transaction: After the execution and reporting, it is necessary to give a confirmation to the client by issuing a contract note. Issuance of contract note makes the claim of the broker and the client against each other a legal and valid claim. The contract note shall contain the details of the trade-type of securitiy,quantity,market rate,brokerage,other charges,tax,settlement details and all the relevant information.

Exchange between client and broker: A broker executes transaction on behalf of his clients, but stock exchange considers this as the obligation of broker to settle the transaction on the settlement date. Therefore a broker is responsible for the settlement of transactions executed by him. To meet his obligation at the clearing house of the exchange, the broker takes money/shares from his clients before the PayIn-Day. Clearing Function: By clearing function we mean exchange of money and shares between brokers.Practically,brokers do not exchange the delivery or money value; instead these are exchanged through the intervention of Clearing house'. Every stock exchange has a clearing house, which facilitates the settlement of net position of brokers as follows:

At preset orders are executed under rolling settlement system with the convention of T+2 hence on the day of trade buyer is required to pay the money to his broker and seller is required to deliver the cheque of his beneficiary a/c(depository a/c) so as to execute the settlement between broker and client. The second working day after the day of trade is pay-in-day. On this day buying broker has the obligation to pay money in his clearing bank a/c and selling broker is to deliver the shares in his Clearing depository a/c. The same day is the pay-out-day accordingly buying broker receives shares in his clearing depository a/c and selling broker receives money in his clearing bank a/c. After the pay out buying broker has the responsibility to deliver the shares in the beneficiary a/c of buyer and selling broker has the responsibility to make the payment to seller.