INVESTOR SERVICES BY MUTUAL

FUNDS

 Applying and Redeeming for

Mutual Fund Units
 Investment Plans and Services
 IMPORTANCE OF INVESTOR
SERVICE

 Besides good returns of funds…

 Most important advantage of MF
is…“CONVENIENCE”
 Depends upon
 type of service provided
 variety of service provided
PROCEDURE FOR PURCHASE OF
UNITS

 Read the Offer Document

 Description of the procedure for
purchase of units
 acceptable mode and permissible places
of payment
 Refer Key Information Memorandum
(KIM)
 Application form
 Salient features of schemes
‘Only KIM contains Application form and not OD’
 Submission of application form to

 Collection Centres
 AMC offices
 ‘Registrars’ accept new subscriptions
and redeem from investors.
 MF may own ‘Investor Service Centres’
 Payment is through Cheque / Demand
Draft / Cash (in certain cases), Internet
can be used to transfer funds
 FOR NRIs

 RBI has given permission to all MFs to sell units

to NRIs / OCBs/ Foreign entities
 Companies need to submit Board resolutions,
memorandum and articles of association with
application forms
 Mode of Payment:
 For repatriation benefits- DDs or cheques using FCNR
account / NRE account
 Non repatriation benefits- DDs or cheques on
NRO/NRSR accounts
 PROCEDURE FOR
REDEMPTION

 OD contains place where redemption notice

must be sent
 Investors have to deal with registrars or
Investor service centres
 Payment is through cheque, ECS to bank
account
 For NRIs and OCBs: ECS to to NRE or US
Dollar draft at current exchange rate
‘If investment was on repatriable basis’
Else - Rupee cheque in favour of investors
NRO, NR/SR account
INVESTMENT PLANS AND
SERVICES
 Automatic Reinvestment plan:
 There are two options: Dividend & Growth
 ARP is also called Growth option
 allows investor to reinvest in additional units
the amounts of dividends or other distributions
 they do not receive dividends
 Reinvestment takes place at ex-div NAV
 ‘Investor reaps benefit of Compounding’
 Some funds allow reinvestment in other
schemes of same fund family.
 Automatic Investment plan:

 Invest a fixed sum periodically

 Investors save in a disciplined and
phased manner
 Investment mode would be direct
debit to Investor’s salary or Bank
account
 ‘Investor get the benefit of Rupee cost
averaging’
 Voluntary Accumulation
Plan
 Investor gets flexibility of the amount and frequency of
Investment
 Through AIP & VAP Investment can only be in Open end
schemes
 AIP is a contractual obligation of the Investor to keep
investing
 Whereas in VAP Investor is not obliged to keep investing,
but has voluntary self discipline
 Investment accounts are maintained for both VAP and SIP
 Normally. funds which issue certificates do not have
Investment accounts
 Systematic Withdrawal Plan

 Allows Investor to make Periodic

withdrawals from Fund Investment accounts
 Amount withdrawn is treated as redemption
of units at the applicable NAVs
 They are different from MIPs, because MIPs
pay the income generated on regular basis,
without touching the capital.
 Hence, Dividend Tax is not levied on SWP,
whereas it is levied for MIPs with more than
50% in debt.
 Systematic Transfer
Plans
 Allows investor to transfer on a periodic
basis a specified amount from one
scheme to another within same fund
family.
 The redemption or investment will be at
applicable NAV
 It is necessary to maintain a minimum
balance under both the schemes.
 The service allows the investor to
manage his Investments actively to
achieve his objectives
 OTHER INVESTOR SERVICES

 Phone transactions:
 Investors may telephonically redeem
or purchase units.
 The telephone instructions are
possible in case of the funds that
keep investment accounts, rather
than issue certificates.
 Cheque Writing Facility:

 Open - End MFs allow cheque writing by

treating fund account equivalent to bank
saving account
 Checks can be issued subject to
maintaining minimum balance
 RBI approval is needed to start this service
 Usually offered by MMFs and other liquid
schemes of short duration.
 Useful for investors with large short-term
surpluses.
 Periodic statements and
Tax information:
 Account statement show units purchased,
redeemed or transferred between schemes,
distributions and reinvestments and investor’s
current holding in units and in amount.
 ‘SEBI regulations require funds to send annual
financial statements to unit holders within six
months of close of accounting year’
 If a fund has deducted tax at source from
income distributed to the investors, it would
also issue TDS statement.
 Loans against units:
 Several banks lend to the investors
against mutual fund units held by them.
 The amount is usually a percentage of
the value of the value of the Investor’s
holding in Units
 ‘SEBI prohibits MFs to give loans’
 Nomination facility is available for
Open end Funds and Close End
Funds not listed on SE.
 The benefits passes to the nominee
 In case of Close Ended schemes
listed on SE same procedure as
Share transfer is followed