ASSOCIATION OF MUTUAL FUNDS IN INDIA INDIAN MUTUAL FUND INDUSTRY.

ASSOCIATION OF MUTUAL FUNDS IN INDIAASSOCIATION OF MUTUAL FUNDS IN INDIA

INDIAN MUTUAL FUND INDUSTRYINDIAN MUTUAL FUND INDUSTRY

145657

47733

134554564126139417225 65

100594

6243070623

90587

103453

79464

0

20000

40000

60000

80000

100000

120000

140000

160000

GROWTH IN ASSETS UNDER MANAGEMENTGROWTH IN ASSETS UNDER MANAGEMENT

Compounded Annual Growth Rate -1965 to Feb 2004. 24.20%

March 1993

February 2004

Compounded Annual Growth Rate (CAGR) Mar 1993-Feb2004

10.67%

GROWTH OF MUTUAL FUND ASSETS

PeriodMUTUAL FUND ASSETS UNDER

MANAGEMENTRs. Crores

1.45,657

47,734

Estimates of Investors - 1998-99Estimates of Investors - 1998-99

Individuals/Unit Holding Account

Households% to Total Households

Directly investing in equities or debentures

19 m 12.8 m 8%

No. of Unit Holders in Mutual Fund 23m 15 m 9%

Survey of Indian Investors - June 2000

UNITHOLDING PATTERN OF MUTUAL FUND UNITHOLDING PATTERN OF MUTUAL FUND INDUSTRY AS ON MARCH 31, 2003INDUSTRY AS ON MARCH 31, 2003

Category Number Of Investors

(Accounts)

% To Total Investors

(Accounts)

Net Asset Value

% To Total Net Asset Value

Individuals 15,557,506 97.42 32,691.12 41.07

NRIs/OCBs 84,311 0.53 878.51 1.1FIIs 2,058 0.01 561.67 0.71

Corporates/ Institutions/ Others

324,979 2.04 45,469.53 57.12

TOTAL 15,968,854 100 79,600.83 100

Rs. In Crores

Source: SEBI

ASSETS SEGMENTS NO. OF FUNDS

NO. OF SCHEMES (Rs. in

Crores) % to Total

A Bank Sponsored 5 91 27397 19 B Institutions 3 36 7371 5 C Private Sector I Indian 8 69 20714 14 II Foreign 1 13 4044 2

III Joint Ventures - Predominantly Indian

5 72 34132 23

IV Joint Ventures - Predominantly Foreign

9 121 51999 36

Total (I+II+III+IV) 23 275 110889 75 Grand Total (A+B+C) 31 402 145657

SEGMENTWISE COMPOSITION OF MUTUAL FUND SEGMENTWISE COMPOSITION OF MUTUAL FUND INDUSTRY AS ON FEBRUARY 29, 2004INDUSTRY AS ON FEBRUARY 29, 2004

Category/ Type

No. of Schemes

Assets No. of

SchemesAssets

No. of Schemes

Assets

1 Equity Funds 123 21524 3 1498 126 23022 16 2 Income Funds 119 64571 12 825 131 65396 45 3 Liquid/ Money Market 33 45200 - - 33 45200 31 4 Balanced Funds 36 3533 2 790 38 4323 3 5 Gilt Funds 31 5955 - 31 5955 4 6 Tax Saving (ELSS) 19 539 24 1222 43 1761 1

TOTAL 361 141322 41 4335 402 145657

Sr. No.

No. of Schemes and Assets by type and category - February 2004 (Rs. In Crores)

Open-Ended Close-Ended Total% to Total

CATEGORY / TYPE WISE COMPOSITION CATEGORY / TYPE WISE COMPOSITION OF MUTUAL FUND SCHEMESOF MUTUAL FUND SCHEMES

CURRENT STATUSCURRENT STATUS

The industry is in the institution building phase – setting highest

professional standardsEnhancing credibility through transparency of

operation and frequency of disclosure

Consolidation through mergers and acquisitions [6+2]

Product range – conventional and new generation funds – sector specific, index funds, exchange traded funds, fixed maturity funds, systematic withdrawal, automatic redemption funds etc.

Since end 1999, moved away from assured return schemes

Predominance of non-individual investor base

Heavy concentration of investors from a limited number of cities

Emergence of independent research bodies evaluating performance and providing ratings of funds

Generating investor awareness and investor interest in the industry

CURRENT STATUS Contd..

REGULATORY FRAMEWORKREGULATORY FRAMEWORK Well Regulated - Strictly Regulated Industry.

Regulation is comprehensive, sensitive and supportive of healthy development of industry. In most areas it matches with the best internationally.

Pro-active initiatives from the regulator. The Regulation is constantly reviewed and amended periodically. Guidelines on a variety of subjects such as valuation, benchmarking, disclosure issued regularly to match with best practices.

Yearly inspection of all mutual funds – a support to the healthy development.

Self regulatory process is in built in Mutual Fund structure and set up.

While Mutual Fund functions in terms of the Trust Deed the AMC functions in terms of the Investment Management Agreement as approved by SEBI.

Separate Auditors for Asset Management Company and for Mutual Fund.

Trustees are first level Regulators.

Their general and specific duties and responsibilities are well spelt out.

REGULATORY FRAMEWORKREGULATORY FRAMEWORK contd..

Predominance of independent (2/3rd) trustees - Role of independent Trustees.

Quarterly compliance test and Certification by Trustees.

AMCs to record investment decisions and investment management process.

Partner relationship of SEBI with AMFI close interactive working style

AMFI acts as a catalyst and initiator of many new standards and refinements of systems and procedures.

REGULATORY FRAMEWORKREGULATORY FRAMEWORK contd..

IMPROVEMENT IN IMPROVEMENT IN OPERATIONAL AREASOPERATIONAL AREAS

Standard Offer document with comparative data. Refinement in the Calculation of NAV. Daily release of NAVs before 8.00 P.M and

posting them on AMFI website. Uniform methodology for Valuation of Non-

Traded Securities – debt & equities. Valuation of Government Securities. Setting up Valuation Committee at the AMCs

level. Identification, Provisioning and Disclosure of

Non-Performing Assets. Disclosure standards - Mandatory disclosure of

full portfolio twice a year.

Quarterly and even monthly disclosure of portfolio by many funds.

Keeping investors informed – Audited reports to be sent to investors within a stipulated time – periodic communication to investors.

Release of redemption cheques within stipulated time and payment of penal interests for delayed payment.

Advertisement guidelines- general and those relating to Performance Advertisement.

Adoption of technology for quicker service - Online Transaction.

Suitable benchmarks being developed for different types of schemes.

Minimum level of risk management system being worked out.

IMPROVEMENT IN IMPROVEMENT IN OPERATIONAL AREAS OPERATIONAL AREAS contd….contd….

World over intermediaries selling mutual funds are licensed and regulated.

Beginning made towards regulation-AMFI’s initiatives

Launched Certification programme since July 2000 in association with NSE

Certification made mandatory from November 2001 Launched registration of certified intermediaries as

AMFI Registered Mutual Fund Advisors (ARMFA) Provided a broad set of guidelines known as AMFI

Guidelines and Norms for Intermediaries (AGNI) Registration of AMFI Certified Agents made

mandatory from November 2002 Extensive training programmes being conducted

countrywide

REGULATION OF INTERMEDIARIES

To promote and protect the interests of Mutual Funds and their unit holders.

To define and maintain high ethical and professional standards in the industry.

To enhance public awareness of Mutual Funds.

To represent industry views and suggestions to the Regulator, Government and the Central Bank

ROLE ANDROLE AND ACTIVITIES OF ASSOCIATION ACTIVITIES OF ASSOCIATION OF MUTUAL FUNDS IN INDIAOF MUTUAL FUNDS IN INDIA

AMFI is the industry association of all mutual funds operating in India. It is not a Self-Regulatory Organisation. It is a non-profit organisation whose objectives are:

PERFORMANCE PERFORMANCE

(EQUITY DIVERSIFIED FUNDS)(EQUITY DIVERSIFIED FUNDS)

P2P Returns 1 year

(74 Sch)

3 years

(65 Sch)

5 years

(43 Sch)

MF Average Returns 17.81 -3.45 13.89

BSE Sensex 11.11 -8.76 2.09

S&P CNX Nifty 7.18 -8.31 3.79

S&P CNX 500 Equity Index 15.65 -5.89 7.45

Equity mutual funds have outperformed all major indices over 1 year, 3 years & 5 years

CRISILFUND SERVICES

* Data for year ending June 30, 2003


(EQUITY DIVERSIFIED FUNDS BASED ON AUM)(EQUITY DIVERSIFIED FUNDS BASED ON AUM)

* Data for year ending June 30, 2003 CRISILFUND SERVICES

Outperformance Underperformance

Period No. of Sch Corpus No. of Sch Corpus

1 Year 53 83.72% 21 16.28%

3 Years 48 84.04% 17 15.96%

5 Years 37 98.14% 6 1.86%

•Over 5 year period 98.14% of AUM has outperformed BSE Sensex

•Over a longer investment horizon a majority of schemes have outperformed BSE Sensex

•As of 30th June 2003, out of 86 schemes 21 schemes are below par value, which amounts to 17.12% of AUM

•Over 5 year period 98.14% of AUM has outperformed BSE Sensex


(IT SECTOR FUNDS)(IT SECTOR FUNDS)

IT mutual funds have managed to outperform the benchmark index with 2 of the schemes giving positive returns

CRISILFUND SERVICES


P2P Returns 1 Year

(10 Sch)

MF Average Returns -7.28

BSE IT -22.49


(DEBT FUNDS)(DEBT FUNDS)

P2P Returns 1 year

(32Sch)

3 years

(22 Sch)

5 years

(14Sch)

MF Average Returns 13.13 13.53 13.16

FD Rates 8.00 10.00 12.00

Small Saving Scheme Rates 9.50 12.00 12.50

Debt mutual funds have consistently given better returns than the other fixed income investment avenues

CRISILFUND SERVICES



(DEBT FUNDS BASED ON AUM)(DEBT FUNDS BASED ON AUM)


CRISILFUND SERVICES

Outperformance Underperformance

Period No. of Sch Corpus No. of Sch Corpus

1 Year 30 99.35% 2 0.65%

3 Years 22 100.00%

0 0.00%

5 Years 13 99.98% 1 0.02%

Almost 100% of AUM has given returns more than the prevalent FD rates.


(LIQUID FUNDS)(LIQUID FUNDS)

P2P Returns 1 year

(26 Sch)

3 years

(15 Sch)

5 years

(9 Sch)

MF Average Returns 6.22 7.69 8.32

SB Rates 4.00 4.00 4.50

Liquid mutual funds have consistently given much higher returns than Savings Bank A/C rates

CRISILFUND SERVICES



(BALANCED FUNDS)(BALANCED FUNDS)

Balanced mutual funds have given much higher returns than the composite benchmarks constituting S&P CNX Nifty and the prevalent FD rates

CRISILFUND SERVICES


P2P Returns 1 Year (30 Sch)

MF Average Returns 14.91

Composite Returns (Equity 60: Debt 40) 7.51

Composite returns (Equity 40: Debt 60) 7.67


(GILT FUNDS)(GILT FUNDS)

Gilt mutual funds have given returns more than double the prevalent FD rates.

CRISILFUND SERVICES


P2P Returns 1 Year (24 Sch)

MF Average Returns 16.42

1 year FD Rates 8.00

Small saving schemes 9.50

THANK THANK YOUYOU

ASSOCIATION OF MUTUAL FUNDS IN INDIAASSOCIATION OF MUTUAL FUNDS IN INDIA

ASSOCIATION OF MUTUAL FUNDS IN INDIA INDIAN MUTUAL FUND INDUSTRY.

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