Growth of Mutual Fund

UTTAR PRADESH TECHNICAL UNIVERSITY

A Project Report On “Growth History of Mutual Fund in India” In partial fulfillment of the requirement of two years full time Masters of Business Administration (MBA) Program (2009-2011) Of

UNDER THE GUIDANCE OF: Prof.

SUBMITTED BY:

CONTENTS
Certificate Declaration Preface Acknowledgement Research Methodology Executive Summary 1 Introduction to Mutual Fund 2 Investors portfolio 2.1. Fixed Return Options 2.2. Variable Return Options 3 Concept of mutual funds By structure By investment objective 5 Different styles of Mutual Funds 6 Process of Mutual Fund 7 Net Asset Value (NAV) 8 Companies in India 14 Conclusion 15 Bibliography

DECLARATION

I, hereby, declare that the Project titled “Growth History of Mutual Fund in India” is original to the best to my knowledge & has not published elsewhere. This is for the purpose of partial fulfillment of Ambalika Institute of Management & technology requirement for the award of the degree of Master of Business Administration. MOHD. ASHRAF HUSSAIN

PREFACE
Investing money where the risk is less has always been risky to decide. The first factor, which an investor would like to see before investing, is risk factor. Diversification of risk gave birth to the phenomenon called Mutual Fund. We are preparing comprehensive report of Mutual Fund industry in India. The basic idea of assignment of this project is to augment our knowledge about the industry in its totality and appreciate the use of an integrated loom. It is concerned the environmental issues and tribulations. This makes us more conscious about Industry and its pose and makes us capable of analyzing Industry‟s position in the competitive market. This may also enhance our logical abilities. The Mutual Fund Industry is in the growing stage in India, which is evident from the flood of mutual funds offered by the Banks, Financial Institutes & Private Financial Companies. There are various aspects, which have been studied in detail in the project and have been added to this project report. Hope this report would help one understand the Mutual Fund Industry of India in detail.

ACKNOWLEDGEMENT
I am indebted to a multitude of persons who have provided me with valuable help during our endeavor of research. The project would not have seen the illumination of the day without the efforts of the many who managed the show in the wings. I am thankful to all people who have put in great efforts and gave me guidance for the successful completion of the project. I am indeed grateful to Prof.XXXXXXX for providing me the guidance, advice, constructive suggestions and faith in my ability inspired to perform well who gave me a valuable opportunity of involving me in studying this project. Preparing a project of this nature is an arduous task and I am fortunate enough to get support from a large number of people to whom we shall always remain grateful. Finally, I thank all those who directly and indirectly contributed to this project.

Mutual Fund
A Mutual Fund is a body corporate that pools the savings of a number of investors and invests the same in a variety of different financial instruments, or
securities. A mutual fund is a professionally managed type of collective investment scheme that

many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities before we understand mutual funds in detail, it‟s very important to know the area in which mutual funds works, the basic understanding of stocks and bonds.
pools money from

Stocks: Stocks represent shares of ownership in a public
company. Examples of public Companies include Reliance, ONGC and Infosys. Stocks are considered to be the most Common owned investment traded on the market.

Bonds: Bonds are basically the money which you lend to the
government or a company, and in return you can receive interest on your invested amount, which is back over predetermined amounts of time. Bonds are considered to be the most common lending investment traded on the market. There are many other types of investments other than stocks and bonds (including annuities, real estate, and precious metals), but the majority of mutual funds invest in stocks and/or bonds.

What Is Mutual Fund?
A mutual fund is just the connecting bridge or a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. A mutual fund is a company that pools the money of many investors to invest in a variety of different securities. Investment may be in stocks, bonds, debentures, money market or combination of these. These securities are professionally managed on the behalf of investor, by the fund manager. The mutual fund will have a fund manager who is responsible for investing the gathered Money into specific securities (stocks or bonds). When we invest in a mutual fund, you are buying units or portions of the mutual fund and thus on investing becomes a shareholder or unit holder of the fund. Mutual funds are considered as one of the best available investments as compare to others they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual funds is Diversification, by Minimizing Risk & Maximizing Returns. Thus a Mutual Fund is the most suitable investment for the common man as it offers an Opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

History of Mutual Funds in India And Role of SEBI in Mutual Funds Industry
Unit Trust of India was the first mutual fund set up in India in the year 1963. In early 1990s, Government allowed public sector banks and institutions to set up mutual funds. In the year 1992, Securities and exchange Board of India (SEBI) Act was passed. The objectives of SEBI are – to protect the interest of investors in securities and to promote the development of and to regulate the securities market. As far as mutual funds are concerned, SEBI formulates policies and regulates the mutual funds to protect the interest of the investors. SEBI notified regulations for the mutual funds in 1993. Thereafter, mutual funds sponsored by private sector entities were allowed to enter the capital market. The regulations were fully revised in 1996 and have been amended thereafter from time to time. SEBI has also issued guidelines to the mutual funds from time to time to protect the interests of investors. All mutual funds whether promoted by public sector or private sector entities including those promoted by foreign entities are governed by the same set of Regulations. There is no distinction in regulatory requirements for these mutual funds and all are subject to monitoring and inspections by SEBI. The risks associated with the schemes launched by the mutual funds sponsored by these entities are of similar type.

How is a Mutual Fund set up?
A mutual fund is set up in the form of a trust, which has Sponsor, Trustees, Asset Management Company (AMC) And Custodian. The trust is established by a sponsor or more than one sponsor who is like promoter of a company. The trustees of the mutual fund hold its property for the benefit of the unit holders. Asset Management Company (AMC) approved by SEBI manages the funds by making investments in various types of securities. Custodian, who is registered with SEBI, holds the securities of various schemes of the fund in its custody. The trustees are vested with the general power of superintendence and direction over AMC. They monitor the performance and compliance of SEBI Regulations by the mutual fund. SEBI Regulations require that at least two thirds of the directors of trustee company or board of trustees must be independent i.e. they should not be associated with the sponsors. Also, 50% of the directors of AMC must be independent. All mutual funds are required to be registered with SEBI before they launch any scheme.

The flow chart below describes broadly the working of a mutual fund.

Mutual Fund Basic Terminologies
Asset Management Company is the fund house or the company that manages the money. The Mutual fund is a trust registered under the Indian Trust Act. It is initiated by a Sponsor. A sponsor is a person who acts alone or with a corporate to establish a mutual fund. The sponsor then appoints an AMC to manage the investment, marketing, accounting and other functions pertaining to the fund. Trust or Trustee Company -They form mutual funds under existing Trust or Companies Acts. Trust managed by the Trustees and Trustee Companies are managed by the Board of Directors. Asset Management Company (AMC) - Undertakes the administration & investment activities of the fund. Custodian- She/he is an independent entity who is responsible for safekeeping the fund‟s assets. Registrars/Transfer Agents- They handle sales and redemption related activities of the fund. They also maintain records of the shareholders and send the payment cheques to the investors. Distributors-They are the funds distributors / underwriters to handle the sales of units. The underwriters act as wholesale selling units to the brokers who in turn sell to the retail investors.

Flow from SEBI to INVESTOR

Types of Mutual Fund Schemes
BY STRUCTURE

Open Ended Schemes
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 at Net Asset Value ("NAV") related prices. The key feature of open-end schemes is liquidity.

Close Ended Schemes
A closed-end fund has a stipulated maturity period which generally ranging from 3 to15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes is provided to the investor.

Interval Schemes
Interval Schemes are that scheme, which combines the features of open-ended and Close-ended schemes. The units may be traded on the stock exchange or may be open for sale or redemption during pre-determined intervals at NAV related prices.

BY NATURE
Under this the mutual fund is categorized on the basis of Investment Objective. By nature the mutual fund is categorized as follow:

1. Equity fund:
These funds invest a maximum part of their corpus into equities holdings. The structure of the fund may vary different for different schemes and the fund manager‟s outlook on different stocks. The Equity Funds are sub-classified depending upon their investment objective, as follows:  Diversified Equity Funds  Mid-Cap Funds  Sector Specific Funds  Tax Savings Funds (ELSS) Equity investments are meant for a longer time horizon, thus Equity funds rank high on the risk-return matrix.

2. Debt fund:
The objective of these Funds is to invest in debt papers. Government authorities, private companies, banks and financial institutions are some of the major issuers of debt papers. By investing in debt instruments, these funds ensure low risk and provide stable income to the investors. Debt funds are further classified as:  Gilt Funds: Invest their corpus in securities issued by Government, popularly known as Government of India debt papers. These Funds carry zero Default risk but are associated with Interest Rate risk.

These schemes are safer as they invest in papers backed by Government.  Income Funds: Invest a major portion into various debt instruments such as bonds, corporate debentures and Government securities.  MIPs: Invests maximum of their total corpus in debt instruments while they take minimum exposure in equities. It gets benefit of both equity and debt market. These scheme ranks slightly high on the risk-return matrix when compared with other debt schemes.

 SIPs: Systematic Investment Plan is a vehicle offered by
mutual funds to help you save regularly. It is just like a recurring deposit with the post office or bank where you put in a small amount every month. The difference here is that the difference here is that the amount is invested in a mutual fund. The minimum amount to be invested can be as small as Rs 100 and the frequency of investment is usually monthly or quarterly.  Short Term Plans (STPs): Meant for investment horizon for three to six months. These funds primarily invest in short term papers like Certificate of Deposits (CDs) and Commercial Papers (CPs). Some portion of the corpus is also invested in corporate debentures.  Liquid Funds: Also known as Money Market Schemes, These funds provides easy liquidity and preservation of capital. These schemes invest in short-term instruments like

Treasury Bills, inter-bank call money market, CPs and CDs. These funds are meant for short-term cash management of corporate houses and are meant for an investment horizon of 1day to 3 months. These schemes rank low on risk-return matrix and are considered to be the safest amongst all categories of mutual funds.

3. Balanced funds: As the name suggest they, are a mix of
both equity and debt funds. They invest in both equities and fixed income securities, which are in line with pre-defined investment objective of the scheme. These schemes aim to provide investors with the best of both the worlds. Equity part provides growth and the debt part provides stability in returns.

Further the mutual funds can be broadly classified on the basis of Investment parameter viz,
Each category of funds is backed by an investment philosophy, which is pre-defined in the objectives of the fund. The investor can align his own investment needs with the funds objective and invest accordingly.

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Growth Schemes: Growth Schemes are also known as equity schemes. The aim of these schemes is to provide capital appreciation over medium to long term. These schemes normally invest a major part of their fund in equities and are willing to bear Short-term decline in value for possible future appreciation.

 Income Schemes: Income Schemes are also known as debt schemes. The aim of these schemes is to provide regular and steady income to investors. These schemes generally invest in fixed income securities such as bonds and corporate debentures. Capital appreciation in such schemes may be limited.  Balanced Schemes: Balanced Schemes aim to provide both growth and income by periodically distributing a part of the income and capital gains they earn. These schemes invest in both shares and fixed income securities, in the proportion indicated in their offer documents (normally 50:50).  Money Market Schemes: Money Market Schemes aim 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.

OTHER SCHEMES  Tax Saving Schemes: Tax-saving schemes offer tax
rebates to the investors under tax laws prescribed from time to time. Under Sec.88 of the Income Tax Act, contributions made to any Equity Linked Savings Scheme (ELSS) are eligible for rebate.

 Index Schemes: Index schemes attempt to replicate the
performance of a particular index such as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of only those stocks that constitute the index. The percentage of each stock to the total holding will be identical to the stocks index weightage.

 Sector Specific Schemes: These are the funds/schemes
which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving Consumer Goods (FMCG), Petroleum stocks,etc. The returns in these funds are dependent on the performance of the respective Sectors/industries.

Types of Returns
There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:  Income is earned from dividends on stocks and interest on bonds. A fund pays out nearly all income it receives over the year to fund owners in the form of a distribution.

 If the fund sells securities that have increased in price; the
fund has a capital gain. Most funds also pass on these gains to investors in a distribution.

 If fund holdings increase in price but are not sold by the
fund manager, the fund's Shares increase in price. You can then sell your mutual fund shares for a profit. Funds will also usually give you a choice either to receive a check for distributions or to reinvest the earnings and get more shares.

NET ASSET VALUE (NAV)
The net asset value of the fund is the cumulative market value of the assets fund net of its liabilities. In other words, if the fund is dissolved or liquidated, by selling off all the assets in the fund, this is the amount that the shareholders would collectively own. This gives rise to the concept of net asset value per unit, which is the value, represented by the ownership of one unit in the fund. It is calculated simply by dividing the net asset value of the fund by the number of units. However, most people refer loosely to the NAV per unit as NAV, ignoring the "per unit". We also abide by the same convention.

Calculation of NAV
The most important part of the calculation is the valuation of the assets owned by the fund. Once it is calculated, the NAV is simply the net value of assets divided by the number of units outstanding. The detailed methodology for the calculation of the asset value is given below. Asset value =Sum of market value of shares/debentures+ Liquid assets/cash held, if any+ Dividends/interest accrued Amount due on unpaid asset Expenses accrued but not paid Mathematically NAV is expressed as:
*NAV = Total of all assets – less liabilities (other than to unit holders) Total number of outstanding units

* Always expressed per scheme

EXAMPLE Mr. A has invested in a regular investment SIP of Rs.100 for 10 months. Mr. A has also paid the broker post-dated cheques to be encashed on the 10th of every month starting 10th April 2010. The unit price of NAV is as follows starting April 2010 Rs.11.79, Rs.12.11, Rs.11.17, Rs.11.62, Rs. 13.59, Rs. 13.82, Rs.11.82, Rs.10.30, Rs.10.38, Rs.9.74 what are the no of units acquired by Mr. A every month and also find out the Average Unit price at the end of 10th month?

HOW TO INVEST IN MUTUAL FUNDS?

Step One - Identify your investment needs. Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses among many other factors. Therefore, the first step is to assess your needs. Begin by asking yourself these questions: What are my investment objectives and needs? 1. Probable Answers: I need regular income or need to buy a home or finance a wedding or educate my children or a combination of all these needs.

2. How much risk I am willing to take? Probable Answers: I can only take a minimum amount of risk or I am willing to accept the fact that my investment value may fluctuate or that there may be a short-term loss in order to achieve a long-term potential gain. 3. What are my cash flow requirements? Probable Answers: I need a regular cash flow or I need a lump sum amount to meet a specific need after a certain period or I don't require a current cash flow but I want to build my assets for the future.

By going through such an exercise, you will know what you want out of your investment and can set the foundation for a sound Mutual Fund investment strategy. Step Two - Choose the right Mutual Fund. Once you have a clear strategy in mind, you have to choose which Mutual Fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some factors to evaluate before choosing a particular Mutual Fund are:
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The track record of performance over the last few years in relation to the appropriate yardstick and similar funds in the same category. How well the Mutual Fund is organized to provide efficient, prompt and personalized service. Degree of transparency as reflected in frequency and quality of their communications.

Step Three - Select the ideal mix of Schemes. Investing in just one Mutual Fund scheme may not meet all your investment needs. You may consider investing in a combination of schemes to achieve your specific goals. The following tables could prove useful in selecting a combination of schemes that satisfy your needs.

AGGRESSIVE PLAN
Money Market Schemes Income Schemes Balanced Schemes Growth Schemes 5% 10-15% 10-20 % 60-70 %

MODERATE PLAN
Money Market Schemes Income Schemes Balanced Schemes Growth Schemes 10 % 20 % 40-50 % 30-40 %

CONSERVATIVE PLAN
Money Market Schemes Income Schemes Balanced Schemes Growth Schemes 10 % 50-60 % 20-30 % 10 %

Step Four - Invest regularly For most of us, the approach that works best is to invest a fixed amount at specific intervals, say every month. By investing a fixed sum every month, you buy fewer units when the price is higher and more units when the price is low, thus bringing down your average cost per unit. This is called rupee cost averaging and is a disciplined investment strategy followed by investors all over the world. With many open-ended schemes offering systematic investment plans, this regular investing habit is made easy for you.

Step Five - Keep your taxes in mind If you are in a high tax bracket and have utilized fully the exemptions under section 80L of the Income Tax Act, investing in growth funds that do not pay dividends might be more tax efficient and improve your post-tax return. If you are in a low tax bracket and have not utilized fully the exemptions available under Section 80L of the Income Tax Act, selecting funds paying regular income could be more tax efficient. Further, there are other benefits available for investment in Mutual Funds under the provisions of the prevailing tax laws. You may therefore, consult your tax advisor or Chartered Accountant for specific advice. Step Six - Start early It is desirable to start investing early and stick to a regular investment plan. If you start now, you will make more than if you wait and invest later. The power of compounding lets you earn income on income and your money multiplies at the compounded rate of return. Step Seven - The final step All you need to do now is to get a touch with a Mutual Fund or your agent/broker and start investing. Reap the rewards in the years to come. Mutual Funds are suitable for every kind of investor - whether starting a career or retiring, conservative or risk-taking, growth-oriented or income seeking.

How to choose a scheme for investment from a number of schemes available?
As already mentioned, the investors must read the offer document of the mutual fund scheme very carefully. They may also look into the past track record of performance of the scheme or other schemes of the same mutual fund. They may also compare the performance with other schemes having similar investment objectives. Though past performance of a scheme is not an indicator of its future performance and good performance in the past may or may not be sustained in the future, this is one of the important factors for making investment decision. In case of debt oriented schemes, apart from looking into past returns, the investors should also see the quality of debt instruments which is reflected in their rating. A scheme with lower rate of return but having investments in better rated instruments may be safer. Similarly, in equities schemes also, investors may look for quality of portfolio. They may also seek advice of experts.  Performance The past performance of a fund is important in analyzing a mutual fund. But, as learnt earlier past performance is not everything. It just indicates the fund‟s ability to clock returns across market conditions. And, if the fund has a well-established track record, the likelihood of it performing well in the future is higher than a fund which has not performed well. Under the performance criteria, we must make a note of the following:

1. Comparisons: A fund‟s performance in isolation does not indicate anything. Hence, it becomes crucial to compare the fund with its benchmark index and its peers, so as to deduce a meaningful inference. Again, one must be careful while selecting the peers for comparison. For instance, it doesn‟t make sense comparing the performance of a midcap fund to that of a large cap. Remember: Don‟t compare apples with oranges. 2. Time period: It‟s very important that investors have a long term (atleast 3-5 years) horizon if they wish to invest in equity oriented funds. So, it becomes important for them to evaluate the long term performance of the funds. However this does not imply that the short term performance should be ignored. Besides, it is equally important to evaluate how a fund has performed over different market cycles (especially during the downturn). During a rally it is easy for a fund to deliver aboveaverage returns; but the true measure of its performance is when it posts higher returns than its benchmark and peers during the downturn. Remember: Choose a fund like you choose a spouse – one that will stand by you in sickness and in health. 3. Returns: Returns are obviously one of the important parameters that one must look at while evaluating a fund. But remember, although it is one of the most important, it is not the only parameter. Many investors simply invest in a fund because it has given higher returns. In our

opinion, such an approach for making investments is incomplete. In addition to the returns, investors must also look at the risk parameters, which explain how much risk the fund has taken to clock higher returns. 4. Risk: We have seen in our Definitions section and on our Path to Knowledge, that risk is normally measured by Standard Deviation (SD). SD signifies the degree of risk the fund has exposed its investors to. From an investor‟s perspective, evaluating a fund on risk parameters is important because it will help to check whether the fund‟s risk profile is in line with their risk profile or not. For example, if two funds have delivered similar returns, then a prudent investor will invest in the fund which has taken less risk i.e. the fund that has a lower SD. 5. Risk-adjusted return: This is normally measured by Sharpe Ratio. It signifies how much return a fund has delivered vis-à-vis the risk taken. Higher the Sharpe Ratio, better is the fund‟s performance. From an investor‟s perspective, it is important because they should choose a fund which has delivered higher risk-adjusted returns. In fact, this ratio tells us whether the high returns of a fund are attributed to good investment decisions, or to higher risk. 6. Portfolio Concentration: Funds that have a high concentration in particular stocks or sectors tend to be very risky and volatile. Hence, investors should invest in these funds only if they have a high risk appetite. Ideally,

a well diversified fund should hold no more than 40% of its assets in its top 10 stock holdings. Remember: Make sure your fund does not put all its eggs in one basket. 7. Portfolio Turnover: The portfolio turnover rate measures the frequency with which stocks are bought and sold. Higher the turnover rate, higher the volatility. The fund might not be able to compensate the investors adequately for the higher risk taken. Remember: Invest in funds with a low turnover rate if you want lower volatility.

 Fund Management
The performance of a mutual fund scheme is largely linked to the fund manager and his team. Hence, it‟s important that the team managing the fund should have considerable experience in dealing with market ups and downs. As mentioned earlier, investors should avoid fund‟s that owe their performance to a „star‟ fund manager. Simply because if the fund manager is present today, he might quit tomorrow, and hence the fund will be unable to deliver its „star‟ performance without its „star‟ fund manager. Therefore, the focus should be on the fund houses that are strong in their systems and processes. Remember: Fund houses should be process-driven and not 'star' fund manager driven.

 Costs
If two funds are similar in most contexts, it might not be worth buying the high cost fund if it is only marginally better

than the other. Simply put, there is no reason for an AMC to incur higher costs, other than its desire to have higher margins. The two main costs incurred are: 1. Expense Ratio: Annual expenses involved in running the mutual fund include administrative costs, management salary, overheads etc. Expense Ratio is the percentage of assets that go towards these expenses. Every time the fund manager churns his portfolio, he pays a brokerage fee, which is ultimately borne by investors in the form of an Expense Ratio. Remember: Higher churning not only leads to higher risk, but also higher cost to the investor. 2. Exit Load: Due to SEBI‟s recent ban on entry loads, investors now have only exit loads to worry about. An exit load is charged to investors when they sell units of a mutual fund within a particular tenure; most funds charge if the units are sold within a year from date of purchase. As exit load is a fraction of the NAV, it eats into your investment value. Remember: Invest in a fund with a low expense ratio and stay invested in it for a longer duration. Among the factors listed above, while few can be easily gauged by investors, there are others on which information is not widely available in public domain. This makes analysis of a fund difficult for investors and this is where the importance of a mutual fund advisor comes into play.

Are the companies having names like mutual benefit the same as mutual funds schemes?
Investors should not assume some companies having the name "mutual benefit" as mutual funds. These companies do not come under the purview of SEBI. On the other hand, mutual funds can mobilize funds from the investors by launching schemes only after getting registered with SEBI as mutual funds.

Is the higher net worth of the sponsor a guarantee for better returns?
In the offer document of any mutual fund scheme, financial performance including the net worth of the sponsor for a period of three years is required to be given. The only purpose is that the investors should know the track record of the company which has sponsored the mutual fund. However, higher net worth of the sponsor does not mean that the scheme would give better returns or the sponsor would compensate in case the NAV falls.

Where can an investor look out for information on mutual funds?
Almost all the mutual funds have their own web sites. Investors can also access the NAVs, half-yearly results and portfolios of all mutual funds at the web site of Association of mutual funds in India (AMFI) www.amfiindia.com. AMFI has also published useful literature for the investors.

Investors can log on to the web site of SEBI www.sebi.gov.in and go to "Mutual Funds" section for information on SEBI regulations and guidelines, data on mutual funds, draft offer documents filed by mutual funds, addresses of mutual funds, etc. Also, in the annual reports of SEBI available on the web site, a lot of information on mutual funds is given. There are a number of other web sites which give a lot of information of various schemes of mutual funds including yields over a period of time. Many newspapers also publish useful information on mutual funds on daily and weekly basis. Investors may approach their agents and distributors to guide them in this regard.

Can an investor appoint a nominee for his investment in units of a mutual fund?
Yes. The nomination can be made by individuals applying for / holding units on their own behalf singly or jointly. Nonindividuals including society, trust, body corporate, partnership firm, Karta of Hindu Undivided Family, holder of Power of Attorney cannot nominate.

If mutual fund scheme is wound up, what happens to money invested?
In case of winding up of a scheme, the mutual funds pay a sum based on prevailing NAV after adjustment of expenses. Unit holders are entitled to receive a report on winding up from the mutual funds which gives all necessary details.

How can the investors redress their complaints?
Investors would find the name of contact person in the offer document of the mutual fund scheme that they may approach in case of any query, complaints or grievances. Trustees of a mutual fund monitor the activities of the mutual fund. The names of the directors of Asset Management Company and trustees are also given in the offer documents. Investors should approach the concerned Mutual Fund / Investor Service Centre of the Mutual Fund with their complaints. If the complaints remain unresolved, the investors may approach SEBI for facilitating redressal of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned mutual fund and follows up with it regularly. Investors may send their complaints to: Securities and Exchange Board of India Office of Investor Assistance and Education (OIAE) Plot No.C4-A, “G” Block, 1st Floor, Bandra-Kurla Complex, Bandra (E), Mumbai – 400 051. Phone: 26449199-88-77

What is the procedure for registering a mutual fund with SEBI?
An applicant proposing to sponsor a mutual fund in India must submit an application in Form A along with a fee of Rs.25, 000. The application is examined and once the sponsor satisfies certain conditions such as being in the financial services business and possessing positive net worth for the last five years, having net profit in three out of the last five years and possessing the general reputation of fairness and integrity in all business transactions, it is required to complete the remaining formalities for setting up a mutual fund. These include inter alia, executing the trust deed and investment management agreement, setting up a trustee company/board of trustees comprising twothirds independent trustees, incorporating the asset management company (AMC), contributing to at least 40% of the net worth of the AMC and appointing a custodian. Upon satisfying these conditions, the registration certificate is issued subject to the payment of registration fees of Rs.25.00 lacs .For details, see the SEBI (Mutual Funds) Regulations, 1996.

ESCORTS MUTUAL FUND
Escorts Mutual Fund is the premier Asset Management Company offering Investment products across a broad crosssection of Financial Asset covering both Debt and Equity. It was registered with Securities and Exchange Board of India (SEBI) in 1996.The Company is the one of the earliest entrants into the Indian Mutual Funds Industry. It is associated with Escorts Group - with Escorts Limited as its Flagship Company, which is amongst India's leading corporations, operating in diverse fields of Agri Machinery, Construction and Railway Ancillaries and Financial Services. The genesis of Escorts goes back to 1944 and over the decades, Escorts has surged ahead and evolved into one of the India's leading conglomerates. The group holds a great repute and trust amongst people. Escorts Mutual Fund has been established as a trust in accordance with the provisions of the Indian Trusts Act, 1882 and the Deed of Trust dated 15th April, 1996 has been registered under the Indian Registration Act, 1908.

Backed by one of the most trusted and valued brands in India, Escorts Mutual Fund has earned the trust of lakhs of investors with its consistent performance and excellent service. Escorts Mutual Fund, has made impressive gains by constantly increasing its retail client base over the years. We at Escorts Mutual Fund aim to provide best risk-adjusted returns to our clients. The Escorts philosophy is centered on seeking consistent, long-term results. It aims at overall excellence, within the framework of transparent and rigorous risk controls. SERVICE: We offer a wide range of services to assist investors have a fulfilling and rewarding financial planning experience with us. We have designed our services keeping in mind the needs of our investors, giving them a smooth and hassle-free financial planning process. INVESTMENT PHILOSPHY: We believe in a simple philosophy that different people have different needs. That is why our investment strategies and products are geared towards fulfilling the needs of our investors. e derive our satisfaction from the fulfillment of the expectations of those special people, who have exposed faith in us and have invested their savings in our schemes. The following fundamentals define and guide our investments: A Value-Based Approach We believe in the concept of value investing and look for a consistent track-record and the inherent fundamental soundness

of the entities we invest our money in. We also give weightage to the future business prospects and the sustainability of the earnings .Such a value based investment approach ensures that the investors money grows with us. Emphasis on Research Our extensive research on the industry, the corporate and the money markets helps us in planning our investments and formulating our strategies in a wise manner. In periods of uncertainties and fluctuating market trends, the research work gives substance to strategies and ensure their soundness. Discipline In markets that are characterized by cyclical booms and busts, it is vey essential to be cautious and prudent. That is why, we believe in well thought out and well planned investments and in having a healthy suspicion of volatile market situations. We need to do all this because we feel that we have a responsibility towards our investors.

ESCORTS MUTUAL FUND Schemes

Escorts Income Bond, an open ended income scheme has the investment objective to generate current income by investing predominantly in a well -diversified portfolio of Fixed Income securities with moderate risk levels. Escorts Income Plan, an open ended scheme, with the investment objective to generate current income by investing predominantly in a well-diversified portfolio of Fixed Income securities with moderate risk levels. Escorts Tax Plan, an open-ended Equity Linked Savings Scheme, with the investment objective to generate capital appreciation by investing predominantly in a well-diversified portfolio of Equity Shares with growth potential. Escorts Opportunities Fund, an open ended Scheme with the investment objective to generate long term capital appreciation by predominantly moving investments in a portfolio of equity and equity related securities amongst different sectors, present or future, expected to show high earnings such as Technology Sector, Media Sector, Entertainment Sector, Communications Sector, FMCG Sector, Pharmaceuticals Sector, Cyclical Sector, Real Estate Sector, Space Sector, Cyber city Sector etc. Escorts Balanced Fund, an open-ended balanced scheme, with the investment objective to generate long term capital

appreciation and current income from a portfolio of equity & fixed income securities. Escorts Growth Plan, an open-ended growth scheme, with the investment objective to generate capital appreciation by investing predominantly in a well-diversified portfolio of Equity Shares with growth potential. Escorts Gilt Plan, an open-ended income scheme, with the investment objective to generate of income and capital appreciation through investments in government securities market. The aim is to generate returns commensurate with minimal credit by investing in securities created and issued by the Central Government and / or a State Government and / or repos / reverse repos in such government securities as may be permitted by RBI. Escorts High Yield Equity Plan, an open-ended growth scheme, with the investment objective to generate income by investing predominantly in well diversified portfolio of equity stocks providing high dividend yield but at the same time capture long term capital appreciation as and when the opportunity arises. This long term style of investment tries to locate, in a disciplined manner, shares, which for a variety of reasons are selling at prices which are substantially lower than the company‟s actual business value or future earnings potential, and are also yielding a higher than normal dividend yield. These companies would be backed by stable earnings in the past while offering fair growth potential in the future. Escorts Leading Sectors Fund, an open-ended growth scheme, has the investment objective to provide capital appreciation or

income distribution by investing in companies from Leading Sectors, depending upon their growth prospects and sustainability of future earnings growth. Escorts Power & Energy Fund, an open-ended growth scheme, has the investment objective to provide income distribution and / or medium to long-term capital gains by investing predominantly in equity/equity related instruments of the companies in the Power/ Energy Sector and /or Debt/Money Market Instruments.

Escorts Mutual Fund
NAV Performance Vs Benchmark Indices
Escorts Growth PLAN 11.29% 101.42% 11.53% 20.02% Escorts Leading Sector Fund 5.02% 63.45% N.A N.A Escorts Infrastructure Fund 5.12% 67.15% N.A. N.A.

Period Last 6 months Last 1 year Last 3 years Last 5 years

Nifty 3.25% 73.76% 11.16% 20.86%

Since launch of the Scheme

24.18%

-49.57%

-6.71%

13.12%ETP 18.54%EGP 4.88%EIF 18.14%ELSF

Period Last 6 months Last 1 year Last 3 years Last 5 years

Debt Oriented Schemes Crisil Escorts Escorts Composite Income Income Bond Fund Plan Bond Index 3.08 7.56% 8.83% 7.00% -1.18% 3.41% 6.91% 9.72% 2.79% 5.41% 7.00% 5.59%

Since launch of the Scheme

9.48%

6.64%

N.A

Equity Oriented Schemes Period Last 6 months Last 1 year Last 3 years Last 5 years Escorts High Yield Equity Plan 6.79% 64.53% 6.26% N.A. CNX 100 5.00% 83.09% 11.91% N.A. Escorts Power Energy Fund 5.02% 63.45% N.A. N.A. BSE Power Index 0.31% 67.06% N.A. N.A.

Since launch of the Scheme

5.59%

9.69%

38.74%

12.04%

Period Last 6 months Last 1 year Last 3 years Last 5 years Since launch of the Scheme

I - Sec MiBEX 2.57% 4.99% 8.31% 6.65%

Balanced Schemes Escorts Escorts Opportunities Balanced Fund Fund 2.79% 6.12% 13.12% 58.78% 2.82% 9.66% 6.74% 17.18%

Crisil Balanced Fund Index 3.27% 47.31% 11.38% 15.92%

Escorts Liquid Plan 2.17% 6.29% 8.19% N.A.

Liquid Scheme Escorts Crisil Floating Liquid Rate Fund Fund Index 2.75% 1.60% 5.14% 3.69% 8.08% 6.66% N.A. N.A 6.40%ELP, 6.24%-EFR

N.A.

11.26%

21.67%

N.A.

7.43%

7.12%

LOAD STRUCTURE
1. Following shall be the load structure in case of Escorts Growth Plan, Escorts High Yield Equity Plan, Escorts Leading Sectors Fund and Escorts Power & Energy Fund with effect from 10th January, 2009: Entry Load: - 2.25% (Nil for direct applications) Exit Load: a. If the amount is withdrawn < = 6 months - 1.00%. b. If the amount is withdrawn after 6 months and upto 1 year (> 6 months and <= 1year) - 0.50%. 2. Following shall be the load structure in case of Escorts Opportunities Fund with effect from 10th January, 2009: Option A Minimum Investment Amount – Rs. 1,000/- : Growth Option & Dividend Re-investment Option Rs. 30,000/- : Dividend Option Additional Investment Amount – Rs. 1,000/Entry Load – 1.25% (Nil for direct applications) Exit Load – 1% if redemption < = 365 days of allotment. Option B Minimum Investment Amount – Rs. 50,000/Additional Investment Amount – Rs. 10,000/Entry Load – NIL Exit Load – 1% if redemption < = 365 days of allotment.

CHANGE IN TERMS OF SYSTEMATIC INVESTMENT PLAN / INTRODUCTION OF AUTO DEBIT (ECS) FORM
Auto Debit (ECS) Form facility is being introduced in Escorts Mutual Fund. Following shall be the terms of Systematic Investment Plan (SIP) under Escorts Income Bond, Escorts Income Plan, Escorts Tax Plan, Escorts Opportunities Fund, Escorts Growth Plan, Escorts Gilt Plan, Escorts Balanced Fund, Escorts High Yield Equity Plan, Escorts Leading Sectors Fund and Escorts Power & Energy Fund with effect from 10th January, 2009: 1. Minimum Investment Amount Monthly Option - Rs. 1,000/- per month subject to minimum 6 installments. Quarterly Option - Rs. 1,500/- per quarter subject to minimum 4 installments. However, for SIP under Escorts Opportunities Fund, the minimum and additional amounts applicable under various options shall be as given above under Option A and Option B. 2. SIP Dates – 1st, 10th and 25th of every month. 3. Registration of SIP – SIP to be registered by the investors with Escorts Mutual Fund at least 30 clear days before the first SIP date. 4. Validity of SIP – As indicated by the investors in the application form against SIP

Start Date and SIP End Date. If SIP End Date is not filled the SIP Auto Debit will be considered perpetual till further instructions are received from the investor. 5. Termination of SIP – If 3 consecutive SIPs fail, the SIP will be automatically terminated without any notice to investors. However, in case the investor gives in writing to discontinue SIP, the instructions must reach Escorts Mutual Fund atleast 20 clear days from the next SIP date. All other terms and conditions of the schemes will remain unchanged. This addendum forms an integral part of the Offer Documents of Escorts Mutual Fund as Amended from time to time. Addendum dated 05.01.2009. Statutory Details: Escorts Mutual Fund has been constituted as a Trust under the Indian Trust Act, 1882 with Escorts Finance Ltd. as its sponsor/settler and Escorts Investment Trust Ltd. as its sole Trustee. Escorts Asset Management Ltd. has been incorporated under the provisions of the Companies Act, 1956 and has been appointed as the investment manager of Escorts Mutual Fund. Risk Factors: All Mutual Funds and securities investments are subject to market risks and there is no assurance and no guarantee that the Fund's objectives will be achieved. As with any investment in stocks and shares, the Net Asset Value (NAV) of the Units issued under the Schemes can go up or down depending on the factors and forces affecting the capital markets such as price and volume volatility in stock markets, interest rates, currency exchange rates, change in Government policies, taxation, political or economic developments and closure of stock exchanges, liquidity and settlement systems in equity and debt markets. Past performance of the Sponsor / Asset

Management Company / Mutual Fund does not guarantee the future performance of the schemes of the Mutual Fund. Escorts Income Bond, Escorts Income Plan, Escorts Tax Plan, Escorts Opportunities Fund, Escorts Gilt Plan, Escorts Growth Plan, Escorts Balanced Fund, Escorts High Yield Equity Plan, Escorts Leading Sectors Fund and Escorts Power & Energy Fund are only the names of the Schemes and do not in any manner indicate either the quality of the Scheme or its future prospects and returns. Please read the Offer Documents before investing.

Taxation And Mutual Fund Investments
One key point to keep in mind when investing , is how that investment is going to be taxed. Given below are the facts one needs to know regarding taxation of mutual funds: Equity Funds  As an investor if you have opted for the dividend option, for the reason that you want cash inflows to be managed through dividends, then the dividends which you received under the scheme is completely exempt from tax under section 10(35) of the Income Tax Act, 1961.  If you are caught in the wrong habit of short-term (period of less than 12 months) trading, then you better be ready to forgo your profits/capital gains, if any, in the form of Short Term Capital Gains (STCG) tax. STCG are subject to taxation @ 15% plus a 3% education cess.

 If an investor deploys his money for long-term (over a period of 12 months) and thus subscribe to a good habit of long-term investing, then there is no tax liability towards any Long Term Capital Gain (LTCG)  If an investor deploys his money in an Equity Linked Saving Scheme (ELSS), then he enjoys a tax deduction under section 80C of the Income Tax Act, which enables him to reduce his Gross Total Income (GTI). However, this

benefit can be availed by investors upto a maximum sum of Rs 1,00,000. Also at the time of exiting (after 3 years of lock-in) from the fund the investor will not be liable to any LTCG tax  Investors will also have to bear a Securities Transaction Tax (STT) @ 0. 25%; this is levied at the time of redemption of mutual fund units. Debt Funds  Similarly, in a debt funds too, if investors have opted for the dividend option, to manage your cash inflows, then the dividend which the scheme declares will be subject to an additional tax on income distributed. Hence, in such a case investors are actually paying the tax indirectly.  Unlike equity funds, in debt funds, investors are liable to pay a tax on their Long Term Capital Gains (LTCG), which is 10% without the benefit of indexation and 20% with the benefit of indexation.  Similarly, in case of Short Term Capital Gains (STCG), the individual assesses will be taxed at the rate, in accordance to the tax slabs Unlike in case of equity mutual funds, investors will not have pay any Securities Transaction Tax (STT)

Chapter - 3

Objectives and scope
OBJECTIVES OF THE STUDY 1. To find out the Preferences of the investors for Asset Management Company. 2. To know the Preferences for the portfolios. 3. To know why one has invested or not invested in Escort Mutual fund 4. To find out the most preferred channel. 5. To find out what should do to boost Mutual Fund Industry. Scope of the study A big boom has been witnessed in Mutual Fund Industry in resent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The research was carried on in Lucknow. I had been sent at one of the branch of State Bank of India Lucknow where I completed my Project work. I surveyed on my Project Topic “Growth story of mutual fund in India with special Reference to Escort mutual fund” portfolio, mode of investment, option for getting return and so on they prefer. This project report may help the company to make further planning and strategy.

Chapter – 4

Research Methodology

RESEARCH METHODOLOGY This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem . It also helps in collecting the vital information that is required by the top management to assist them for the better decision making bothday to day decision and critical ones. Data sources: Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites. Duration of Study: The study was carried out for a period of two months, from 30th May to 30th July 2008.

Sampling:
Sampling procedure: The sample was selected of them who are the customers/visitors of Mutual fund‟

Sample size: The sample size of my project is limited to 200 people only. Out of which only 120 people had invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund. Sample design: Data has been presented with the help of bar graph, pie charts, line graphs etc.

Limitation:
Some of the persons were not so responsive. Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire. Sample size is limited to 200 visitors of Escort mutul fund ,Lucknow out of these only 120 had invested in Mutual Fund. The sample. size may not adequately represent the whole market. Some respondents were reluctant to divulge personal information which can affect the validity of all responses. The research is confined to a certain part of Lucknow.

Chapter – 5

Data Analysis & Interpretation
ANALYSIS & INTERPRETATION OF THE DATA 1. (a) Age distribution of the Investors of Lucknow.

Age group of the Investors Investors invested in Mutual Fund According to this chart out of 120 Mutual Fund investors of Lucknow the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

Out of 120 Mutual Fund investors 71% of the investors in Dehradoon are Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

© Occupation of investor in lucknow.

Figure 1

Govt. Service Pvt. Service Business Agriculture Others Occupation of the customers

No. of Investors Occupation No. of Investors Govt. Service 30 Interpretation: In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others. Income Group No. of Investors (d).Monthly Family Income

(d).Monthly Family Income of the investors of Lucknow.

20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly income group of more than Rs. 30,000 and the minimum investors i.e. 4%

Interpretation: From the above graph it can be inferred that out of 200 people,

97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust

Interpretation: From the above chart it is inferred that 67% People are aware of Mutual Fund and its

operations and 33% are not aware of Mutual Fund and its operations.

MUTUAL FUND COMPANIES IN INDIA
1. AIG Global Investment Group Mutual Fund

2. Bharti AXA Mutual Fund 3. Birla Sun Life Mutual Fund 4. Canara Robeco Mutual Fund 5. DBS Chola Mutual Fund 6. DSP BlackRock Mutual Fund 7. DWS Mutual Fund 8. Edelweiss Mutual Fund 9. Escort Mutual Fund 10. Fidelity Mutual Fund 11. Fortis Mutual Fund 12. Franklin Templeton Mutual Fund 13. HDFC Mutual Fund 14. HSBC Mutual Fund 15. ICICI Prudential Mutual Fund

16. IDFC Mutual Fund 17. ING Mutual Fund 18. JM Financial Mutual Fund 19. JPMorgan Mutual Fund 20. Kotak Mahindra Mutual Fund 21. LIC Mutual Fund 22. Lotus India Mutual Fund 23. Mirae Asset Mutual Fund 24. Principal Mutual Fund 25. Reliance Mutual Fund 26. Sahara Mutual Fund 27. SBI Mutual Fund 28. Sundaram BNP Paribas Mutual Fund 29. Tata Mutual Fund

30. Taurus Mutual Fund 31. UTI Mutual Fund

ABN AMRO Mutual Fund
ABN AMRO Mutual Fund was setup on April 15, 2004 with ABN AMRO Trustee (India) Pvt. Ltd. as the Trustee Company. The AMC, ABN AMRO Asset Management (India) Ltd. was incorporated on November 4, 2003. Deutsche Bank A G is the custodian of ABN AMRO Mutual Fund.

Birla Sun Life Mutual Fund
Birla Sun Life Mutual Fund is the joint venture of Aditya Birla Group and Sun Life Financial. Sun Life Financial is a global organization evolved in 1871 and is being represented in Canada, the US, the Philippines, Japan, Indonesia and Bermuda apart from India. Birla Sun Life Mutual Fund follows a conservative long-term approach to investment. Recently it crossed AUM of Rs. 10,000 Crores.

Baroda Mutual Fund (BOB Mutual Fund)
Bank of Baroda Mutual Fund or BOB Mutual Fund was setup on October 30, 1992 under the sponsorship of Bank of Baroda. BOB Asset Management Company Limited is the AMC of BOB Mutual Fund and was incorporated on November 5, 1992. Deutsche Bank AG is the custodian.

HDFC Mutual Fund
HDFC Mutual Fund was setup on June 30, 2000 with two sponsors namely Housing Development Finance Corporation Limited and Standard Life Investments Limited.

HSBC Mutual Fund
HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital

Markets (India) Private Limited as the sponsor. Board of Trustees, HSBC Mutual Fund acts as the Trustee Company of HSBC Mutual Fund.

ING Vysya Mutual Fund
ING Vysya Mutual Fund was setup on February 11, 1999 with the same named Trustee Company. It is a joint venture of Vysya and ING. The AMC, ING Investment Management (India) Pvt. Ltd. was incorporated on April 6, 1998.

Prudential ICICI Mutual Fund
The mutual fund of ICICI is a joint venture with Prudential Plc. of America, one of the largest life insurance companies in the US of A. Prudential ICICI Mutual Fund was setup on 13th of October, 1993 with two sponsors, Prudential Plc. and ICICI Ltd. The Trustee Company formed is Prudential ICICI Trust Ltd. and the AMC is Prudential ICICI Asset Management Company Limited incorporated on 22nd of June, 1993.

Sahara Mutual Fund
Sahara Mutual Fund was set up on July 18, 1996 with Sahara India Financial Corporation Ltd. as the sponsor. Sahara Asset Management Company Private Limited incorporated on August 31, 1995 works as the AMC of Sahara Mutual Fund. The paid-up capital of the AMC stands at Rs 25.8 crore.

State Bank of India Mutual Fund
State Bank of India Mutual Fund is the first Bank sponsored Mutual Fund to launch offshore fund, the India Magnum Fund with a corpus of Rs. 225 cr. approximately. Today it is the largest Bank sponsored Mutual Fund in India. They have already launched 35 Schemes out of which 15 have already yielded handsome returns to investors. State Bank of India Mutual Fund has more than Rs. 5,500 Crores as AUM. Now it has an investor base of over 8 Lakhs spread over 18 schemes.

Tata Mutual Fund
Tata Mutual Fund (TMF) is a Trust under the Indian Trust Act, 1882. The sponsors for Tata Mutual Fund are Tata Sons Ltd., and Tata Investment Corporation Ltd. The investment manager is Tata Asset Management Limited and its Tata Trustee Company Pvt. Limited. Tata Asset Management Limited's is one of the fastest in the country with more than Rs. 7,703 Crores (as on April 30, 2005) of AUM.

Kotak Mahindra Mutual Fund
Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of KMBL. It is presently having more than 1, 99,818 investors in its various schemes. KMAMC started its operations in December 1998. Kotak Mahindra Mutual Fund offers schemes catering to investors with varying risk - return profiles. It was the first company to launch dedicated gilt scheme investing only in government securities.

Unit Trust of India Mutual Fund
UTI Asset Management Company Private Limited, established in Jan 14, 2003, manages the UTI Mutual Fund with the support of UTI Trustee Company Private Limited. UTI Asset Management Company presently manages a corpus of over Rs.20000 Crore. The sponsors of UTI Mutual Fund are Bank of Baroda (BOB), Punjab National Bank (PNB), State Bank of India (SBI), and Life Insurance Corporation of India (LIC). The schemes of UTI Mutual Fund are Liquid Funds, Income Funds, Asset Management Funds, Index Funds, Equity Funds and Balance Funds.

Reliance Mutual Fund
Reliance Mutual Fund (RMF) was established as trust under Indian Trusts Act, 1882. The sponsor of RMF is Reliance Capital Limited and Reliance Capital Trustee Co. Limited is the Trustee. It was registered on June 30, 1995 as Reliance Capital Mutual Fund which was changed on March 11, 2004. Reliance Mutual Fund was formed for launching of various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities.

Standard Chartered Mutual Fund
Standard Chartered Mutual Fund was set up on March 13, 2000 sponsored by Standard Chartered Bank. The Trustee is Standard Chartered Trustee Company Pvt. Ltd. Standard Chartered Asset Management Company Pvt. Ltd. is the AMC which was incorporated with SEBI on December 20, 1999.

Franklin Templeton India Mutual Fund

The group, Franklin Templeton Investments is a California (USA) based company with a global AUM of US$ 409.2 bn. (as of April 30, 2005). It is one of the largest financial services groups in the world. Investors can buy or sell the Mutual Fund through their financial advisor or through mail or through their website. They have Open end Diversified Equity schemes, Open end Sector Equity schemes, Open end Hybrid schemes, Open end Tax Saving schemes, Open end Income and Liquid schemes, closed end Income schemes and Open end Fund of Funds schemes to offer.

Morgan Stanley Mutual Fund India
Morgan Stanley is a worldwide financial services company and it‟s leading in the market in securities, investment management and credit services. Morgan Stanley Investment Management (MISM) was established in the year 1975. It provides customized asset management services and products to governments, corporations, pension funds and non-profit organisations. Its services are also extended to high net worth individuals and retail investors. In India it is known as Morgan Stanley Investment Management Private Limited (MSIM India) and its AMC is Morgan Stanley Mutual Fund (MSMF). This is the first close end diversified equity scheme serving the needs of Indian retail investors focusing on a long-term capital appreciation.

Escorts Mutual Fund
Escorts Mutual Fund was setup on April 15, 1996 with Escorts Finance Limited as its sponsor. The Trustee Company is Escorts Investment Trust Limited. Its AMC was incorporated on December 1, 1995 with the name Escorts Asset Management Limited.

Alliance Capital Mutual Fund
Alliance Capital Mutual Fund was setup on December 30, 1994 with Alliance Capital Management Corp. of Delaware (USA) as sponsor. The Trustee is ACAM Trust Company Pvt. Ltd. and AMC, the Alliance Capital Asset Management India (Pvt) Ltd. with the corporate office in Mumbai.

Benchmark Mutual Fund
Benchmark Mutual Fund was setup on June 12, 2001 with Niche Financial Services Pvt. Ltd. as the sponsor and Benchmark Trustee Company Pvt. Ltd. as the Trustee Company. Incorporated on October 16, 2000 and headquartered in Mumbai, Benchmark Asset Management Company Pvt. Ltd. is the AMC.

Canbank Mutual Fund
Canbank Mutual Fund was setup on December 19, 1987 with Canara Bank acting as the sponsor. Canbank Investment Management Services Ltd. incorporated on March 2, 1993 is the AMC. The Corporate Office of the AMC is in Mumbai.

Chola Mutual Fund
Chola Mutual Fund under the sponsorship of Cholamandalam Investment & Finance Company Ltd. was setup on January 3, 1997. Cholamandalam Trustee Co. Ltd. is the Trustee Company and AMC is Cholamandalam AMC Limited.

LIC Mutual Fund
Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989. It contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. . The Company started its business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed Jeevan Bima Sahayog Asset Management Company Ltd as the Investment Managers for LIC Mutual Fund.

GIC Mutual Fund
GIC Mutual Fund, sponsored by General Insurance Corporation of India (GIC), a Government of India undertaking and the four Public Sector General Insurance Companies, viz. National Insurance Co. Ltd (NIC), The New India Assurance Co. Ltd. (NIA), The Oriental Insurance Co. Ltd (OIC) and United India Insurance Co. Ltd. (UII) and is constituted as a Trust in accordance with the provisions of the Indian Trusts Act, 1882.

TOP 10 MUTUAL FUND COMPANIES IN INDIA
1. HDFC Mutual Fund
Inception Date – June 30th 2000 Trustee – HDFC Trustee Company Ltd.

Top Performing Schemes – AUM as on 30th April 09  HDFC Top 200 (2338 Cr)  HDFC Equity (2759.30 Cr)  HDFC MIP Long-term (887.90 Cr)

2. Tata Mutual Fund
Inception Date – June 30th 1995 Trustee – Tata Trustee Company Pvt. Ltd. Top Performing Schemes – AUM as on 30th April 09  Tata Pure Equity (269.95 Cr)  Tata Index Nifty (6.77 Cr)  Tata Short-term Bond (292.08 Cr)

3. SBI Mutual Fund
Inception Date – June 29th 1987 Trustee – SBI Mutual Fund Trustee Company Pvt. Ltd. Top Performing Schemes – AUM as on 30th April 09  Magnum Contra (1,958.50 Cr)  Magnum Balanced (333.11 Cr)  Magnum Multiplier Plus (687.15 Cr)

4. Reliance Mutual Fund
Inception Date - June 30th 1995 Trustee – Reliance Capital Trustee Company Ltd. Top Performing Schemes – AUM as on 30th April 09  Reliance MIP (168.52 Cr)  Reliance Banking Retail (681.25 Cr)  Reliance Diversified Power Sector Fund (3809.57 Cr)

5. DSP BlackRock Mutual Fund
Inception Date – December 16th 1996 Trustee – DSP Merrill Lynch Trustee Company Pvt. Ltd. Top Performing Schemes – AUM as on 30th April 09  DSPBR top 100 Equity (1167.08 Cr)  DSPBR Equity (919.77 Cr)  DSPBR GSF Longer Duration (425.67 Cr)

6. Kotak Mutual Fund
Inception Date – June 23rd 1998 Trustee – Kotak Mahindra Trustee Company Ltd. Top Performing Schemes – AUM as on 30th April 09  Kotak Bond Regular (445.69 Cr)  Kotak 30 (688.14 Cr)  Kotak Opportunities (658.50 Cr)

7. Principal Mutual Fund
Inception Date – November 25th 1994 Trustee – Principal Trustee Co. Pvt. Ltd Top Performing Schemes – AUM as on 30th April 09  Principal Child Benefit (19.81 Cr)  Principal Index (21.88 Cr)  Principal Personal Tax Saver (332.53 Cr)

8. Sundaram BNP Paribas Mutual Fund
Inception Date – August 24th 1996 Trustee – Sundaram BNP Paribas Trustee Company Limited Top Performing Schemes – AUM as on 30th April 09  Sundaram BNP Paribas TaxSaver (703.54 Cr)  Sundaram BNP Paribas Select Focus Fund (880.78 Cr)  Sundaram BNP Paribas Bond Saver (59.12 Cr)

9. Franklin Templeton Mutual Fund
Inception Date – February 19th 1996 Trustee – Franklin Templeton Trustee Services Pvt. Ltd. Top Performing Schemes – AUM as on 30th April 09  Franklin India Blue Chip Fund (1642.87 Cr)  Templeton IGSF PF (32.68 Cr)  Franklin India Prima Plus (1153.20 Cr)

10.

Birla Sun Life Mutual Fund
Inception Date - December 24th 1994 Trustee – Birla Sun Life Trustee Co. Ltd. Top Performing Schemes – AUM as on 30th April 09  Birla GSF Long Term (10.48 Cr.)  Birla Frontline Equity (481.14 Cr)  Birla'95 (127.12 Cr)

1. Professional Management - The basic advantage of funds is that, they are professional managed, by well qualified professional. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is considered to be relatively less expensive way to make and monitor their investments. 2. Diversification - Purchasing units in a mutual fund instead of buying individual stocks or bonds, the investors risk is spread out and minimized up to certain extent. The idea behind diversification is to invest in a large number of assets so that a loss in any particular investment is minimized by gains in others.

3. Economies of Scale - Mutual fund buy and sell large amounts of securities at a time, thus help to reducing transaction costs, and help to bring down the average cost of the unit for their investors. 4. Liquidity - Just like an individual stock, mutual fund also allows investors to liquidate their holdings as and when they want. 5. Simplicity - Investments in mutual fund is considered to be easy, compare to other available instruments in the market, and the minimum investment is small. Most AMC also have automatic purchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis. 6. Tax benefits -We do not have to pay any taxes on dividends issued by mutual funds. We also have the advantage of capital gains taxation. Tax-saving schemes and pension schemes give us the added advantage of benefits under section88.

DISADVANTAGES OF MUTUAL FUNDS:
1. Professional Management- Some funds don‟t perform in

neither the market, as their management is not dynamic enough to explore the available opportunity in the market, thus many investors debate over whether or not the so-called professionals are any better than mutual fund or investor himself, for picking up stocks.
2. Costs – The biggest source of AMC income is generally from

the entry & exit load which they charge from investors, at the time of purchase. The mutual fund industries are thus charging extra cost under layers of jargon.

3. Dilution - Because funds have small holdings across different

companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the result of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. 4. Taxes-When making decisions about your money, fund managers don't consider your personal tax situation.

Mutual Funds Industry in India
The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase; the Assets under Management (AUM) were Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 in March 1993 and till April 2004; it reached the height of 1,540 bn. Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility of all mutual fund companies, to market the product correctly abreast of selling. The mutual fund industry can be broadly put into four phases according to the development of the sector. First Phase - 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the

RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI. The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 Crores of assets under management. Second Phase - 1987-1993 (Entry of Public Sector Funds) Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug,89), Indian Bank Mutual Fund (Nov,89), Bank of India (Jun, 90), Bank of Baroda Mutual Fund (Oct 92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management. Third Phase - 1993-2003 (Entry of Private Sector Funds) With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except UTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at

the end of January 2003, there were 33 mutual funds with total assets of Rs. 1, 21,805 Crores. The Unit Trust of India with Rs.44, 541 Crores of assets under management was way ahead of other mutual funds. Fourth Phase - since February 2003 This phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 Crores (as on January 2003). The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76, 000 Crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of September, 2004, there were 29 funds, which manage assets of Rs.153108 Crores under 421 schemes.

SWOT ANALYSIS
Strength’s  SEBI/AMFI has taken an active role in protecting investor‟s interest through regulations certifications and code of conduct.  Open product architecture i.e. distributors offer a range of Mutual fund products to choose from.  Has often added as a counterbalance to equity market volatility and market liquidity. Weakness  Limited channels of distribution i.e. banks and agent account for more than 70% of distribution of mutual funds.  Lack of effort of wealth managers in educating the market about the mutual products has been the cause of low penetration.  Absence of global policies on global mutual funds. Opportunities  Mutual fund investment as a % of Household savings invested in financial assets is less than 1%  Because of the economic growth, investors are actively diversifying their income into various funds.  Mutual funds in India permitted to invest up to 10 % of the net assets abroad in foreign securities

Threats  Large number of substitutes available to Indian investorDeposit, equities and real estate.  In India low risk investment products like PPF offer high returns.  As more foreign players enter India through the JV route, investors in India will need to educate themselves about abroad risks.

BIBLIOGRAPHY
WEBSITES www.google.com www.yahoo.com www.wikipedia.com www.indiainfoline.com www.amfiindia.com www.moneycontrol.com www.escortsmutual.com

BOOKS
Financial Institutions and Markets – L.M Bhole Securities Laws and Compliances –ICSI

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