EXECEUTIVE SUMMARY CHAPTER 1

This chapter basically deals with what exactly mutual funds are and how did they evolve. Mutual fund is a kind of investment from many investors and a fund manager invests these funds in other types of investment for which he gets a fee. There are thousands of different kinds of mutual funds, specializing in investing in different countries, different types of businesses, and different investment styles. There are even some funds that only invest in other funds. The mutual fund industry was previously started by kings of different territories. These mutual funds were not exactly mutual funds but collective funds; they collected capital from small investors and gave them fair return on investment After the kings rule there were certain mutual funds companies established and went on diversifying. Different countries have different types of mutual funds and different type of schemes with different net asset value and other respective feature. In this modern era the funds were classified and later on many new innovations were carried out on mutual funds in different countries. This chapter has defined in detail how the mutual funds have evolved from a prehistoric era and now in todays modern world what mutual funds position are to an investor.

EXECEUTIVE SUMMARY CHAPTER 2

This chapter tells us how mutual fund exactly works. Mutual funds have diversified investments spread in calculated proportions amongst securities of various economic sectors. Mutual funds get their earnings in two ways. First is the dividend they get on the securities they hold. Second is by the redemption of their shares by investors will be at a discount to the current NAVs (net asset values). Do we know what nav. is? So this will clearly know about the net asset value. We also know that mutual funds are risky and some times risk free. Mutual fund investment is done by the professional portfolio manager. His presence in the investment is like a broker in shares. This chapter tells us the reason for investment in the mutual funds. If we are considering investing in stock market and are afraid of its somewhat unpredictable fluctuations, we can definitely consider investing in mutual funds. Mutual funds have gained in popularity with the investing public especially in the last two decades following what is now known as the longest bull run of twenty years. Mutual funds have created wealth for retirees and general safe financial players with the rise in stock prices. This chapter also tells us the procedure to invest in mutual fund and also its registration with the security exchange board of India. There are many other facets of SEBI with regards to working of mutual funds Further the advantages and disadvantage are discussed.

EXECEUTIVE SUMMARY CHAPTER 3 In the chapter 3 various types of mutual funds are discussed and the schemes of different types are discussed in brief. TYPES: Closed-End Fund Open-End Fund Growth Funds Income Funds Balanced Funds Money Market Funds Tax Saving Schemes Index Schemes Sectoral Scheme. Different plans of mutual funds: Growth Option Dividend Payout Option Dividend Re-investment Option Retirement Pension Option Systematic Investment Plan (SIP) Insurance Option Systematic Withdrawal Plan (SWP

EXECEUTIVE SUMMARY CHAPTER 4 In chapter 4 different major companies for mutual fund are discussed in detail. ABN AMRO Mutual Fund Birla Sun Life Mutual Fund Bank of Baroda Mutual Fund (BOB Mutual Fund) HDFC Mutual Fund HSBC Mutual Fund ING Vysya Mutual Fund Prudential ICICI Mutual Fund Sahara Mutual Fund State Bank of India Mutual Fund Tata Mutual Fund Kotak Mahindra Mutual Fund Unit Trust of India Mutual Fund Reliance Mutual Fund Standard Chartered Mutual Fund Franklin Templeton India Mutual Fund Morgan Stanley Mutual Fund India Escorts Mutual Fund Alliance Capital Mutual Fund Benchmark Mutual Fund Canbank Mutual Fund Chola Mutual Fund LIC Mutual Fund GIC Mutual Fund

EXECEUTIVE SUMMARY CHAPTER 5 ] In chapter 5, the mutual fund industry and its future is discussed. In the coming years the mutual funds liquidity is going to disappear but there is a good opportunity for the young investors to invest in the gold and real estate mutual funds. This chapter discusses the following future options for mutual fund industry. Historically, gold has been a proven method of preserving value when a national currency was losing value. If your investments are valued in a depreciating currency, allocating a portion to gold assets is similar to a financial insurance policy. In the past year, the climb in the price of gold above $700 per ounce is due to many factors, one being that the dollar is losing value. Reasons are favoring to invest to Gold The SEBI Board has now approved the guidelines for the much awaited Real Estate Mutual Funds. "Real Estate Mutual Fund Scheme" is defined to mean a scheme of a mutual fund which has investment objective to invest directly or indirectly in real estate property This was a brief idea about the mutual funds after describing in short it will enthusiastic to learn in detail the mutual funds.

CHAPTER 1: INTRODUCTION EQUITY MARKETS WITH RESPECT TO MUTUAL FUNDS.

What are mutual funds? A mutual fund is a kind of investment that uses money from many investors to invest in stocks, bonds or other types of investment. A fund manager (or "portfolio manager") decides how to invest the money, and for this he is paid a fee, which comes from the money in the fund. Mutual funds are usually "open ended", meaning that new investors can join into the fund at any time. When this happens, new units, which are like shares, are given to the new investors. There are thousands of different kinds of mutual funds, specializing in investing in different countries, different types of businesses, and different investment styles. There are even some funds that only invest in other funds.

History of mutual funds In the Beginning Historians were uncertain of the origins of investment funds some cite the closed-end investment companies launched in the Netherlands in 1822 by King William I as the first mutual funds, while others point to a Dutch merchant named Adriaan van Ketwich whose investment trust created in 1774 may have given the king the idea. Ketwich probably theorized that diversification would increase the appeal of investments to smaller investors with minimal capital. The name of Ketwich's fund, Eendragt Maakt Magt,

translates to "unity creates strength". The next wave of near-mutual funds included an investment trust launched in Switzerland in 1849, followed by similar vehicles created in Scotland in the 1880s. The idea of pooling resources and spreading risk using closed-end investments soon took root in Great Britain and France, making its way to the United States in the 1890s. The Boston Personal Property Trust, formed in 1893, was the first closed-end fund in the U.S. The creation of the Alexander Fund in Philadelphia in 1907 was an important step in the evolution toward what we know as the modern mutual fund. The Alexander Fund featured semi-annual issues and allowed investors to make withdrawals on demand.

The Arrival of the Modern Fund The creation of the Massachusetts Investors' Trust in Boston, Massachusetts, heralded the arrival of the modern mutual fund in 1924. The fund went public in 1928, eventually spawning the mutual fund firm known today as MFS Investment Management. State Street Investors' Trust was the custodian of the Massachusetts Investors' Trust. Later, State Street Investors started its own fund in 1924 with Richard Paine, Richard Saltonstall and Paul Cabot at the helm. Saltonstall was also affiliated with Scudder, Stevens and Clark, an outfit that would launch the first noload fund in 1928. A momentous year in the history of the mutual fund, 1928 also saw the launch of the Wellington Fund, which was the first mutual fund to include stocks and bonds, as opposed to direct merchant bank style of investments in business and trade. By 1929, there were 19 open-ended mutual funds competing with nearly 700 closed-end funds. With the stock market crash of 1929, the dynamic began to change as highly leveraged closed-end funds were wiped out and small open-end funds managed to survive. The creation of the Securities and Exchange Commission (SEC), the passage of the Securities Act of 1933 and the enactment of the Securities Exchange Act of 1934 put 7

in place safeguards to protect investors: mutual funds were required to register with the SEC and to provide disclosure in the form of a prospectus. The Investment Company Act of 1940 put in place additional regulations that required more disclosures and sought to minimize conflicts of interest. The mutual fund industry continued to expand. At the beginning of the 1950s, the number of open-end funds topped 100. In 1954, the financial markets overcame their 1929 peak, and the mutual fund industry began to grow in earnest, adding some 50 new funds over the course of the decade. The 1960s saw the rise of aggressive growth funds, with more than 100 new funds established and billions of dollars in new asset inflows. Hundreds of new funds were launched throughout the 1960s until the bear market of 1969 cooled the public appetite for mutual funds. Money flowed out of mutual funds as quickly as investors could redeem their shares, but the industry's growth later resumed. With the 1980s and '90s came bull market mania and previously obscure fund managers became superstars; Max Heine, Michael Price and Peter Lynch, the mutual fund industry's top gunslingers, became household names and money poured into the retail investment industry at a stunning pace Despite the 2003 mutual fund scandals and the global financial crisis of 2008-2009, the story of the mutual fund is far from over. In fact, the industry is still growing. In the U.S. alone there are more than 10,000 mutual funds, and if one accounts for all share classes of similar funds, fund holdings are measured in the trillions of dollars. Despite the launch of separate accounts, exchange-traded funds and other competing products, the mutual fund industry remains healthy and fund ownership continues to grow.

CHAPTER 2: WORKING OF MUTUAL FUNDS.

How mutual funds work Mutual funds can be either or both of open ended and closed ended investment companies depending on their fund management pattern. An open-end fund offers to sell its shares (units) continuously to investors either in retail or in bulk without a limit on the number as opposed to a closed-end fund. Closed end funds have limited number of shares.

Mutual funds have diversified investments spread in calculated proportions amongst securities of various economic sectors. Mutual funds get their earnings in two ways. First is the most organic way, which is the dividend they get on the securities they hold. Second is by the redemption of their shares by investors will be at a discount to the current NAVs (net asset values).

NAV: Basically, this is the investment company's best assessment of the value of a portfolio holdings in their fund, and is what you see listed in the paper. They use the daily closing price of all securities held by the fund, subtract some amount for liabilities, and divide the result by the number of outstanding units in the fund and Poof! You have the NAV. The fund company will sell you units at that price or will buy back your units at that price (possibly less some fee). Net Asset Value (NAV) = (Value of All Securities Held By the Fund - Expenses and Liabilities Of The Fund) % Value Of Outstanding Units In The Fund

Are Mutual Funds Risk Free?

One must not forget the fundamentals of investment that no investment is insulated from risk. Then it becomes interesting to answer why mutual funds are so popular. We can say mutual funds are relatively risked free in the way they invest and manage the funds. The investment from the pool is well diversified across securities and shares from various sectors. The fundamental understanding behind this is not all corporations and sectors fail to perform at a time. And in the event of a security of a corporation or a whole sector doing badly then the possible losses from that would be balanced by the returns from other shares.

This logic has seen the mutual funds to be perceived as risk free investments in the market. Yes, this is not entirely untrue if one takes a look at performances of various mutual funds. This relative freedom from risk is in addition to a couple of advantages mutual funds carry with them. So, if we are a retail investor and planning an investment in securities, we will certainly have to consider the advantages of investing in mutual funds. Lowest per unit investment in almost all the cases Our investment will be diversified Investment managed by professionals.

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Why Invest In Mutual Funds? If you are considering investing in stock market and are afraid of its somewhat unpredictable fluctuations, you can definitely consider investing in mutual funds. Some of the reasons that go strongly in favor of mutual funds are their lowest risk factors owing to diversification of assets in to various sectors and scripts or instruments within. As with the risk, the costs of unit share too are spread across making them affordable by almost any one. If you are looking at open-end funds you can always purchase them from the company at the NAV minus some loads or expenses. The closed end funds give you the flexibility of independent stocks while combining the best of the features of mutual funds.

Will Mutual Funds Definitely Work in our Favor? Mutual funds have gained in popularity with the investing public especially in the last two decades following what is now known as the longest bull run of twenty years. Mutual funds have created wealth for retirees and general safe financial players with the rise in stock prices. Any one who is aware of stock market is not new to mutual funds. Mutual funds have gained in popularity with the investing public especially in the last two decades following what is now known as the longest bull run of twenty years. At the out set mutual funds have created wealth for retirees and general safe financial players with the rise in stock prices. But why invest in mutual funds and why is investing in mutual funds a popular option? How beneficial are they and what are the risk factors involved in mutual funds investing? After all they are also a kind of instruments of investments.

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Are returns from mutual funds guaranteed?

Generally, Mutual Funds do not offer guaranteed returns to investors. Although, SEBI regulations allow Mutual Funds to offer guaranteed returns subject to the Fund meeting certain conditions, most Funds do not offer such guarantees. In case of a guaranteed return scheme, the sponsor or the AMC, guarantees a minimum level of return and makes good the difference if the actual returns are less than the guaranteed minimum. The name of the guarantor and the manner in which the guarantee shall be met must be disclosed in the offer document by the Mutual Fund. The Government of India, the Reserve Bank of India or any other government body, does not guarantee investments in mutual funds. What is the procedure to Invest in Mutual Funds?

Prospective investors who wish to invest in mutual funds have to contact a distributor/agent of mutual funds. Any good agent/distributor would be able to suggest you the appropriate funds from the overall funds available. The normal procedure is to fill-up the required application form and submit it along with a cheque for the amount of investment. Cheques and Demand Drafts are accepted. Payment by cash is not allowed. The agent/distributor would submit the application form with the cheque to the mutual fund company. The mutual fund company would issue you an Account Statement with 4 working days from the date of investment.

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What is the procedure for registering a mutual fund with SEBI? An applicant proposing to sponsor a mutual fund in India must apply in Form A 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 two- thirds 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 Fund s) Regulations, 1996. What is the procedure for redressal of investor grievances? When investors send complaints to SEBI, SEBI takes up the matter with the concerned mutual funds and follows up with them till they are resolved. Can a mutual fund change the asset allocation while deploying funds of investors? Considering the market trends, any prudent fund managers can change the asset allocation i.e. he can invest higher or lower percentage of the fund in equity or debt instruments compared to what is disclosed in the offer document. It can be done on a short term basis on defensive considerations i.e. to protect the NAV. Hence the fund managers are allowed certain flexibility in altering the asset allocation considering the interest of the investors. In case the mutual fund wants to change the asset allocation on a permanent basis, they are required to inform the unit holders and giving them option to exit the scheme at prevailing NAV without any load.

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How long will it take for transfer of units after purchase from stock markets in case of close-ended schemes? According to SEBI Regulations, transfer of units is required to be done within thirty days from the date of lodgment of certificates with the mutual fund. Can a mutual fund change the nature of the scheme from the one specified in the offer document? Yes. However, no change in the nature or terms of the scheme, known as fundamental attributes of the scheme e.g. structure, investment pattern, etc. can be carried out unless a written communication is sent to each unit holder and an advertisement is given in one English daily having nationwide circulation and in a newspaper published in the language of the region where the head office of the mutual fund is situated. The unit holders have the right to exit the scheme at the prevailing NAV without any exit load if they do not want to continue with the scheme 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 can also approach SEBI for redressal of their complaints. On receipt of complaints, SEBI takes up the matter with the concerned mutual fund and follows up with them till the matter is resolved. Investors may send their complaints to SEBI.

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Advantages of Mutual Funds Professional Management: Mutual funds give a small investor a chance to invest a low amount in a professional manner. It is not feasible for small investments to be managed professionally, on an individual level, because of low capital and low returns for the managing company. Once you decide on a mutual fund to take care of your investment, all these charges can be avoided. You needn't be an expert in trading or market analysis for making an investment. A professional fund manager make decisions on behalf of every small investor who put in money through the firm, thus saving valuable time and effort. Diversification: A good investment practice involves diversifying the amount in different stocks or bonds. It provides the option to hold a number of securities and reduce the risk of losing money, which is not subject to the volatility of a single stock. Lower transaction costs: If you want to make an individual investment, it would involve a large transaction cost. On the other hand, a mutual fund involves a large amount of capital to be traded. Therefore, it bears a small transaction cost, which eventually translates into a small transaction fee to be paid by an investor. Liquidity: Mutual funds allow the liquefying of assets within a short period. Close-end funds may trade below or above the Net Asset Values, in which case, the investment recovered depends on the NAV of the security invested into. But the entire investment can be regained in two business days for an open-ended mutual fund. 15

 Low initial costs and service: No-load mutual funds, which are a part of open-ended mutual funds, do not require transaction costs. An open-ended fund can be bought or sold with no premium or sale charge associated with it. Any doubt or clarification regarding the nature of your investments can be immediately sought from a mutual funds company along with other professional services like software aided portfolio management. Disadvantages of Mutual Funds.

High costs and risks: Mutual funds require a detailed study of the investment options as the fee charged by the management firm can be quite high. Mutual funds are subjected to market risks or asset risks. If the investment is not sufficiently diversified, it may involve huge losses. Tax issues: Although, the returns on investments are quite high, a mutual fund cannot guarantee lower tax bills. The tax amounts are usually high, especially in case of short-term gains. Moreover, it is the fund manager who handles these issues and you cannot dictate terms on the amount of tax to be paid. Investor issues and company profile:

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In case of repeated investments by new entrants, the value of shares owned by current or existing investor decreases significantly. Also, a mutual fund requires a deep and long term analysis of the amount of investment and its potential investment areas. If the company fund managers are changing regularly, it may adversely affect the returns on your investment. A mutual fund organization is, however, characterized by frequent changes in jobs and positions.

CHAPTER 3: MUTUAL FUND TYPES AND SCHEMES INVOLVED

What are different types of Mutual Funds? Mutual funds can be classified based on the structure and investment objective. Closed-End Fund Open-End Fund Growth Funds Income Funds Balanced Funds Money Market Funds Tax Saving Schemes Index Schemes Sectoral Scheme. Closed-End Fund A closed-end fund looks much like a stock of a publically traded company. It's traded on some stock exchange, you buy or sell shares in the fund through a broker just like a stock (including paying a commission), the price fluctuates in response to the fund's performance and (very important) what people are willing to pay for it. Also like a publically traded company, only a fixed number of shares are available. These funds have a stipulated maturity period generally ranging from 3 to 15 years. The fund is open for

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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. The market price of closed-end funds is determined by supply and demand and not by net-asset value (NAV), as is the case in open-end funds. Usually closed mutual funds trade at discounts to their underlying asset value. Open-End Fund An open-end fund is the most common variety of mutual fund. Both existing and new investors may add any amount of money they want to the fund. In other words, there is no limit to the number of shares in the fund. Investors buy and sell shares usually by dealing directly with the fund company, not with any exchange. The price fluctuates in response to the value of the investments made by the fund, but the fund company values the shares on its own; investor sentiment about the fund is not considered. Open-end funds keep some portion of their assets in short-term and money market securities to provide available funds for redemptions. A large portion of most open mutual funds is invested in highly liquid securities, which enables the fund to raise money by selling securities at prices very close to those used for valuations. By Investment Objective Growth Funds 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 who have a long-term outlook and are seeking growth over a period of time. Income Funds

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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. Capital appreciation in such funds may be limited, though risks are typically lower than that in a growth fund.

Balanced Funds The aim of Balanced Funds is to provide both growth and regular income. Such schemes periodically distribute a part of their earning and invest both in equities and fixed income securities in the proportion indicated in their offer documents. This proportion affects the risks and the returns associated with the balanced fund - in case equities are allocated a higher proportion, investors would be exposed to risks similar to that of the equity market. Balanced funds with equal allocation to equities and fixed income securities are ideal for investors looking for a combination of income and moderate growth. Money Market Funds 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. Tax Saving Schemes

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These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws, as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction under Section 88 of the Indian Income Tax Act, 1961.

Index Schemes Index Funds attempt to replicate the performance of a particular index such as the BSE Sensex or the NSE S&P CNX 50. Sectoral Schemes Sectoral Funds are those, which invest, exclusively in specified sector(s) such as FMCG, Information Technology, Pharmaceuticals, etc. These schemes carry higher risk as compared to general equity schemes as the portfolio is less diversified, i.e. restricted to specific sector(s) / industry. Bond funds Bond funds account for 18% of mutual fund assets. Types of bond funds include term funds, which have a fixed set of time (short-, medium-, or long-term) before they mature. Municipal bond funds generally have lower returns, but have tax advantages and lower risk. High-yield bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential for high yield, these bonds also come with greater risk. Hedge funds Hedge funds in the United States are pooled investment funds with loose SEC regulation, unlike mutual funds. Some hedge fund managers are required to register with SEC as 20

investment advisers under the Investment Advisers Act. The Act does not require an adviser to follow or avoid any particular investment strategies, nor does it require or prohibit specific investments. Hedge funds typically charge a management fee of 1% or more, plus a performance fee of 20% of the hedge fund's profit. There may be a "lockup" period, during which an investor cannot cash in shares. A variation of the hedge strategy is the 130-30 funds for individual investors.

What are the different plans that mutual funds offer?

To cater to different investment needs, Mutual Funds offer various investment options. Some of the important investment options include:

Growth Option Dividend is not paid-out under a Growth Option and the investor realizes only the capital appreciation on the investment (by an increase in NAV

Dividend Payout Option Dividends are paid-out to investors under the Dividend Payout Option. However, the NAV of the mutual fund scheme falls to the extent of the dividend payout.

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 Dividend Re-investment Option Here the dividend accrued on mutual funds is automatically re-invested in purchasing additional units in open-ended funds. In most cases mutual funds offer the investor an option of collecting dividends or re-investing the same.

Retirement Pension Option Some schemes are linked with retirement pension. Individuals participate in these options for themselves, and corporate participate for their employees.

Insurance Option Certain Mutual Funds offer schemes that provide insurance cover to investors as an added benefit.

Systematic Investment Plan (SIP) Here the investor is given the option of preparing a pre-determined number of post-dated cheques in favour of the fund. The investor is allotted units on a predetermined date specified in the offer document at the applicable NAV.

Systematic Withdrawal Plan (SWP) As opposed to the Systematic Investment Plan, the Systematic Withdrawal Plan allows the investor the facility to withdraw a pre-determined amount / units from his fund at a

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pre-determined interval. The investor's units will be redeemed at the applicable NAV as on that day.

CHAPTER 4: MAJOR MUTUAL FUND COMPANIES IN INDIA

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. Bank of 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

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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 sponsorers 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 sponsorers, 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

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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 sponsorers 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

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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 sponsorers 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

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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 its 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 nonprofit organizations. 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 Excorts 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 sponsorer. The Trustee is ACAM Trust

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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 sponsorer 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.

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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.

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CHAPTER 5: FUTURE OF MUTUAL FUND INDUSTRY IN INDIA

Why Invest in Gold? Historically, gold has been a proven method of preserving value when a national currency was losing value. If your investments are valued in a depreciating currency, allocating a portion to gold assets is similar to a financial insurance policy. In the past year, the climb in the price of gold above $700 per ounce is due to many factors, one being that the dollar is losing value. Reasons favoring to invest to Gold The dollar is weak and getting weaker due to national economic policies which don't appear to have an end. Gold price appreciation makes up for lost interest, especially in a bull market. The last four years are the beginning of a major bull move similar to the 70's when gold moved from $38 to over $800. Central banks in several countries have stated their intent to increase their gold holdings instead of selling. All gold funds are in a long term uptrend with bullion, most recently setting new all-time highs. The trend of commodity prices to increase is relative to gold price increases. Worldwide gold production is not matching consumption. The price will go up with demand. Most gold consumption is done in India and China and their demand is increasing with their increase in national wealth. Several gold funds reached all-time highs in 2006 and are still trending upward. The short position held by hedged gold funds is being methodically reduced.

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Gold Mutual funds - A relatively safe method of buying and owning gold stocks allows the owner to diversify among many stocks and allows the investing decisions to be made by a professional. Investment methods vary among funds and provide many different styles of portfolio management for an investor to choose from. Prices move faster and further in both directions than the price of gold. Provide professional management and

diversification within the gold sector. Are more volatile than the S&P index. May or may not have any correlation with the general market. Move daily with the price of gold, but not always. Move proportionally more than gold, up and down. If you believe in 'buy low, sell high', gold is still low, but climbing.

Real Estate Mutual Funds ('REMFs'): The SEBI Board has now approved the guidelines for the much awaited REMF. "Real Estate Mutual Fund Scheme" is defined to mean a scheme of a mutual fund which has investment objective to invest directly or indirectly in real estate property. It is proposed that REMFs will be governed by the provisions and guidelines issued under SEBI (Mutual Funds) Regulations. REMFs, shall initially, be close ended. The units of REMFs shall be compulsorily listed on the Stock Exchanges and Net Asset Value (NAV) of the scheme shall be declared daily. The REMFs would be required to appoint Custodian who has been granted a Certificate of Registration to carry on the business of Custodian of securities by the SEBI Board. The custodian would safe keep real estate properties held by the REMFs. The investment is Directly in real estate properties within India; Mortgage (housing lease) backed securities; Equity shares / Bonds / Debentures of listed / unlisted companies which deal in properties and also undertake property development; and in

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Other securities. CONCLUDING REMARKS

CHAPTER 1

After doing the findings I have been able to fin out A mutual fund is a kind of investment that uses money from many investors to invest in stocks, bonds or other types of investment. A fund manager portfolio manager" decides how to invest the money, and for this he is paid a fee, which comes from the money in the fund.

Mutual funds are usually "open ended", means that new investors can join into the fund at any time. When this happens, new units, which are like shares, are given to the new investors.

I have been able to find out how there was evolution of mutual funds in the pre historic period. I have also understood the methodology of the modern mutual funds.

During the early period it was just gathering of collective funds but in the modern era it was pooling of resource in investment in different forms of other investment.

Mutual funds help a investor in diversifying funds with a proper allotment of profit from gaining a limited amount fee and involment of certain risks.

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CONCLUDING REMARKS

CHAPTER 2 The mutual funds are a risk free investment. We can say mutual funds are relatively risk free in the way they invest and manage the funds. The investment from the pool is well diversified across securities and shares from various sectors. The fundamental understanding behind this is not all corporations and sectors fail to perform at a time. And in the event of a security of a corporation or a whole sector doing badly then the possible losses from that would be balanced by the returns from other shares. If we are considering investing in stock market and are afraid of its somewhat unpredictable fluctuations, we can definitely consider investing in mutual funds. Some of the reasons that go strongly in favor of mutual funds are their lowest risk factors owing to diversification of assets in to various sectors. Mutual funds have gained in popularity with the investing public especially in the last two decades following what is now known as the longest bull run of twenty years. Mutual funds have created wealth for retirees and general safe financial players with the rise in stock prices Prospective investors who wish to invest in mutual funds have to contact a distributor/agent of mutual funds. Any good agent/distributor would be able to suggest us the appropriate funds from the overall funds available. I have been able to understand other aspects such as opening a mutual fund setup, its requirements, and registration with the SECUTITY EXCHANGE BOARD OF INDIA.

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CONCLUDING REMARKS CHAPTER 3 The various types of mutual funds are discussed and the schemes of different types were: Closed-End Fund: A closed-end fund looks like a stock of a publically traded company Open-End Fund: There is no limit to the number of shares in the fund Growth Funds: The aim is to provide capital appreciation over the medium to long term Income Funds: The aim is to provide regular and steady income to investors Balanced Funds: The aim is to provide both growth and regular income Money Market Funds: The aim is to provide easy liquidity Tax Saving Schemes: These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws Index Schemes: They replicate the performance of a particular index such as the BSE Sectoral Scheme: Sectoral Funds are those, which invest, exclusively in specified sector(s) such as FMCG, Information Technology, Pharmaceuticals, etc. Bond funds: Types of bond funds include term funds, which have a fixed set of time (short-, medium-, or long-term) before they mature.

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Hedge funds: In the United States is pooled investment funds with loose SEC regulation, unlike mutual funds. CONCLUDING REMARKS CHAPTER 4 This chapter has helped to understand the major companies of mutual fund who are on their financial highs. The major mutual fund companies are as follows. ABN AMRO Mutual Fund, Birla Sun Life Mutual Fund, Bank of Baroda Mutual Fund (BOB Mutual Fund), HDFC Mutual Fund, HSBC Mutual Fund, ING Vysya Mutual Fund, Prudential ICICI Mutual Fund ,Sahara Mutual Fund, State Bank of India Mutual Fund, Tata Mutual Fund, Kotak Mahindra Mutual Fund, Unit Trust of India Mutual Fund, Reliance Mutual Fund ,Standard Chartered Mutual Fund, Franklin Templeton India Mutual Fund, Morgan Stanley Mutual Fund India, Escorts Mutual Fund, Alliance Capital Mutual Fund, Benchmark Mutual Fund, Canbank Mutual Fund, Chola Mutual Fund, LIC Mutual Fund, GIC Mutual Fund.

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CONCLUDING REMARKS CHAPTER 5 There a future scope for gold mutual funds: The dollar is weak and getting weaker due to national economic policies which don't appear to have an end. Gold price appreciation makes up for lost interest, especially in a bull market. The last four years are the beginning of a major bull move similar to the 70's when gold moved from $38 to over $800. Central banks in several countries have stated their intent to increase their gold holdings instead of selling. All gold funds are in a long term uptrend with bullion, most recently setting new all-time highs. The trend of commodity prices to increase is relative to gold price increases. Worldwide gold production is not matching consumption. The price will go up with demand. Most gold consumption is done in India and China and their demand is increasing with their increase in national wealth. Several gold funds reached all-time highs in 2006 and are still trending upward. The future scope of real estate mutual funds: "Real Estate Mutual Fund Scheme" is a scheme of a mutual fund which has investment objective to invest directly or indirectly in real estate property by; Directly in real estate properties within India; Mortgage (housing lease) backed securities; Equity shares / Bonds / Debentures of listed / unlisted companies which deal in properties and also undertake property development; and in Other securities

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I am very thankful to Prof Somnath vibhute for giving a great opportunity to give a project work on such knowledgeable topic on mutual funds.

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