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INTRODUCTION TO THE PROJECT

INTRODUCTION TO THE MUTUAL FUNDS

TYPES OF MUTUAL FUNDS

MUTUALFUNDS HISTORY IN INDIA

SEBI REGESTERED MUTUAL FUNDS

MERITS OF MUTUAL FUNDS

DEMERITS OF MUTUAL FUNDS

PERFORMANCE OF MUTUALFUNDS IN INDIA

ASSOCIATION OF MUTUAL FUNDS IN INDIA

INTRODUCTION TO MUTUAL FUNDS-

MUTUAL FUNDS

A MUTUAL FUND is simply a financial intermediary that allows a group of investors to

pool their money together with a predetermined investment objective. The mutual fund will
have a fund manager who is responsible for investing the pooled money into specific
securities (usually stocks or bonds). When you invest in a mutual fund, you are buying shares
(or portions) of the mutual fund and become a shareholder of the fund. Mutual funds are one
of the best investments ever created because they are very cost efficient and very easy to
invest in (you don't have to figure out which stocks or bonds to buy). If you would like to
know the history of mutual funds,

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.

Diversification is the idea of spreading out your money across many different types of
investments. When one investment is down another might be up. Choosing to diversify your
investment holdings reduces your risk tremendously.

The most basic level of diversification is to buy multiple stocks rather than just one stock.
Mutual funds are set up to buy many stocks (even hundreds or thousands). Beyond that, you
can diversify even more by purchasing different kinds of stocks, then adding bonds, then
international, and so on. It could take you weeks to buy all these investments, but if you
purchased a few mutual funds you could be done in a few hours because mutual funds
automatically diversify in a predetermined category of investments (i.e. - growth companies,
low-grade corporate bond )

A MUTUAL FUND is an investment company designed to pool the funds of smaller

investors and place them under professional management. A mutual fund allows small
investors to diversify their portfolios. When a mutual fund is formed, it issues a prospectus
detailing its intended investment strategy, and it is not permitted to deviate from that strategy
without public disclosure. A mutual fund prospectus also details the fees investors will be
charged, which can be substantial. In the US, a mutual fund is regulated by the SEC. A
mutual fund may invest in stocks, bonds, options, futures, currencies, and/or commodities.
Although any specific mutual fund is required to follow a specific investing strategy, the
range of strategies available is wide. A mutual fund such as an index fund may attempt to
replicate market or sector index. A mutual fund may specialize in large-cap, small-cap or
even micro-cap stocks. Investors seeking regular income can invest in a mutual fund that
specializes in government bonds or, for the more aggressive, corporate debt.

STOCKS

Stocks represent shares of ownership in a public company. Examples of public companies

include IBM, Microsoft, Ford, Coca-Cola, and General Motors etc. Stocks are the most
common ownership investment traded on the market.

BONDS

Bonds are basically a chance for you to lend your money to the government or a company.
You can receive interest and your principle back over predetermined amounts of time. Bonds
are 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.

A Mutual Fund is a trust that pools the savings of a number of investors who share a common
financial goal. The money thus collected is then invested in capital market instruments such
as shares, debentures and other securities. The income earned through these investments and
the capital appreciation realized is shared by its unit holders in proportion to the number of
units owned by them. 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. The flow chart below describes broadly the working of a
mutual fund
In the working of mutual fund, there are following steps-

1. First of all, Asset Management Company issues new fund offer.

2. Interested investors invest the money with fund manager.

3. Then fund manager invests the money in different profitable securities.

4. Then securities generate returns.

5. These returns are passed back to investors.

Returns are given to investors according to the units given to them which is determined
according to the investment made by them in the mutual funds.

ORGANIZATION OF MUTUAL FUND-

For organization of mutual fund there is a set criterion which has to be opted.

There are many entities involved and the diagram below illustrates the organizational set up
of a mutual fund:
SPONSORS

The sponsor establishes the mutual fund and gets it registered with SEBI. The mutual
fund needs to be constituted in the form of a trust and the instrument of the trust
should be in the form of a deed registered under the provisions of the Indian
Registration Act, 1908. The sponsor is required to contribute at least 40% of the
minimum net worth (Rs. 10 crore) of the asset management company. The board of
trustees manages the MF and the sponsor executes the trust deeds in favor of the
trustees. It is the job of the MF trustees to see that schemes floated and managed by
the AMC appointed by the trustees are in accordance with the trust deed and SEBI
guidelines.

ASSET MANAGEMENT COMPANY

The sponsor also appoints the asset management company (AMC) for the investment and
administrative functions. The AMC does the research, the managers the corpus of the fund. It
launches the various schemes of the fund, manages them, and then liquidates them at the end
of their term. It also takes care of the other administrative work of the fund. It receives an
annual management fee from the fund for its services.

BOARD OF TRUSTEES

The board of trustees is responsible for protecting the investor’s interests. Under the SEBI
regulation 1996, trustee means a person who holds the property of the mutual fund in trust,
for the benefit of the unit holders. The word “trustee” can be used to denote board of trustees.
In case a trustee company governs the trust, it can be used to denote either the trustee
company or its directors.

CUSTODIANS

The custodians are appointed by the sponsor to look after the transfer and storage of
securities. Only a registered custodian under the SEBI Regulation can act as a custodian of a
mutual fund. The functions of custodian a cover a wider range of services like safe keeping of
securities bid settlement, corporate action, and transfer agent. In addition, they may be
contracted to perform administrative functions like fund accounting, cash management and
other similar functions
 TYPES OF MUTUAL FUND SCHEMES

1. BY STRUCTURE
 Open – Ended Schemes.
 Close – Ended Schemes.
 Interval Schemes.

2. BY INVESTMENT OBJECTIVE
 Growth Schemes.
 Income Schemes.
 Balanced Schemes.

3. OTHER SCHEMES
 Tax Saving Schemes.
 Special Schemes.
 Index Schemes.
 Sector Specific Schemes.

1. OPEN – ENDED SCHEMES

The units offered by these schemes are available for sale and repurchase on any
business day at NAV based prices. Hence, the unit capital of the schemes keeps
changing each day. Such schemes thus offer very high liquidity to investors and are
becoming increasingly popular in India. Please note that an open-ended fund is NOT
obliged to keep selling/issuing new units at all times, and may stop issuing further
subscription to new investors. On the other hand, an open-ended fund rarely denies to
its investor the facility to redeem existing units.

2. CLOSED – ENDED SCHEMES

The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed
number of units. These schemes are launched with an initial public offer (IPO) with a
stated maturity period after which the units are fully redeemed at NAV linked prices.
In the interim, investors can buy or sell units on the stock exchanges where they are
listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually
remains unchanged. After an initial closed period, the scheme may offer direct
repurchase facility to the investors. Closed-ended schemes are usually more illiquid as
compared to open-ended schemes and hence trade at a discount to the NAV. This
discount tends towards the NAV closer to the maturity date of the scheme.

3. INTERVAL SCHEMES

These schemes combine the features of open-ended and closed-ended schemes. They
may be traded on the stock exchange or may be open for sale or redemption during
pre-determined intervals at NAV based prices.

4. GROWTH SCHEMES

These schemes, also commonly called Equity Schemes, seek to invest a majority of
their funds in equities and a small portion in money market instruments. Such
schemes have the potential to deliver superior returns over the long term. However,
because they invest in equities, these schemes are exposed to fluctuations in value
especially in the short term.

5. INCOME SCHEMES

These schemes, also commonly called Debt Schemes, invest in debt securities such as
corporate bonds, debentures and government securities. The prices of these schemes
tend to be more stable compared with equity schemes and most of the returns to the
investors are generated through dividends or steady capital appreciation. These
schemes are ideal for conservative investors or those not in a position to take higher
equity risks, such as retired individuals. However, as compared to the money market
schemes they do have a higher price fluctuation risk and compared to a Gilt fund they
have a higher credit risk.
6. BALANCED SCHEMES

These schemes are commonly known as Hybrid schemes. These schemes invest in
both equities as well as debt. By investing in a mix of this nature, balanced schemes
seek to attain the objective of income and moderate capital appreciation and are ideal
for investors with a conservative, long-term orientation.

7. TAX SAVING SCHEMES

Investors are being encouraged to invest in equity markets through Equity Linked
Savings Scheme (“ELSS”) by offering them a tax rebate. Units purchased cannot be
assigned / transferred/ pledged / redeemed / switched – out until completion of 3 years
from the date of allotment of the respective Units.

The Scheme is subject to Securities & Exchange Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance
(Department of Economic Affairs), Government of India regarding ELSS.

Subject to such conditions and limitations, as prescribed under Section 88 of the

Income-tax Act, 1961.

8. INDEX SCHEMES

The primary purpose of an Index is to serve as a measure of the performance of the

market as a whole, or a specific sector of the market. An Index also serves as a
relevant benchmark to evaluate the performance of mutual funds. Some investors are
interested in investing in the market in general rather than investing in any specific
fund. Such investors are happy to receive the returns posted by the markets. As it is
not practical to invest in each and every stock in the market in proportion to its size,
these investors are comfortable investing in a fund that they believe is a good
representative of the entire market. Index Funds are launched and managed for such
investors.

9. SECTOR SPECIFIC SCHEMES.

Sector Specific Schemes generally invests money in some specified sectors for
example: “Real Estate” Specialized real estate funds would invest in real estates
 directly, or may fund real estate developers or lend to them directly or buy shares of
housing finance companies or may even buy their securitized assets

SEBI REGISTERED MUTUAL FUNDS

1. FORTIS Mutual fund 24. IDFC Mutual fund,

2. Alliance Capital Mutual fund, 25. JM Financial Mutual fund

3. AIG Global Investment Group Mutual fund 26. JP Morgan Mutual fund

4. Benchmark Mutual fund, 27. Kotak Mahindra Mutual fund,

5. Baroda Pioneer Mutual fund 29. LIC Mutual fund

6. Birla Mutual fund 31. Morgan Stanley Mutual fund

7. Bharti AXA Mutual fund 32. Mirae Asset Mutual fund

8. Canara Robeco Mutual fund 33. Principal Mutual fund

9. CRB Mutual fund (Suspended) 34. Quantum Mutual fund,

10. DBS Chola Mutual fund, 35. Reliance Mutual fund

11. Deutsche Mutual fund 36. Religare AEGON Mutual fund

12. DSP Blackrock Mutual fund, 37. Sahara Mutual fund,

13. Edelweiss Mutual fund 38. SBI Mutual fund

14. Escorts Mutual fund, 39. Shriram Mutual fund

15. Franklin Templeton Mutual fund 40. Sundaram BNP Paribas Mutual fund,

16. Fidelity Mutual fund 41. Taurus Mutual fund

17. Goldman Sachs Mutual fund 42. Tata Mutual fund,

18. HDFC Mutual fund, 43. UTI Mutual fund

19. HSBC Mutual fund,

20. ICICI Securities Fund, If the complaints remain unresolved, the

21. IL & FS Mutual fund, investors may approach SEBI for facilitating
redressal of their complaints. On receipt of
22. ING Mutual fund,
complaints, SEBI takes up the matter with the
23. ICICI Prudential Mutual fund
concerned Mutual fund and follows up with it
regularly. Investors may send their complaints
to:
 Pointers to Measure Mutual Fund Performance
MEASURES DESCRIPTION IDEAL RANGE
STANDARD Standard Deviation allows to evaluate the volatility Should be near to it’s
DEVIATION of the fund. The standard deviation of a fund mean return.
measures this risk by measuring the degree to which
the fund fluctuates in relation to its mean return.
BETA Beta is a fairly commonly used measure of risk. It Beta > 1 = high risky
basically indicates the level of volatility associated Beta = 1 = Avg
with the fund as compared to the benchmark. Beta <1 = Low Risky
R-SQUARE R- square measures the correlation of a fund’s R-squared values range
movement to that of an index. R-squared describes between 0 and 1, where 0
the level of association between the fund's volatility represents no correlation
and market risk. and 1 represents full
correlation.
ALPHA Alpha is the difference between the returns one Alpha is positive =
would expect from a fund, given its beta, and the returns of stock are
return it actually produces. It also measures the better then market
unsystematic risk . returns.

Alpha is negative =
returns of stock are
worst then market.

Alpha is zero = returns

are same as market.
SHARPE Sharpe Ratio= Fund return in excess of risk free The higher the Sharpe
RATIO return/ Standard deviation of Fund. Sharpe ratios ratio, the better a funds
are ideal for comparing funds that have a mixed returns relative to the
asset classes. amount of risk taken.

HISTORY OF MUTUAL FUND

The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at
the initiative of the Government of India and Reserve Bank. The history of mutual funds in
India can be broadly divided into four distinct phases: -

First Phase – 1964-87

An Act of Parliament established Unit Trust of India (UTI) on 1963. 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)

1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks
and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India
(GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987
followed by Can bank 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 established its mutual fund in June 1989 while GIC had set up its mutual fund
in December 1990.

At the end of 1993, the mutual fund industry had assets under management of Rs.47,004
crores.
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
In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was
bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of
India with assets under management of Rs.29,835 crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return and certain other schemes.
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 assets under
management 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.

PERFORMANCE OF MUTUAL FUNDS IN INDIA

The year was 1963. Unit Trust of India invited investors or rather to those who believed in savings, F
to park their money in UTI Mutual Fund or 30 years it goaled without a single second player. Though
the 1988 year saw some new mutual fund companies, but UTI remained in a monopoly position.

The performance of mutual funds in India in the initial phase was not even closer to satisfactory level.
People rarely understood, and of course investing was out of question. But yes, some 24 million
shareholders was accustomed with guaranteed high returns by the begining of liberalization of the
industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations
of investors touched the sky in profitability factor. However, people were miles away from the
praparedness of risks factor after the liberalization.

The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me concentrate about
the performance of mutual funds in India through figures. From Rs. 67bn. the Assets Under
Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance
by April 2004. It rose as high as Rs. 1,540bn. The net asset value (NAV) of mutual funds in India
declined when stock prices started falling in the year 1992. Those days, the market regulations did not
allow portfolio shifts into alternative investments. There were rather no choice apart from holding the
cash or to further continue investing in shares. One more thing to be noted, since only closed-end
funds were floated in the market, the investors disinvested by selling at a loss in the secondary market.

The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the
losses by disinvestments and of course the lack of transparent rules in the where about rocked
confidence among the investors. Partly owing to a relatively weak stock market performance, mutual
funds have not yet recovered, with funds trading at an average discount of 1020 percent of their net
asset value.
The supervisory authority adopted a set of measures to create a transparent and competitve
environment in mutual funds. Some of them were like relaxing investment restrictions into the market,
introduction of open-ended funds, and paving the gateway for mutual funds to launch pension
schemes. The measure was taken to make mutual funds the key instrument for long-term saving. The
more the variety offered, the quantitative will be investors.

At last to mention, as long as mutual fund companies are performing with lower risks and higher
profitability within a short span of time, more and more people will be inclined to invest until and
unless they are fully educated with the dos and donts of mutual funds. The year 1993 was a
remarkable turning point in the Indian Mutual Fund industry.

The stock investment scenario till then was restricted to UTI (Unit Trust of India) and public sector.
This year marked the entry of private sector mutual funds, giving the Indian investors a wider choice
of selecting mutual funds. From then on, the graph of mutual fund players has been on the rise with
many foreign mutual funds also setting up funds in India. The industry has also witnessed several
mergers and acquisitions proving it advantageous to the Indian investors. Are mutual funds emerging
as preferred investment option? Are they safe and will your money be secured with them? Before
proceeding to answer these questions, a look at the February 2006, Indian bull market scenario is
worth a mention

For the first time ever, stock market indices in India are at a record high. The Bombay Stock Exchange
closed above the 10,000-mark for the first time ever, an ecstatic event in the history of the Stock
exchange. Market savvy Indian investors have been busy transacting across sectors such as banking
automobile, sugar, consumer durable, fast moving consumer goods (FMCG) and pharmaceutical
scripts. And, the Union Finance Minister, Mr.P.Chidambaram, has responded positively and advised
investors to take informed decisions or invest through mutual funds.

Mutual funds are not considered any more as obscure investment opportunities. The mutual funds
assets have registered an annual growth rate of 9% over the past 5 years. Considering the current trend
and the relative positive response of the Indian economy, a much bigger jump is on the anvil.

With the Sensex on a scorching bull rally, many investors prefer to trade on stocks themselves. Mutual
funds are more balanced since they diversify over a large number of stocks and sectors. In the rally of
2000, it was noticed that mutual funds did better than the stocks mainly due to prudent fund
management based on the virtues of diversification

Different Indian mutual funds allow investors various solutions ranging from retirement planning and
buying a house to planning for child's education or marriage. Tax-wise stocks and mutual funds work
similarly since long-term capital gains from both stocks and equity-oriented mutual funds are tax-free.
Well, what are the charges, fees and expenses associated with investing in Indian mutual funds? At the
time of entry into a mutual fund, you have to pay an additional charge or entry load along with the
value of units purchased

When you exit from the scheme, you will get back the value of the units less the exit load charges. If
you want to switch from one type of mutual fund investment to another, you will be required to pay
the exchange fees. Advisory fees, broker fees, audit fees and registrar fees are some of the other
recurring expenditures that would be charged to you. These expenses involve administrative and other
running costs.

In India, SEBI (The Securities and Exchange Board of India) is the regulating authority that SEBI
formulates policies and regulates the mutual funds to protect the interest of the Indian investors.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India was
generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was
incorporated on 22nd August, 1995.

AMFI is an apex body of all Asset Management Companies (AMC) which has been

registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its
members. It functions under the supervision and guidelines of its Board of Directors

Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a
professional and healthy market with ethical lines enhancing and maintaining standards. It follows the
principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

THE OBJECTIVES OF ASSOCIATION OF MUTUAL FUNDS

IN INDIA

The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has
certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are
as follows:

This mutual fund association of India maintains a high professional and ethical standards in all areas
of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct which is
followed by members and related people engaged in the activities of mutual fund and asset
management. The agencies who are by any means connected or involved in the field of capital markets
and financial services also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.

Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India
and other related bodies on matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors. It implements a programme of
training and certification for all intermediaries and other engaged in the mutual fund industry.

AMFI undertakes all India awarness programme for investors inorder to promote proper understanding
of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate informations on Mutual
Fund Industry and undertakes studies and research either directly or in association with other bodies.

THE SPONSORERS OF ASSOCIATION OF MUTUAL FUNDS

IN INDIA

BANK SPONSORED

1.SBI Fund Management Ltd.

2.BOB Asset Management Co. Ltd.

3.Canbank Investment Management Services Ltd.

4.UTI Asset Management Company Pvt. Ltd

5.Institutions

6.GIC Asset Management Co. Ltd.

7.Jeevan Bima Sahayog Asset Management Co. Ltd.

PRIVATE SECTOR INDIAN:-

(a) BenchMark Asset Management Co. Pvt. Ltd.

(b) Cholamandalam Asset Management Co. Ltd.

© Credit Capital Asset Management Co. Ltd.

(d) Escorts Asset Management Ltd.

(e) JM Financial Mutual Fund

(f) Kotak Mahindra Asset Management Co. Ltd.

(g) Reliance Capital Asset Management Ltd.

(h) Sahara Asset Management Co. Pvt. Ltd

(i)_Sundaram Asset Management Company Ltd.

(j)Tata Asset Management Private Ltd.

PREDOMINANTLY INDIA JOINT VENTURES:-

1.Birla Sun Life Asset Management Co. Ltd.

2.DSP Merrill Lynch Fund Managers Limited

3.HDFC Asset Management Company Ltd.

PREDOMINANTLY FOREIGN JOINT VENTURES:-

1.ABN AMRO Asset Management (I) Ltd.

2.Alliance Capital Asset Management (India) Pvt. Ltd.

3.Deutsche Asset Management (India) Pvt. Ltd.

4.Fidelity Fund Management Private Limited

5.Franklin Templeton Asset Mgmt. (India) Pvt. Ltd.

6.HSBC Asset Management (India) Private Ltd.

7.ING Investment Management (India) Pvt. Ltd.

8.Morgan Stanley Investment Management Pvt. Ltd.

9.Principal Asset Management Co. Pvt. Ltd.

10.Prudential ICICI Asset Management Co. Ltd.

11.Standard Chartered Asset Mgmt Co. Pvt. Ltd.

ASSOCIATION OF MUTUAL FUNDS IN INDIA

PUBLICATIONS

AMFI publices mainly two types of bulletin. One is on the monthly basis and the other is quarterly.
These publications are of great support for the investors to get intimation of the knowhow of their
parked money.

Merits of Mutual Funds

1. Professional Investment Management.

 By pooling the funds of thousands of investors, mutual] funds provide fu]]-time, high-]eve]
professional management that few individual investors can afford to obtain independently. Such
management is vital to achieving results in today's complex markets. Your fund managers' interests are
tied to yours, because their compensation is based not on sales commissions, but on how well the fund
performs. These managers have instantaneous access to crucial market information and are able to
execute trades on the largest and most cost- effective scale. In short, managing investments is a full-
time. job for professionals.

2.Diversification.

Mutual funds invest in a broad range of securities. Tbhis limits investment risk by reducing the effe,ct
of a possible decline in the value: of any one security. Mutual fund shareowners can benefit from
diversification techniques usually available only to investors wealthy enough to buy significant
positions in a wide variety of se:curities.

3.Low Cost.

If you tried to create your own diversified portfolio of 50 stocks, you'd need at least $ 100,000 and
you'd pay thousands of dollars in commissions to assemble your portfolio. A mutual fund lets you
participate: in a diversified portfolio for as little as $ 1 ,000, and sometimes less. And if you buy a no-
load fund; you pay no sales charges to own them.

4. Convenience and Flexibility.

You own just one: security rather than many, yet enjoy the benefits of a diversified portfolio and a
wide range of services. Fund managers decide what securities to trade, clip the bond coupons, collect
the interest payments and see that your dividends on portfolio securities are received and your rights
exercised. It's easy to purchase and redeem mutual fund shares, either directly online or with a phone
call.

5. Quick, Personalized Service.

Most funds now offer extensive websites with a host of shareholder services for immediate access to
information about your fund account. Or a phone call puts you in touch with a trained investment
specialist at a mutual fund company who can provide information you can use to make your own
investment choices, assist you with buying and selling your flind shares, and answer questions about
your account status.

6. Ease of Investing

You may open or add to your account and conduct transactions or business with the fund by mail,
telephone or bank wire. You can even arrange for automatic monthly investments by authorizing
electronic fund transfers from your checking account in any amount and on a date you choose. Also,
many of the companies featured at this site allow account transactions online:

7. Total Liquidity, Easy Withdrawal

You can easily redeem your shares anytime you need cash by letter, telephone, bank wire or check,
depe:nding on the: fund. Your proceeds are usually available within a day or two.

8. Life Cycle Planning

With no-load mutual funds, you can link your investment pkins to future individual and family needs
and make changes as your life cycles change. You can invest in growth funds for future c()llege
tuiti()n needs, then move to income funds for retirement, and adjust your investments as your needs
change throughout your life. With no-load funds, there are no commissions to pay when you change
your investments.

9. Nlarket Cycle Planning

For investors who understand how to actively manage their porn'ono, mutual fund investments can
be: moved as market conditions change. You can place your funds in equities when the market is on
the upswing and move into money market funds on the downswing or take any number of steps to
ensure that your investments are meeting your needs in changing market climates. A word of caution:
since it is impossible to predict what the market will do at any point in time, staying on course with a
long-term, diverfied investment view is recommended lor most investors.

lO. Investor InJ'ormation

Shareholders receive regular reports from the funds, including details of transactions on a year-to-
date basis. The current net asset value of your shares (the price at which you may purchase or redeem
them) appears in the mutual fund price listings of daily newspapers. You can also obtain pricing and
performance results for the all mutual funds at this site, or it can be obtained by phone from the fund.

11. Periodic Withdraw'als

If you want steady monthly income, many funds allow you to anange for monthly fixed checks to be
sent to you, first by distributing some or all of the income and then, if necessary, by dipping into your
principal.

12. Dividend Options

You can receive all dividend payments in cash. Or you can have them reinvested in the fund free of
charge, in which case the dividends are automatically compounded. This can make a significant
contribution to your long-temp investment results. With some funds you can elect to have your
divide:nds from income paid in cash and your capital gains distributions reinvested.

13. Automatic Direct Deposit

Y()u can usually arrange to have regular, third-party payments such as Social Security or pension
checks deposited directly into your fund account. ibis puts your money to work immediately, without
waiting to clear your checking account, and it sdvcs you from worrying about checks being lost in the
mail.

14. Recordkeeping Service

With your own portfolio of stocks and bonds, you would have to do your own recordkeeping of
purchases, sa]es, dividends, interest, short-temp and ]ong-term gains and ]osses. Mutua] lungs provide
confirmation of your transactions and necessary tax forms to help you keep track of your investments
and tax reporting.

15. Sal'ekeeping

Whcn you own shares in a mutual fund, you own securities in many companies without having to
worry about keeping stock certificates in safe deposit boxes or sending them by registered mail. You
don't even have to wong about handling the mutual fund stock certificates; the fund maintains your
account on its books and sends you periodic statements keeping track of all your transactions.

16. Retirement and College Plans

Mutual funds are well suited to Individual Retirement Accounts and most funds offer IRA- approved
prototype and master plans for individual retirement accounts (IRAN) and Keogh, 403(b), SEP-IRA
and 401(k) retirement plans. Funds also make it easy to invest for college, children or other long-temp
goals. Many offer special investment products or programs tailored specifically for investments for
children and college.

17. Online Services

The intemet provides a fast, convenient way for investors to access financial infomiation. A host of
services are available to the online investor including direct access to no-load companies.

18. Sweep Accounts

With many funds, if you choose not to reinvest your stock or bond fund dividends, you can arrange to
have: them swept into your money market fund automatically. You get all the advantages of both
accounts with no extra effort.

19. Asset Nlanagement Accounts

The:se master accounts, available from many of the larger fund groups, enable you to manage all
your financial service needs under a single umbrella from unlimited check writing and aut()matic bill
paying to disc()unt brokerage and credit card accounts.

20. Margin

Some mutual fund shares are marginable. You may buy them on mmgin or use them as collate:nil to
borrow money tram your bank or broker. Call your fund company for details.
1. Professional Management.

Did you notice how we qualified the advimtage of professional management with the word
"theoretically"? Many investors debate whether or not the so-called pro/essfo/za/s are any better than
you or I at picking stocks. Management is by no means infallible, and, even if the lund loses money,
the manager still takes his/her cut. We'll talk about this in detail in a later section.

2. Costs.

Mutual funds don't exist solely to make your life easier - all funds are in it for a profit. 'nie mutual
fund industry is masterful at burying costs under layers ofjargon. 'sese costs are so complicated that in
this tutorial we have devoted an entire section to the subject.

3. Dilution.

It's possible to have too much diversification. Because funds have small holdings in so many different
companies, high retums flom a few investments often don't make much difference on the: overall
retum. 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.
For example, when a fund manager sells a security, a capital-gains tax is triggered, which affects how
profitable the individual is from the sale. It might have been more advantageous for the individual to
defer the capital gains liability.
 1.3 SWOT Analysis

A type of fundamental analysis of the health of a company by examining its

Strengths(S), Weakness(W), Opportunity(O), and any Threat(T) or dangers it might be
exposed to.

I. STRENGTHS

1 Brand strategy: as opposed to some of its competitors (e.g. HSBC), Kotak Mutual
Fund operates a multi-brand strategy. The company operates under numerous well-known
brand names, which allows the company to appeal to many different segments of the market.

2 Economies of Scale: The easiest way to understand economies of scale is by thinking

about volume discounts; in many stores, the more of one product you buy, the cheaper that
product becomes. For example, when you buy a dozen donuts, the price per donut is usually
cheaper than buying a single one. This also occurs in the purchase and sale of securities. If
you buy only one security at a time, the transaction fees will be relatively large. 
Mutual funds are able to take advantage of their buying and selling size and thereby reduce
transaction costs for investors. When you buy a mutual fund, you are able to diversify without
the numerous commission charges. Imagine if you had to buy the 10-20 stocks needed for
diversification. The commission charges alone would eat up a good chunk of your savings.
Add to this the fact that you would have to pay more transaction fees every time you wanted
to modify your portfolio - as you can see the costs begin to add up. With mutual funds, you
can make transactions on a much larger scale for less money.

3 Divisibility: Many investors don't have the exact sums of money to buy round lots of
securities. One to two hundred dollars is usually not enough to buy a round lot of a stock,
especially after deducting commissions. Investors can purchase mutual funds in
smaller denominations. Smaller denominations of mutual funds provide mutual fund investors
the ability to make periodic investments through monthly purchase plans. So, rather than
having to wait until you have enough money to buy higher-cost investments, you can get in
right away with mutual funds.
 4 Distribution channel strategy: Reliance is continuously improving the distribution of
its products. Its online and Internet-based access offers a combination of excellent growth
prospects and its retail direct business also saw growth of 27% in 2002 and 15% in 2003.

1 Various sources of income: Reliance has many sources of income throughout the
group, and this diversity within the group makes the company more flexible and resistant to
economic and environmental changes.
1 Large pool of installed capacities.
1 Experienced managers for large number of Generics.
1 Large pool of skilled and knowledgeable manpower.
1 Increasing liberalization of government policies.

II. WEAKNESS

1 Emerging markets: since there is more investment demand in the United States, Japan
and the rest of Asia, Reliance should concentrate on these markets, especially in view of
low global interest rates.

1 Mutual funds are like many other investments without a guaranteed return: there

is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-
income products, such as bonds and Treasury bills, mutual funds experience price fluctuations
along with the stocks that make up the fund. When deciding on a particular fund to buy, you
need to research the risks involved – just because a professional manager is looking after the
fund, that doesn’t mean the performance will be stellar.

1 Fees: In mutual funds, the fees are classified into two categories: shareholder fees and
annual operating fees. The shareholder fees, in the forms of loads and redemption fees are
paid directly by shareholders purchasing or selling the funds. The annual fund operating fees
are charged as an annual percentage – usually ranging from 1-3%. These fees are assessed to
mutual fund investors regardless of the performance of the fund. As you can imagine, in years
when the fund doesn’t make money, these fees only magnify losses.

2 Insufficient funds are available for investment in new plant or product development.
3 All available security, including personal assets and guarantees, is already pledged for
existing borrowings.
4 Poor credit control leads to unpredictable cash flow.

III.  OPPORTUNITIES
 1 Potential markets: The Indian rural market has great potential. All the major market
leaders consider the segments and real markets for their products. A senior official in a one of
the leading company says foray into rural India already started and there has been realization
that the rural market is both price and quantity conscious.
1 Entry of MNCs: Due to multinationals are entering into market job opportunities are
increasing day by day. Also India Mutual Fund majors are tie up with other financial
institutions.
2 Deterioration in competitor’s performance, or the insolvency of a competitor.
3 The development of new distribution channels (e.g. the internet).
4 Improved supply arrangements, such as just-in-time supply or outsourcing non-core
activities.

IV.  THREATS

1 Increased Competition: With intense competition by so many local players causing

headache to the current marketers. In addition to this though multinational brands are not yet
established but still they will soon hit the mark. Almost 60 to 70% of the revenue is spending
on the management and services.
2 Hedge funds: sometimes referred to as ‘hot money’, are also causing a threat
for mutual funds have gained worldwide notoriety for bringing the markets down. Be it a
crash in the currency, stock or bond market, usually a hedge fund prominently figures
somewhere in the picture.
3 Creeping over-reliance on one distributor or group of distributors.
4 Lenders reducing credit lines or increasing charges.
5 A rent review threatening to increase costs, or the expiry of a lease.

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 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 funds) Regulations, 1996.
EVALUATING PORTFOLIO PERFORMANCE

It is important to evaluate the performance of the portfolio on an ongoing basis. The following
factors are important in this process: Consider long-term track record rather than short-term
performance. It is important because long-term track record moderates the effects which
unusually good or bad short-term performance can have on a fund's track record. Besides,
longer-term track record compensates for the effects of a fund manager's particular investment
style. Evaluate the track record against similar funds. Success in managing a small or in a
fund focusing on a particular segment of the market cannot be relied upon as an evidence of
anticipated performance in managing a large or a broad based fund. Discipline in investment
approach is an important factor as the pressure to perform can make a fund manager
susceptible to have an urge to change tracks in terms of stock selection as well as investment
strategy.
The objective should be to differentiate investment skill of the fund manager from luck and to
identify those funds with the greatest potential of future success.

INVESTOR'S FINANCIAL PLANNING AND ITS RESULTS.

Planning for long term objectives

Many people get overwhelmed by the thought of retirement and they think how they will ever
save the huge money that is required to lead a peaceful and happy retired life. However, the
fact is that if we save and invest regularly over a period of time, even a small sum of money
can be adequate.

It is a proven fact that the real power of compounding comes with time. Albert Einstein called
compounding "the eighth wonder of the world" because of its amazing abilities. Essentially,
compounding is the idea that one can make money on the money one has already earned.
That's why, the earlier one starts saving, the more time money gets to grow.

Through Mutual funds, one can set up an investment programme to build capital for
retirement years. Besides, it is an ideal vehicle to practice asset allocation and rebalancing
thereby maintaining the right level of risk at all times.

It is important to know that determination and maintaining the right level of risk tolerance can
go a long way in ensuring the success of an investment plan. Besides, it helps in customizing
fund category allocations and suitable fund selections. There are certain broad guidelines to
determine the risk tolerance.

These are:

Be realistic with regard to volatility. One needs to seriously consider the effect of potential
downside loss as well as potential upside gain. Determine a "comfort level" i.e. If one is not
confident with a particular level of risk tolerance, and then select a different level.

Regardless of the level of risk tolerance, one should adhere to the principles of effective
diversification i.e. The allocation of investment assets among different fund categories to
achieve a variety of distinct risk/reward objectives and a reduction in overall portfolio risk.

It helps to reassess risk tolerance every year. The risk tolerance may change due to either
major adjustment in return objectives or to a realization that an existing risk tolerance is
inappropriate for one's current situation.

Market cap of a company signifies its market value, which is equal to the total number of
shares outstanding multiplied by the current stock price.

The market cap has a role to play in the kind of returns the stock might deliver and the risk or
volatility that one may have to encounter while achieving those returns.For example, large
companies are usually more stable during the turbulent periods and the mid cap and small cap
companies are more vulnerable.

As regards the allocation to each segment, there cannot be a standard combination applicable
to all kinds of investors. Each one of us has different risk profile, time horizon and investment
objectives.

Besides, while deciding on the allocation, one has to keep in mind the fact whether the
allocation is being done for an existing investor or for a new investor. While for an existing
investor, the allocation that already exists has to be considered, for a new investor the right
way to begin is by considering funds that invest predominantly in large cap stocks. The
exposure to mid and small caps can be enhanced over a period of time.
It is always advisable to take help of professionals to decide the allocation as well as select the
appropriate funds. However, investors themselves have an important role to play in this
process.

All award-winning funds may not be suitable for everyone

Many investors feel that a simple way to invest in Mutual funds is to just keep investing in
award winning funds. First of all, it is important to understand that more than the awards; it is
the methodology to choose winners that is more relevant.

A rating firm generally elaborates on the criteria for deciding the winner’s i.e. consistent
performance, risk adjusted returns, total returns and protection of capital. Each of these
factors is very important and has its significance for different categories of funds.

Besides, each of these factors has varying degree of significance for different kinds of
investors. For example, consistent return really focuses on risk. If someone is afraid of
negative returns, consistency will be a more important measure than total return i.e. Growth in
NAV as well as dividend received.

A fund can have very impressive total returns overtime, but can be very volatile and tough for
a risk adverse investor. Therefore, all the award winning funds in different categories may not
be suitable for everyone. Typically, when one has to select funds, the first step should be to
consider personal goals and objectives. Investors need to decide which element they value the
most and then prioritize the other criteria.

Once one knows what one is looking for, one should go about selecting the funds according to
the asset allocation. Most investors need just a few funds, carefully picked, watched and
managed over period of time.
7 INVESTMENT TIPS TO IMPROVE YOUR RETURNS

1. Know your risk profile

Before you take a decision to invest in equity funds, it is important to assess your risk
tolerance. Risk tolerance depends on certain factors like emotional temperament, attitude and
investment experience. Remember, Vwhile ascertaining the risk tolerance, it is crucial to
consider one's desire to assume risk as the capacity to assume the risk. It helps to understand
different categories of overall risk tolerance, i.e. Conservative, moderate or aggressive. While
a conservative investor will accept lower returns to minimise price volatility, a moderate
investor would be all right with greater price volatility than conservative risk tolerances to
pursue higher returns. An aggressive investor wouldn't mind large swings in the NAV’s to
seek the highest returns. Though identifying the desire for risk is a tough job, it can be made
easy by defining one's comfort zone.

2. Don't have too many schemes in your portfolio

While it is true that diversification helps in earning better returns with a lower level of
fluctuations, it becomes counterproductive when one has too many funds in the portfolio. For
example, if you have 15 funds in your portfolio, it does not necessarily mean that your
portfolio is adequately diversified. To determine the right level of diversification, one has to
consider factors like size of the portfolio, type of funds and allocation to different asset
classes. Therefore, it is possible that a portfolio having 5 schemes may be adequately
diversified whereas another one with 10 schemes may have very little diversification.
Remember, to have a well-balanced equity portfolio, it is important to have the right level of
exposure to different segments of the equity market like large cap, mid-cap and small cap. In
addition, for a decent portfolio size, it is all right to have some exposure in the sector and
specialty funds.

3. Longer time horizon provides protection from volatility

As an equity fund investor, you need to understand that volatility is an integral part of the
stock market. However, if you remain focused on the long-term objectives and follow a
disciplined approach to investing, you can not only handle volatility properly but also turn it
to your advantage.
4. Understand and analyze 'Good Performance'

'Good performance' is a subjective thing. Ideally, to analyze performance, one should consider
returns as well as the risk taken to achieve those returns. Besides, consistency in terms of
performance as well as portfolio selection is another factor that should play an important part
while analyzing the performance. Therefore, if an investment in a Mutual fund scheme takes
you past your risk tolerance while providing you decent returns; it cannot always be termed as
good performance. In fact, at times to ensure that your investment remains within the
parameters defined in the investment plan, you may to be forced to exit from that scheme. In
other words, you need to assess as to how much risk did the fund manger subject you to, and
did he give you an adequate reward for taking that risk. Besides, you also need to consider
whether own risk profile allows you to accept the revised level of risk

5. Sell your fund, if you need to

There is no standard formula to determine the right time to sell an investment in Mutual fund
or for that matter any investment. However, you can definitely benefit by following certain
guidelines while deciding to sell an investment in a Mutual fund scheme. Here are some of
them:
You may consider selling a fund when your investment plan calls for a sale rather than doing
so for emotional reasons. You need to hold a fund long enough to evaluate its performance
over
a complete market cycle, i.e. around three years or so. Many of us make the mistake of either
holding on to funds for too long or exit in a hurry. It is important to do a thorough analysis
before taking a decision to sell. In other words, if you take a wrong decision, there is always a
risk of missing out on good rallies in the market or getting out too early thus missing out on
potential gains. You should consider coming out of a fund if its performance has consistently
lagged its peers for a period of one year or so. It doesn't make sense to hold a fund when it no
longer meets your needs. If you have made a proper selection, you would generally be
required
to make changes only if the fund changes its objective or investment style, or if your needs
change.

6. Diversified vs. Concentrated Portfolio

The choice between funds that have a diversified and a concentrated portfolio largely depends
upon your risk profile. As discussed earlier, a well - diversified portfolio helps in spreading
the investments across different sectors and segments of the market. The idea is that if one or
more stocks do badly, the portfolio won't be affected as much. At the same time, if one stock
does very well, the portfolio won't reap all the benefits. A diversified fund, therefore, is an
ideal choice for someone who is looking for steady returns over the longer term. A
concentrated portfolio works exactly in the opposite manner. While a fund with a
concentrated portfolio has a better chance of providing higher returns, it also increases your
chances of underperforming or losing a large portion of your portfolio in a market downturn.
Thus, a concentrated portfolio is ideally suited for those investors who have the capacity to
shoulder higher risk in order to improve the chances of getting better returns.
 7. Review your portfolio periodically

It is always a good idea to review your portfolio periodically. For example, you may begin
reviewing your portfolio on a half-yearly basis. Besides, you may be required to review your
portfolio in greater detail when your investments goals or financial circumstances change.

HOW TO REDUCE RISK WHILE INVESTING:

 Any kind of investment we make is subject to risk. In fact we get return on our investment
purely and solely because at the very beginning we take the risk of parting with our funds, for
getting higher value back at a later date. Partition itself is a risk.

 Well known economist and Nobel Prize recipient William Sharpe tried to segregate the total
risk faced in any kind of investment into two parts - systematic (Systemic) risk and
unsystematic (Unsystemic) risk.

 Systematic risk is that risk which exists in the system. Some of the biggest examples of
systematic risk are inflation, recession, war, political situation etc.

 Inflation erodes returns generated from all investments e.g. If return from fixed deposit is 8
per cent and if inflation is 6 per cent then real rate of return from fixed deposit is reduced by 6
per cent.

 Similarly if returns generated from equity market is 18 per cent and inflation is still 6 per cent
then equity returns will be lesser by the rate of inflation. Since inflation exists in the system
there is no way one can stay away from the risk of inflation.

 Economic cycles, war and political situations have effects on all forms of investments. Also
these exist in the system and there is no way to stay away from them. It is like learning to
walk.

 Anyone who wants to learn to walk has to first fall; you cannot learn to walk without falling.
Similarly anyone who wants to invest has to first face systematic risk; there can never make
any kind of investment without systematic risk.
 Another form of risk is unsystematic risk. This risk does not exist in the system and hence is
not applicable to all forms of investment. Unsystematic risk is associated with particular form
of investment.

 Suppose we invest in stock market and the market falls, then only our investment in equity
gets affected OR if we have placed a fixed deposit in particular bank and bank goes bankrupt,
than we only lose money placed in that bank.

 While there is no way to keep away from risk, we can always reduce the impact of risk.
Diversification helps in reducing the impact of unsystematic risk. If our investment is
distributed across various asset classes the impact of unsystematic risk is reduced.

 If we have placed fixed deposit in several banks, then even if one of the banks goes bankrupt
our entire fixed deposit investment is not lost.

 Similarly if our equity investment is in Tata Motors, HLL, Infosys, adverse news about
Infosys will only impact investment in Infosys, all other stocks will not have any impact.

 To reduce the impact of systematic risk, we should invest regularly. By investing regularly we
average out the impact of risk.

 Mutual fund, as an investment vehicle gives us benefit of both diversification and averaging.

 Portfolio of mutual funds consists of multiple securities and hence adverse news about single
security will have nominal impact on overall portfolio.

 By systematically investing in mutual fund we get benefit of rupee cost averaging.

 Mutual fund as an investment vehicle helps reduce, both, systematic as well as unsystematic
risk.
1.1 Competitor Analysis

We have many competitors in the Mutual Fund Industry in India. Here are some of the competitors that exist
in the Indian market.

 KOTAK MAHINDRA MUTUAL FUND

Kotak Mahindra Asset Management Company (KMAMC) is a subsidiary of Kotak Mahindra Bank
Limited (KMBL). It is presently having more than 1,99,800 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.
  HDFC MUTUAL FUND

HDFC Asset Management Company Ltd (AMC) was incorporated under the Companies Act, 1956, on
December 10, 1999, and was approved to act as an Asset Management Company for the HDFC Mutual Fund
by SEBI vide its letter dated June 30, 2000. HDFC Mutual Fund was setup with two sponsors namely
Housing Development Finance Corporation Limited and Standard Life Investments Limited.

 UNIT TRUST OF INDIA (UTI) 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 Crores. 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.

 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.

 RELAINCE 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.

 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.

 HSBC MUTUAL FUND

HSBC Mutual Fund was setup on May 27, 2002 with HSBC Securities and Capital Markets (India)
Private Limited as the sponsor.

 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 & ING. The AMC, ING Investment Management Pvt. Ltd. was incorporated on April
6, 1998.

 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.

FUTURE OF MUTUAL FUNDS IN INDIA

December 2008, Indian mutual fund industry reached Rs 2,50,537 crore. It is estimated that by 2010 March-end, the
total assets of all scheduled commercial Banks should be Rs 40,90,000 crore.

The annual composite rate of growth is expected 13.4% during the rest of the decade. In the last 5 Years we have seen
annual growth rate of 9%. According to the current growth rate, by year 2010, mutual fund assets will be double.

Number of foreign AMC's are in the queue to enter the Indian markets like Fidelity Investments, US based, with over
US$1trillion assets under management worldwide. our saving rate is over 23%, highest in the world. Only
channelizing these savings in mutual funds sector is required.

we have approximately 29 mutual funds which is much less than US having more than 800. There is a big scope for
expansion and 'C' class cities are growing rapidly. Today most of the mutual funds are concentrating on the 'C’class
cities. Soon they will find scope in the growing cities.

Mutual fund can penetrate rural like the Indian insurance industry with simple and limited product. SEBI allowing the
MF's to launch commodity mutual fundse,emphasis on better corporate governance trying to curb the late trading
practices. Introduction of Financial Planners who can provide need based advice.