A

Project Report ON
“STUDY OF MUTUAL FUNDS IN INDIA”
“Submitted By

SUPRIYA ARVIND TARDE

In partial fulfillment of

Master of Commerce

Project Guidance of

Dr. Dattatray khune

Submitted To

University of Pune

Through
 CAMP EDUCATION SOCIETYS

DR.ARVIND B. TELANG COLLEGE OF ARTS, SCIENCE & COMMERCE

NIGDI,PUNE-411044.

For Academic Year

2020-2021
 DECLARATION

I Supriya Arvind Tarde student of class Mcom (Advance Accounting &

Taxation) Taxation (SEM-4), academic year 2020-2021 Studying at CAMP
EDUCATION SOCIETYS DR.ARVIND B. TELANG COLLEGE OF ARTS,
SCIENCE & COMMERCE hereby declare that the work done on the project
Entitled “ STUDY OF MUTUAL FUNDS IN INDIA.” is true and original and any
Reference used in this project is duly acknowledged.

DATE:

PLACE: Pune

( Supriya .A. Tarde )

 CERTIFICATE

This is to certify that MISS SUPRIYA TARDE, studying in Mcom (Advance

Accounting & Taxation) (SEM-4), academic year 2020-2021 at CAMP
EDUCATION SOCIETYS DR.ARVIND B. TELANG COLLEGE OF ARTS,
SCIENCE & COMMERCE has completed the project on ‘ STUDY OF MUTUAL
FUNDS IN INDIA.’ The information submitted herein is true and original to the best
of my knowledge.

____________________ ___________________

Mr. DATTATRY KHUNE SIR Mr. PRAKASH PATIL SIR

[PROJECT GUIDE] [PRINCIPAL]

____________________

EXTERNAL EXAMINER
 DECLARATION BY GUIDE

To,

The Project Guide

CAMP EDUCATION SOCIETYS

DR. ARVIND B. TELANG COLLEGE OF ARTS, SCIENCE & COMMERCE NIGDI, PUNE-
411044

Subject : “ STUDY OF MUTUAL FUNDS IN INDIA "

Respected Sir,

I am Supriya Arvind Tarde .I would like to apply for the above mentioned topic for the purpose of
Project Report Presentation as a part and partial of project of M.Com Semester IV of the academic
year 2020-21.

Kindly do the needful with regards to this.

Thanking You.
 Topic Confirmed

Dr. Dattatray Khune.

(Project Guide )

Yours Sincerely

Supriya A. Tarde

(M.Com Part II Semester IV)

ACKNOWLEDGEMENT

It gives me immense pleasure to present a project on “STUDY OF MUTUAL FUNDS IN INDIA ". As
a Mcom student it is a great honour to undergo a project work at an graduate level and
I would like to thank the University of Mumbai for giving me such a golden
opportunity.

I am eternally grateful to almighty god for giving me the spirit to put in my best effort
towards my project. I owe my sincere gratitude to Dr. Prakash D. Patil, the principal
of our college. I am also thankful to my project guide Mr. Dattatray Khune Sir for
his valuable guidance and for providing an insight to the subject.
I am also obliged to the library staff of Dr. A.B. Telang Comp College for the
numerous books made me available for the handy reference.

Although, I have taken every care to check mistake and misprint yet it is difficult to
claim perfection. Any error, omission and suggestion brought to my notice, will be
thankfully acknowledged by me.
 INDEX

SR PAGE
NO. CHAPTER NAME NO.
1 Mutual Fund-An Introduction  7-13
  1.1 Introduction  8
  1.2 Benefits of Mutual Fund  10
  1.3 Limitations of Mutual Fund  11
  1.4 Rights of Unit Holders  13
   
2 Types of Mutual Funds  14-18
   
3 Investment Strategies of Mutual Fund  19-22
  3.1 Investment Strategies  20
  3.2 Risk Return Analysis  20
  3.3 Mutual Fund Asset Type  21
  3.4 Working of Mutual Fund  22
   
4 Organisational Structure & Regulation of Mutual Fund  23-30
  4.1 Organisational Structure of Mutual Fund  24
  4.2 Regulations of Mutual Fund  26
  4.3 Players of Mutual Fund  30
   
5 UTI - Unit Trust of India  31-40
   
  Conclusion  41
  Biblography  42
     
 MUTUAL FUND – AN INTRODUCTION

1.1 INTRODUCTION

Mutual fund is a trust that pools the savings of a number of investors who share a common financial
goal. This pool of money is invested in accordance with a stated objective. The joint ownership of
the fund is thus “Mutual”, i.e. the fund belongs to all investors. 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 appreciations realized are shared by its unit holders
in proportion 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. A Mutual Fund is an investment tool that
allows small investors access to a well-diversified portfolio of equities, bonds and other securities.
Each shareholder participates in the gain or loss of the fund. Units are issued and can be redeemed as
needed. The funds Net Asset value (NAV) is determined each day.
 Investments in securities are spread across a wide cross-section of industries and sectors and thus the
risk is reduced. Diversification reduces the risk because all stocks may not move in the same
direction in the same proportion at the same time. Mutual fund issues units to the investors in
accordance with quantum of money invested by them. Investors of mutual funds are known as unit
holders.

Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual
fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it
on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk &
maximizing returns.

Thus a Mutual Fund is the most suitable investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed basket of securities at a relatively low
cost.
When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of
the fund in the same proportion as his contribution amount put up with the corpus (the total amount
of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder.

Any change in the value of the investments made into capital market instruments (such as shares,
debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the
market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated
by dividing the market value of scheme's assets by the total number of units issued to the investors.

1.2 Benefits of investing in Mutual Funds:

There are several benefits from investing in a Mutual Fund:

• Small investments: Mutual funds help you to reap the benefit of returns by a portfolio spread
across a wide spectrum of companies with small investments.

• Professional Fund Management: Professionals having considerable expertise, experience

and resources manage the pool of money collected by a mutual fund. They thoroughly
analyse the markets and economy to pick good investment opportunities.

• Spreading Risk: An investor with limited funds might be able to invest in only one or two
stocks/bonds, thus increasing his or her risk. However, a mutual fund will spread its risk by
investing a number of sound stocks or bonds. A fund normally invests in companies across a
wide range of industries, so the risk is diversified.

• Transparency: Mutual Funds regularly provide investors with information on the value of
their investments. Mutual Funds also provide complete portfolio disclosure of the
investments made by various schemes and also the proportion invested in each asset type.

• Choice: The large amount of Mutual Funds offer the investor a wide variety to choose from.
An investor can pick up a scheme depending upon his risk/ return profile.

• Regulations: All the mutual funds are registered with SEBI and they function within the
provisions of strict regulation designed to protect the interests of the investor.
 • Flexibility: Through features such as Systematic Investment Plans (SIP), Systematic
Withdrawal Plans (SWP) and dividend reinvestment plans, you can systematically invest or
withdraw funds according to your needs and convenience.

• Return Potential: Over a medium to long term, Mutual Funds have the potential to provide
a higher return as they invest in a diversified basket of selected securities.

• Diversification: Mutual Funds invest in a number of companies across a broad cross section
of industries and sectors. This diversification reduces the risk because seldom do all stocks
decline at the same time and in the same proportion. You achieve this diversification through
a Mutual Fund with far less money than you can do on your own.

1.3 Limitation of Mutual Fund:

• Entry and exit costs: Mutual Funds are a victim of their own success. When a large body
like a fund invests in shares, the concentrated buying or selling often results in adverse price
movements i.e. at the time of buying, the fund ends up paying a higher price and while selling
it realizes a lower price. For obvious reasons, this problem is even more severe for funds
investing in small capitalization stocks. However, given the large size of the debt market,
excluding UTI, most debt funds do not face this problem.

• Waiting time before investment: It takes time for a Mutual Fund to invest money. Since it
is difficult to invest all funds in one day, there is dome money waiting to be invested.
Further, there may be a time lag before investment opportunities are identified. This ensures
that the fund under performs the index. For open-ended funds, there is the added problem of
perpetually keeping some money in liquid assets to meet redemption. The problem of
impracticability of quick investments is likely to be reduced to some extent with the
introduction of index futures.
• Fund management costs: The costs of the fund management process are deducted from the
fund. This includes marketing and initial costs deducted at the time of entry itself, called
“load”. Then there is the annual asset management fee and expenses, together called the
expense ratio. Usually, the former is not counted while measuring performance, while the
later is. A standard 2% expense ratio means that, everything else being equal, the Fund
manager under performs the benchmark index by an equal amount.

• Professional Management- Some funds doesn’t perform in neither the market, as their
management is not dynamic enough to explore the available opportunity in the market, thus
many investors debate over whether or not the so-called professionals are any better than
mutual fund or investor himself, for picking up stocks.

• Costs – The biggest source of AMC income, is generally from the entry & exit load which
they charge from an investors, at the time of purchase. The mutual fund industries are thus
charging extra cost under layers of jargon.

• Dilution - Because funds have small holdings across different companies, high returns from
a few investments often don't make much difference on the overall return. Dilution is also
the result of a successful fund getting too big. When money pours into funds that have had
strong success, the manager often has trouble finding a good investment for all the new
money.

• 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-gain 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.
1.4 Rights of Unit holders:

As a unitholder in a Mutual Fund scheme coming under the SEBI (Mutual Funds) Regulations, you
are entitled to:

• Receive unit certificates or statements of accounts confirming your title within 30 days from
the date of closure of the subscription under open-ended schemes or within 6 weeks from the
date your request for a unit certificate is received by the Mutual Fund.
• Receive information about the investment policies, investment objectives, financial position
and general affairs of the scheme.
• Receive dividend within 30 days of their declaration and receive the redemption or
repurchase proceeds within 10 working days from the date of redemption or repurchase.
• Vote in accordance with the Regulations to:
• Change the Asset Management Company.
• Wind up the schemes.
• Receive communication from the Trustees about change in the fundamental attributes of any
scheme or any other changes which would modify the scheme and affect the interest of the
unitholders and to have option to exit at prevailing Net Asset Value without any exit load in
such cases.
• Inspect the documents of the Mutual Funds specified in the scheme’s offer document.

In addition to your rights, you can expect the following from Mutual Funds:
• To publish their NAV, in accordance with the regulations: daily, in case of open-ended
schemes and once a week, in case of close-ended schemes.
• To disclose your schemes’ entire portfolio twice a year, unaudited financial results half yearly
and audited annual accounts once a year. In addition many mutual funds send out newsletters
periodically.
• To adhere to a Code of Ethics which require that investment decisions are taken in the best
interest of the unitholders.
 2.TYPES OF MUTUAL FUNDS

TYPES OF MUTUAL FUNDS

Mutual funds can be classified as follow:

BASED ON THEIR STRUCTURE :

• Open-ended funds: Investors can buy and sell the units from the fund, at any point of time.
 • Close-ended funds: These funds raise money from investors only once. Therefore, after the
offer period, fresh investments can not be made into the fund. If the fund is listed on a stocks
exchange the units can be traded like stocks (E.g., Morgan Stanley Growth Fund). Recently,
most of the New Fund Offers of close-ended funds provided liquidity window on a periodic
basis such as monthly or weekly. Redemption of units can be made during specified intervals.
Therefore, such funds have relatively low liquidity.

BASED ON THEIR INVESTMENT OBJECTIVES :

• Equity funds: These funds invest in equities and equity related instruments. With
fluctuating share prices, such funds show volatile performance, even losses. However, short
term fluctuations in the market, generally smoothens out in the long term, thereby offering
higher returns at relatively lower volatility. At the same time, such funds can yield great
capital appreciation as, historically, equities have outperformed all asset classes in the long
term. Hence, investment in equity funds should be considered for a period of at least 3-5
years. It can be further classified as:

i) Index funds- In this case a key stock market index, like BSE Sensex or Nifty is tracked.
Their portfolio mirrors the benchmark index both in terms of composition and individual stock
weightages.

ii) Equity diversified funds- 100% of the capital is invested in equities spreading across
different sectors and stocks.

iii) Dividend yield funds- it is similar to the equity diversified funds except that they invest in
companies offering high dividend yields

iv) Thematic funds- Invest 100% of the assets in sectors which are related through some
theme.
e.g. -An infrastructure fund invests in power, construction, cements sectors etc.

v) Sector funds- Invest 100% of the capital in a specific sector. e.g. - A banking sector fund
will invest in banking stocks.

vi) ELSS- Equity Linked Saving Scheme provides tax benefit to the investors.
 • Balanced fund: Their investment portfolio includes both debt and equity. As a result, on the
risk-return ladder, they fall between equity and debt funds. Balanced funds are the ideal
mutual funds vehicle for investors who prefer spreading their risk across various instruments.
Following are balanced funds classes:

i) Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities, remaining in debt.

• Debt fund: They invest only in debt instruments, and are a good option for investors averse
to idea of taking risk associated with equities. Therefore, they invest exclusively in fixed-
income instruments like bonds, debentures, Government of India securities; and money
market instruments such as certificates of deposit (CD), commercial paper (CP) and call
money. Put your money into any of these debt funds depending on your investment horizon
and needs.

i) Liquid funds- These funds invest 100% in money market instruments, a large portion being
invested in call money market.

ii) Gilt funds - They invest 100% of their portfolio in government securities of and T-bills.

iii) Floating rate funds - Invest in short-term debt papers. Floaters invest in debt instruments
which have variable coupon rate.

iv) Arbitrage fund- They generate income through arbitrage opportunities due to mis-pricing
between cash market and derivatives market. Funds are allocated to equities, derivatives and money
markets. Higher proportion (around 75%) is put in money markets, in the absence of arbitrage
opportunities.

v) Gilt funds - They invest 100% of their portfolio in long-term government securities.

vi) Income funds - Typically, such funds invest a major portion of the portfolio in long-term debt
papers.
 vii) MIPs- Monthly Income Plans have an exposure of 70%-90% to debt and an exposure of 10%-
30% to equities.

viii)FMPs- fixed monthly plans invest in debt papers whose maturity is in line with that of the
fund.
 3. INVESTMENT STRATEGIES

3.1 INVESTMENT STRATEGY

1. Systematic Investment Plan: under this a fixed sum is invested each month on a fixed date of a
month. Payment is made through post dated cheques or direct debit facilities. The investor gets fewer
units when the NAV is high and more units when the NAV is low. This is called as the benefit of
Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and give
instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of the same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund then he can
withdraw a fixed amount each month.
3.2 RISK V/S. RETURN:

3.3 MUTUAL FUND ASSETS TYPE :

Worldwide Mutual Fund Assets by type of fund:

If we see the worldwide Mutual fund Assets by the type of fund for the third
quarter in 2008, then it is seen that the major investments were in equities
i.e. 40% of the total investments.
Worldwide Mutual Fund Assets by Region:

By region, 55 percent of worldwide assets were in the Americas in the third

quarter of 2008, 34 percent were in Europe and 11 percent in Africa and
Asia/Pacific.
3.4 WORKING OF MUTUAL FUND :

A mutual fund is just the connecting bridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment objective. The mutual fund
will have a fund manager who is responsible for investing the gathered money into specific
securities (stocks or bonds). When you invest in a mutual fund, you are buying units or portions of
the mutual fund and thus on investing becomes a shareholder or unit holder of the fund.

Mutual funds are considered as one of the best available investments as compare to others
they are very cost efficient and also easy to invest in, thus by pooling money together in a mutual
fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it
on their own. But the biggest advantage to mutual funds is diversification, by minimizing risk &
maximizing returns.

Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity
to invest in a diversified, professionally managed basket of securities at a relatively low cost. The
flow chart below describes broadly the working of a mutual fund
4. ORGANISATIONAL STRUCURE
AND REGULATIONS OF MUTUAL
FUNDS

4.1 ORGANISATIONAL STRUCURE OF MUTUAL FUNDS :

The Mutual fund organization as per the SEBI formation and necessary formation is needed for sooth
activities of the companies and achieved the desire objectives.Transfer agent and custodian play role
for dematerialization of the fund and unit holders hold the account statement, but custody of the unit
is on particular Asset Management Company. Custodian holds all the fund units on dematerialization
form. Sponsor had decided the responsibility of custodian when investor to purchase the fund and to
sell the unit. Application forms, transaction slip and other requests received by transfer agent, middle
men between investors and Assts Management co.
THE STRUCTURE OF MUTUAL FUND CONSISTS OF:

SPONSOR

Sponsor is the person who acting alone or in combination with another body corporate establishes a
mutual fund. Sponsor must contribute at least 40% of the net worth of the Investment managed and
meet the eligibility criteria prescribed under the Securities and Exchange Board of India (Mutual
Fund) Regulations, 1996. The sponsor is not responsible or liable for any loss or shortfall resulting
from the operation of the Schemes beyond the initial contribution made by it towards setting up of
the Mutual Fund.

TRUST

The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act,
1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908.

TRUSTEE

Trustee is usually a company (corporate body) or a Board of Trustees (body of individuals). The
main responsibility of the Trustee is to safeguard the interest of the unit holders and ensure that the
AMC functions in the interest of investors and in accordance with the Securities and Exchange
Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer
Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent
directors who are not associated with the Sponsor in any manner.

ASSET MANAGEMENT COMPANY (AMC)

The AMC is appointed by the Trustee as the Investment Manager of the Mutual Fund. The AMC is
required to be approved by the Securities and Exchange Board of India (SEBI) to act as an asset
management company of the Mutual Fund. At least 50% of the directors of the AMC are
independent directors who are not associated with the Sponsor in any manner. The AMC must have a
net worth of at least 10 cores at all times.

REGISTRAR AND TRANSFER AGENT

The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the
Mutual Fund. The Registrar processes the application form, redemption requests and dispatches
account statements to the unit holders. The Registrar and Transfer agent also handles
communications with investors and updates investor records.

4.2 REGULATION OF MUTUAL FUNDS :

Role of SEBI

(Securities exchange board of India)

There was no uniform regulation of the mutual funds industry till a few years ago. The UTI was
regulated by a special Act of Parliament while funds promoted by public sector banks were subject to
RBI Guidelines of July 1989. The Securities & Exchange Board of India (SEBI) was formed in 1993
as a capital market regulator. One of its responsibilities was to regulate the mutual fund industry and
it came up with comprehensive regulations for the industry in 1993. The rules for the formation,
administration and management of mutual funds in India were clearly laid down. Regulations also
prescribed disclosure requirements.

The regulations were thoroughly reviewed and re-notified in December 1996. The revised guidelines
tighten the accounting and disclosure requirements in line with recommendations of The Expert
Committee on Accounting Policies, Net Asset Values and Pricing of Mutual Funds. The SEBI
(Mutual Funds) Regulations, 1996 have been further amended in 1997, 1998 and 1999. Today, all
mutual funds are regulated by SEBI. Efforts have been made to bring UTI schemes under SEBI's
ambit with the result that all schemes, with the exception of Unit 64, are now regulated by the capital
market regulator.

SEBI Guideline of Mutual Fund

SEBI Regulation Act 1996

Establishment of a Mutual Fund:

In India mutual fund play the role as investment with trust, some of the formalities laid down by the
SEBI to be establishment for setting up a mutual fund. As the part of trustee sponsor the mutual fund,
under the Indian Trust Act, 1882, under the trustee company are represented by a board of directors.
Board of Directors is appoints the AMC and custodians. The board of trustees made relevant
agreement with AMC and custodian. The launch of each scheme involves inviting the public to
invest in it, through an offer documents.

Depending on the particular objective of scheme, it may open for further sale and repurchase of
units, again in accordance with the particular of the scheme, the scheme may be wound up after the
particular time period.

1. The sponsor has to register the mutual fund with SEBI

2. To be eligible to be a sponsor, the body corporate should have a sound track record and a general
reputation of fairness and integrity in all his business transactions.

Role of AMFI
(Association Mutual Fund in India)

AMFI, the apex body of all the registered asset management companies was incorporated on
August 22, 1995 as a nonprofit organization. All the asset management companies that have
launched mutual fund schemes are its members. One of the objectives of AMFI is to promote
investors' interest by defining and maintaining high ethical and professional standards in the
mutual fund industry. The AMFI code of ethics sets out the standards of good practices to be
followed by the asset management companies in their operations and in their dealings with
investors, intermediaries and public. AMFI code has been drawn up to encourage adherence to
standards higher than those prescribed by the regulations for the benefits of investors in the
mutual fund industry.

The members of Asset Management Companies (AMC) have always carried out the

responsibility of introducing new mutual fund schemes under the governance and guidelines of
its Board of Directors. Association of Mutual Funds in India has played a significant role in
creating a healthy and professional market for mutual funds. It has elevated the standard of the
mutual fund investment patterns by introducing more beneficiary schemes to attract more
investors. The Association of Mutual Funds is also the main governing body of all Asset
Management Companies (AMC). The Association of Mutual Funds in India (AMFI) has been
registered with the Securities and Exchange Board of India (SEBI). The main principle
religiously followed by AMFI is to protect and promote the mutual funds along with the
investors or shareholders.
 The Association of Mutual Funds in India (AMFI) is dedicated to developing the Indian Mutual
Fund Industry on professional, healthy and ethical lines and to enhance and maintain standards in all
areas with a view to protecting and promoting the interests of mutual funds and their unit holders.

AMFI working group on Best Practices for sales and marketing of Mutual Funds under the
Chairmanship of Shri B. G. Daga, Former Executive Director of Unit Trust of India with Shri Vivek
Reddy of Pioneer ITI, Shri Alok Vajpeyi of DSP Merrill Lynch, Shri Nikhil Khattau of Sun F & C
and Shri Chandrashekhar Sathe, Formerly of Kotak Mahindra Mutual Fund has suggested
formulation of guidelines and code of conduct for intermediaries and this work has been ably done
by a sub-group consisting of Shri B. G. Daga and Shri Vivek Reddy.

Objectives of AMFI:

• To define and maintain high professional and ethical standards in all areas of operation of mutual
fund industry.

• To recommend and promote best business practices and code of conduct to be followed by members
and others engaged in the activities of mutual fund and asset management including agencies
connected or involved in the field of capital markets and financial services.

• To interact with the Securities and Exchange Board of India (SEBI) and to represent to SEBI on all
matters concerning the mutual fund industry.

• To represent to the Government, Reserve Bank of India and other bodies on all matters relating to the
Mutual Fund Industry.
• To develop a cadre of well trained Agent distributors and to implement a programme of training and
certification for all intermediaries and others engaged in the industry.

• To undertake nation wide investor awareness programme so as to promote proper understanding of

the concept and working of mutual funds.

• To disseminate information on Mutual Fund Industry and to undertake studies and research directly
and/or in association with other bodies.

• To take regulate conduct of distributors including disciplinary actions (cancellation of ARN) for
violations of Code of Conduct.

• To protect the interest of investors/unit holders.

Important aspects of AMFI:

• AMFI provides professionalism and a proper balance in the mutual fund industry.

• It promotes the highly-efficient business practices as well as the code of conduct in the

mutual fund industry among its members and those who are involved in mutualfund
investments.

• AMFI is registered with SEBI and follows its suggestions while executing its activities.

• AMFI also represents the Government of India, the Reserve Bank of India and other related
higher authority bodies in the mutual fund operations.
• It also provides training programs to hone the skills of those who are involved in mutual fund
investments and also develops a team of efficient and skilled agents.

• AMFI also carries out various campaigns and awareness programs to inform the individuals
about the basic concept of mutual fund investments.

4.3 PLAYERS OF MUTUAL FUND :

Fund Managers

Fund managers, assigned by management company, are responsible for making investment in
accordance with the mutual fund’s objective and investment policy specified in the constitutive
documents. Fund managers are required to be approved by the SEC. Approval criteria include
relevant knowledge and experience, knowledge on laws, professional ethic and standards and no
subject to statutory disqualification.

Fund Supervisors

Mutual fund supervisor (performing the roles equivalent to those of a trustee) is entrusted with
fiduciary duties in that it shall act for the best interest of unitholders. Mutual fund supervisor shall
ensure that the investment of mutual fund follows the constitutive documents approved by the SEC,
confirm that the net asset value of the mutual fund is valued properly, hold in safe-keeping,
administer the movement of and register mutual fund assets to ensure accuracy, monitor the
investment of mutual fund and file a legal action in court on behalf of unitholders in case of
noncompliance caused by the management company. Mutual fund supervisor shall be a financial
institution registered with the SEC. The registration criteria are based on “fit & proper” principles.
Fund supervisor shall not be connected to the management company either directly or indirectly nor
have an interest in fund management which may jeopardize its independence.
 

Custodians

Assigned by the management company or customer, a custodian is responsible for holding in safe-
keeping, administering the movement of, registering and carrying out inventory control to assure the
accuracy for the fund assets. In addition, custodian shall collect information on income from such
assets and prepare a report for the management company. Custodian shall be “fit & proper” and
approved by the SEC. 

5. UNIT TRUST OF INDIA

UNIT TRUST OF INDIA MUTUAL FUND

'Unit Trust of India was created by the UTI Act passed by the Parliament in 1963. For more
than two decades it remained the sole vehicle for investment in the capital market by the Indian
citizens. In mid-1980's public sector banks were allowed to open mutual funds. The real vibrancy
and competition in the MF industry came with the setting up of the Regular SEBI and its laying
down the MF Regulations in 1993. UTI maintained its pre-eminent place till 2001, when a massive
decline in the market indices and negative investor sentiments after Ketan Parekh scam created
doubts about the capacity of UTI to meet its obligations to the investors. This was further
compounded by two factors; namely, its flagship and largest scheme US 64 was sold and re-
purchased not at intrinsic NAV but at artificial price and its Assured Return Schemes had promised
returns as high as 18% over a period going up to two decades.
 In order to distance Government from running a mutual fund the ownership was transferred
to four institutions; namely SBI, LIC, BOB and PNB, each owning 25%. UTI lost its market
dominance rapidly and by end of 2005, when the new share-holders actually paid the consideration
money to Government its market share had come down to close to 10%.

A new board was constituted and a new management inducted. Systematic study of its
problems role and functions was carried out with the help of a reputed international consultant. Once
again UTI has emerged as a serious player in the industry. Some of the funds have won famous
awards, including the Best Infra Fund globally from Lipper. UTI has been able to benchmark its
employee compensation to the best in the market.

Besides running domestic MF Schemes UTI AMC is also a registered portfolio manager
under the SEBI (Portfolio Managers) Regulations.

This company runs two successful funds with large international investors being active
participants. UTI has also launched a Private Equity Infrastructure Fund along with HSH Nord Bank
of Germany and Shinsei Bank of Japan.

Company profile :

Vision :

To be the most Preferred Mutual Fund.

Mission :

• The most trusted brand, admired by all stakeholders.

• The largest and most efficient money manager with global presence.
• The best in class customer service provider.
• The most preferred employer.
• The most innovative and best wealth creator.
• A socially responsible organization known for best corporate governance.
Assets Under Management: UTI Asset Management Co. Ltd

Sponsor:

• State Bank of India

• Bank of Baroda
• Punjab National Bank
• Life Insurance Corporation of India

Trustee: UTI Trustee Co. Limited.

Reliability

UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs
and registrar offices are connected on a robust IT network to ensure cost-effective quick and efficient
service. All these have evolved UTIMF to position as a dynamic, responsive, restructured, efficient
and transparent entity, fully compliant with SEBI regulations.

UTI MUTUAL FUND

When started? Established in 1964.

1st Mutual Fund Company in

India.
How they came into business? By the UTI Act passed by the
parliament in 1963.

Mr Leo Puri (Managing director)

Board of director
Mr.P.N.Venkatachalam

Minimum Investment Rs.1000

Investment Equity

Finanicial service:16-22%

Energy: 12-18%
 Consumer Goods:8-14%

Main Funds UTI Dividend Yield Fund.

UTI Opportunity Fund.

Type of Fund Offered Equity Fund,Index Fund,Asset

Fund,Balanced Fund, Debt Fund.

Fund managers
Mr. Anoop Bhaskar

Mr. Amandeep Chopra

Mr. Sanjay Dongre

Mr. Manish Joshi

Ms. Swati Kulkarni

Ms. Shilpita Guha

No. of schemes offered 107 Schemes
Distribution • Tie-up with post offices
branches.
• UTI outlet and branches.

Subsidiaries

UTI Venture

UTI Venture is leading private equity firm. Focused on growth capital, they propel the ambitions of
passionate Indian entrepreneurs, while unlocking superior returns for our investors. Our
demonstrated track record of successful investments, led by an experienced management team,
positions our funds among top performers in India.
UTI International Ltd

UTI International Ltd (UTI IL) is a 100% subsidiary of UTI Asset Management Company Ltd. (UTI
AMC). UTI AMC is the largest retail Asset Management Company in India with more than 9
million investor accounts and Assets under Management of close to US$ 9.5bn (September 30,
2008). UTI International Ltd. is responsible for all international business activities of UTI AMC. The
Assets under Management (AUM) of UTI International Ltd stands at USD 615 mn as on September
30, 2008.

UTI RSL (Retirement Solutions Limited)

UTI RSL has been set up to carry out the operations as Pension Fund as directed by the Board of
Trustees of the New Pension System Trust, set up under the Indian Trust Act, 1882, and to undertake
wholesale asset management as prescribed by the Government.

Awards

UTI MF CNBC Award 2009.

UTI Mutual Fund sweeps ICRA mutual fund Award 2009.
UTI MF wins the Best Debt Fund House Award.
Lipper Fund Awards09-UTI Mahila Unit-5 yrs.
Lipper Fund Awards09-UTI Mahila Unit-3 yrs.
Lipper Fund Awards 2007.
CNBC-TV18-BNP Par-ibas Mutual Fund of the year Award 2006.
CNBC-TV18-BNP Par-ibas Mutual Fund of the year Award 2004
ICRA online Mutual Fund Award: UTI NIFTY INDEX FUND won the award for
the year 2004.
CNBC India Mutual Fund of the Year Award 2003.
UTI Nifty Index Fund wins Gold at ICRA Online 2005.
UTI Dynamic Equity Fund wins Silver at ICRA Online 2005.
UTI Growth Value Fund has been ranked by CRISIL 2004.
PRODUCTS OF UTI MUTUAL FUND :

• Unit Scheme (An open-ended equity scheme)

• UTI - Master Plus Unit Scheme (An open-ended equity scheme)
• UTI - Equity Fund (An open-ended equity scheme)
• UTI - Top 100 Fund (An open-ended equity scheme)
• UTI - MNC Fund (An open-ended equity scheme)
• UTI - Master Value Fund (An open-ended equity oriented value fund)
• UTI - Pharma & Healthcare Fund (An open-ended equity scheme)
• UTI - Energy Fund (An open-ended equity scheme)
• UTI - Services Industries Fund (An open-ended equity scheme)
• UTI - Equity Tax Savings Plan (An open-ended ELSS with a lock-in period of 3 years)
• UTI - Nifty Index Fund (An open-ended passive Index Fund tracking the CNX Nifty Index)
• UTI - Mid Cap Fund (An open-ended equity scheme)
• UTI - Infrastructure Fund (An open-ended equity scheme)
• UTI-Transportation and Logistics Fund (An open-ended equity scheme)
• UTI - Banking Sector Fund (An open-ended equity scheme)
• UTI - Dividend Yield Fund (An open-ended equity scheme)
• UTI - Opportunities Fund (An open-ended equity scheme)
• UTI - Leadership Equity Fund (An open-ended equity scheme)
• UTI - Contra Fund (An open-ended equity scheme)
• UTI - India Lifestyle Fund (An open-ended equity scheme)
• UTI-Wealth Builder Fund Series II (An open-ended equity scheme)
• UTI - Balanced Fund (An open-ended Balanced Fund)
• UTI - G-SEC Fund (An open-ended dedicated gilt fund)
• UTI - Gilt Advantage Fund (An open-ended Gilt Scheme)
• UTI - Bond Fund (An open ended pure debt fund)
• UTI - Short Term Income Fund (An open-ended income scheme)
• UTI - Treasury Advantage Fund (An open-ended Income Scheme)
• UTI - Floating Rate Fund (An open-ended Income Scheme)
• UTI - Dynamic Bond Fund (An open ended income scheme)
• UTI - Spread Fund (An open-ended equity fund investing in a mix of equity, equity
derivatives, debt and money market instruments)
• UTI Credit Opportunity Fund (An open-ended Income scheme)
• Fixed Maturity Plans (FMPs), Fixed Term Income Funds (FTIFs), Fixed Income Interval
Funds (FIIFs) & Interval Funds
• UTI - MIS-Advantage Plan (An open-ended income scheme)
• UTI - Monthly Income Scheme (An open-ended debt oriented scheme)
• UTI - Unit Linked Insurance Plan (An open-ended tax saving cum insurance scheme)
• UTI- Unit Scheme for Charitable & Religious Trusts & Registered Societies (UTI-C.R.T.S)
(An open-ended income scheme)
• UTI -Childrens Career Balanced Plan (An open-ended scheme)
• UTI-Retirement Benefit Pension Fund (An open-ended notified tax saving -cumpension
scheme)
• UTI - Mahila Unit scheme (An open-ended debt oriented scheme)
• UTI - CCP Advantage Fund (An open-ended scheme)
• UTI - Liquid Cash Plan (An open-ended income scheme)
• UTI - Money Market Fund (An open-ended Money Market Mutual Fund)
ASSET UNDER MANAGEMENT LTD. WITH OTHER CO.
Assets under management includes:

• Capital raised from investors;

• Capital belonging to the principals of the fund management firm.

For example, if fund managers contribute $

CONCLUSION

Mutual fund has become one of the important sources for investing. It is quite likely that a more
efficient portfolio can be constructed directly from funds. Thus, the two-step process of choosing an
asset allocation based on the information about benchmark indexes and then choosing funds in each
category may be one of the best realistically attainable approaches. To use this approach to portfolio
selection effectively, investors would benefit from estimates of future asset returns, risks and
correlations, as well as from fund management’s disclosure of future asset exposures and appropriate
benchmarks.

It has been a great opportunity for me to get a first experience of Mutual Funds. My study is to get
the feel of how the work is carried out in relation to fund’s portfolio aspect. I got an opportunity in
relation to the documentation and also the portfolio analysis that have been carrying out in
facilitating the investor and the fund manager.