Unit Trust of India (UTI) Mutual Fund

CHAPTER-IRESEARCH DESIGN

1.1Introduction:

In India only mutual fund operating for a long time since 1964 was the UTI opened. It as an open ended fund, whose unit can be sold and repurchased at any time. It is the public sector, enjoying monopoly position and some unique benefits such as exemptions from income tax of its entire income. Although the UTI has operated a number of schemes linked to insurance and gifts and some tax benefits, income since 1995-1996, there was a TDS, if the annual income is more than 10000 which was removed in 1999-2000.

Mutual funds have been set up since 1987 by the public sector banks following an amendment to the Banking Regulation Act in 1983, which empowered the RBI to permit the banks to carry on non-banking business such leasing, mutual fund, etc. under section 6 of this act. Since then, the SBI, Canara Bank, Punjab National Bank and some other nationalized banks have set up their own mutual funds. The business of mutual funds has caught the imagination of the financial community and has grown at a rapid in India. These funds cater mainly to individual investors and small savers. It was thrown open to private sector and foreign sector in 1992-93, since 1996, this Mutual fund business was in a bad shape due to depressed conditions in the capital market.

1.2Statement of the problem

Every investor before investing in stock market or in equity shares (mutual fund) they must analyses the risk and return of the securities by using past preference and economic growth of the firm. And expect future returns and also by analyzing the industry and company. An attempt is made to know the risk and return of there company

1.3 Objective of the study :1. The main objective of this project is concerned with getting the opinion of people regarding mutual funds and what they feel about availing the services of financial advisors.

2. To provide suggestions measures based on the analysis.

3. Analysis customer awareness about mutual fund.4. To know the various roles of UTI mutual fund.

5. Conducting a market survey and understanding the customer perception.

1.4 Scope of the study

This study is specifically covered by the ABOUT UTI Mutual fund with special reference to UTI MUTUAL FUND in Sindhanur.

1.4 RESEARCH METHODOLOGY:

To collect the data, relevant information is necessary as regards to the project; as a result data was collected by using two ways:

Primary Data:The tools used by us for the primary data are:i) Questionnaireii) Face-to-Face Interview

Secondary Data:

The information that is received with the help of Magazines, Financial reports or which is already present with the company.i) Gathered information through World Wide Web (WWW).ii) Support and knowledge provided by financial advisor.iii) Collected information published in authorized website.iv) To collect information through magazines formats, newspapers, textbook.v) Data is also obtained from annual publication of the company such as Annual reports, accounting statement etc.

1.6LIMITATIONS OF THE STUDY:

Getting accurate responses from the respondents. Locating the target respondents was very time consuming. The selection of respondents to cover the various strata of the society was tedious and time consuming.

1.7 Chapter Scheme

The study is designed into five chapters: The First chapter is about introduction, statement of the problem, objectives, research methodology and advantages and dis- advantages of the study The Second chapter contains an overview of the companys profile The Third Chapter contains Theoretical overview of the MUTUAL FUNDS. The Fourth Chapter contains data analysis and interpretation. The fifth Chapter contains Finding &Suggestions and conclusion

CHAPTER-IICOMPANY PROFILE

2.1 Introduction:

Unit Trust of Indiais a financial organization inIndia, which was created by the UTI Act passed by the Parliament in 1964.For more than two decades it remained the sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s 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 Regulator 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.

As of 2010, UTI has 10 million investors Fearing a run on the institution and possible impact on the whole market Government came out with a rescue package and change of management in 2001.Subsequently, the UTI Act was repealed and the institution was bifurcated into two parts .UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of schemes where Government had to come out with a bail-out package were taken over directly by the Government in a new entity called Specified Undertaking of UTI,SUUTI. SUUTI holds over 27% stakeAxis bank.. 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%. Certain reforms like improving the salary from PSU levels and effecting a VRS were carried out 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. Fresh talent was recruited from the private market, organizational structure was changed to focus on newly emerging investor and distributor groups and massive changes in investor services and funds management carried out. 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, has introduced Performance Related Payouts and ESOPs.

The UTI Asset Management Company has its registered office at: UTI Tower, Gn Block, Bandra Kurla Complex, Bandra (East), MUMBAI- 400 051.It has over 70 schemes in domestic MF space and has the largest investor base of over 9 million in the whole industry. It is present in over 450 districts of the country and has 100 branches called UTI Financial Centres or UFCs. About 50% of the total IFAs in the industry work for UTI in distributing its products! India Posts, PSU Banks and all the large Private and Foreign Banks have started distributing UTI products. The total average Assets Under Management (AUM) for the month of June 2008 was Rs. 530 billion and it ranked fourth. In terms of equity AUM it ranked second and in terms of Equity and Balanced Schemes AUM put together it ranked FIRST in the industry. This measure indicates its revenue- earning capacity and its financial strength.

Besides running domestic MF Schemes UTI AMC is also a registered portfolio manager under the SEBI (Portfolio Managers) Regulations. It runs different portfolios for its HNI and Institutional clients. It is also running a Sharia Compliant portfolio for its Offshore clients. UTI tied up with Shinsei Bank of Japan to run a large size India-centric portfolio for Japanese investors.

For its international operations UTI has set up its 100% subsidiary, UTI International Limited, registered in Guernsey, Channel Islands. It has branches in London, Dubai and Bahrain. It has set up a Joint Venture with Shinsei Bank in Singapore. The JV has got its license and has started its operations.

In the area of alternate assets, UTI has a 100% subsidiary called UTI Ventures at Banglore 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.

UTI Mutual Fund: Company Information, Profile and Products2.2 Company History:.Mutual Funds in India (1964-2000)

The end of millennium marks 36 years of existence of mutual funds in this country. The ride through these 36 years is not been smooth. Investor opinion is still divided. While some are for mutual funds others are against it.

UTI commenced its operations from July 1964 .The impetus for establishing a formal institution came from the desire to increase the propensity of the middle and lower groups to save and to invest. UTI came into existence during a period marked by great political and economic uncertainty in India. With war on the borders and economic turmoil that depressed the financial market, entrepreneurs.UTI commenced its operations from July 1964 "with a view to encouraging savings and investment and participation in the income, profits and gains accruing to the Corporation from the acquisition, holding, management and disposal of securities."

Different provisions of the UTI Act laid down the structure of management, scope of business, powers and functions of the Trust as well as accounting, disclosures and regulatory requirements for the Trust.

The openings up of the asset management business to private sector in 1993 saw international players like Morgan Stanley, Jardine Fleming, JP Morgan, George Soros and Capital International along with the host of domestic players join the party. But for the equity funds, the period of 1994-96 was one of the worst in the history of India.

Mutual Funds.

1999-2000 Year of the funds

Mutual funds have been around for a long period of time to be precise for 36 yrs but the year 1999 saw immense future potential and developments in this sector. This year signaled the year of resurgence of mutual funds and the regaining of investor confidence in these MFs. This time around all the participants are involved in the revival of the funds the AMCs, the unit holders, the other related parties. However the sole factor that gave lifr to the revival of the funds was the Union Budget. The budget brought about a large number of changes in one stroke. An insight of the Union Budget on mutual funds taxation benefits is provided later.

It provided centre stage to the mutual funds, made them more attractive and provides acceptability among the investors. The Union Budget exempted mutual fund dividend given out by equity-oriented schemes from tax, both at the hands of the investor as well as the mutual fund. No longer were the mutual funds interested in selling the concept of mutual funds they wanted to talk business which would mean to increase asset base, and to get asset base and investor base they had to be fully armed with a whole lot of schemes for every investor .So new schemes for new IPOs were inevitable. The quest to attract investors extended beyond just new schemes. The funds started to regulate themselves and were all out on winning the trust and confidence of the investors under the aegis of the Association of Mutual Funds of India (AMFI).

One can say that the industry is moving from infancy to adolescence, the industry is maturing and the investors and funds are frankly and openly discussing difficulties opportunities and compulsion.

Future Scenario

The asset base will continue to grow at an annual rate of about 30 to 35 % overthe next few years as investors shift their assets from banks and other traditionalavenues. Some of the older public and private sector players will either close shop or betaken over.

Out of ten public sector players five will sell out, close down or merge with stronger players in three to four years. In the private sector this trend has already started with two mergers and one takeover. Here too some of them will down their shutters in the near future to come.

But this does not mean there is no room for other players. The market will witness flurry of new players entering the arena. There will be a large number of offers from various asset management companies in the time to come. Some big names like Fidelity, Principal, and Old Mutual etc. are looking at Indian market seriously. One important reason for it is that most major players already have presence here and hence these big names would hardly like to get left behind.

The mutual fund industry is awaiting the introduction of derivatives in India as this would enable it to hedge its risk and this in turn would be reflected in its Net Asset Value (NAV).SEBI is working out the norms for enabling the existing mutual fund schemes to trade in derivatives. Importantly, many market players have called on the Regulator to initiate the process immediately, so that the mutual funds can implement the Changes Theater required to trade in Derivatives.

ContactUTI Towers

'GN' Block, Bandra Kurla Complex Bandra (E), Mumbai - 400051.Toll Free: 1800 22 1230

2.3 COMPANY PROFILE:SBI Mutual Fund is Indias largest bank sponsored mutual fund and has an enviable track record in judicious investments and consistent wealth creation.The fund traces its lineage to UTI - Indias largest banking enterprise. The institution has grown immensely since its inception and today it is India's largest bank, patronized by over 80% of the top corporate houses of the country.UTI Mutual Fund is a joint venture between the State Bank of India and societe general Asset Management, one of the worlds leading fund management companies that manages over US$ 500 Billion worldwide.In twenty years of operation, the fund has launched 38 schemes and successfully redeemed fifteen of them. In the process it has rewarded its investors handsomely with consistent returns.A total of over 5.8 million investors have reposed their faith in the wealth generation expertise of the Mutual Fund.Schemes of the Mutual fund have consistently outperformed benchmark indices and have emerged as the preferred investment for millions of investors and HNIs.Today, the fund manages over Rs. 42,100 corers of assets and has a diverse profile of investors actively parking their investments across 38 active schemes.The fund serves this vast family of investors by reaching out to them through network of over 130 points of acceptance, 29 investor service centers, 59 investor service desks and 6 Investor Service Points.

Our mission make UTI mutual fund

1. The most trusted brand , admired by all stakeholders2. The largest and most efficient money manager with global presence3. The best in class customer service provider4. The most preferred employer5. The most innovative and best wealth creator6. A socially responsible organization known for best corporate governance.

Asset under Management UTIAMC presently managers a corpus of over Rs 73588 corers as on 30th September 2013 .UTI mutual fund has a track record of managing a variety of schemes catering to the needs of every class of citizens. It has a nationwide network consisting 114 UTI financial centres and UTI international offices in London, Dubai and Bahrain. With a view to reach common investors at district level, 1 satellite office has also been opened.UTIAMC has a well qualified, professional fund management team, which has been fully empowered to manage funds with greater efficiency and accountability in the sole interest of the unit holders.

2.4 Awards and Achievements:

1. UTI MF CNBC AWARD 2009. 2. UTI MUTUAL FUND SWEEPS ICRA MUTUAL FUND AWARD 2009 3. UTI MUTUAL fund wins best debt fund house award. 4. Golden peacock innovative product/service award 2008 5.Loyality awards 2009 6. Lipper fund awards09 UTI Mahila unit -5 years 7. Lipper fund awards 09 UTI Mahila unit -3 years 8. Readers digest trusted brand 2008 9. Lipper fund awards gulf 2008 10.Top performing infrastructure fund income 11.Lipper fund awards gulf 2008 12. Four ICRA awards 7 star gold awards 13. ICRA mutual fund award 2007 IN THE YEAR 2013: 20 MAR 2013-UTI fund equity has won the Morningstar India fund awards 2013 as best large cap equity fund.

11 FEB 2013- UTI short term fund winner of BUSINESS WORLDS survey of the BestPerforming mutual funds in the DEBT: SHOR TERM CATEGORY

2.5 Board of Directors:

Director NameDesignation

SRI P R KHANChairman

FLEMING MADSENDirector

MR. PRADEEP GUPTADirector

M.V.SURYA NARAYANDirector

JAMES SELLERS RIEPEDirector

MR.SACHIT JAINDirector

P.N.VENKATCHALAMDirector

KEY PEOPLE:-1. Mr.IMTAIYAZUE RAHMAN2. MR.ANOOP BHASKAR3. MR.AMANDEEP SINGH CHOPRA4. S.C.PANDIAN

Chapter-IIITheoretical over view of Mutual Funds

3.1. Introduction:Of late, mutual funds have become a hot favorite of millions of people all over the world. The driving force of mutual funds is the safety of the principal guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. People prefer Mutual Funds to bank deposits, life insurance and even bonds because with a little money, they can get into the investment game. One can own a string of blue chips like ITC, TISCO, and Reliance etc. Through mutual funds act as a gate way to enter into big companies hitherto inaccessible to an ordinary investor with his small investment.

Mutual funds are relatively new in India. Many investors have not been very satisfied with their mutual funds investment experience, because they either invested wrongly or they were advised wrongly. May mutual funds investments plans satisfy the AIMS of investment mutual funds are financial intermediaries, which collect the savings of investor and invested them in large and well diversified portfolio of securities such as money market instruments, corporate and Government bonds and equity shares of joint stock companies. A mutual funds is a pool of commingle (mix) funds invested by different investors. Who have no contact with each other? Mutual funds are conceived as institutions for providing small investor generally do not have adequate time, knowledge, experience and resources for directly accessing the capital market, they have to rely on an intermediary, which undertakes informed investments decisions and provides the consequently benefits of professionals expertise.

3.2. Meaning and Definition:

Meaning:

In simple words, a mutual fund collects the savings from small investors, invest them in Government and other corporate securities and earn income through interests and dividends, besides capital gains. It works on the principle of small drops of water make a big ocean. A mutual fund is nothing but a form of collective investment.Mutual funds is essentially a mechanism of pooling together the savings of a large number of small investors for collective investment, with an avowed objective of attractive yields and capital appreciation, holding the safety and liquidity as promo parameters

Definition:

According to mutual fund fact book, a Mutual fund is a financial service organization that receives money from shareholder, invests in, earns return on it, attempts to make it grow and agree to pay the shareholders cash on demand for the current value of his investment.

The securities and Exchange Board of India [Mutual Funds] Regulations, 1993 defines a mutual fund as a fund established in the form of a trust by a sponsor, to raise monies by the trustees through the sale of units to the public, under one or more schemes, for investing in securities in accordance with these regulations.

3.3 Types of Funds:-In the investment market one can find a variety of investors with different needs, objective and risk taking capacities. For instance, a young businessman would like to get more capital appreciation for his funds and he would be prepared to take greater risks than a person who is just on the verge of his retiring age. So, it is very difficult to offer one fund to satisfy all the requirement of investors. Just as one shoe is not suitable for all legs, one fund is not suitable to meet the vast requirements of all investors. Therefore, many types of funds are available to the investor. It is completely left to the discretion of the investor to choose any one of them depending upon his requirement and his risk taking capacity.

A. On the basis of execution and operation.a. Close-ended Fundsb. Open-ended Funds

B. On the basis of yield and investment pattern.a. Income Fundsb. Pure growth Funds [Growth Oriented Funds]c. Balanced Fundsd. Specialized Fundse. Money-Market Mutual Funds [MMMFs]

A. On the basis of execution and operation.a. Close-ended Funds: Under this scheme, the corpus of the fund and its duration are prefixed. In other words, the corpus of the fund and number of units are determined in advance. One the subscription reaches the pre-determined level, the entry of investors is closed. After the expiry of the fixed period, the entire corpus is disinvested and the proceeds are distributed to the various unit holders in proportion to their holding.

b. Open-ended Funds:It is just opposite of close-ended funds. Under this scheme, the size of the fund and/or the period of the fund is not pre-determined. The investors are free to buy and sell any number of units at any point of time. For instance, the unit scheme (1964) of the unit Trust of India is an open ended one, both in terms of period and target amount. Anybody can buy this unit at any time and sell it also at his discretion.

B. On the basis of yield and investment pattern.

a. Income Funds:As the name suggests his Fund aims at generating and distributing regular income to the members on a periodicals basis. It concentrates more on the distribution of regular income and it also sees that average return is higher than that of the income from bank deposits.

b. Pure Growth Funds (Growth Oriented Funds):Unlike the income funds, Growth funds concentrate mainly on long run gains, that is capital appreciation. They do not offer regular income and they aim at capital appreciation in the long run. Hence, they have been described as Nest Eggs Investments.c. Balanced Funds:This is otherwise called income-cum-growth fund. It is nothing but a combination of both income and growth funds. It aims at distributing regular income as well as capital appreciation. This is achieved by balancing the investments between the high growth equity shares and also the fixed income earning securities.

d. Specialized Funds:Besides the above, a large number of specialized funds are in existence abroad. They offer Special schemes so as to meet the specific needs of specific categories of people like pensioners, windows etc. These are also Funds for investments in securities of specified areas. For instance, Japan Fund, South Korea Fund etc. In fact, these funds open the door for foreign investors to invest on the domestic securities of these countries.

e. Money-Market Mutual Fund (MMFs):These funds are basically open mutual fund and as such they have all the features of the open ended Fund. But, they invest in highly liquid and safe securities like commercial paper, bankers acceptances, certificates of deposits, Treasury bills etc. These instruments are called money market instruments. They take the place of shares, debentures and bonds in a capital market. They pay money market. They pay money market rates of interest. These funds are called Money funds in U.S.A. and they have been functioning since 1972. Investors generally use it as a Parking place or stop gap arrangement for their cash till they finally decide about the proper avenue for their investment, i.e., Long-term financial assets like bonds and stocks.

3.4 Importance of Mutual Funds:

The mutual funds industry has grown at a phenomenal rate in the recent past. One can witness a revolution in the mutual fund industry in view of its importance to the investors in general and the countrys economy at large. The following are some of the important advantages of mutual funds.

(1) Channelizing savings for Investment:

Mutual funds act as a vehicle in galvanizing the savings of the people offering various schemes suitable to the various classes of customers for the development of the economy as a whole. A number of schemes are being offered by MFs so as to meet the varied requirements of the masses, and thus, savings are directed towards capital investment directly. In absence of MFs, these savings would have remained idle. Thus, the whole economy benefits due to the cost efficient and optimum use and allocation of scare financial and real resources in economy for its speedy development.

(2) Offering Wide portfolio Investment:Small and medium investors used to burn their fingers in stock exchange operations with a relatively modest outlay. If they invest in a select few shares, some may even sink without a trace never to rise again. Now, these investors can enjoy the wide portfolio of the investment held by the mutual fund. The fund diversifies its risks by investing on a large variety of shares and bonds which cannot be done by small and medium investors. This is an accordance with the maxim Not to Lay all eggs in one basket these funds have large amounts at their disposal, and so, they carry a clout in respect of stock exchange transactions.

(3) Providing Better Yields:The pooling of funds from a large number of customers enables the fund to have large funds at the disposal. Due to these large funds, mutual funds are able to buy cheaper and sell dearer than the small and medium investors. Thus, they are able to command better yields to their customers. They also enjoy the economies of large scale and can reduce the cost of capital market participation.(4) Providing Research Service:A mutual fund is able to command vast resources and hence it is possible for it to have an in depth study and carry out research on corporate securities. Each fund maintains a large research team which constantly analyses the companies and the industries and recommends the fund to buy or sell a particular share. Thus, investments are made purely on the basis of a thorough research. Since research involves a lot of time, efforts and expenditure, an individual investor cannot take up this work. By investing in a mutual fund, the investor gets the benefit of the research done by the fund.

(5) Offering Tax benefits:Certain funds offer tax benefits to its customers. Thus, apart from dividends, interest and capital appreciation, investors also stand to get the benefits of tax concession. For instance, under section 80L of the Income Tax Act, a sum of Rs.10, 000 received as dividend (Rs. 13000 to UTI) from a MF is deductible from the gross total income. Under section 88A 20% of the amount invested is allowed to be deducted from the tax payable. Under the Wealth Tax Act, investments in MF are exempted up to Rs.5 lakhs.The mutual funds themselves are totally exempt from tax on all income on their investments. But, all other companies have to pay taxes and they can declare dividends only from the profits after tax. But, mutual funds do not deduct tax source from dividends. This is really a boon to investors.

(6) Introducing Flexible Investment schedule:Some mutual funds have permitted the investors to exchange their units from one scheme to another and this flexibility is a great boon to investors. Income Units can be exchanged for growth units depending upon the performance of the funds. One can not derive such flexibility in any other investments.

(7) Providing Greater Affordability and Liquidity:Even a very small investor can afford to invest in Mutual funds. They provide an attractive and cost effective alternative to direct purchase of shares. In the absence of MFs, small investors cannot think of participating in a number of investments with such a meager sum. Again, there is greater liquidity. Units can be sold to the Fund at any time at the Net Asset Value and thus quick access to liquid cash is assured. Besides, a branch of the sponsoring bank is always ready to provide loan facility against the unit certificates.

(8) Acting as Substitute for Initial Public Offerings (IPOS):

In most cases investors are not able to get allotment in IPOs of companies because they are often oversubscribed many times. Moreover, they have to apply for a minimum of 500 shares which is very difficult particularly for small investors. But, in mutual funds, allotment is more or less guaranteed. Mutual funds are also guaranteed a certain percentage of IPOs by companies. Thus, by participating in MFs, investors are able to get the satisfaction of participating in hundreds of varieties of companies.

(9) Reducing the Marketing Cost of New Issues: The mutual funds help to reduce the marketing cost of new issues. The promoters used to allot a major share of the Initial Public offering to the mutual funds and thus they are saved from the marketing cost of such issues.

(10) Keeping the Money Market Active:An individual investor can not have any access to money market instruments since the minimum amount of investment is out of his reach. On the other hand, mutual funds keep the money market active by investing money on the money market instruments. In fact, the availability of more money market instruments itself is a good sign for a developed money market which is essential for the successful functioning of the central bank in a country.The mutual funds provide stability to share prices, safety to investors and resources to prospective entrepreneurs

The advantages or benefits of investing in a Mutual

Funds are:\ Professional Management Mutual funds hire full-time, high-level investment professionals. Funds can afford to do so as they manage large pools of money. The managers have real-time access to crucial market information and are able to execute trades on the largest and most cost-effective scale.

Diversification Mutual funds invest in a broad range of securities. This limits investment risk by reducing the effect of a possible decline in the value of any one security. Low Costs

A mutual fund let's you participate in a diversified portfolio for as little as Rs.5,000/-, and sometimes less. And with a no-load fund, you pay little or no sales charges to own them. Liquidity In open-ended schemes, you can get your money back promptly at net asset value related prices from the mutual fund itself. Transparency You get regular information on the value of your investment in addition to disclosure on the specific investments made by the mutual fund scheme. Return potentialOver 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.\

Risk factors associated with mutual fund:

1. Mutual fund & securities investment are subject to risks and there in no assurance or guarantee that the objectives of the scheme will be achieved.2. Past performance of the sponsor or that of existing scheme of the fund does not indicate the performance of the scheme.3. Tax laws may change, affecting the return on investment in units.

3.7 History of Mutual Fund:

Introduction:Mutual funds really captured the public's attention in the 1980s and '90s when mutual fund investment hit record highs and investors saw incredible returns. However, the idea of pooling assets for investment purposes has been around for a long time. Here we look at the evolution of this investment vehicle, from its beginnings in the Netherlands in the 18th century to its present status as a growing, international industry with fund holdings accounting for trillions of dollars in the United States alone.

In the BeginningHistorians are uncertain of the origins of investment funds; some cite theclosed-end investment companieslaunched inthe Netherlands in 1822 by King William I as the first mutual funds, while others point to a Dutch merchant named Adrian van Ketwichwhose investment trust created in 1774 may have given the king the idea. Ketwich probably theorized that diversification would increase the appeal of investments to smaller investors with minimal capital. The name of Ketwich's fund, EendragtMaaktMagt, translates to "unity creates strength". The next wave of near-mutual funds included an investment trust launched in Switzerlandin 1849, followed by similar vehicles created inScotlandin the1880s.

The idea of pooling resources and spreading risk using closed-end investments soon took root inGreat BritainandFrance, making its way to theUnited Statesin the 1890s. The Boston Personal Property Trust, formed in 1893, was the firstclosed-end fundin theU.S.The creation of the Alexander Fund in Philadelphia in 1907 was an important step in the evolution toward what we know as the modern mutual fund. The Alexander Fund featured semi-annual issues and allowed investors to make withdrawals on demand.

The Arrival of the Modern Fund

The creation of the Massachusetts Investors' Trust inBoston,Massachusetts, heralded the arrival of the modern mutual fund in 1924. The fund went public in 1928, eventually spawning the mutual fund firm known today as MFS Investment Management. State Street Investors' Trust was thecustodian of the Massachusetts Investors' Trust. Later, State Street Investors started its own fund in 1924 with Richard Paine, Richard Saltonstall and Paul Cabot at the helm. Saltonstall was also affiliated with Scudder, Stevens and Clark, an outfit that would launch the firstno load fundin 1928. A momentous year in the history of the mutual fund, 1928 also saw the launch of the Wellington Fund, which was the first mutual fund to include stocks and bonds, as opposed to direct merchant bank style of investments in business and trade.

Regulation and Expansion

By 1929, there were 19open ended funds competing with nearly 700 closed-end funds. With the stock market crash of 1929, the dynamic began to change as highly-leveraged closed-end funds were wiped out and small open-end funds managed to survive.

Government regulators also began to take notice of the fledgling mutual fund industry. The creation of the Securities and Exchange Commission (SEC), the passage of theSecurities Act of 1933and the enactment of theput in place Securities Act of 1934 safeguards to protect investors: mutual funds were required to register with the SEC and to provide disclosure in the form of a prospectus. TheInvestment Company Act of1940put in place additional regulations that required more disclosures and sought to minimize conflicts of interest.

The mutual fund industry continued to expand. At the beginning of the 1950s, the number of open-end funds topped 100. In 1954, the financial markets overcame their 1929 peak, and the mutual fund industry began to grow in earnest, adding some 50 new funds over the course of the decade. The 1960s saw the rise ofaggressive growthfunds, with more than 100 new funds established and billions of dollars in new asset inflows.

Hundreds of new funds were launched throughout the 1960s until the bear market of 1969 cooled the public appetite for mutual funds. Money flowed out of mutual funds as quickly as investors could redeem their shares, but the industry's growth later resumed.

Recent DevelopmentsIn 1971, William Fouse and John McQuown of Wells Fargo Bank established the firstindwx fund, a concept that John Bogle would use as a foundation on which to build The Vanguard Group, a mutual fund powerhouse renowned for low-cost index funds. The 1970s also saw the rise of theno-loadfund. This new way of doing business had an enormous impact on the way mutual funds were sold and would make a major contribution to the industry's success.

With the 1980s and '90s came bull market mania and previously obscure fund managers became superstars; Max Heine, Michael Price andPeterLynch, the mutual fund industry's top gunslingers, became household names and money poured into the retail investment industry at a stunning pace. More recently, the burst of the tech bubble and a spate of scandals involving big names in the industry took much of the shine off of the industry's reputation. Shady dealings at major fund companies demonstrated that mutual funds aren't always benign investments managed by folks who have their shareholders' best interests in mind.Concept of Mutual Funds: 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.Mutual Fund Operation Flow Chart

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered industry.In the past, Indian mutual fund industry had seen dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase, the Assets under Management (AUM) was Rs. 67bn. The private sector entry to the fund family raised the AUM to Rs. 470 bn in March 1993 and till April 2004; it reached the height of 1,540 bn.The mutual fund industry can be broadly put into four phases according to the development of the sector. Each phase is briefly described

Phase 1. Establishment and Growth of Unit Trust of India - 1964-87

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years.UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (Indias first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.

2011-12Amount mobilized Asset under managementMobilisation as % of gross Domestic Savings

UTI11,05738,2475.2%

Public Sector1,9648,7570.9%

Total13,02147,0046.1%

Phase III. Emergence of Private Sector Funds - 1993-96

The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilization of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds.

Inventors ' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. Various Investor Awareness Programmers were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund players on the same level. UTI was re-organized into two parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund

Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes(like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilization of funds from investors and assets under management which is supported by the following data:

ASSETS UNDER MANAGEMENT (RS. CRORES)

AS ONUTIPUBLIC SECTORPRIVATE SECTORTOTAL

31-March-1353,3208,2926,86068,472

Phase V. Growth and Consolidation - 2004 Onwards:-

The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

The graph indicates the growth of assets over the years.

Mutual Fund Companies in India: The concept of mutual funds in India dates back to the year 1963. The year between 1963 and 1987 marked the existence of only one mutual fund company in India with Rs. 67bn assets under management (AUM), by the end of its monopoly era, the Unit Trust of India (UTI). The new entries of mutual fund companies in India were SBI Mutual Fund, Canara bank Mutual Fund, Punjab National Bank Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund.

Kothari Pioneer was the first private sector mutual fund company in India which has now merged with Franklin Templeton. Just after ten years with private sector players penetration, the total assets raise up to Rs. 1, 21,805 bn. Today there are 33 mutual fund companies in India.

MAJOR MUTUAL FUNDS IN INDIA1. IDBI Principal Mutual Fund 2. ZurichIndia Mutual Fund3. Alliance capital Mutual Fund4. HDFC Mutual Fund5. UTI Mutual Fund6. TATA Mutual Fund7. SBI Mutual Fund8. BIRLA Sun life Mutual Fund9. Can Bank Mutual Fund10. RELIANCE capital Mutual Fund11. ESCORT Mutual Fund12. Franklin Templeton Mutual Fund13. Sidearm Mutual Fund14. Cholamandalam Mutual Fund 15. Kothari Pioneer Mutual Fund16. Kodak Mahindra Mutual Fund17. Prudential ICICI Mutual Fund18. J M Mutual Fund19. IL&FS Mutual Fund20. ING savings trust Mutual Fund21. Sun F&C Mutual Fund22. ANZ Grind lays Mutual Fund23. BOB Mutual Fund24. DSP merillynch Mutual Fund25. Dundee Mutual Fund26. GIC Mutual Fund27. LIC Mutual Fund28. PNB Mutual Fund29. TAURUS Mutual Fund30. Morgan Stanley Mutual Fund31. HB Mutual Fund32. Asia pacific Mutual Fund33. Apple Mutual Fund.

Future of Mutual Funds in India: By December 2004, Indian mutual fund industry reached Rs 1, 50,537 crore. It is estimated that by 2010 March-end, the total assets of all scheduled commercial banks should be Rs 40, 90,000crore.

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.

Structure of the Indian mutual fund industry:Structure wise mutual fund industry can be classified in to three categories.

Unit trust of India: The India mutual industry is dominated by the unit trust of India,Which has a total crops of Rs.51, 100 crore collected from over 20 million investors. The UTI has many schemes in all categories. The unit scheme1964 commonly referred to as US 64, which is a balanced fund, is the biggest scheme with a crops of about 10,000 corers.

Public sector mutual fund: The second largest categories of mutual fund are the ones floated by nationalized bank. Canara bank asset management floated by Canara bank and SBI funds management floated by State Bank of India is the largest of these. GIC, AMC floated by General Insurance Corporation and Jeevan BheemSahayog AMC floated by the LIC are some of the other prominent ones. This categories funds managed by AMC is around Rs.8, 300 crore.

Private sector mutual fund: The third largest categories of mutual fund are the ones floated private domestic mutual funds and the private foreign mutual funds. The largest private domestic mutual funds are Cholamandalam asset management company ltd. J M capital management co. ltd, Birla sun life asset management company pvt.Ltd, Alliance capital asset management company pvt.Ltd, prudential ICICI management co.ltd.Zurich asset management company pvt. Ltd the aggregated groups of the assets managed by this category of AMC is about Rs.42, 200 crore.

CHAPTER IV DATA ANALYSIS AND INTERPRETATION1. The table showing no of respondents generally invested?Sl. noAttributesNo. of RespondentsPercentage

1Share market510

2Mutual fund1530

3Bank2550

4Other510

Total50100

Source: Field survey

Data analyses: This table shows that overall respondent generally invest in, mutual funds (30%), bank (50%), share market (10%), others (10%).

Interpretation: From the table no-1, from this data we concluded that most of the respondents invest in generally bank (50%).

2. The table showing no of respondents is regular investor or not? Sl. noAttributesNo. of RespondentsPercentage

1Yes2040

2No3060

Total50100

Source: Field survey

Data analyses: This table shows that overall respondent invest in mutual fund in regular are not. The most of respondents are not regular investor (60%), regular are (40%).

Interpretation: From the table no-2, from this data we concluded that most of the respondents not invest in regular (60%).

3. The table showing respondents perception about mutual fund?

Sl. noAttributesNo. of RespondentsPercentage

1Safe3570

2Risk1530

Total50100

Source: Field survey

Data analyses: This table shows that all respondent s perception about mutual fund is safe and risk. Show that (70%) of the respondent perception is safe, and rest of (30%) of the respondents is risk.

Interpretation: From the table no-3, from this data we concluded that 70% of the respondents perception about mutual fund is safe.

4. The table showing no of respondents investing their money on which factor?

Sl. noAttributesNo. of RespondentsPercentage

1Low risk2550

2High return1530

3Trust1020

Total50100

Source: Field survey

Data analyses:The table showing number of respondents invest their money on which factor. The 50% of respondent are investment in low risk & 30% respondent are high return, and few members are investing in 20% trust factors.

Interpretation:From the table no-4, from this table shows that 50% of respondent prefer investment in low risk & 30% respondent high return factors.5. If you plan to invest your money in asset Management Company, which company will prefer?Sl. noAttributesNo. of RespondentsPercentage

1UTI1020

2SBI2550

3ICICI1020

4Other510

Total50100

Source: field survey

Data analysis: This table shows that respondents invest in their money asset management co, which company will prefer. The 50% of the investors invest in SBI mutual fund, 20% of UTI mutual fund & few members invest ICICI 20%, and the rest 10% of invest in other mutual funds.Interpretation: From the table no-5, from this data we concluded that 50% of the investors invest in SBI mutual fund and 20% of UTI mutual fund.

6. How do you select & chose the mutual fund? Sl. noAttributesNo. of RespondentsPercentage

1Brand name2040

2Advertisement1530

3Advisor1020

4Other510

Total50100

Source: Field survey

Data analysis: This table shows that respondents how do you select the mutual fund, brand name (40%), adv(30%), high return(20%)&(10%)other.

Interpretation: From the table no-6, from this data we concluded that 40% of the investors invest in brand name or scheme name & 30% of the investors attract the advertisement.

7. What percentage of your income do you invest?Si noAttributesNo. of RespondentsPercentage

1Below 10%1020

210% to 25%3060

325% to 50%1020

4 Above 50%

Source: Field Survey.

DATA ANALYSIS: This table shows that respondents what percent of income invest , 60% of investors invest 10% to 25% of their income, 20% of investors below 10%, and the rest 20% of investors25% to 50% invest their income invest.

Interpretation:From the table no-6, from this data we concluded that most of the peoples 10% to 25% of income invest in mutual fund.

8. Do you know different types of mutual funds at Present?Sl. NoAttributesNo. of RespondentsPercentage

1Yes4590

2No510

Total50100

Source: Field Survey.

Data analyses: This table shows that to know the different types of mutual fund in present most of the respondent yes (90%), rest (10 %) no.

Interpretation: From the table 8, from this data we concluded that most of the respondents to know the different types of mutual fund (90%).

9. Investment pattern:

Sl. NoAttributesNo. of RespondentsPercentage

1Short term1530

2Long term3570

Total50100

Source: Field Survey.

Data analyses: This table shows that overall respondent invest in mutual fund in short term (30%) &long term (70%).

Interpretation: From the table 8, from this data we concluded that most of the respondents invest long term (70%) in mutual fund because of future plan OR purpose.

10. Have you any time lost money by investing in MF?Sl. noAttributesNo. of RespondentsPercentage

1Yes1020

2No4080

Total50100

Source: Field Survey.

Data analyses: This table shows that respondents any time lose their money in mutual fund (20%) of yes and rest (80%) no

Interpretation: From the table 9, from this data we concluded that some 20% respondents lose their money in mutual because of misguidance& entry at higher level.

11. Reason for losing?Sl. noAttributesNo. of Respondents

1Misguidance5

2Entry at higher level10

3Other0

Total15

Source: Field Survey

Data analyses: This table shows that respondents any time lose their money in mutual fund (20%) of yes.

Interpretation: From the table 11, from this data we concluded that most of the respondents lose their money in mutual because entry at higher level& misguidance.

12. Your opinion about overall performance of mutual funds?

Sl. noAttributesNo. of RespondentsPercentage

1Good3570

2Medium1020

3Very good510

Total50100

Source: Field Survey.

Data analyses: This table shows that respondents opinion about overall performance of mutual funds. The 70% of respondents opinion about mutual fund performance is good, 10% of respondents opinion about mutual fund performance is very good and rest 20% of medium.

Interpretation: From the table 12, from this data we concluded that the 70% of respondents opinion about mutual fund performance is good.

CHAPTER VFINDINGS, SUGGESTIONS AND CONCLUSION

5.1FINDINGS:-

1. Most of the respondents prefer investment in bank because of less risk.

2. The investment port folio of majority of the respondents in UTI mutual fund.

3. The some of respondents loosing the money in mutual fund because of entering at higher level &misguidance.

4. Some of the respondents taking wrong step to the selecting mutual funds because of advertisement, ads and their relatives force.

5. The some of respondents invested money in mutual funds is low when we can compare with their income due to critical marketing risk.

6. The most of respondents are not regular investors.

7. The some of the respondents perception about the mutual funds is risk.

8. The respondents while investing the money some peoples low risk factor is selected and remaining peoples are high return factor and depend upon the trust factor also.

9. Majority of the respondents known about mutual funds.

10. Majority of investors invested in long-term mutual funds.

11. The most of the respondents opinion about overall mutual fund performance is good and satisfactory.

5.2 SUGGESTIONS:

1. Proper care and responsibility should be taken to the investors.2. Provide right guidelines and full information to the investors for invests their savings in mutual funds.3. Target the new schemes to the middle class and upper middleClass and Middle aged investors in the services.4. The most of respondents while selecting the long-term because they dont ready to face risk situations that persons convinced and offering new schemes to entering to terms.5. Offering new schemes for attracting the investors.6. Maintain good relationship with investors.

5.3 CONCLUSION: If mutual fund ensure good returns, quick liquidity and safety and create a good rapport with the investors, their future will be very bright. They act as a via media between bank deposit and share in the sense it involves a higher risk than a bank deposit and hence a better return, but a lower risk than a share and hence more safety. Hence, soon it would become an ideal vehicle for investment in India. It is time for the mutual funds to act as mutual friends by creating a good rapport with the investors by rendering efficient and prompt services. No doubt, there is a bright future for mutual funds in India.

Bibliography

Name of the bookAuthor of the book

1.Finance markets and servicesNATARAJAN

2. .Finance markets and servicesGORDON

1. Personal interview with the member-regional managers club-2006[south]2. Newspapers, business line, the economics items.

WEB SITES:1. WWW.UTI.CO.IN2. WWW.UTIMF.COM

QUESTIONNAIREDear sir/ madam,I, Vishwanath.S student of M.com IVSemester,Govt,Degree college,sindhanur, Gulbarga University, Gulbarga. I am working on a project entitled UTI Mutual fund under the guidance of Venkatanarayana.M Associate professor, govt. degree college, Sindhanur. Therefore, kindly co-operate and spend a few of your precious minutes towards the questionnaire and answer as openly as frankly as possible.Personal Information of Respondent1]i. Respondent name:..ii. Address:.iii. Age : a)20-30 yr b)31-40 yr

c)41-50 yrd)51&above

iv. . Education: a) Illiterate b)Primary & Secondary c) SSLC d) Graduate e)Post graduatev. Occupation: a) Govt. employee b)Pvt. employeec) Businessmen d) other vii.Telephone no:e-mail :..

2) Income Level per month:a) Below thousand ( ) b) 5000-10000 ( ) c) 10000-15000 ( )d) Above 15000 ( )

3) Name you known brands of Mutual Funds4) Which brand you use?SBI ( ) B) ICICI ( ) C) HDFC ( ) D) Other Specify

5) Who influenced you for investing on this mutual fund?a) Advertisementb) Family membersc) Friendsd) Self6) Do you use any other product of mutual fund?a) Yes( )b) No( )

7) What do you think about the toll of UTI Mutual Fund?a) High ( ) b) Economy ( ) c) Low()

8) Since how long you have been using this mutual fund?a) Bellow 1yr ( ) B) 5 to 10yrs ( ) C) more than 10yrs ( )

9) Mention quality of uti mutual fund?a) Goodb) Neutralc) Very badd) Very Goode) Bad

10) What do you think of availability and Visibility of uti mutual fund in your city branch a) Good b) Very Good c) Badd) Very Bade) Neither good nor bad

11) In case you are not using uti mutual fund would you like to shift to another mutual fund? a) Yesb) Noc) Cant say

12} where do you generally invest? A] Share market [ ] b} mutual fund [ ] C] Bank [ ] d] other [ ]

13] Are u regular investor? A] Yes [ ] b] No [ ]

14] What is your perception about mutual fund ?

A] Safe [ ] B] NO [ ]

15] While investing your money which factor will you prefer?

A] Low risk [ ] b] high risk [ ] C] Trust [ ] d] other [ ]

16] if you plan to invest your money in asset management company, which company will prefer ?

A] UTI [ ] B] SBI [ ]

C] ICICI [ ] D] OTHER [ ]

17] What percentage of your incomes do you invest?

A] Below 10% [ ] b] 10% to 25% [ ]

C] 25% to 50% [ ] d] 50% above [ ]

18] Reason for loosing?

A] Misguidance [ ] B] Entry at high level [ ]

C] Other [ ]

19] Investment pattern?A] Shortterms [ ] b] long term [ ]

20) Are you satisfied with uti mutual fund?a) Yesb) No

21) If yes, tell me what factors admired you in uti mutual fund..

Department of Master of Commerce, Govt College Sindhanur-584128Page 14