MUTUAL FUNDS

REPORT ON PROSPECTS OF MUTUAL FUND

The report has expressly tried to explain the
pros and cons of development of mutual fund
and how it can be a major breakthrough in the
utilization of freeze of the financial resources
of Nepal.
Prepared by: Diwas Agasti
Exam Roll No.: 390846
Campus Roll No.: 1085\068
Subject: Financial Institutions & Markets
Group: Finance
Submitted to: Tribhuvan University Affiliated
ShankerDev Campus
In partial fulfilment of the requirement of the degree
of Bachelor of Business Studies (BBS)

Faculty of Management
Tribhuvan University

RECOMMENDATION

This is to certify that fieldwork assignment report

Submitted by:
Diwas Agasti
Group: Finance
Subject: Financial Institution & Markets
Exam Roll No. : 390846
Campus Roll No.: 1085\068

Entitled:
MUTUAL FUNDS

Has been prepared as approved by this Department. This fieldwork assignment report is
forwarded for examination.

Date:..

_____________
Head of Department
ShankerDev Campus

Acknowledgment

I am very thankful to those people who have acknowledged my report and assisted me in
the preparation of it through their active participation. The report contains data which I
collected through a questionnaire survey from different banks and financial institutions,
students and faculty members of different educational institutions.
Therefore I would like to thank every single person who have motivated me in preparing
this report and helped me analyze my findings.
My deepest regards to Tribhuvan University for providing me with an opportunity to utilize
my theoretical knowledge in a practical analysis task. I am also in debt of ShankerDev
Campus for providing us every sort of help necessary to complete this report.
Also my friends and faculties have a very important role in the completion of the report
without which I couldnt possibly have completed my report in the way I did it now.

Thank you.

Contents

Page

Understanding mutual fund. 1

What is mutual fund? ........................................................
Origin of mutual fund.. 1
How does it operate? ........................................................
Its pros and cons
. 10
Accounting and Calculation .... 12
Survey
13
Methodology .. 13
Findings
......14
Data Collection and Presentation .. 14
Prospect of mutual funds in Nepal . 19
Conclusion
.21
Bibliography
.22
Questionnaire
. 23

1
8

Understanding mutual fund

What is a mutual fund?
Mutual fund, etymologically, means a collective fund of the stakeholders who share
a mutual objective. The collective fund requires a fund manager. A fund manager is a
corporation set up to utilize the fund collected from the stakeholders and invest it in
different financial instruments in the markets. These instruments may be equity, bonds,
money market instruments.
Origin of mutual fund
In the beginning

Historians are uncertain of the origins of investment funds; some cite the closed-end
investment companies launched in the Netherlands in 1822 by King William I as the first
mutual funds, while others point to a Dutch merchant named Adriaan van Ketwich whose
investment trust created in 1774 may have given the king the idea. Ketwich probably
theorized that diversification would increase the appeal of investments to smaller

investors with minimal capital. The name of Ketwich's fund, EendragtMaaktMagt,

translates to "unity creates strength". The next wave of near-mutual funds included an
investment trust launched in Switzerland in 1849, followed by similar vehicle created
in Scotland in
the
1880s.

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

The Arrival of the Modern Fund

The creation of the Massachusetts Investors' Trust in Boston, Massachusetts, heralded
the arrival of the modern mutual fund in 1924. The fund went public in 1928, eventually
spawning the mutual fund firm known today as MFS Investment Management. State Street
Investors' Trust was the custodian of the Massachusetts Investors' Trust. Later, State
Street Investors started its own fund in 1924 with Richard Paine, Richard Saltonstall and
Paul Cabot at the helm. Saltonstall was also affiliated with Scudder, Stevens and Clark, an
outfit that would launch the first no-load fund in 1928. A momentous year in the history of
the mutual fund, 1928 also saw the launch of the Wellington Fund, which was the first
mutual fund to include stocks and bonds, as opposed to direct merchant bank style of
investment
in
different
types
of
businesses
and
trades.

Regulation and Expansion

By 1929, there were 19 open-ended mutual funds competing with nearly 700
closed-end funds. With the stock market crash of 1929, the dynamic began to change as
highly-leveraged closed-end funds were wiped out and small open-end funds managed to
survive.
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
the Securities Act of 1933 and the enactment of the Securities Exchange Act of 1934 put
in place safeguards to protect investors: mutual funds were required to register with the
SEC and to provide disclosure in the form of a prospectus. The Investment Company Act of
1940 put in place additional regulations that required more disclosures and sought to
minimizeconflicts
of
interest
between
different
related
parties.

The mutual fund industry continued to expand. At the beginning of the 1950s, the
number of open-end funds topped 100. In 1954, the financial markets overcame their
1929 peak, and the mutual fund industry began to grow in earnest, adding some 50 new
funds over the course of the decade. The 1960s saw the rise of aggressive growth funds,
with more than 100 new funds established and billions of dollars in new asset inflows.
Hundreds of new funds were launched throughout the 1960s until the bear market
of 1969 cooled the public appetite for mutual funds. Money flowed out of mutual funds as
quickly as investors could redeem their shares, but the industry's growth later resumed.

Recent Developments
In 1971, William Fouse and John McQuown of Wells Fargo Bank established the first index
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 the no-load fund. 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 and Peter Lynch, the mutual fund
industry's top gunslingers, became household names and money poured into the retail
investment industry at a stunning pace. 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'
appropriate
and
selective
interests
in
their
mind.

Types of mutual fund

1. Types of schemes (funds) based on maturity:
Mutual fund schemes can be classified into open-ended scheme or close-ended
scheme based on the maturity period.

a. Open-ended Fund/ Scheme

An open-ended fund or scheme is one that is available for subscription and
repurchase on a continuous basis. These schemes do not have a fixed maturity period.
Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices
which are declared on a daily basis or weekly basis. In general, entry of exit load is
charged on NAV to sell and repurchase the units. The key feature of open-end schemes is
liquidity.

b. Close-ended Fund/ Scheme

A close-ended fund or scheme has a stipulated maturity period e.g. 6 months, one
year, 3 years, 5 years, 7 years, 10 years etc. The units of the fund can be redeemed only
after the maturity period is over. However, the units of this scheme are listed on the stock
exchange to provide liquidity to investors during the scheme period. Investors can invest
in the scheme at the time of the initial issue and thereafter they can buy or sell the units
of the scheme on the stock exchanges where the units are listed. These mutual funds
schemes disclose NAV generally on a weekly basis.

2. Types of schemes (funds) based on Investment Objective:

Mutual fund schemes can also be classified as growth scheme, income scheme, or
balanced scheme etc, considering their investment objective and index fund, real estate
fund, infrastructure fund etc, based on the area of investment. Such schemes may be
open-ended or close-ended schemes as described earlier. Some of the schemes are
explained below.

a. Growth/Equity Oriented Scheme (Growth fund)

The aim of growth funds is to provide capital appreciation over the medium to longterm. Such schemes normally invest a major part of their corpus in equities. Such funds
have comparatively high risks. These schemes provide different options to the investors
like dividend option, capital appreciation, etc. and the investors may choose an option
depending on their preferences. The mutual funds also allow the investors to change the
options at a later date. Growth schemes are good for investors having a long-term outlook
seeking appreciation over a period of time.

b. Income/Debt Oriented Scheme

The aim of income funds is to provide regular and steady income to investors. Such
schemes generally invest in fixed income securities such as bonds, corporate debentures,
government securities and money market instruments. Such funds are less risky as
compared to equity schemes. These funds are not affected because of fluctuations in
equity markets. However, opportunities of capital appreciation are also limited in such
funds. The NAVs of such funds are affected because of change in interest rates in the
country. If the interest rates fall, NAVs of such funds are likely to increase in the short run
and vice versa. However, long term investors may not bother about these fluctuations.

c. Balanced Fund
The aim of balanced funds is to provide both growth and regular income. These
schemes invest in both equities and fixed income securities in the proportion indicated in
their offer documents. These are appropriate for investors looking for moderate growth.
They generally invest 40-60% in equity and rest in debt instruments. These funds are also
affected because of fluctuations in share prices in the stock markets and interest rates.
However, NAVs of such funds are likely to be less volatile compared to pure equity funds.

d. Money Market or Liquid Fund

These funds are also income funds and their aim is to provide easy liquidity,
preservation of capital and moderate income. These schemes invest exclusively in safer
short-term instruments such as treasury bills, certificates of deposit, commercial paper
and inter-bank call money, government securities, etc. Returns on these schemes
fluctuate much less compared to other funds. These funds are appropriate for corporate
and individual investors as a means to park their surplus funds for short periods.

e. Index Funds
Index Funds replicate the portfolio of a particular index of the stocks listed in a
particular stock exchange. NAVs of such schemes would rise or fall in accordance with the
rise or fall in the index, though not exactly by the same percentage due to some factors
known as "tracking error" in technical terms. Necessary disclosures in this regard are
made in the offer document of the mutual fund schemes.
These types of funds are also launched in Indian Securities Markets. Such funds are
based on the index of particular stock exchanges in India such as BSE Sensitive index,
S&P NSE 50 index (Nifty), etc. These schemes invest in the securities in the same
weightage comprising of that index.
There are also exchange traded index funds launched by the mutual funds in India,
which are traded on the stock exchanges.
6

f. Sector specific funds/schemes

These are the funds/schemes which invest in the securities of only those sectors or
industries as specified in the offer documents. e.g. Pharmaceuticals, Software, Fast Moving
Consumer Goods (FMCG), Petroleum stocks, Real estate, Infrastructure etc. The returns in
these funds are dependent on the performance of the respective sectors/industries. While
these funds may give higher returns, they are more risky compared to diversified funds.
Investors need to keep a watch on the performance of those sectors/industries while
making investment decisions. They may also require seeking advice of an expert or
getting proper counseling/information from a fund manager.
Mutual fund can be segregated as following:

In terms of functionality of the scheme, mutual fund can be of two types. They are:
Bases
Meaning

Open ended
Mutual fund with no

Closed ended
Mutual fund with a specified
8

Liquidity

Scheme

Investment

specified maturity period

is a open ended mutual
fund.
Entry and exit in the
scheme is possible at any
time.

life span to operate is a

closed end mutual fund.

These funds include

income funds(bond) and
also invest in balanced
fund.
It has unlimited
investment.

These funds include growth

funds(equity) as they focus
on capital appreciation.

Investors can buy stocks in

Initial Public Offering(IPO) or
from stock exchange.

It has limited investment.

How does it operate?

Mutual fund is merelya scheme. Therefore it needs an operator. A body corporate
that operates the scheme of mutual fund is called a fund manager. Mutual fund actively,
through its fund manager, pools money from the investors and invests it in securities. The
return obtained from the investment is then transferred to the investors in proportionate
basis of share holdings.
Its operating cycle can be illustrated as:
In v
s to
e
rs
Re
r n
tu
s

nd
u
F
Ma
ng
r
e
Se
u rite s
c

Passes

Pool their

Invest the

Key players in the game

In order to complete this cycle and provide shareholders with the return they are
supposed to receive, some players enter into this game of investment. These players are
listed below with their roles:
Sponsor

A company
registered
under
companies
act that
establishes
mutual fund.

Asset
management
company
A company
registered under
companies act
that manages
the investment
in mutual fund.

Fund
supervisor

Unit holder Depository

A fund
supervisor
is a
guardian
that holds
the
properties
of the
mutual
fund for the
benefit of
the unit
holders.

A person
who holds
the stock of
mutual fund
and is
viable of
any return
distributed
by the fund.
They are
the
shareholder
s of the
fund.

It is
responsible
for record
keeping,
dividend
distribution
etc.

Pros and Cons of mutual fund

There are many advantages and disadvantages of a mutual fund. It is different
investment than investment in a normal share market.
Some of its advantages are:
1. Professional management:
The funds are managed by skilled and professionally experienced personnel
with a backup by research team. Therefore investors can be secured against the risk
of default.
2. Diversification:
Investment in securities involves different types of risk namely systematic risk
and unsystematic risk. Systematic risk is non diversifiable risk but unsystematic risk
can be diversified in such a way that it will give a higher return. Therefore securities
are diversified in mutual fund.
3. Convenient administration:
There is no any time consuming administrative work as no share transfer is
required and many mutual fund even provide direct form filling to buy its units.
4. Higher returns:
Generally mutual funds provide higher returns compared to investment in any
other shares as the professional personnel diversify the investment intohigh earning
portfolio.
5. Low cost of management
10

The cost of management of the fund is very low than the floating costs
involved in trading of other securities.
6. Liquidity:
In all open ended funds the mutual fund directly sells and repurchases the
units and for closed end fund units are listed in stock market to provide liquidity.
Few other advantages of it include transparency, highly regulated, flexibility,
etc
Drawbacks of mutual fund
1. No guarantee of return
A mutual fund might do better than the stock market but this doesnt lead to
the increase in investors wealth. Mutual fund investment may erode in value.
2. Diversification
Though diversification minimizes risk, it doesnt ensure a high return than an
investor can achieve.For example if a bond doubles in value, the mutual fund itself
wont double in value as the bond is only a part of a mutual fund.
3. Selection of proper fund
An investor can select a share better than stock as there are many factors to
be compared with while selecting it but for selecting a fund, we only have a past
trend analysis.
4. Cost factor
Mutual funds carry a price tag. Fund managers are the highest paid
executives. While investing an entry load is to be paid and while exiting, an exit load
is to be paid.
5. Unethical practices
Mutual funds may not play fair game. Each schemes may sell some of the
holdings to its sister concerns for substantive notional gains and posting NAVs in a
formalized manner.
Accounting and Calculation
A fund of a mutual fund is known as a unit. The fund manager calculates the Net
Assets Value (NAV) of the unit in daily, weekly or monthly basis. Net Assets refers to the
assets that remain after deducting any allowable deductions like expenses and liabilities.
When the Net Asset is divided by the outstanding number of unit standing on the date, we
get the NAV of a unit. The unit of the fund are bought and sold on the basis of this NAV.
NAV=

Net Assets of the scheme

Number of units outstanding
Where,

Net Assets=MV of investment + Receivables+ Accrued Income+Other AssetsAccrued ExpensesPayablesOther

Examples:
1. Balance sheet of Rockford Incorporation represents the following data
11

Assets
: 3,00,00,00,000
Liabilities
: 25,00,00,000
Outstanding shares :50,00,00,000
Calculate NAV.
Solution:
Here, given
Assets (MA)
: 3,00,00,00,000
Liabilities (ML)
: 25,00,00,000
Outstanding shares (S) : 50,00,00,000
We have,
NAV = (MA ML) / S
= (3000000000 - 250000000 )/500000000
= 5.5
Therefore, Net Asset Value (NAV) = Rs. 5.5.

2. If the offer price of an open-end fund is Rs. 12.30 per share and the fund is
sold with a front-end load of 5%, what is its net asset value?
Solution:
Here, given
Offering price
= Rs. 12.30
Front-end load
= 5%
Net asset value = ?
We have,
Offering price = Net asset value(1 + Front-end load)
or, Rs. 12.30
= NAV (1 + 0.05)
NAV
= Rs. 11.7143.

Survey
Methodology:
In order to complete my research on the public of Nepal regarding their knowledge
about mutual fund, its operation, strengths and weaknesses, I used questionnaire method
as well as direct personal interview with different students and faculties of colleges. I
inquired with the senior officials of Banks and Financial Institutions in Kathmandu Valley
like Siddhartha Limited which is a fund manager of the mutual fund growth scheme of
Siddhartha Bank Ltd.

Findings:
In my survey I have discovered following points that I would like to share:
i.
ii.
iii.

Public prefers to hoard their income rather than invest it in mutual fund.
Public is unaware of the establishment of mutual fund
Many interested corporations are there who want to establish a mutual fund but are
far away from its initiatives.
12

iv.
v.
vi.
vii.

People do not feel secured to let somebody else decide how to utilize their money
though they might be experienced personnel.
People do not find the schemes of the mutual fund operating now, attractive enough
to make investment.
The Inland Revenue Department is silent if mutual fund is a Tax Exempt Entity or
not.
Some people are interested in investing but they are not sure where and how they
can invest.

Data gathered and their presentation

With my keen interest on knowing about the situation of mutual funds in Nepal, I
conducted a survey about how a mutual fund impacts on peoples perception in the 1 st
pronunciation of the word. A copy of the questionnaire is attached with this report.
All the data collected through primary and secondary sources have been presented
in graph and analyzed through visualization of those representation.
In order to analyze the performance of a mutual fund, I have considered a data
downloaded from the site of Siddhartha Limited which has put forth the closed end
scheme, for the month of Poush, 2069 to Jestha, 2071.
The data of monthly NAV reported by Siddhartha Limited from the month of Poush, 2069
to Jestha, 2071 has been represented in a table and plotted in the line graph below:
Date
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of
End of

NAV
Poush, 2069
Magh, 2069
Falgun, 2069
Chaitra, 2069
Baisakh, 2070
Jestha, 2070
Ashad, 2070
Shrawan, 2070
Bhadra, 2070
Ashwin, 2070
Kartik, 2070
Mangsir, 2070
Poush, 2070
Magh, 2070
Falgun, 2070
Chaitra, 2070
Baisakh, 2071
Jestha, 2071

10.211
10.374
10.682
11.277
10.528
10.796
11.33
11.789
11.87
12.45
12.87
15.01
16.33
16.22
15.79
16.28
17.24
18.497

Source:www.siddharthacapital.com

13

NAV evaluation
18.5
17.24
16.3316.22
15.01

12.45

12.87

11.7911.87
11.33

11.28
10.2110.37

10.68

10.53

10.8

14

16.28
15.79

Date
19-Jul-13
26-Jul-13
2-Aug-13
9-Aug-13
16-Aug-13

Siddharth
Nabil a
10.3
7
11.386
10.5
3
11.667
10.7
4
11.953
10.7
1
11.883

Date
7-Feb-14
14-Feb-14
21-Feb-14
28-Feb-14

29-Nov-13

10.7
10.7
8
10.9
2
10.8
4
10.9
4
10.5
5
10.4
1
10.6
9
11.2
7
11.3
3
11.4
4
11.2
6
11.3
5
11.6
5
12.0
4
12.2
2

6-Dec-13

13.2

14.859

27-Jun-14

13-Dec-13

13.1
14.2
2
14.0
7
13.9
13.9
8
14.4
5
14.6
8

14.719

4-Jul-14

23-Aug-13
30-Aug-13
6-Sep-13
13-Sep-13
20-Sep-13
27-Sep-13
4-Oct-13
11-Oct-13
18-Oct-13
25-Oct-13
1-Nov-13
8-Nov-13
15-Nov-13
22-Nov-13

20-Dec-13
27-Dec-13
3-Jan-14
10-Jan-14
17-Jan-14
24-Jan-14

11.79

7-Mar-14

11.958

14-Mar-14

12.027

21-Mar-14

11.843

28-Mar-14

11.964

4-Apr-14

11.735

11-Apr-14

11.491

18-Apr-14

11.602

25-Apr-14

12.357

2-May-14

12.446

9-May-14

12.516

16-May-14

12.495

23-May-14

12.533

30-May-14

12.875

6-Jun-14

13.433

13-Jun-14

13.579

20-Jun-14

Nabil Siddhartha
14.4
4
16.127
14.6
3
16.268
14.9
15.0
3
14.7
4

16.657

14.4
14.2
3

15.793

14.4
14.7
7
14.9
5
15.0
1
15.0
5
15.0
7

15.748

15.4
15.3
1
15.5
5
15.9
1

17.246

16
16.7
4
17.1
1
17.2
5
17.9
4

17.567

16.753
16.303

15.597

16.06
16.198
16.243
16.345
16.633

17.221
17.164
17.423

18.502
19.187
19.256
19.866
16.382
16.148
16.078
15.804

15

16.503
16.318

The data given

below is the weekly
NAV of Nabil mutual
fund and Siddhartha
Capital. They have
been
graphically
represented
in
a
scattered graph.

Source: www.siddharthacapital.com
www.nabilinvest.com.np

Comparision of NAVs

19.26
19.19
18.5
17.57
17.42
17.25
17.22
17.16
16.75
16.66
16.63
16.5
16.38
16.35
16.32
16.27 16.3 16.06
16.24
16.2
16.17
16.15
16.13
16.08
17.25
15.8
15.79
17.11
15.75
15.6
16.74
14.86
14.72
16
15.91
15.55
15.4
15.31
15.07
15.05
15.03
15.01
14.95
13.58
14.9
13.43
14.77
14.74
Nabil mutual fund
Siddhartha
Capital
14.68
14.63
14.48
14.45
14.44
14.4
14.4
12.88
14.23
14.22
14.07
13.98
13.9
12.53
12.52
12.5
12.45
12.36
12.03
11.96
11.96
11.95
11.88
11.84
13.2
13.1
11.74
11.6711.79
11.6
11.49
11.39
12.22
12.04
11.65
11.44
11.35
11.33
11.27
11.26
10.9410.69
10.92
10.84
10.78
10.74
10.71
10.7
10.55
10.53
10.41
10.37

Over the years, we can see through the scatter graph that Siddhartha Capital has
more NAV as compared to Nabil Mutual Fund.

16

Prospects of mutual funds in Nepal

Operation:
The provisions for establishing a mutual fund is extracted below from the mutual
fund rules, 2067.
Any one or more than one body corporate may establish Mutual Fund.The
qualification of body corporate willing to establish a MutualFund shall be as follows:(a)
A body corporate established for performing financial business
pursuant to prevalent laws,
(b)
Having minimum paid up capital equal to one Billion rupees.
(c)
Having completed five years of operation of business subject to
its objective,
(d)
Have earned profit for last three years continuously,
(e)
Having paid up capital not less than its net worth,
Clarification: For the provision of this clause "net-worth" means
the aggregate value of the paid up equity capital and free
reserves (excluding reserves created out of revaluation),
reduced by the aggregate value of accumulated losses and
deferred expenditure not written off including miscellaneous
expenses not written off.
(f) The body corporate or its promoters and Directors should not be
one who have been convicted and punished against fraud or
criminal offence of moral turpitude,
(g) Have not remain in the black list of Credit InformationBureau or
any other regulating body,
(h)
Have satisfied other qualification as prescribed by the Board
from time to time.
At present there are few mutual funds in Nepal. The mutual fund scheme proposed by
Citizen Investment Trust (CIT) is a open ended mutual fund scheme and that proposed by
Siddhartha Capital Limited (SCL) is a closed ended mutual fund.
The differential analysis of these two types of mutual funds, in my view, will
practically help us know the prospects of mutual fund in Nepal.
Bases
Type

Nagarik Ekanki
Yojana,2052
Open ended

Siddhartha investment
growth scheme-1
Closed ended

Fund manager

Citizen Investment Trust

Siddhartha Capital Limited

Own
investment
Investment
sectors

50 lakhs By CIT

51% holding by Siddhartha

Bank Ltd
Securitiesissued
by
95% in stocks listed in
Government of Nepal.
stock exchange.
Shares, debentures, bonds
5% deposit in BFI.
17

Risk
Liquidity

Management
fee

Investment
Term

of body corporate.
T-bills of GON, Bonds of
NRB, etc.
Securities
guarantee,
seed financing.
Term loans
Minimum risk due to portfolio
scheme.
Units can be sold to the fund
and purchased as the value
prescribed by the mutual
fund.
1.5% of Net Asset

Other authorized area.

Minimum risk due to portfolio

scheme.
Units can be sold and bought
from stock exchange.

1.75% of Net Asset,0.5% of

Net Asset for depository fee
and 0.2% for supervisory
cost.
Seed financing by CIT Rs 50 Rs 40 crore
lakh
Infinite
5 years

Conclusion:
I would like to conclude my report with a point that mutual funds help different
sectors of the markets and also to the government. Few of those contributions are:
a. It helps in utilizing the money of public that has been hoarded.
b. It directly increases the index of the stock market.
c. It creates employment opportunities.
d. It makes the investment of the people, secure.
Therefore with our own discretion, we can choose to invest in mutual fund and
become a part of the market.

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Bibliography
Books:
Financial Institution and Markets.
By Kiran Thapa, Bharat Parajuli
Internet:
www.siddharthacapital.com
www.nabilinvest.com.np

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Questionnaire
Survey for understanding about a mutual fund
The participants of this survey are kindly informed that the survey will be made
a part of my report on mutual fund and the questions below is to be answered
solely in your own discretion. Participants can tick only one answer that is more
suitable in his/her thinking.
1) What is a mutual fund?
i) An investment scheme
ii) Publics money multiplier
iii) User of unutilized wealth of public
2) Why invest in mutual fund?
i) A better return to our investment
ii) A secure return to our investment
iii) Better utilization of our fund
3) Is mutual fund a cheaper option for investment?
i) Yes
ii) No
4) Where to mutual fund invest our investment?
i) Stocks and bonds
ii) Real estate
iii) Infrastructures
5) Do you know why a mutual fund is not taxed? Is it because
i) It is a Tax Exempt Entity
ii) It has no Taxable Income
6) How can public make investment in mutual funds?
i) Buy from shareholders
ii) Buy from stock markets
7) What is an open ended fund in just one line?
______________________________________________________________________________________
____
8) What is a closed end fund in one line?
______________________________________________________________________________________
____
9) What is the formula for calculation of Net Assets Value (NAV)?
________________

_________________ / ______________

10) Do you think more mutual funds should be established in Nepal? If yes, give two
reasons.
i) ____________________________________________________
ii) ____________________________________________________
11) What is the minimum capital requirement to operate a mutual fund?
i) ____________________________________________________

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12) Is it necessary that the mutual fund manager has to be a corporation or a

company?
i) Yes
ii) No

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