Prjt on Mutual Fund

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A PROJECT REPORTONMUTUAL FUNDS IS THE BETTERINVESTMENTS PLANSubmitted in partial fulfillment forMASTER OF BUSINESS ADMIMISTRATIONProgramme ofINSTITUTE OF MANAGEMENT TECHNOLOGYGHAZIABAD

Batch2005-08

Submitted by :AKHILESHMISHRAUnder Guidance :CASHARAD CHAUHANMBA( Three Year Programme)Batch (2005-2008)Enrolment No-52102689Manager AccountsUttam Sugar Mills LimitedCorprote office Noida

Department of Business ManagementINSTITUTE OF MANAGEMENT TECHNOLOGYGHAZIABAD


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ACKNOWLEDGEMENT

With regard to my Project with Mutual Fund I would li e to than each and everyonewho offered help, guideline and support whenever required.

First and foremost I would li e to express gratitude to Manager SBI anwaliRoad Dehradoon and other staffs for their support and guidance in the Project wor .. Iam extremely grateful to my guide, CA Sharad Chauhan for their valuable guidanceand timely suggestions. I would li e to than all faculty members of Uttam SugarMillsLimited for the valuable guidance& support.

I would also li e to extend my than s to my members and friends for theirsupport specially .MCA Anuj Panday officer I.T.Uttam Sugar Mills Limited Sharanpur& Mr. Rajeev Goyal consultant, Sales tax, income tax .And lastly, I would li e toexpress my gratefulness to the parents for seeing me through it all.

AKHILESH MISHRA


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CERTIFICATE

This is to certify that Mr. A hilesh Mishra a student of IMT-CDL Ghazibad has completedproject wor on MUTUAL FUNDS IS THE BETTER INVESTMENTS PLAN under myguidance and supervision.

I certify that this is an original wor and has not been copied from any source.

Signature of GuideName of Project Guide CA Sharad ChauhanDate


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DECLERATION

I hereby declare that this Project Report entitled THE MUTUAL FUND IS BETTERINVESTMENT PLAN in SBI Mutual Fund submitted in the partial fulfillment of therequirement of Master of Business Administration (MBA) of INSTITUTE OFMANAGEMET TECHNOLOGY, GHAZIABAD is based on primary & secondarydata found by me in various departments, boo s, magazines and websites & Collectedby me in under guidance of C.A. Sharad Chauhan.

DATE: AKHILESH MISHRA

MBA (Three Years)

Enrollment No.52102689


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EXECUTIVE SUMMARY

In few years Mutual Fund has emerged as a tool for ensuring ones financial wellbeing. Mutual Funds have not only contributed to the India growth story but havealsohelped families tap into the success of Indian Industry. As information and awarenessis rising more and more people are enjoying the benefits of investing in mutualfunds.The main reason the number of retail mutual fund investors remains small is thatninein ten people with incomes in India do not now that mutual funds exist. But oncepeople are aware of mutual fund investment opportunities, the number who decidetoinvest in mutual funds increases to as many as one in five people. The tric forconverting a person with no nowledge of mutual funds to a new Mutual Fundcustomer is to understand which of the potential investors are more li ely to buymutual funds and to use the right arguments in the sales process that customerswillaccept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it gave meenough scope to implement my analytical ability. The analysis and advice presented inthis Project Report is based on mar et research on the saving and investment practicesof the investors and preferences of the investors for investment in Mutual Funds. ThisReport will help to now about the investors Preferences in Mutual Fund means Arethey prefer any particular Asset Management Company (AMC), Which type of Product

they prefer, Which Option (Growth or Dividend) they prefer or Which InvestmentStrategy they follow (Systematic Investment Plan or One time Plan). This Projectas awhole can be divided into two parts.


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The first part gives an insight about Mutual Fund and its various aspects, the CompanyProfile, Objectives of the study, Research Methodology. One can have a briefnowledge about Mutual Fund and its basics through the Project.

The second part of the Project consists of data and its analysis collected through surveydone on 200 people. For the collection of Primary data I made a questionnaire andsurveyed of 200 people. I also ta en interview of many People those who were comingat the SBI Branch where I done my Project. I visited other AMCs in Dehradoon togetsome nowledge related to my topic. I studied about the products and strategiesofother AMCs in Dehradoon to now why people prefer to invest in those AMCs. ThisProject covers the topic THE MUTUAL FUND IS BETTER INVESTMENT PLAN.The data collected has been well organized and presented. I hope the research findingsand conclusion will be of use.


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CONTENTS

Ac nowledgementDeclarationExecutive Summary

Chapter - 1 INTRODUCTIONChapter - 2 COMPANY PROFILEChapter - 3 OBJECTIVES AND SCOPEChapter - 4 RESEARCH METHODOLOGYChapter - 5 DATA ANALYSIS AND INTERPRETATIONChapter - 6 FINDINGS AND CONCLUSIONSChapter - 7 SUGGESTIONS & RECOMMENDATIONS

BIBLIOGRAPHY

MUTUAL FUNDS


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ALL ABOUT MUTUAL FUNDS.WHAT IS MUTUAL FUND.BY STRUCTURE

.BY NATURE.EQUITY FUND.DEBT FUNDS.BY INVESTMENT OBJECTIVE.OTHER SCHEMES.PROS & CONS OF INVESTING IN MUTUAL FUNDS.ADVANTAGES OF INVESTING MUTUAL FUNDS.DISADVANTAGES OF INVESTING MUTUAL FUNDS

.MUTUAL FUNDS INDUSTRY IN INDIA

.MAJOR PLAYERS OF MUTUAL FUNDS IN INDIA

.HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY.CATEGORIES OF MUTUAL FUNDS.INVESTMENT STRATEGIES.

WORKING OF A MUTUAL FUND.GUIDELINES OF THE SEBI FOR MUTUAL FUND.COMPANIES DISTRIBUTION CHANNELS.DOES FUND PERFORMANCE AND RANKING PERSIST?.PORTFOLIO ANALYSIS TOOLS


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RESEARCH REPORT

.OBJECTIVE OF RESEARCH.SCOPE OF THE STUDY.DATA SOURCES.SAMPLING.DATA ANALYSIS.QUESTIONNAIRE


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Chapter - 1Introduction


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INTRODUCTION TO MUTUAL FUND AND ITS VARIOUSASPECTS.

Mutual fund is a trust that pools the savings of a number of investors who shareacommon financial goal. This pool of money is invested in accordance with a statedobjective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to allinvestors. The money thus collected is then invested in capital mar et instruments suchas shares, debentures and other securities. The income earned through theseinvestments and the capital appreciations realized are shared by its unit holders inproportion the number of units owned by them. Thus a Mutual Fund is the mostsuitable investment for the common man as it offers an opportunity to invest inadiversified, professionally managed bas et of securities at a relatively low cost. AMutual Fund is an investment tool that allows small investors access to a well-diversified portfolio of equities, bonds and other securities. Each shareholderparticipates 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 andsectors and thus the ris is reduced. Diversification reduces the ris because all stoc smay not move in the same direction in the same proportion at the same time. Mutualfund issues units to the investors in accordance with quantum of money investedbythem. Investors of mutual funds are nown as unit holders.


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When an investor subscribes for the units of a mutual fund, he becomes part owner ofthe assets of the fund in the same proportion as his contribution amount put upwith thecorpus (the total amount of the fund). Mutual Fund investor is also nown as a mutualfund shareholder or a unit holder.Any change in the value of the investments made into capital mar et instruments(suchas shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme.NAV is defined as the mar et value of the Mutual Fund scheme's assets net of itsliabilities. NAV of a scheme is calculated by dividing the mar et value of scheme'sassets by the total number of units issued to the investors.


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ADVANTAGES OF MUTUAL FUND

Portfolio Diversification Professional management Reduction / Diversification of Ris Liquidity Flexibility & Convenience Reduction in Transaction cost Safety of regulated environment Choice of schemes TransparencyDISADVANTAGE OF MUTUAL FUND

No control over Cost in the Hands of an Investor No tailor-made Portfolios Managing a Portfolio Funds Difficulty in selecting a Suitable Fund Scheme


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HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

The mutual fund industry in India started in 1963 with the formation of Unit Trust ofIndia, at the initiative of the Government of India and Reserve Ban . Though thegrowth was slow, but it accelerated from the year 1987 when non-UTI players enteredthe Industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvement,bothqualities wise as well as quantity wise. Before, the monopoly of the mar et hadseen anending phase; the Assets Under Management (AUM) was Rs67 billion. The privatesector entry to the fund family raised the Aum to Rs. 470 billion in March 1993and tillApril 2004; it reached the height if Rs. 1540 billion.

The Mutual Fund Industry is obviously growing at a tremendous space with the mutualfund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.

First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by theReserve Ban of India and functioned under the Regulatory and administrative controlof the Reserve Ban of India. In 1978 UTI was de-lin ed from the RBI and theIndustrial Development Ban of India (IDBI) too over the regulatory andadministrative control in place of RBI. The first scheme launched by UTI was UnitScheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under

management.


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Second Phase 1987-1993 (Entry of Public Sector Funds)

1987 mar ed the entry of non-UTI, public sector mutual funds set up by public sectorban s and Life Insurance Corporation of India (LIC) and General InsuranceCorporation of India (GIC). SBI Mutual Fund was the first non-UTI Mutual Fundestablished in June 1987 followed by Canban Mutual Fund (Dec 87), Punjab NationalBan Mutual Fund (Aug 89), Indian Ban Mutual Fund (Nov 89), Ban of India (Jun90), Ban of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June1989 while GIC had set up its mutual fund in December 1990.At the end of 1993, themutual fund industry had assets under management of Rs.47,004 crores.

Third Phase 1993-2003 (Entry of Private Sector Funds)

1993 was the year in which the first Mutual Fund Regulations came into being, underwhich all mutual funds, except UTI were to be registered and governed. The erstwhileKothari Pioneer (now merged with Fran lin Templeton) was the first private sector

mutual fund registered in July 1993.

The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensiveand revised Mutual Fund Regulations in 1996. The industry now functions under theSEBI (Mutual Fund) Regulations 1996. As at the end of January 2003, there were 33mutual funds with total assets of Rs. 1,21,805 crores.

Fourth Phase since February 2003

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI w

asbifurcated into two separate entities. One is the Specified Underta ing of the Unit Trust


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of India with assets under management of Rs.29,835 crores as at the end of January2003, representing broadly, the assets of US 64 scheme, assured return and certainother schemes

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It isregistered with SEBI and functions under the Mutual Fund Regulations. consolidationand growth. As at the end of September, 2004, there were 29 funds, which manageassets of Rs.153108 crores under 421 schemes.


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CATEGORIES OF MUTUAL FUND:


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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 anypoint 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 thefund is listed on astoc s exchange the units can be traded li e stoc s (E.g., Morgan Stanley GrowthFund).Recently, most of the New Fund Offers of close-ended funds provided liquidity window on aperiodic basis such as monthly or wee ly. Redemption of units can be made duringspecifiedintervals. Therefore, such funds have relatively low liquidity..Based on their investment objective:

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 mar et, generally smoothens out in the long term,therebyoffering higher returns at relatively lower volatility. At the same time, such funds canyield great capital appreciation as, historically, equities have outperformed all assetclasses in the long term. Hence, investment in equity funds should be consideredfor aperiod of at least 3-5 years. It can be further classified as:


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i) Index funds-In this case a ey stoc mar et index, li e BSE Sensex or Nifty istrac ed. Their portfolio mirrors the benchmar index both in terms of compositionand individual stoc weightages.

ii) Equity diversified funds-100% of the capital is invested in equities spreadingacross different sectors and stoc s.

iii|) Dividend yield funds-it is similar to the equity diversified funds exceptthat theyinvest in companies offering high dividend yields.

iv) Thematic funds- Invest 100% of the assets in sectors which are related throughsome 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 ban ingsectorfund will invest in ban ing stoc s.

vi) ELSS- Equity Lin ed Saving Scheme provides tax benefit to the investors.

Balanced fund: Their investment portfolio includes both debt and equity. As a result, onthe ris -return ladder, they fall between equity and debt funds. Balanced fundsare the idealmutual funds vehicle for investors who prefer spreading their ris 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.


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Debt fund: They invest only in debt instruments, and are a good option for investorsaverse to idea of ta ing ris associated with equities. Therefore, they invest exclusivelyin fixed-income instruments li e bonds, debentures, Government of India securities;and money mar et instruments such as certificates of deposit (CD), commercial paper(CP) and call money. Put your money into any of these debt funds depending on yourinvestment horizon and needs.

i) Liquid funds-These funds invest 100% in money mar et instruments, a largeportion being invested in call money mar et.

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

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

iv) Arbitrage fund-They generate income through arbitrage opportunities due to mispricingbetween cash mar et and derivatives mar et. Funds are allocated to equities,derivatives and money mar ets. Higher proportion (around 75%) is put in moneymar ets, in the absence of arbitrage opportunities.

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


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vi) Income funds LT-Typically, such funds invest a major portion of the portfolio inlong-term debt papers.

vii) MIPs-Monthly Income Plans have an exposure of 70%-90% to debt and anexposure of 10%-30% to equities.

viii) FMPs-fixed monthly plans invest in debt papers whose maturity is in line withthat of the fund.


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INVESTMENT STRATEGIES

1. Systematic Investment Plan: under this a fixed sum is invested each month onafixed date of a month. Payment is made through post dated cheques or direct debitfacilities. The investor gets fewer units when the NAV is high and more units when theNAV 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 fundandgive instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of thesame mutual fund.3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fundthen he can withdraw a fixed amount each month.


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RISK V/S. RETURN:


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Chapter 2Company Profile

INTRODUCTION TO SBI MUTUAL FUND

SBI Funds Management Pvt. Ltd. is one of the leading fund houses in thecountry with an investor base of over 4.6 million and over 20 years of rich


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experience in fund management consistently delivering value to its investors.SBI Funds Management Pvt. Ltd. is a joint venture between 'The State Ban ofIndia' one of India's largest ban ing enterprises, and Socit Gnrale AssetManagement (France), one of the world's leading fund management companiesthat manages over US$ 500 Billion worldwide.

Today the fund house manages over Rs 28500 crores of assets and has a diverseprofile of investors actively par ing their investments across 36 active schemes.In 20 years of operation, the fund has launched 38 schemes and successfullyredeemed 15 of them, and in the process, has rewarded our investors withconsistent returns. Schemes of the Mutual Fund have time after timeoutperformed benchmar indices, honored us with 15 awards of performanceand have emerged as the preferred investment for millions of investors. Thetrust reposed on us by over 4.6 million investors is a genuine tribute to ourexpertise in fund management.

SBI Funds Management Pvt. Ltd. serves its vast family of investors through anetwor of over 130 points of acceptance, 28 Investor Service Centres, 46Investor Service Des s and 56 District Organizers.SBI Mutual is the first ban -sponsored fund to launch an offshore fund Resurgent India Opportunities Fund.

Growth through innovation and stable investment policies is the SBI MF credo.

PRODUCTS OF SBI MUTUAL FUND

Equity schemes


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The investments of these schemes will predominantly be in the stoc mar etsand endeavor will be to provide investors the opportunity to benefit from thehigher returns which stoc mar ets can provide. However they are also exposedto the volatility and attendant ris s of stoc mar ets and hence should bechosen only by such investors who have high ris ta ing capacities and arewilling to thin long term. Equity Funds include diversified Equity Funds,Sectoral Funds and Index Funds. Diversified Equity Funds invest in variousstoc s across different sectors while sectoral funds which are specialized EquityFunds restrict their investments only to shares of a particular sector and hence,are ris ier than Diversified Equity Funds. Index Funds invest passively only inthe stoc s of a particular index and the performance of such funds move withthe movements of the index.

.Magnum COMMA Fund.Magnum Equity Fund.Magnum Global Fund.Magnum Index Fund

.Magnum Midcap Fund

.Magnum Multicap Fund.Magnum Multiplier plus 1993.Magnum Sectoral Funds Umbrella

.MSFU-Emerging Business Fund.MSFU-IT Fund


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.

.

.

.

.

.

.MSFU-Pharma Fund.MSFU-Contra Fund.MSFU-FMCG Fund

SBI Arbitrage Opportunities FundSBI Blue chip FundSBI Infrastructure Fund -Series ISBI Magnum Taxgain Scheme 1993

SBI ONE India FundSBI TAX ADVANTAGE FUND -SERIES I

Debt schemes

Debt Funds invest only in debt instruments such as Corporate Bonds,Government Securities and Money Mar et instruments either completelyavoiding any investments in the stoc mar ets as in Income Funds or Gilt Fundsor having a small exposure to equities as in Monthly Income Plans or Children'sPlan. Hence they are safer than equity funds. At the same time the expectedreturns from debt funds would be lower. Such investments are advisable for theris -averse investor and as a part of the investment portfolio for other investors.

Magnum Childrens benefit PlanMagnum Gilt Fund


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Magnum Income FundMagnum Insta Cash FundMagnum Income Fund- Floating Rate PlanMagnum Income Plus FundMagnum Insta Cash Fund -Liquid Floater PlanMagnum Monthly Income PlanMagnum Monthly Income Plan- FloaterMagnum NRI Investment FundSBI Premier Liquid FundBALANCED SCHEMESMagnum Balanced Fund invests in a mix of equity and debt investments. Hencethey are less ris y than equity funds, but at the same time providecommensurately lower returns. They provide a good investment opportunity toinvestors who do not wish to be completely exposed to equity mar ets, but is

loo ing for higher returns than those provided by debt funds. Magnum Balanced Fund


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COMPETITORS OF SBI MUTUAL FUND

Some of the main competitors of SBI Mutual Fund in Dehradoon are asFollows:

i. ICICI Mutual Fundii. Reliance Mutual Fundiii. UTI Mutual Fundiv. Birla Sun Life Mutual Fundv. Kota Mutual Fundvi. HDFC Mutual Fundvii. Sundaram Mutual Fundviii. LIC Mutual Fundix. Principalx. Fran lin TempletonAWARDS AND ACHIEVEMENTS


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SBI Mutual Fund (SBIMF) has been the proud recipient of the ICRA Online Award -8times, CNBC TV -18 Crisil Award 2006 -4 Awards, The Lipper Award (Year 2005-2006) and most recently with the CNBC TV -18 Crisil Mutual Fund of the YearAward 2007 and 5 Awards for our schemes.


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Chapter - 3Objectives and scope


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Chapter 4Research Methodology


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RESEARCH METHODOLOGY

This report is based on primary as well secondary data, however primary datacollection was given more importance since it is overhearing factor in attitudestudies.One of the most important users of research methodology is that it helps in identifyingthe problem, collecting, analyzing the required information data and providing analternative solution to the problem .It also helps in collecting the vital information thatis required by the top management to assist them for the better decision ma ingbothday to day decision and critical ones.

Data sources:

Research is totally based on primary data. Secondary data can be used only for thereference. Research has been done by primary data collection, and primary data hasbeen collected by interacting with various people. The secondary data has beencollected through various journals and websites.

Duration of Study:

The study was carried out for a period of two months, from 30th May to 30th July2008.


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Sampling:

.Sampling procedure:

The sample was selected of them who are the customers/visitors of State Ban ifIndia,Boring Canal Road Branch, irrespective of them being investors or not or availing theservices or not. It was also collected through personal visits to persons, by formal andinformal tal s and through filling up the questionnaire prepared. The data has beenanalyzed by using mathematical/Statistical tool.

.Sample size:

The sample size of my project is limited to 200 people only. Out of which only 120people had invested in Mutual Fund. Other 80 people did not have invested in MutualFund.

.Sample design:

Data has been presented with the help of bar graph, pie charts, line graphs etc.


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Limitation:

.Some of the persons were not so responsive..Possibility of error in data collection because many of investors may have notgiven actual answers of my questionnaire.

.Sample size is limited to 200 visitors of State Ban of India , Boring Canal Road

Branch, Dehradoon out of these only 120 had invested in Mutual Fund. Thesample.size may not adequately represent the whole mar et.

. Some respondents were reluctant to divulge personal information which canaffect the validity of all responses.. The research is confined to a certain part of Dehradoon.


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Chapter 5

Data Analysis&Interpretation


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ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors of DehradoonAge Group 50No. ofInvestors12 18 30 24 20 16

Investors invested in Mutual Fund

353025201510

5050Age group of the Investors

121830242016

Interpretation:


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According to this chart out of 120 Mutual Fund investors of Dehradoon the mostare inthe age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of Dehradoon

Educational Qualification Number of InvestorsGraduate/ Post Graduate 88Under Graduate 25Others 7Total 120


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71%23%6%Graduate/Post Graduate Under Graduate OthersInterpretation:71%23%6%Graduate/Post Graduate Under Graduate OthersInterpretation:


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Out of 120 Mutual Fund investors 71% of the investors in Dehradoon areGraduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors of Dehradoon

Occupation No. of InvestorsGovt. Service 30Pvt. Service 45Business 35Agriculture 4Others 6

.

No. of Investors

50403020100

3545304 6Govt. Pvt. Business Agriculture OthersService ServiceOccupation of the customers


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Interpretation:

In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% areBusinessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are inothers.

(d). Monthly Family Income of the Investors of Dehradoon.

Income Group No. of Investors30,000 32

5045

No. of Investors

403530

2520151050

51228433230

Income Group of the Investorsn (Rs. in Th.)

Interpretation:

In the Income Group of the investors of Dehradoon, out of 120 investors, 36%investors that is the maximum investors are in the monthly income group Rs.


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20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthlyincome group of more than Rs. 30,000 and the minimum investors i.e. 4%are in the monthly income group of below Rs. 10,000

(2) Investors invested in different ind of investments.Kind of Investments No. of RespondentsSaving A/C 195Fixed deposits 148Insurance 152Mutual Fund 120Post office (NSC) 75Shares/Debentures 50Gold/Silver 30Real Estate 65

65305075120152148195

Kinds of Investment

0 50 100 150 200 250

No.of Respondents


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Interpretation: From the above graph it can be inferred that out of 200 people,97.5% people have invested in Saving A/c, 76% in Insurance, 74% in Fixed Deposits,60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% inGold/Silver and 32.5% in Real Estate.3. Preference of factors while investingFactors (a) Liquidity (b) Low Ris (c) High Return (d) TrustNo. ofRespondents40 60 64 3620%30% 32%18%Liquidity LowRis HighReturn TrustInterpretation:Factors (a) Liquidity (b) Low Ris (c) High Return (d) TrustNo. ofRespondents40 60 64 3620%30% 32%18%Liquidity LowRis HighReturn Trust

Interpretation:


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Out of 200 People, 32% People prefer to invest where there is High Return, 30% preferto invest where there is Low Ris , 20% prefer easy Liquidity and 18% prefer Trust4. Awareness about Mutual Fund and its Operations67%33%Yes NoResponse Yes NoNo. of Respondents 135 6567%33%Yes NoResponse Yes NoNo. of Respondents 135 65


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Interpretation:From the above chart it is inferred that 67% People are aware of Mutual Fund anditsoperations and 33% are not aware of Mutual Fund and its operations.5. Source of information for customers about Mutual FundSource of information No. of RespondentsAdvertisement 18Peer Group 25Ban 30Financial Advisors 6218 25 3062010203040506070No.ofRespondentsAdvertisementPeerGroup Ban FinancialAdvisors

SourceofInformationInterpretation:From the above chart it can be inferred that the Financial Advisor is the mostimportant source of information about Mutual Fund. Out of 135 Respondents, 46%now about Mutual fund Through Financial Advisor, 22% through Ban , 19%through Peer Group and 13% through Advertisement.Source of information No. of RespondentsAdvertisement 18Peer Group 25Ban 30Financial Advisors 6218 25 3062

010203040506070No.ofRespondentsAdvertisementPeerGroup Ban FinancialAdvisorsSourceofInformationInterpretation:

From the above chart it can be inferred that the Financial Advisor is the mostimportant source of information about Mutual Fund. Out of 135 Respondents, 46%now about Mutual fund Through Financial Advisor, 22% through Ban , 19%through Peer Group and 13% through Advertisement.


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6. Investors invested in Mutual FundResponse No. of RespondentsYES 120NO 80Total 200

No

Yes40%60%

Interpretation:

Out of 200 People, 60% have invested in Mutual Fund and 40% do not have investedin Mutual Fund.


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7. Reason for not invested in Mutual FundReason No. of RespondentsNot Aware 65Higher Ris 5Not any Specific Reason 1081%13% 6%NotAware HigherRis NotAnyInterpretation:Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of MutualFund, 13% said there is li ely to be higher ris and 6% do not have any specificreason.8. Investors invested in different Assets Management Co. (AMC)Reason No. of RespondentsNot Aware 65Higher Ris 5Not any Specific Reason 1081%13% 6%NotAware HigherRis NotAnyInterpretation:Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mut

ualFund, 13% said there is li ely to be higher ris and 6% do not have any specificreason.8. Investors invested in different Assets Management Co. (AMC)


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Name of AMC No. of InvestorsSBIMF 55UTI 75HDFC 30Reliance 75ICICI Prudential 56Kota 45Others 70757556554530700 20 40 60 80UTIRelianceICICISBIMFKota HDFCOthers

Name of AMCNo. of InvestorsInterpretation:In Dehradoon most of the Investors preferred UTI and Reliance Mutual Fund. Out of120 Investors 62.5% have invested in each of them, only 46% have invested in SBIMF,47% in ICICI Prudential, 37.5% in Kota and 25% in HDFC.Name of AMC No. of InvestorsSBIMF 55UTI 75HDFC 30Reliance 75

ICICI Prudential 56Kota 45Others 70757556554530700 20 40 60 80UTIReliance

ICICISBIMFKota HDFCOthersName of AMCNo. of InvestorsInterpretation:In Dehradoon most of the Investors preferred UTI and Reliance Mutual Fund. Out of


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120 Investors 62.5% have invested in each of them, only 46% have invested in SBIMF,47% in ICICI Prudential, 37.5% in Kota and 25% in HDFC.


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9. Reason for invested in SBIMFReason No. of RespondentsAssociated with SBI 35Better Return 5Agents Advice 1564% 9%27%AssociatedwithSBI BetterReturn AgentsAdviceInterpretation:Out of 55 investors of SBIMF 64% have invested because of its association withBrand SBI, 27% invested on Agents Advice, 9% invested because of better return.10. Reason for not invested in SBIMFReason No. of RespondentsAssociated with SBI 35Better Return 5Agents Advice 1564% 9%27%AssociatedwithSBI BetterReturn AgentsAdviceInterpretation:Out of 55 investors of SBIMF 64% have invested because of its association withBrand SBI, 27% invested on Agents Advice, 9% invested because of better return.10. Reason for not invested in SBIMF


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Kota 60Others 75

NameofAMC

OthersKota ICICIPrudentialRelianceHDFCUTISBIMF

764535828060750 20 40 60 80 100No.ofInvestors

Interpretation:

Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential,63%in SBIMF, 62.5% in Others, 50% in Kota , 37.5% in UTI and 29% in HDFC MutualFund.

12. Channel Preferred by the Investors for Mutual Fund InvestmentChannel Financial Advisor Ban AMCNo. of Respondents 72 18 30


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60% 15%25%FinancialAdvisor Ban AMCInterpretation:Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% throughAMC and 15% through Ban .13. Mode of Investment Preferred by the InvestorsMode of Investment One time Investment Systematic Investment Plan (SIP)No. of Respondents 78 4260% 15%25%FinancialAdvisor Ban AMCInterpretation:Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% throughAMC and 15% through Ban .13. Mode of Investment Preferred by the InvestorsMode of Investment One time Investment Systematic Investment Plan (SIP)No. of Respondents 78 42


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65%35%OnetimeInvestment SIPInterpretation:Out of 120 Investors 65% preferred One time Investment and 35 % Preferred throughSystematic Investment Plan.14. Preferred Portfolios by the InvestorsPortfolio No. of InvestorsEquity 56Debt 20Balanced 4465%35%OnetimeInvestment SIPInterpretation:Out of 120 Investors 65% preferred One time Investment and 35 % Preferred throughSystematic Investment Plan.14. Preferred Portfolios by the InvestorsPortfolio No. of InvestorsEquity 56Debt 20

Balanced 44


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46%17%37%Equity Debt BalanceInterpretation:From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%preferred Debt portfolio15. Option for getting Return Preferred by the InvestorsOption Dividend Payout DividendReinvestmentGrowthNo. of Respondents 25 10 8546%17%37%Equity Debt BalanceInterpretation:From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17%preferred Debt portfolio15. Option for getting Return Preferred by the InvestorsOption Dividend Payout Dividend

ReinvestmentGrowthNo. of Respondents 25 10 85


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21%8%71%DividendPayout DividendReinvestment GrowthInterpretation:From the above graph 71% preferred Growth Option, 21% preferred Dividend Payoutand 8% preferred Dividend Reinvestment Option.16. Preference of Investors whether to invest in Sectoral FundsResponse No. of RespondentsYes 25No 9521%8%71%DividendPayout DividendReinvestment GrowthInterpretation:From the above graph 71% preferred Growth Option, 21% preferred Dividend Payoutand 8% preferred Dividend Reinvestment Option.16. Preference of Investors whether to invest in Sectoral FundsResponse No. of RespondentsYes 25No 95


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21%79% Yes NoInterpretation:Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund becausethere is maximum ris and 21% prefer to invest in Sectoral Fund.Chapter 621%79% Yes NoInterpretation:Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund becausethere is maximum ris and 21% prefer to invest in Sectoral Fund.Chapter 6


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Findings andConclusion

Findings

.In Dehradoon in the Age Group of 36-40 years were more in numbers. Thesecond most Investors were in the age group of 41-45 years and the least were inthe age group of below 30 years..In Dehradoon most of the Investors were Graduate or Post Graduate andbelow HSC there were very few in numbers.


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.In Occupation group most of the Investors were Govt. employees, thesecond most Investors were Private employees and the least were associated withAgriculture..In family Income group, between Rs. 20,001-30,000 were more innumbers, the second most were in the Income group of more than Rs.30,000 andthe least were in the group of below Rs. 10,000..About all the Respondents had a Saving A/c in Ban , 76% Invested inFixed Deposits, Only 60% Respondents invested in Mutual fund..Mostly Respondents preferred High Return while investment, the secondmost preferred Low Ris then liquidity and the least preferred Trust..Only 67% Respondents were aware about Mutual fund and its operationsand 33% were not..Among 200 Respondents only 60% had invested in Mutual Fund and 40%did not have invested in Mutual fund..Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told thereis not any specific reason for not invested in Mutual Fund and 6% told there is

li ely to be higher ris in Mutual Fund..Most of the Investors had invested in Reliance or UTI Mutual Fund, ICICIPrudential has also good Brand Position among investors, SBIMF places afterICICI Prudential according to the Respondents.


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.Out of 55 investors of SBIMF 64% have invested due to its association withthe Brand SBI, 27% Invested because of Advisors Advice and 9% due to betterreturn..Most of the investors who did not invested in SBIMF due to not Aware ofSBIMF, the second most due to Agents advice and rest due to Less Return..For Future investment the maximum Respondents preferred RelianceMutual Fund, the second most preferred ICICI Prudential, SBIMF has beenpreferred after them..60% Investors preferred to Invest through Financial Advisors, 25% throughAMC (means Direct Investment) and 15% through Ban ..65% preferred One Time Investment and 35% preferred SIP out of bothtype of Mode of Investment..The most preferred Portfolio was Equity, the second most was Balance(mixture of both equity and debt), and the least preferred Portfolio was Debtportfolio..Maximum Number of Investors Preferred Growth Option for returns, the

second most preferred Dividend Payout and then Dividend Reinvestment..Most of the Investors did not want to invest in Sectoral Fund, only 21%wanted to invest in Sectoral Fund.


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Conclusion

Running a successful Mutual Fund requires complete understanding of thepeculiarities of the Indian Stoc Mar et and also the psyche of the smallinvestors. This study has made an attempt to understand the financialbehavior of Mutual Fund investors in connection with the preferences ofBrand (AMC), Products, Channels etc. I observed that many of peoplehave fear of Mutual Fund. They thin their money will not be secure inMutual Fund. They need the nowledge of Mutual Fund and its relatedterms. Many of people do not have invested in mutual fund due to lac ofawareness although they have money to invest. As the awareness andincome is growing the number of mutual fund investors are also growing.


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Brand plays important role for the investment. People invest in thoseCompanies where they have faith or they are well nown with them. Thereare many AMCs in Dehradoon but only some are performing well due toBrand awareness. Some AMCs are not performing well although some ofthe schemes of them are giving good return because of not awarenessabout Brand. Reliance, UTI, SBIMF, ICICI Prudential etc. they are wellnown Brand, they are performing well and their Assets UnderManagement is larger than others whose Brand name are not well nownli e Principle, Sunderam, etc.

Distribution channels are also important for the investment in mutual fund.Financial Advisors are the most preferred channel for the investment inmutual fund. They can change investors mind from one investment optionto others. Many of investors directly invest their money through AMCbecause they do not have to pay entry load. Only those people investdirectly who now well about mutual fund and its operations and thosehave time.


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Chapter 7SuggestionsAnd


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Recommendations

Suggestions and Recommendations

.The most vital problem spotted is of ignorance. Investors should be madeaware of the benefits. Nobody will invest until and unless he is fully convinced.Investors should be made to realize that ignorance is no longer bliss and what theyare losing by not investing..Mutual funds offer a lot of benefit which no other single option could offer.But most of the people are not even aware of what actually a mutual fund is? Theyonly see it as just another investment option. So the advisors should try to changetheir mindsets. The advisors should target for more and more young investors.Young investors as well as persons at the height of their career would li e to gofor advisors due to lac of expertise and time.


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.Mutual Fund Company needs to give the training of the IndividualFinancial Advisors about the Fund/Scheme and its objective, because they are themain source to influence the investors.

.Before ma ing any investment Financial Advisors should firstenquire about the ris tolerance of the investors/customers, their need and time(how long they want to invest). By considering these three things they can ta ethecustomers into consideration.

.Younger people aged under 35 will be a ey new customer group into thefuture, so ma ing greater efforts with younger customers who show some interestin investing should pay off..Customers with graduate level education are easier to sell to and there is alarge untapped mar et there. To succeed however, advisors must provide soundadvice and high quality..

Systematic Investment Plan (SIP) is one the innovative products launchedby Assets Management companies very recently in the industry. SIP is easy formonthly salaried person as it provides the facility of do the investment in EMI.Though most of the prospects and potential investors are not aware about the SIP.There is a large scope for the companies to tap the salaried persons.


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BIBLIOGRAPHY

NEWS PAPERS OUTLOOK MONEY TELEVISION CHANNEL (CNBC AAWAJ) MUTUAL FUND HAND BOOK FACT SHEET AND STATEMENT WWW.SBIMF.COM WWW.MONEYCONTROL.COM WWW.AMFIINDIA.COM WWW.ONLINERESEARCHONLINE.COM WWW. MUTUALFUNDSINDIA.COM


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Mutual Funds


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All About Mutual Funds

Before we understand what is mutual fund, its very important to now the area inwhichmutual funds wor s, the basic understanding of stoc s and bonds.

Stoc s : Stoc s represent shares of ownership in a public company. Examples of public companiesinclude Reliance, ONGC and Infosys. Stoc s are considered to be the most commonownedinvestment traded on the mar et.

Bonds : Bonds are basically the money which you lend to the government or a company, and inreturn you can receive interest on your invested amount, which is bac over predetermined amountsof time. Bonds are considered to be the most common lending investment traded onthe mar et. Thereare many other types of investments other than stoc s and bonds (including annuities, real estate, andprecious metals), but the majority of mutual funds invest in stoc s and/or bonds.

What Is Mutual Fund

A mutual fund is just the connecting bridge or a financial intermediary that allows a group ofinvestors to pool their money together with a predetermined investment objective. The mutual fundwill have a fund manager who is responsible for investing the gathered money into specific securities(stoc s or bonds). When you invest in a mutual fund, you are buying units or portions of the mutualfund 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 theyare very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund,investors can purchase stoc s or bonds with much lower trading costs than if they tried to do it on


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their own. But the biggest advantage to mutual funds is diversification, by minimizing ris &maximizing returns.

Thus a Mutual Fund is the most suitable investment for the common man as it offers anopportunity to invest in a diversified, professionally managed bas et of securities at a relatively lowcost. The flow chart below describes broadly the wor ing of a mutual fund

Unit Trust of India is the first Mutual Fund set up under a separate act,UTI Act in 1963, and started its operations in 1964 with the issue ofunits under the scheme US-64.

Overview of existing schemes existed in mutual fund category

Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,ris tolerance and return expectations etc. The table below gives an overview into the existing types ofschemes in the Industry.

Type of Mutual Fund Schemes

BY STRUCTURE

Open Ended Schemes

An open-end fund is one that is available for subscription all through the year.These do nothave a fixed maturity. Investors can conveniently buy and sell units at Net Asset Value ("NAV")related prices. The ey feature of open-end schemes is liquidity.

Close Ended Schemes

A closed-end fund has a stipulated maturity period which generally ranging from3 to 15years. The fund is open for subscription only during a specified period. Investors can invest in thescheme at the time of the initial public issue and thereafter they can buy or sell the units of the schemeon the stoc exchanges where they are listed. In order to provide an exit routeto the investors, someclose-ended funds give an option of selling bac the units to the Mutual Fund through periodicrepurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes isprovided to the investor.

Interval Schemes


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Interval Schemes are that scheme, which combines the features of open-ended andclose-endedschemes. The units may be traded on the stoc exchange or may be open for sale or redemptionduring pre-determined intervals at NAV related prices.

BY NATURE

1. Equity fund:These funds invest a maximum part of their corpus into equities holdings. The structure of thefund may vary different for different schemes and the fund managers outloo on different stoc s. TheEquity Funds are sub-classified depending upon their investment objective, as follows:

Diversified Equity FundsMid-Cap FundsSector Specific Funds

Tax Savings Funds (ELSS)Equity investments are meant for a longer time horizon, thus Equity funds ran high on the ris -return matrix.

2. Debt funds:The objective of these Funds is to invest in debt papers. Government authorities, private companies,ban s and financial institutions are some of the major issuers of debt papers. By investing in debtinstruments, these funds ensure low ris and provide stable income to the investors. Debt funds arefurther classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly nown asGovernment of India debt papers. These Funds carry zero Default ris but are associated withInterest Rate ris . These schemes are safer as they invest in papers bac ed by Government.Income Funds: Invest a major portion into various debt instruments such as bonds, corporatedebentures and Government securities.


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MIPs: Invests maximum of their total corpus in debt instruments while they ta eminimumexposure in equities. It gets benefit of both equity and debt mar et. These scheme ran sslightly high on the ris -return matrix when compared with other debt schemes.Short Term Plans (STPs): Meant for investment horizon for three to six months. These fundsprimarily invest in short term papers li e Certificate of Deposits (CDs) and CommercialPapers (CPs). Some portion of the corpus is also invested in corporate debentures.Liquid Funds: Also nown as Money Mar et Schemes, These funds provides easy liquidityand preservation of capital. These schemes invest in short-term instruments li eTreasuryBills, inter-ban call money mar et, CPs and CDs. These funds are meant for short-term cashmanagement of corporate houses and are meant for an investment horizon of 1day to 3months. These schemes ran low on ris -return matrix and are considered to be th

e safestamongst all categories of mutual funds.3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. They invest inboth equities and fixed income securities, which are in line with pre-defined investment objective ofthe scheme. These schemes aim to provide investors with the best of both the worlds. Equity partprovide growth and the debt part provides stability in returns.Further the mutual funds can be broadly classified on the basis of investment parameter viz,

Each category of funds is bac ed by an investment philosophy, which is pre-defin

ed in the objectivesof the fund. The investor can align his own investment needs with the funds objective and investaccordingly.


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Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors undertax lawsprescribed from time to time. Under Sec.88 of the Income Tax Act, contributionsmade to anyEquity Lin ed Savings Scheme (ELSS) are eligible for rebate.Index Schemes: Index schemes attempt to replicate the performance of a particular indexsuch as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of onlythose stoc s that constitute the index. The percentage of each stoc to the total holding will beidentical to the stoc s index weightage. And hence, the returns from such schemes would bemore or less equivalent to those of the Index.Sector Specific Schemes: These are the funds/schemes which invest in the securities of onlythose sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software,Fast Moving Consumer Goods (FMCG), Petroleum stoc s, etc. The returns in these funds are

dependent on the performance of the respective sectors/industries. While these funds may givehigher returns, they are more ris y compared to diversified funds. Investors need to eep awatch on the performance of those sectors/industries and must exit at an appropriate time.Types of returns

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:

Income is earned from dividends on stoc s and interest on bonds. A fund pays out

nearly allincome it receives over the year to fund owners in the form of a distribution.If the fund sells securities that have increased in price, the fund has a capital gain. Most fundsalso pass on these gains to investors in a distribution.If fund holdings increase in price but are not sold by the fund manager, the fund's sharesincrease in price. You can then sell your mutual fund shares for a profit. Fundswill alsousually give you a choice either to receive a chec for distributions or to reinvest the earnings

and get more shares.


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Pros & cons of investing in mutual funds:

For investments in mutual fund, one must eep in mind about the Pros and cons ofinvestments in mutual fund.

Advantages of Investing Mutual Funds:

1. Professional Management - The basic advantage of funds is that, they are professional managed,by well qualified professional. Investors purchase funds because they do not have the time or theexpertise to manage their own portfolio. A mutual fund is considered to be relatively less expensiveway to ma e and monitor their investments.2. Diversification - Purchasing units in a mutual fund instead of buying individual stoc s or bonds,the investors ris is spread out and minimized up to certain extent. The idea behind diversification isto invest in a large number of assets so that a loss in any particular investment is minimized by gainsin others.3. Economies of Scale - Mutual fund buy and sell large amounts of securities at

a time, thus help toreducing transaction costs, and help to bring down the average cost of the unitfor their investors.4. Liquidity - Just li e an individual stoc , mutual fund also allows investorsto liquidate theirholdings as and when they want.


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5. Simplicity - Investments in mutual fund is considered to be easy, compare toother availableinstruments in the mar et, and the minimum investment is small. Most AMC also have automaticpurchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.Disadvantages of Investing Mutual Funds:

1. Professional Management- Some funds doesnt perform in neither the mar et, as theirmanagement is not dynamic enough to explore the available opportunity in the maret, thus manyinvestors debate over whether or not the so-called professionals are any betterthan mutual fund orinvestor himself, for pic ing up stoc s.2. Costs The biggest source of AMC income, is generally from the entry & exit load which theycharge from an investors, at the time of purchase. The mutual fund industries are thus charging extracost under layers of jargon.3. Dilution - Because funds have small holdings across different companies, highreturns from a fewinvestments often don't ma e much difference on the overall return. Dilution is

also the result of asuccessful fund getting too big. When money pours into funds that have had strong success, themanager often has trouble finding a good investment for all the new money.4. Taxes - when ma ing decisions about your money, fund managers don't consideryour personal taxsituation. For example, when a fund manager sells a security, a capital-gain taxis triggered, which


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affects how profitable the individual is from the sale. It might have been moreadvantageous for theindividual to defer the capital gains liability.

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund byUTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry.

In the past decade, Indian mutual fund industry had seen a dramatic improvements, both quality wiseas well as quantity wise. Before, the monopoly of the mar et had seen an endingphase, the AssetsUnder Management (AUM) was Rs. 67bn. The private sector entry to the fund familyrose the AUMto Rs. 470 in in March 1993 and till April 2004, it reached the height of 1,540bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it is less than the

deposits of SBI alone, constitute less than 11% of the total deposits held by the Indian ban ingindustry.

The main reason of its poor growth is that the mutual fund industry in India isnew in the country.Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the primeresponsibility of all mutual fund companies, to mar et the product correctly abreast of selling.

The mutual fund industry can be broadly put into four phases according to the development of the

sector. Each phase is briefly described as under.


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The major players in the Indian Mutual Fund Industry are:

Major Players of Mutual Funds In IndiaPeriod (Last&nbsp1 Wee )

Ran Scheme Name Date NAV(Rs.)Last 1Wee SinceInception1 JM Core 11 Fund - Series 1 GrowthMar 26, 20088.45 5.12 -94.642 Tata Indo-Global InfrastructureFund - GrowthMar 26, 20088.26 5.05 -40.423 Tata Capital Builder Fund GrowthMar 26, 2008

12.44 5.03 15.354 Standard Chartered EnterpriseEquity Fund - GrowthMar 26, 200814.07 5 20.925 DBS Chola Infrastructure Fund GrowthMar 26, 20089.01 4.65 -17.176 ICICI Prudential Fusion Fund SeriesIII - Institutional GrowthMar 26

, 200810.2 4.62 23.697 DSP Merrill Lynch Micro CapFund - Regular - GrowthMar 26, 20089.93 4.56 -0.858 ICICI Prudential Fusion Fund SeriesIII - Retail - GrowthMar 26, 200810.19 4.51 22.399 DBS Chola Small Cap Fund Growth

Mar 26, 20086.36 3.75 -81.78


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10 Principal Personal Taxsaver Mar 25, 2008124.66 3.44 29.9711 Benchmar Split Capital Fund PlanA - Preferred UnitsMar 26, 2008141.51 3.14 13.7112 ICICI Prudential FMP - Series33 - Plan A - GrowthMar 26, 20089.89 2.91 -7.8813 Tata SIP Fund - Series I GrowthMar 26, 200810.25 2.38 2.3914 Sahara R.E.A.L Fund - Growth Mar 25, 20087.64 1.86 -49.5215 Tata SIP Fund - Series II GrowthMar 26, 2008

9.93 1.58 -0.94

A mutual fund is a professionally-managed firm of collective investments that pools money frommany investors and invests it in stoc s, bonds, short-term money mar et instruments, and/or othersecurities.in other words we can say that A Mutual Fund is a trust registered with the Securities andExchange Board of India (SEBI), which pools up the money from individual / corporate investors andinvests the same on behalf of the investors /unit holders, in equity shares, Government securities,Bonds, Call money mar ets etc., and distributes the profits.

The value of each unit of the mutual fund, nown as the net asset value (NAV),is mostly calculateddaily based on the total value of the fund divided by the number of shares currently issued andoutstanding. The value of all the securities in the portfolio in calculated daily. From this, all expensesare deducted and the resultant value divided by the number of units in the fundis the funds NAV.

NAV = Total value of the fund.

No. of shares currently issued and outstanding

Advantages of a MF

Mutual Funds provide the benefit of cheap access to expensive stoc s Mutual funds diversify the ris of the investor by investing in a bas et of assets


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Categories of mutual funds:


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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.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.


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units when the NAV is high and more units when the NAV is low. This is called asthe benefit ofRupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fundand giveinstructions 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 fundthen he canwithdraw a fixed amount each month.Ris v/s. return:


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Wor ing of a Mutual fund: Wor ing of a Mutual fund:


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The entire mutual fund industry operates in a very organized way. The investors, nown as unitholders,handover their savings to the AMCs under various schemes. The objectiveof the investmentshould match with the objective of the fund to best suit the investors needs. TheAMCs further investthe funds into various securities according to the investment objective. The return generated from theinvestments is passed on to the investors or reinvested as mentioned in the offer document.The entire mutual fund industry operates in a very organized way. The investors, nown as unitholders,handover their savings to the AMCs under various schemes. The objectiveof the investmentshould match with the objective of the fund to best suit the investors needs. TheAMCs further investthe funds into various securities according to the investment objective. The return generated from theinvestments is passed on to the investors or reinvested as mentioned in the offer document.


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Wor ingOfMutual Fund

Mutual Funds

Before we understand what is mutual fund, its very important to now the area inwhichmutual funds wor s, the basic understanding of stoc s and bonds.


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Stoc s : Stoc s represent shares of ownership in a public company. Examples of public companiesinclude Reliance, ONGC and Infosys. Stoc s are considered to be the most commonownedinvestment traded on the mar et.

Bonds : Bonds are basically the money which you lend to the government or a company, and inreturn you can receive interest on your invested amount, which is bac over predetermined amountsof time. Bonds are considered to be the most common lending investment traded onthe mar et. Thereare many other types of investments other than stoc s and bonds (including annuities, real estate, andprecious metals), but the majority of mutual funds invest in stoc s and/or bonds.

What Is Mutual Fund

A mutual fund is just the connecting bridge or a financial intermediary that allows a group ofinvestors 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(stoc s or bonds). When you invest in a mutual fund, you are buying units or portions of the mutualfund 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 compareto others theyare very cost efficient and also easy to invest in, thus by pooling money together in a mutual fund,investors can purchase stoc s or bonds with much lower trading costs than if they tried to do it ontheir own. But the biggest advantage to mutual funds is diversification, by mini

mizing ris &maximizing returns.

Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity toinvest in a diversified, professionally managed bas et of securities at a relatively low cost. The flowchart below describes broadly the wor ing of a mutual fund


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Overview of existing schemes existed in mutual fund category Overview of existing schemes existed in mutual fund category


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Wide variety of Mutual Fund Schemes exists to cater to the needs such as financial position,ris tolerance and return expectations etc. The table below gives an overview into the existing types ofschemes in the Industry.


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Type of Mutual Fund Schemes

BY STRUCTURE

Open Ended Schemes

An open-end fund is one that is available for subscription all through the year.These do not have afixed maturity. Investors can conveniently buy and sell units at Net Asset Value("NAV") relatedprices. The ey feature of open-end schemes is liquidity.

Close Ended Schemes

A closed-end fund has a stipulated maturity period which generally ranging from3 to 15years. The fund is open for subscription only during a specified period. Investors can invest in thescheme at the time of the initial public issue and thereafter they can buy or sell the units of the schemeon the stoc exchanges where they are listed. In order to provide an exit routeto the investors, someclose-ended funds give an option of selling bac the units to the Mutual Fund th

rough periodicrepurchase at NAV related prices. SEBI Regulations stipulate that at least one of the two exit routes isprovided to the investor.

Interval Schemes

Interval Schemes are that scheme, which combines the features of open-ended andclose-endedschemes. The units may be traded on the stoc exchange or may be open for sale or redemptionduring pre-determined intervals at NAV related prices.


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BY NATUREUnder this the mutual fund is categorized on the basis of Investment Objective.By nature the mutualfund is categorized as follow:1. Equity fund: 1. Equity fund:


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These funds invest a maximum part of their corpus into equities holdings. The structure of thefund may vary different for different schemes and the fund managers outloo on different stoc s. TheEquity Funds are sub-classified depending upon their investment objective, as follows:

Diversified Equity FundsMid-Cap FundsSector Specific FundsTax Savings Funds (ELSS)Equity investments are meant for a longer time horizon, thus Equity funds ran high on the ris -return matrix.

2. Debt funds:The objective of these Funds is to invest in debt papers. Government authorities, private companies,ban s and financial institutions are some of the major issuers of debt papers. B

y investing in debtinstruments, these funds ensure low ris and provide stable income to the investors. Debt funds arefurther classified as:

Gilt Funds: Invest their corpus in securities issued by Government, popularly nown asGovernment of India debt papers. These Funds carry zero Default ris but are associated withInterest Rate ris . These schemes are safer as they invest in papers bac ed by Government.

Income Funds: Invest a major portion into various debt instruments such as bonds, corporatedebentures and Government securities.MIPs: Invests maximum of their total corpus in debt instruments while they ta eminimumexposure in equities. It gets benefit of both equity and debt mar et. These scheme ran sslightly high on the ris -return matrix when compared with other debt schemes.Short Term Plans (STPs): Meant for investment horizon for three to six months. These fundsprimarily invest in short term papers li e Certificate of Deposits (CDs) and Com

mercialPapers (CPs). Some portion of the corpus is also invested in corporate debentures.


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Liquid Funds: Also nown as Money Mar et Schemes, These funds provides easy liquidityand preservation of capital. These schemes invest in short-term instruments li eTreasuryBills, inter-ban call money mar et, CPs and CDs. These funds are meant for short-term cashmanagement of corporate houses and are meant for an investment horizon of 1day to 3months. These schemes ran low on ris -return matrix and are considered to be the safestamongst all categories of mutual funds.3. Balanced funds: As the name suggest they, are a mix of both equity and debt funds. Theyinvest in both equities and fixed income securities, which are in line with pre-defined investmentobjective of the scheme. These schemes aim to provide investors with the best ofboth the worlds.Equity part provides growth and the debt part provides stability in returns.Further the mutual funds can be broadly classified on the basis of investment parameter viz,

Each category of funds is bac ed by an investment philosophy, which is pre-defin

ed in the objectivesof the fund. The investor can align his own investment needs with the funds objective and investaccordingly.


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BY INVESTMENT OBJECTIVE

Growth Schemes: Growth Schemes are also nown as equity schemes. The aim of theseschemes is to provide capital appreciation over medium to long term. These schemes normallyinvest a major part of their fund in equities and are willing to bear short-termdecline in valuefor possible future appreciation.Income Schemes: Income Schemes are also nown as debt schemes. The aim of theseschemes is to provide regular and steady income to investors. These schemes generally investin fixed income securities such as bonds and corporate debentures. Capital appreciation insuch schemes may be limited.Balanced Schemes: Balanced Schemes aim to provide both growth and income byperiodically distributing a part of the income and capital gains they earn. These schemes investin both shares and fixed income securities, in the proportion indicated in their

offer documents(normally 50:50).Money Mar et Schemes: Money Mar et Schemes aim to provide easy liquidity, preservationof capital and moderate income. These schemes generally invest in safer, short-terminstruments, such as treasury bills, certificates of deposit, commercial paper and inter-ban call money.OTHER SCHEMES

Tax Saving Schemes: Tax-saving schemes offer tax rebates to the investors undertax lawsprescribed from time to time. Under Sec.88 of the Income Tax Act, contributionsmade to anyEquity Lin ed Savings Scheme (ELSS) are eligible for rebate.Index Schemes: Index schemes attempt to replicate the performance of a particular indexsuch as the BSE Sensex or the NSE 50. The portfolio of these schemes will consist of onlythose stoc s that constitute the index. The percentage of each stoc to the total holding will beidentical to the stoc s index weightage. And hence, the returns from such scheme

s would bemore or less equivalent to those of the Index.


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Sector Specific Schemes: These are the funds/schemes which invest in the securities of onlythose sectors or industries as specified in the offer documents. e.g. Pharmaceuticals, Software,Fast Moving Consumer Goods (FMCG), Petroleum stoc s, etc. The returns in these funds aredependent on the performance of the respective sectors/industries. While these funds may givehigher returns, they are more ris y compared to diversified funds. Investors need to eep awatch on the performance of those sectors/industries and must exit at an appropriate time.Types of returns:

There are three ways, where the total returns provided by mutual funds can be enjoyed by investors:

Income is earned from dividends on stoc s and interest on bonds. A fund pays outnearly allincome it receives over the year to fund owners in the form of a distribution.

If the fund sells securities that have increased in price, the fund has a capital gain. Most fundsalso pass on these gains to investors in a distribution.If fund holdings increase in price but are not sold by the fund manager, the fund's sharesincrease in price. You can then sell your mutual fund shares for a profit. Fundswill alsousually give you a choice either to receive a chec for distributions or to reinvest the earningsand get more shares.


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Pros & cons of investing in mutual funds:

For investments in mutual fund, one must eep in mind about the Pros and cons ofinvestments in mutual fund.

Advantages of Investing Mutual Funds:

1. Professional Management - The basic advantage of funds is that, they are professional managed,by well qualified professional. Investors purchase funds because they do not have the time or theexpertise to manage their own portfolio. A mutual fund is considered to be relatively less expensiveway to ma e and monitor their investments.2. Diversification - Purchasing units in a mutual fund instead of buying individual stoc s or bonds,the investors ris is spread out and minimized up to certain extent. The idea behind diversification isto invest in a large number of assets so that a loss in any particular investment is minimized by gainsin others.3. Economies of Scale - Mutual fund buy and sell large amounts of securities at

a time, thus help toreducing transaction costs, and help to bring down the average cost of the unitfor their investors.4. Liquidity - Just li e an individual stoc , mutual fund also allows investorsto liquidate theirholdings as and when they want.5. Simplicity - Investments in mutual fund is considered to be easy, compare toother availableinstruments in the mar et, and the minimum investment is small. Most AMC also have automaticpurchase plans whereby as little as Rs. 2000, where SIP start with just Rs.50 per month basis.


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Disadvantages of Investing Mutual Funds:

1. Professional Management-Some funds doesnt perform in neither the mar et, as theirmanagement is not dynamic enough to explore the available opportunity in the maret, thus manyinvestors debate over whether or not the so-called professionals are any betterthan mutual fund orinvestor himself, for pic ing up stoc s.2. Costs The biggest source of AMC income, is generally from the entry & exit load which theycharge from an investors, at the time of purchase. The mutual fund industries are thus charging extracost under layers of jargon.3. Dilution -Because funds have small holdings across different companies, highreturns from a fewinvestments often don't ma e much difference on the overall return. Dilution isalso the result of asuccessful fund getting too big. When money pours into funds that have had strong success, themanager often has trouble finding a good investment for all the new money.4. Taxes -when ma ing 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 taxis triggered, whichaffects how profitable the individual is from the sale. It might have been moreadvantageous for theindividual to defer the capital gains liability.


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To protect the interest of the investors, SEBI formulates policies and regulatesthe mutualfunds. It notified regulations in 1993 (fully revised in 1996) and issues guidelines from time totime.

SEBI approved Asset Management Company (AMC) manages the funds by ma inginvestments in various types of securities. Custodian, registered with SEBI, holds the securitiesof various schemes of the fund in its custody.According to SEBI Regulations, two thirds of the directors of Trustee Company orboard oftrustees must be independent.The Association of Mutual Funds in India (AMFI) reassures the investors in unitsof mutualfunds that the mutual funds function within the strict regulatory framewor . Itsobjective is toincrease public awareness of the mutual fund industry. AMFI also is engaged in upgradingprofessional standards and in promoting best industry practices in diverse areassuch asvaluation, disclosure, transparency etc.

Documents required (PAN mandatory):

Proof of identity :

1. Photo PAN card2. In case of non-photo PAN card in addition to copy of PAN card any one of thefollowing:driving license/passport copy/ voter id/ ban photo pass boo .Proof of address (any of the following ) :latest telephone bill, latest electricity bill, Passport,latest ban passboo /ban account statement, latest Demat account statement, voter id, drivinglicense, ration card, rent agreement.

Offer document: An offer document is issued when the AMCs ma e New Fund Offer(NFO).Its advisable to every investor to as for the offer document and read it beforeinvesting. An


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QUESTIONNAIRE

A study of preferences of the investors for investment in mutual funds.

1. Personal Details:(a). Name:(b). Add: -Phone:(c). Age:

(d). Qualification:

Graduation/PG Under Graduate Others

(e). Occupation. Pl tic (v)

Govt. Ser Pvt. Ser Business Agriculture Others

(g). What is your monthly family income approximately? Pl tic (v).

Up toRs.10,000Rs. 10,001 to15000Rs. 15,001 to20,000Rs. 20,001 to30,000Rs. 30,001 andabove


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11. When you plan to invest your money in asset management co. which AMC will you prefer?Assets Management Co.a. SBIMFb. UTIc. Relianced. HDFCe. Kota f. ICICI12. Which Channel will you prefer while investing in Mutual Fund?(a) Financial Advisor (b) Ban (c) AMC13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tic (v).a. One Time Investment b. Systematic Investment Plan (SIP)14. When you want to invest which type of funds would you choose?a. Having only debtportfoliob. Having debt & equityportfolio.c. Only equity portfolio.15. How would you li e to receive the returns every year? Pl. tic (v).a. Dividend payout b. Dividend re-investment c. Growth in NAV16. Instead of general Mutual Funds, would you li e to invest in sectorial funds

?Please tic (v). Yes NoAssets Management Co.a. SBIMFb. UTIc. Relianced. HDFCe. Kota f. ICICI12. Which Channel will you prefer while investing in Mutual Fund?(a) Financial Advisor (b) Ban (c) AMC13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tic (v).

a. One Time Investment b. Systematic Investment Plan (SIP)14. When you want to invest which type of funds would you choose?a. Having only debtportfoliob. Having debt & equityportfolio.c. Only equity portfolio.15. How would you li e to receive the returns every year? Pl. tic (v).a. Dividend payout b. Dividend re-investment c. Growth in NAV16. Instead of general Mutual Funds, would you li e to invest in sectorial funds?Please tic (v). Yes No


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