INTRODUCTION OF MUTUAL FUNDS Mutual funds have become a very popular way to take some of the risk out

of investing in individual stocks by investors. Mutual funds are a collection of stocks selected by mutual fund seller and sold to investors as shares in a fund. There are several types of funds that you can invest in. Some of the more popular types are technology funds, growth funds, security funds, and income funds. Mutual funds are very popular because they allow you to invest in a numbers of stocks therefore greatly reducing the risks associated with putting you money in an individual stock. Mutual funds have become one of the most attractive ways for the average person to invest their money. A mutual fund pools resources from thousands of investors and then diversifies its investment into many different holdings such as stocks, bonds, or government securities in order to provide high relative safety and returns. Mutual Funds now represents perhaps the most appropriate opportunity for most investors. It is no wonder that birthplace of mutual funds - the U.S.A.- the fund industry has already overtaken the banking industry. The Indian industry has already started opening up many of the exciting investment opportunities to Indian investors. Though not insured like banks, mutual funds generally provide more return than the current one to two percent obtainable through banks while still being one of the safest ways to grow your money. There are an endless variety of mutual fund investment choices depending on the degree of risk you feel comfortable with. Mutual Funds have emerged as professional intermediaries. Besides providing the expertise in stock market investing, these funds allow investing in small amounts and yet holding a diversified portfolio to a limit.


The mutual fund industry in India started in 1963 with the formation of Unit Trust of India, at the initiative of the Government of India and Reserve Bank and started its operations in 1964 with the issue of units under the scheme US-64. The history of mutual funds in India can be broadly divided into four distinct phases: First Phase- 1964-87 Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set up by the Reserve Bank of India and functioned under the Regulatory and administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory and administrative control in place of RBI The first scheme launched by UTI was Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under management. Second Phase- 1987-1993 (Entry of Public Sector Funds) 1987 marked the entry of non- UTI, public sector mutual funds set up by public sector banks and Life Insurance Corporation of India (LIC) and General Insurance Corporation of India (GIC). SBI Mutual Fund was the first non- UTI Mutual Fund established in June 1987 followed by Canbank Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990. At the end of 1993, the mutual fund industry had assets under management of Rs.47,004 crores. Third Phase- 1993-2003 (Entry of Private Sector Funds

With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. Also, 1993 was the year in which the first Mutual Fund Regulations came into being, under which all mutual funds, except LTI were to be registered and governed. The erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private sector mutual fund registered in July 1993 Fourth Phase - since February 2003 In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated into two separate entities. One is the Specified Undertaking of the Unit

Trust of India with assets under management of Rs.29,835 crores as at the end of January 2003, representing broadly., the assets of US 64 scheme, assured return and certain other schemes. The Specified Undertaking of Unit Trust of India, functioning under an administrator and under the rules framed by Government of India and does not come under the purview of the Mutual Fund Regulations. The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000 more than Rs. 76,000 crores of assets under management and with the setting up of a UTI Mutual Fund, conforming to the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. As at the end of October 31, 2003, there were 31 funds, which manage assets of Rs. 126726 crores under 386 schemes. Erstwhile UTI was bifurcated into UTI Mutual Fund and the Specified Undertaking of the Unit Trust of India effective from February 2003. The Assets under management of the Specified Undertaking of the Unit Trust of India has therefore been excluded from the total assets of the industry as a whole from February 2003 onwards. Currently Public Sector Banks like SBI, Canara Bank, Bank of India, institutions like IDBI, GIC, LIC Foreign Institutions like Alliance, Morgan Stanley, Templeton and Private financial companies like HDFC, Prudential ICICI, DSP Merrill Lynch, Sundaram, Kotak Mahindra etc. have floated their own mutual funds.


A Mutual Fund is a vehicle for investing in stocks and bonds. It is not an alternative investment option to stocks and bonds; rather it pools the money of several investors and invests this in stocks, bonds, money market instruments and other types of securities. Buying a mutual fund is like buying a small slice of a big pizza. The owner of a mutual fund unit gets a proportional share of the fund's gains, losses, income and expenses. A Mutual Fund is a body corporate registered with the Securities and Exchange Board of India (SEBI), that pools up the money from individual/ corporate investors and invests the same on behalf of the investors /unit holders, in equity shares, Government securities, Bonds, Call money markets etc., and distributes the profits. In other words, a mutual fund allows an investor to indirectly take a position in a basket of assets. A mutual fund pools together sums from individual investors and invests it in various financial instruments. Each mutual fund has its own investment objective. Mutual funds have become one of the most attractive ways for the average person to invest their money. A mutual fund pools resources from thousand of investors and then diversifies its investment into many different holdings such as stock, bonds, and securities in order to provide highly relative safety and returns. Each Mutual Fund with different type of schemes is managed by respective Asset Management Company (AMC). An investor can invest his money in one or more schemes of Mutual Fund according to his choice and becomes the unit holder of the scheme. The invested money in a particular scheme of a Mutual Fund is then invested by fund manager in different types of suitable stock and securities, bonds and money market instruments. Each Mutual Fund is managed by qualified professional man, who use this money to create a portfolio which includes stock and shares, bonds, gilt, money-market instruments or combination of all.

DISTINGUISHING CHARACTERISTICS OF MUTUAL FUND The traditional, distinguishing characteristics of the mutual fund may include the following:

? Investors purchase mutual fund shares from the fund itself (or through a broker for the fund) instead of from other investors on a secondary market ? The price that investors pay for mutual fund shares is the fund's per share net asset value (NAV) plus any shareholder fees that the fund imposes at the time of purchase (such as sales loads). ? Mutual fund shares are "redeemable," meaning investors can sell their shares back to the fund (or to a broker acting for the fund). ? Mutual funds generally create and sell new shares to accommodate new investors. In other words, they sell their shares on a continuous basis, although some funds stop selling when, for example, they become too large. ? The investment portfolios of mutual funds typically are managed by separate entities known as "investment advisers" that are registered with the SEBI. MAJOR RIGHTS AS A UNIT HOLDER IN A MUTUAL FUND Some important rights are mentioned below: • Unit holders have a proportionate right in the beneficial ownership of the assets of the scheme and to the dividend declared. • They are entitled to receive dividend warrants within 42 days of the date of declaration of the dividend. • They are entitled to receive redemption cheques within 10 working days from the date of redemption. • the • 75% of the unit holders with the prior approval of SEBI can terminate AMC of fund. 75% of the unit holders can pass a resolution to wind-up the scheme

REGULATORY BODY FOR MUTUAL FUNDS Securities Exchange Board of India (SEBI) is the regulatory body for all the mutual funds mentioned above. All the mutual funds must get registered with SEBl. The only exception is the UTI, since it is a corporation formed under a separate Act of Parliament. Broad Guidelines Issued by SEBI for a MF: -

SEBl has the following broad guidelines pertaining to mutual funds: • Mutual Funds should be formed as a Trust under Indian Trust Act and should be operated by Asset Management Companies (AMCs). ROLE OF A FUND MANAGER Fund managers are responsible for implementing a consistent investment strategy that reflects the goals and objectives of the fund. • Mutual Funds should distribute minimum of 90% of their profits among the investors There are other guidelines also that govern investment strategy. disclosure norms and advertising code for mutual funds. fund managers monitor market and economic trends and analyze securities in order to make informed investment decisions. Normally. • The net worth of the AMCs should be at least Rs. • AMCs and Trustees of a Mutual Fund should be two separate and distinct legal entities • The AMC or any of its companies cannot act as managers for any other fund • AMCs have to get the approval of SEBI for its Articles and Memorandum of Association • All Mutual Funds schemes should be registered with SEBI. Thus the role of fund manager is very crucial. They should also have their Board of Directors.5 crore. • Mutual Funds need to set up a Board of Trustees and Trustee Companies. ACCOUNT STATEMENT .SEBI is the regulatory authority of Mutual Funds.

In mutual fund terminology it is called Account Statement. After investing in a mutual fund investor gets an account statement. The recording of entries would be similar to the passbook entries in the bank. redemption of units.When the units are bought or get allotted a statement will be issued mentioning the number of units allotted/bought and redeemed by you. The account statement is computer generated and cannot be traded or transferred. MUTUAL FUND STRUCTURE . etc are shown in the account statement. which shows his holding and the price at which bought units. The account statement shows the: -•S holding details ? ? ? holding details the number of units outstanding value of the holdings All transactions relating to purchase units. dividend. reinvestment.

1996. This entity that undertakes the designing and marketing of schemes. who buys and sells securities in line with the fund's stated objective. The sponsor is the Settlor of the Trust that holds Trust property on behalf of investors who are the beneficiaries of the Trust. The sponsor is also required to contribute at least 40% of the capital of the asset management company. but these are not entitled to any distributions or share in the equity. All of the equity belongs to the investors. THE ASSET MANAGEMENT COMPANY (AMC): The company that manages a mutual fund is called an AMC. These regulations have since been replaced by the SEBI (Mutual Funds) Regulations. An AMC may have several mutual fund schemes with similar or varied investment objectives. In addition.The SEBI (Mutual Funds) Regulations 1993 define a mutual fund (MF) as a fund established in the form of a trust by a sponsor to raise monies by the Trustees through the sale of units to the public under one or more schemes for investing in securities in accordance with these regulations. the corpus is placed in a legal vehicle. The structure indicated by the new regulations is indicated as under. To segregate the collected funds from this entity's own funds. THE SPONSOR: The Sponsor is the creator of the fund. THE BOARD OF TRUSTEES: The mutual fund needs to be constituted in the form of a trust and the instrument of the trust should be in the form of a deed registered under the provisions of the Indian Registration Act. The supervisory role is fulfilled by the Board of Trustees of the Investment Company. All Asset Management Companies (AMCs) are regulated by SEBI and/or the RBI (in case the AMC is promoted by a bank). 1908. it is an organized form of a "money portfolio manager". what is more . apart from limited major decisions. For all practical purposes. Irrespective of the nature of the structure. It is the job of the MF trustees to see that schemes floated and managed by the AMC appointed by the trustees are in accordance with the trust deed and SEBI guidelines. every mutual fund has a board of directors that represents the unit holders' interests in the mutual fund. It is the character of this legal vehicle that determines the character of the Fund itself. which is formed for managing the assets of the Trust. establishes the mutual fund and gets it registered with SEBI and will typically hold a number of voting shares (perhaps 100) in the fund. The board of trustees manages the MF and the sponsor executes the trust deeds in favour of the trustees. The AMC hires a professional money manager. raises money from the public under the schemes and manages the money on behalf of its owners. typically in the form of nonvoting "preferred redeemable shares" The voting shares generally control management of the fund.

Sometimes the administrator's fees are included within the management fee. • Advertisement in respect of schemes should be in conformity with the SEBI prescribed advertisement code. the administrator's fees could be as little as a few thousand dollars a year or as much as 0. the safe custody of assets of the Trust is entrusted to one or more custodians. Apart from these four there is registrar or a transfer agent who acts as a key party THE ADMINISTRATOR: Administrator acts as registrar and transfer agent. • The listing of close ended schemes is mandatory and every close ended scheme should be listed on a recognized stock exchange with in six months from the . The assets of the Trust comprise of properties of the schemes. Where a broker acts as de facto custodian. THE CUSTODIAN: Custodian holds the fund's cash and investment assets. to the investment manager. Commonly. parts of the fund's assets are held by one or more brokers who execute trades on behalf of the fund Custodial Fees can also be a fixed fee or a percentage of NAV. • The offer document shall contain adequate disclosure to enables the investor to make informed decision. the administrator subcontracts a part of the work.they may be open or closed ended or may have a particular investment focus or portfolio composition. which are floated by the asset management company with the approval of the Trustees Schemes may have different characteristics . REGULATIONS OF MUTUAL FUNDS IN INDIA In India SEBI and RBI act as regulators of mutual fund. particularly the NAV certification. it usually charges on a transactional basis. Finally. there is a need for supervision of the activities of the AMC or fund manager by a separate body. In certain situations.65 % of the NAV per annum. ? SEBI (Mutual Fund) REGULATIONS.5 to 0.1996 The provisions of this regulations pertaining to AMC are: • All the schemes to be launched by the AMC need to be approved by the trustees and copies of offer document of such schemes are to be filed with SEBI. and calculates the NAV. and discloses the method and periodicity of the valuation of investment sales and repurchase in addition to the investment objectives. Depending on the complexity of the fund. keeps the books and records of the fund.fundamental is that in view of the fiduciary role of the AMC or the fund manager towards the public.

• Units of a close ended scheme may be rolled over by passing resolution by a majority of the shareholders. • The AMC must refund the application money if minimum subscription is not received and also the excess over subscription with in the six weeks of closure of subscription. • Units of a close ended scheme can be opened for sale or redemption at a predetermined fixed interval if the minimum and maximum amount of sale. • The AMC must specify in the offer document about the minimum subscription and the extent of over subscription. all applicants applying up to 500 units must be given full allotment subjected to over subscription. and physically handicapped. which is intended to be retained.closure of subscription. there should be a statement indicating the name of the person. However. If the scheme discloses detail of repurchase in the offer document: if the schemes opens for repurchase with in six months of closure of subscription. or if 75% of the unit holders of a scheme pass a resolution of winding up of the scheme : if the trustee on happening of any event. • A close ended scheme shall be wound up on redemption date. • Units of a close ended scheme can also be converted into an open ended scheme with the consent of majority of the unit holder and disclosure is made in the offer document about the option and period of conversion. In such cases. and periodicity is disclosed in the offer document. redemption. ? Investment objectives and valuation policies :- . listing is not mandatory in case the scheme provides for monthly income or caters to the special classes of persons like senior citizen. children. so directed in the interest of investors. • Guaranteed returns can be provided in a scheme if such returns are fully guaranteed by the AMC or sponsor. In the case of over subscription. requires the scheme to be wound up: or if SEBI. women. and the manner in which the guarantee is to be made must be stated in the offer document. unless it is rolled over. • No scheme other than unit linked schemes can be opened for more than 45 days.

the mutual fund trustees or asset management company. ? Procedure in case of default On and from the date of suspension of the certificate or the approval as the may be. Every mutual fund or the asset management company shall prepare in respect of scheme and the fund as specific in eleventh schedule. ? General obligation • Every asset management company for each scheme shall keep and maintain proper books of account. records and document. investments in derivatives and in ADRs and GDR’s. trustee. record. ? Mutual funds are also require to:- . • Every mutual fund shall have the annual statement of account audited by an auditor who is nor in any way associated with the auditor of the asset management company. for each scheme so as to explain its transaction and to disclose at any point of time the financial position of each scheme and in particular give true and fair view of state of affairs of the fund and intimate to board the place where such books of account. trustee or asset management company .The price at which the units may be subscribed or sold and the price at which such units may at any time repurchase by mutual fund shall be made available to the investor. relating to its activities as mutual fund. • To enable the investor to make informed investment decision. or securities that may be in its custody or control. and document are maintained. • The financial year for all the schemes shall end as on march 31 of each year. documents. mutual funds have been directed to fully revise and update offer document and memorandum at least once in two years. and shall be subjected to the directions of the board with regard to any records. shall cease to carry on any activity as a mutual fund. during the period of suspension. ? SEBI Guidelines (2001-02) Relating to Mutual Fund:- • A common format is prescribed for all mutual fund schemes to disclosed their entire portfolio of half yearly basis so that the investors can get meaningful information on the deployment of funds. or asset management company. Mutual funds are also required to disclose the investment in various types of instruments and percentage of in each script to the total NAV illiquid and non performing assets.

• All the schemes by mutual fund shall be launched with in six months from the date of the letter containing observation from SEBI on the scheme offer document. payment made to associate companies for their services. • The format for unaudited half yearly result for the mutual funds has been revised by SEBI. performance in terms of dividend and rise/fall in NAV during the half year period annualized yield over the last 1. Otherwise. vi. reserves. but it has been clarified that all the mutual funds. being primarily capital market players come under the regulatory framework of SEBI. These results shall also be put in their websites by mutual fond. which are over 25% of the NAV. payment made to associate companies. Thus. Dispatch statement of account once the minimum subscription amount specified in offer document is received even before the closure of the issue. vii. investment made in associate companies. Declare their NAVs and sale/repurchase prices of all schemes updated on regular basis on the AMFI website by 8. Bring uniformity in disclosure of various categories of advertisements. Invest in mortgaged backed securities of investment grade given by credit rating agency. ? RBI as supervisor of bank owned Mutual Funds The first non-UTI mutual funds were started by public sector banks. Identify and make a provision for non performing asset (NPAs) according to criteria for classification of n NPAs and treatment of income accrued on NPAs to disclose NPAs in half yearly portfolio reports. Reduce initial offer period from a maximum of 45 days to 30 days. since their operation. percentage of recurring expenses to net asset. Banks come under the regulatory jurisdiction of RBI. 5 years in addition to percentage of management fee. iii. v. These results are to be published before the expiry of one month from the close of each half-year as against two month period provided earlier. • Mutual funds are required to disclose large unit-holding in the scheme. the bank owned fund . with a view to ensuring consistency and comparability across schemes of various mutual funds. a fresh offer document along with filing fee shall be filled with SEBI. iv.00 PM and declare NAVs of their close ended schemes on every Wednesday. ii. Disclose information in a revised format on unit capital. and detail of large holding. So Bank owned mutual funds are regulated by RBI. 3.i.

e. It is the worth of an investment with an openend mutual fund quoted in terms of its net asset value. If the realizable worth of the portfolio is Rs 12 million.28 percent((12-10. a fund's historical NAV performance is not the best indicator of its future performance. Recently it has been decided that money market mutual funds of registered mutual fund will be regulated by SEBI through the same guidelines issued for other mutual funds.1995. And divide the result by the number of outstanding shares. 1996. i.5)/(10. While the NAV of a fixed-income fund is driven more by . But RBI on bank fund should not conflict with SEBI guidelines. then your pre-tax return is 14. divided it by shares outstanding. So money market mutual funds were regulated by RBI guidelines till 23.5)*100). SEBI (MF) regulations. RBI has placed certain restrictions through latest credit policy. with the intention of moving toward a pure inter bank money market. Subtract this amount for liabilities (including expenses and commissions). It is generally understood that all market related and investor related activities of the fund are to be supervised by SEBI. That is also the amount an investor can expect if he or she were to sell his or her units back to the issuer. it tells you the extent to which the securities that comprise the fund's portfolio have outperformed or under performed the index.continue to be under the joint supervision of both RBI and SEBI. risk-returned schemes.11. Having said this. An NAV signifies nothing more than the current worth of a portfolio. For equity funds. If a fund's NAV a year ago was Rs 10. Second. CALCULATION OF NAV Net asset value on a particular date reflects the realizable value of a mutual fund's portfolio in per share or per unit terms. However RBI does retain the right to decide whether mutual funds will be allowed to access inter-call money market. Accordingly. then the NAV is Rs 12 (12/1). the use of certain statistical measures can also tell you whether a fund was able to derive above-average. while any issue concerning the ownership of the AMC by bank fall under the regulatory ambit of RBI. Daily closing prices of all securities held by the fund are used as a starting point. let's say one million units. First. ? RBI as supervisor of money market mutual funds RBI is the only Government agency that is charged with the sole responsibility of overall entities that operates in money market.5 and is currently Rs 12. this NAV changes almost everyday with fluctuations in stock prices. The NAV of a fund only starts to make sense when compared to a benchmark index.

Closed-end fund are traded on the major exchanges. The mutual fund is ready to sell additional shares of the fund at the NAV (at par or adjusted for expenses). at the end of the day.changes in rate of interest. A close-ended scheme operates like any other public entity whose shares are traded on the stock market. if the fund is in demand. a rising NAV only means that assets. There are a fixed number of shares available because a closed-end fund raises its money all at once and does not buy back shares investors want to sell. but you may pay a premium. to buy or sell the shares of a close-ended scheme. Their prices change constantly throughout the trading day. Closed-end fund shares often trade at a discount. which form a part of the fund's portfolio. TYPES OF MUTUAL FUNDS Mutual fund schemes may be classified on the basis of its structure and its investment objective. you have to transact on the BSE or on the NSE. ON THE BASIS OF STRUCTURE. On the contrary. As more shares are sold. or more than the NAV. Sometimes open-end funds are closed to new investors when the funds become too large to be managed effectivelythough current shareholders can continue to invest money. or buy back (redeem) shares of the fund at the NAV (at par or adjusted for expenses). That's why the market price of its shares is also determined by > supply and demand for its shares (apart from quality and performance of its portfolio). When a fund is closed this way. DIFFERENCE BETWEEN THE TWO The difference between the two is in the way each operates after the initial public offering. the investment company offering the fund often creates a similar fund to capitalize on investor interest. Most mutual funds are open-end funds. open-ended funds continue to price. sell and repurchase shares after the initial offer on the basis of the NAV. which means the fund sells and redeems its shares. But a close-ended fund may or may not offer more shares after its . are rising and vice-versa. as stocks are. unlike open-end funds whose prices are set only once. That's why the unit capital of open-ended funds can fluctuate on daily basis. On its own. On the basis of structure mutual fund can be either open-ended or close-ended. Thus. or less than their net asset value. the fund grows.

Generally. (Investors with gross total income of up to Rs. The schemes or funds (often used synonymously) can be classified as: SCHEMES Equity Funds Debt Funds Balanced funds . the higher the potential return.5 Lacs to Rs. 10000 in equity linked savings schemes (ELSS) qualifies for the tax rebate of 20% or 15%. Before investing in any given fund. Most mutual funds fall into one of three main categories —equity funds (also called "stock" funds).1. Investors are permitted to enter and exit the open-ended mutual fund at any point of time at a price that is linked to the net asset value (NAV). ON THE BASIS OF INVESTMENT OBJECTIVE: When it comes to investing in mutual funds. the total size of the corpus is limited by the size of the initial offer. It may or may not also repurchase its shares. Each type has different features and different risks and rewards. The investment strategy for most of the funds is similar to investment strategy followed by the fund under diversified equity funds.5 Lacs can claim a rebate of 15%). 1. In case of closed-ended funds. OTHER SCHEMES: TAX SAVING SCHEME Equity Linked Savings Schemes (ELSS): Equity Linked Saving Schemes (ELSS) are open-ended funds investing predominantly in equity-oriented instruments. That is up to the issuing company to decide. the higher the risk of loss. debt funds (also called "bond" funds) and balanced funds (also called "hybrid" funds). 1961 investments up to Rs. and how much risk one can tolerate. decide whether the investment strategy and risks of the fund are a good fit for you. one can more easily narrow your choices. when you'll need the money. So we can say that in an open-ended mutual fund there are no limits on the total size of the corpus. investors have literally thousands of choices. Once you know what you're saving for. The funds launched under this plan are largely diversified equity funds.listing. Under Section 88 of the Income Tax Act. The first step to successful investing is figuring out financial goals and risk tolerance.50 Lacs can claim a rebate of 20% while investors with gross total income of Rs.

but the strategy is to buy into shares of only one industry.? EQUITY FUNDS: They are also known as growth funds. That's why they are also the riskiest. an ELSS offers no such assurance. They promise pure capital appreciation with equity shares. an investor in these schemes gets an income-tax rebate of 20 per cent (for a maximum of Rs 10. Some of the common equity funds are: ? Sector funds: The goal is once again pure capita! appreciation. Not all growth funds operate similarly. And not diversify like a growth fund. An index fund essentially buys into the stock market in a way determined by some market index (BSE Sensex or S&P CNX Nifty) and does almost no further trading. They also make quick profits by investing in small cap shares and by investing in initial public offerings of small companies. They do not involve stock picking by so called professional fund managers. However. Such funds forgo the principle of asset allocation for high returns.000) under Section 88 of the Income Tax Act. Also while other tax planning schemes guarantee returns. ? Tax planning funds: Also known as equity linked savings schemes. . growth strategy may differ from one fund to another. Index funds are optimally diversified portfolios and only carry along with it the due to economy-wide factors. since these so-called growth shares experience high price volatility. they operate like any other growth fund (and that's why are as risky). They focus on stocks that may not pay a regular dividend but have potential for large capital gains. The NAV of such a fund will tend to be erratic. That's also why these schemes also come with a threeyear lock-in period. They buy shares in companies with high potential for growth (some of which might not pay dividends). Essentially an incentive for the investor (who is otherwise investing in fixed-income instruments like the Public Provident Fund primarily for saving tax on his or her annual salary or business income) a chance to participate in capital appreciation that can be delivered by investing in equity shares. ? Index fund: Their goal is to match the performance of the markets. However.

These are also known as hybrid funds. which otherwise earns a lower return in a savings bank account. corporate debentures and other fixed income instruments. Wherever a debt instrument is not rated. their return is lower than an income fund. quarterly or semi annually) income by investing in bonds. The AMC in this case will also be guided by ratings given to the issuer of debt by credit rating agencies. specific approval of the board of the AMC is required. they are best used to park short-term money.? DEBT FUNDS: They aim to provide safety of principal and regular (monthly. for whom it is doing the favour of managing funds. Some of the common debt funds are: ? Money market funds: Also known as liquid plans. ? Gilt funds: They are aimed at generating returns commensurate with zero credit risk. TYPES OF LOADS The AMC that manages your mutual fund has to bear a number of expenses. ? BALANCED FUNDS: The idea is to get the best of both the world's equity shares and debt. investors reduce their market risk. Most of their investment is in fixed-income instruments with maturity period of less than a year.25 per cent for funds less than Rs 1 billion and one per cent for funds above Rs. Normally about 50 to 65 per cent of a portfolio's assets are invested in equity shares. Since they ensure zero risk. It is broken into two parts: annual management fee (up to 1. Since most of corporate debt is illiquid. Investing in equities is supposed to bring home capital appreciation. instant liquidity. ENTRY LOAD: . while that in fixed income is to impart stability and assure income for distribution. tax-free income. The proportion of the two asset classes depends on the fund managers' preference for risk against return. these funds are a play on volatility in interest rates. the fund tries to provide liquidity by investing in debt of varying maturity. Since they accept money even for a few days. But because the investments are highly diversified. which is by investing securities created and issued by the central and/or the state government securities and/or other instruments permitted by the Reserve Bank of India. 1 billion) and entry & exit loads. So it recovers part of these expenses from its investors.

This is levied to dissuade investors from exiting the fund.50. 9200. short-term investors are charged an exit load. especially with income or money market funds. comes from reinvesting dividends. exit load (if you withdraw within a specified period) is charged while redeeming your units. Assume that the current NAV of the fund is Rs. An exit load is levy that an investor pays at the point of exit.00 and that the exit load is Rs. That's why in such fixed income funds. . So to ensure that longer-term investors are not penalized. Now if you sell 800 units then you stand to receive 800X11. OOO/-. Then you will receive 10000/12. Assume that your proposed investment is Rs. or regular income by ticking on the income option. which is mainly to help the AMC recover expenses relating to sales literature. VARIOUS PLANS OF MUTUAL FUNDS That depends on the strategy of the concerned scheme. EXIT LOAD: On the other hand. 12.00 and that the entry load is Rs. The price at which an investor buys into the fund is a function of both the NAV and sales load.50 = 800 units. An entry load is also called the sales load.0. The entry load could be different for each scheme. advertising and agent/broker commissions. distribution. Also 'growth' in fixed income funds. It would also depend on the amount of investment and the time period of investment.Loads normally apply to only open-ended schemes. and they can choose either growth through reinvestment of dividends. it would also depend on the amount of investment and the time period of investment. where a quick withdrawal by too many investors can put pressure on the fund's asset maturity profile.0. ? A Reinvestment Plan is a plan where these dividends are reinvested in the scheme itself. 12. An entry load is an additional cost that an investor pays at the point of entry. The latter is for more logical reasons. 10.50.5 = Rs. The term 'growth' is often used in a very generic sense to denote every equity mutual fund. But generally there are 3 broad categories that any Mutual Fund scheme offers: ? A Dividend Plan entails a regular payment of dividend to the investors. ? A Growth Plan is one where no dividends are declared and the investor only gains through capital appreciation in the NAV of the fund. investors have an option. The exit load could be different for each scheme. Also assume that the current NAV of the fund is Rs.

HOW MUTUAL FUND WORKS For retail investor who does not have the time and expertise to analyze and invest in stocks and bonds. such as stocks and bonds. Today many funds are offering this facility. financial planners. new shares are issued as each new investment is made. The primary assets of a fund are the securities it invests in (other assets. risk taking capacity and tax status. or insurance agents. For example a retired government employee is most likely to opt for monthly income plan while a high-income youngster is most likely to opt for growth plan. uses investors' cash to purchase securities. This means that at lower prices you end up getting more units for the same investment. SYSTEMATIC INVESTMENT PLAN Besides these three plans there is one another plan whish is becoming popular that is systematic investment plan. are a relatively small part of the total . banks. It is interesting to note that funds do not issue a predetermined amount of stock. mutual funds offer a viable investment alternative. A systematic investment plan is one where an investor contributes a fixed amount every month and at the prevailing NAV the units are credited to his account. A systematic investment plan (SIP) offers 2 major benefits to an investor: ? It avoids lump sum investment at one point of time ? In a scenario of falling prices. financial responsibilities. An application form has to be filled up giving all the particulars along with the cheque or Demand Draft for the amount to be invested.HOW TO CHOOSE A PLAN It depends on investment object of the investor. One can invest by approaching a registered broker of Mutual funds or the respective offices of the Mutual funds in that particular town/city. All mutual funds will redeem (buy back) the shares on any business day and must send the payment within seven days. which again depends on his income. The fund. in turn. and thereby the assets of the fund. age. such as equipment. Investors thus become part owners of the fund itself. as do most corporations. One can purchase shares in some mutual funds by contacting the fund directly or other mutual fund shares are sold mainly through brokers. it reduces your overall cost of acquisition by a process of rupee-cost averaging. The mutual fund issues shares of stock and bonds (just like any other corporation) to investors in exchange for cash.

or loaded. This is called the net asset value. deducts liabilities. Following are the various descriptions needed for the working of mutual fund: How mutual funds work Buy shares Receive incc-me in a fund Invest. the accounting staff of a fund simply adds up the value of all the securities in the portfolio. higher offering price per share It is important to note that the underlying value of the fund's shares do not change. A no-load fund has no sales charge. thus coming up with a new. The value of the shares of an open-end mutual fund is readily determined Each day. not all funds have sales charges. The net asset value is listed in the financial section of many major newspapers. It is then a simple matter to divide the net assets by the number of shares outstanding.: in securities Keturns increase tund value STOCKS BONDS PRICING AND VALUATION DESCRIPTION. and further. As noted above.assets of a fund). adds in other assets. and comes up with a net overall value. that an investor selling shares will still receive only the net asset value A no-load fund is simpler.' LOAD AND NO-LOAD FUNDS DESCRIPTION A load. and is the price at which investors buy and sell shares from the fund. Those that do simply add them on to the net asset value of the fund. The net asset . fund is one that has a sales charge.

Listed below are some examples of major investment objective categories: > Preservation of Capital & Liquidity—Achieved by investing in very short-term bonds > > > Income—Achieved by investing in bonds Balanced—Achieved by investing in bonds and stocks Growth—Achieved by investing in stocks The prospectus: The Securities and Exchange Commission (SEC) requires all mutual funds to publish a plain English prospectus and issue a copy to all potential investors either before they buy or along with the confirmation of their initial investment. Therefore. In the case of a no-load fund. investors usually deal directly with the fund in question. A fund's NAV goes up or down daily as its holdings change in value. BUYING AND SELLING FUND SHARES DESCRIPTION. the fund will pay you the NAV minus any fee the fund assesses at the time of redemption. described in the prospectus. A fund seeking growth fund will utilize stocks. The objective of a fund is so fundamental that it generally determines the category into which a fund will be assigned. you pay the current NAV per share plus any fee the fund assesses at the time of purchase. such as a purchase sales load or other type of purchase fee. the broker usually takes care of the details for you. and a good deal about how it intends to achieve them. When you sell your shares. the two prices are always identical.value is used for both the purchase price and the selling price. When you buy shares. A balanced fund will generally hold stocks and bonds. A fund seeking income with little or no concern for growth will generally hold bonds. In the case of a load fund. FUND OBJECTIVES AND PROSPECTUS DESCRIPTION A fund's objective. gives broad indications of the types of investments a fund may make. such as a deferred (or back-end) sales load or redemption fee. The fund's objective tells investors the goals the fund seeks to achieve. . The most important aspect of a fund is its investment objective.

The higher NAV reflects the higher value of your investment. most funds distribute these capital gains DISTRIBUTIONS (minus any capital losses) to investors. then the value (NAV) of the fund and its shares increases. Increased NAV — If the market value of a fund's portfolio increases after deduction of expenses and liabilities. A fund may sell investments for a number of reasons: . Capital Gains Distributions — They are paid from any profits the fund realizes from selling investments. With respect to dividend payments and capital gains distributions. Dividend Payments — A fund may earn income in the form of dividends and interest on the securities in its portfolio. At the end of the year.The prospectus must explain the programs and policies the management follows to achieve the fund's investment goals. or the dividends or distributions reinvested in the fund to buy more shares (often without paying an additional sales load. the fund has a capital gain. funds usually will give a choice: the fund can send a check or other form of payment. When a fund sells a security that has increased in price. increase. The prospectus includes: ? ? ? ? ? ? ? Statement of objective Investor programs Fund fees and expenses Fund performance history Results of investment How to purchase and redeem shares Shareholder services HOW MUTUAL FUNDS CAN EARN MONEY A mutual fund can earn money in three different ways. The price of the securities a fund owns may . The fund then pays its shareholders nearly all of the income (minus disclosed expenses) it has earned in the form of dividends.

» PAST PERFORMANCE: It measures the fund's historical returns. . » RISK: It measures how likely you are to earn money or lose it. Risk isn't bad if you're investing for the long term and you can tolerate some setbacks without selling in a panic if the fund drops in value. A very important risk involved in mutual fund investments is the market risk. whether the returns are consistent. investing in mutual funds contains the same risk as investing in the markets. the only difference being that due to professional management of funds the controllable risks are substantially reduced.> > > > > fund To capitalize on an investment's increased value To achieve performance targets To free up money to make new investments To prevent additional losses in a security that is losing value To have enough cash to redeem shares its investors want to sell back to the INFORMATION NEEDS TO EVALUATE MUTUAL FUNDS There are three key pieces of information that help to evaluate a mutual fund. » COST: It measures how much you pay in sales charges or commissions. and how they stack up against the returns of comparable funds. you may want a fund that poses less risk to principal. When the market is in doldrums. But one should also consider the effect that fees and taxes will have on the returns over time. But if you're investing to meet short-term goals or preserve capital. you may want to compare the expense ratios and sales charges of various funds as part of your evaluation process. FACTORS TO CONSIDER Thinking about long-term investment strategies and tolerance for risk can help to decide what type of fund is best suited. While there's no guarantee that a fund's future performance will equal its current or past record. and annual asset-based expenses. fees. Higher fees may correlate with higher risk if the fund manager takes added risk to help reduce the impact of fees on return. Since these costs directly affect your return. most of the equity funds will also experience a downturn. DEGREES OF RISK Mutual fund investments are not totally risk free. In fact.

Before investing. you may also have to pay taxes each year on the fund's capital gains. With mutual funds you can control risk by choosing a fund that given your risk profile. TAX CONSEQUENCES When an individual stock or bond is bought and hold. By creating a portfolio of a variety of assets. this risk is substantially reduced. They offer quick liquidity Most private mutual funds can be redeemed in three to four working days. often not so visible and hence not accounted by many investors. Mutual funds are different. in addition to owing taxes on any personal capital gains when you sell your shares. Also when defined in terms of losing money. you believe is the best. One can lose some or all of the money invests principal -because the securities held by a fund go up and down in value. picking stocks individually that will both meet your objectives and match your profile can be tough. they are relatively safer and offer a more convenient way on investing. or an equity share after the end of its settlement period (or depending up on your broker). Financial theory-states that an investor can reduce his total risk by holding a portfolio of assets instead of only one asset. they do not come without risk. This too cuts the overall risk associated with investing. This is because by holding all your money in just one asset. the company specific risks are largely eliminated due to professional fund management All funds carry some level of risk. They also come without systemic risks (like bad deliveries). Dividend or interest payments may also fluctuate as market conditions change. When you buy and hold mutual fund shares. the risk in mutual funds is not dramatically different than that present in other financial instruments. be sure to read a fund's prospectus and shareholder reports to learn about its investment strategy and the potential risks. Funds with higher rates of return may take risks that are beyond your comfort level and are inconsistent with your financial goals. Still. On the other hand. the entire fortunes of your portfolio depend on this one asset..However. A mutual fund portfolio is also easier to monitor than individual shares. And. unlike a fixed deposit that is more likely to be received a month after its maturity. you will owe income tax on any ordinary dividends in the year you receive or reinvest them. HOW SAFE ARE MUTUAL FUNDS: As financial intermediaries. That's because . income tax has to be paid each year on the dividends or interest received.

short-term abnormal profits will not be sustainable in the long run. But in general." Spreading your investments across a . be sure to take taxes into account. SEC rules require mutual funds to disclose in their prospectuses after-tax returns. Whether any particular feature is an advantage for you will depend on your unique circumstances. select. mutual funds are not allowed to assure returns.the law requires mutual funds to distribute capital gains to shareholders if they sell securities for a profit that can't be offset by a loss Tax Exempt Funds If you invest in a tax-exempt fund . and monitor the performance of the securities the fund purchases. mutual funds cannot assure fixed returns to their investors. Investors need to be clear that mutual funds are essentially medium to long-term investments Hence..some or all of your dividends will be exempt from federal (and sometimes state and local) income tax. But in the medium to long run the mutual funds tend to outperform most other avenues of investments at the same time avoiding the risk of direct investment accompanied with professional fund management. Diversification . However. For some investors. In calculating after-tax returns.Diversification is an investing strategy that can be neatly summed up as "Don't put all your eggs in one basket. mutual funds provide an attractive investment choice because they generally offer the following advantages: Professional Management — Professional money managers research. funds floated by AMCs of public sector banks and financial institutions were permitted to assure returns to the unit holders provided the parent sponsor was willing to give an explicit guarantee to honor such a commitment. RETURNS As per SEBI Regulations. mutual funds must use standardized formulas similar to the ones used to calculate before-tax average annual total returns.such as a municipal bond fund .. But it's important to remember that features that matter to one investor may not be important to you.. When comparing funds. But if you receive a capital gains distribution. ADVANTAGES AND DISADVANTAGES Every investment has advantages and disadvantages. you will likely owe taxes — even if the fund has had a negative return from the point during the year when you purchased your shares.

such as: ? Costs Despite Negative Returns -. Some investors may find this cumbersome.Investors must pay sales charges. 1999 are popular benefits that investors in mutual funds can avail of. The operations of Mutual Funds are regularly monitored by SEBI. investors may also have to pay taxes on any capital gains distribution they receive even if the fund went on to perform poorly after they bought shares. and other expenses regardless of how the fund performs.Filling a mutual fund application or a redemption form is all that it takes while entering or exiting a mutual fund. subsequent monthly purchases or both. you need to have an account with a stockbroker (for buying & selling) and another with a depository participant. Affordability .Some mutual funds accommodate investors who don't have a lot of money to invest by setting relatively low amounts for initial purchases. But with equity shares. the proportion invested in each class of assets and the fund manager's investment strategy and outlook. And. depending on the timing of their investment. . But mutual funds also have features that some investors might view as Disadvantages. Some investors find it easier to achieve diversification through ownership of mutual funds rather than through ownership of individual stocks or bonds. ability to reinvest your proceeds from capital gains into mutual funds under section 54EA & 54EB and taxfree status for equity oriented funds for three years starting from April 1. Tax benefits— Section 88 for Equity Linked Saving Schemes.wide range of companies and industry sectors can help lower your risk if a company or sector fails. Easy entry and exit -.. annual fees. Liquidity & flexibility— Mutual fund investors can readily redeem their shares at the current NAV plus any fees and charges assessed on redemption at any time Through features such as regular investment plans. you can systematically invest or withdraw funds according to your needs and convenience. Transparency—One get regular information on the value of the investment in addition to disclosure on the specific investments made by ones scheme. regular withdrawal plans and dividend reinvestment plans. Well Regulated—All Mutual Funds are registered with SEBI and they function within the provisions of strict regulations designed to protect the interests of investors.

Investors typically cannot ascertain the exact make-up of a fund's portfolio at any given time. You can also monitor how a stock's price changes from hour to hour — or even second to second. you can obtain real-time (or close to real ¬time) pricing information with relative ease by checking financial websites or by calling your broker. the price at which you purchase or redeem shares will typically depend on the fund's NAV. which the fund might not calculate until many hours after you've placed your order..With an individual stock. . nor can they directly influence which securities the fund manager buys and sells or the timing of those trades. ? Price Uncertainty . In general.? Lack of Control . mutual funds must calculate their NAV at least once every business day. By contrast. with a mutual fund..


3. To work out potential market for mutual funds. To check awareness level of people about mutual funds. . To access the satisfaction level of mutual funds investors and to find out the reasons for dissatisfaction. To check factors considered by investors while investing in mutual funds. 4. To work out the potential market for Mahindra & Mahindra Finsmart. 6.OBJECTIVES OF STUDY Following are the objectives of the study: 1 2 To know about investors' investment preferences. 5.



" Research is." D. concepts or symbols for the purpose of generalizing to extend. correct or verify knowledge." The first step done was to define the project under study and decided the research objective. thus. " a problem well defined is half solved. analysis and reporting of data and finding relevant solution to a specific marketing situation or problem.Consumer awareness about Mutual Funds The objective of my research was to know the customer awareness about the working of Mutual funds provided by Mahindra & Mahindra and to work out the potential market for Mahindra & Mahindra. collection. The method adopted by me for carrying out study was as followed: . B Developing the research plan: The second stage of my study consisted of developing the most efficient plan for gathering the relevant data. The purpose of Research is to discover answers to he questions through the application of scientific procedures. Defining the problems and research objectives: It is said. Slesinger and M. Such framework is called ^'Research Design". an original contribution to the existing stock of knowledge making for its advancement. Stephonson in the encyclopedia of Social Sciences define research as "the manipulation of things.RESEARCH METHODOLOGY Research Methodology . My project had a specific framework for collecting data in an effective manner. whether that knowledge aids in construction of theory or in the practice of an art. The Research Methodology includes the various methods and techniques for conducting a research Marketing Research is the systemic a way to systematically solve the research problem. The project undertaken by me was. I follow the research process consisted of following steps: A.

Mahindra & Mahindra monthly magazine etc. Interpretations: After analysis Interpretations were done i. The unwieldy data was condensed into few manageable groups and tables for further analysis.e. Newspapers. The analysis of data required a number of closely related operations such as establishment of categories. Journals. which are collected afresh and for the first time. Pie charts and Graphs and Bar Diagrams.The population that was targeted consists of businessmen. Thus it helped to classify the raw data into some purposeful and usable categories. After tabulation the analysis work of my project was based on the computation of various statistical formulae. E. which include both open-ended and close-ended questions. to explain the findings on the basis of analysis Tabulation of data was done wherein classified data were to put in the form of tables. and thus happen to be original in character.Primary data are those. Analysis of Data: After collecting the data the analysis of data had been through various statistical tools and techniques.Percentages. LIMITATIONS Besides following scientific methodologies the study has come across some limitations. These are: . ? ? Sample size. Data Collection: Information was collected from both Primary and Secondary data ? Primary sources. Books.The sample size for my study was -100. ? Secondary sources. tabulation and then drawing the statistical inferences. housewives etc.? Sampling Plan: Sampling can be defined as the section of some part of an aggregate or totality on the basis of which the judgment or an inference about aggregate or totality is made The sampling plan helps in decision making in the following areas: ? Sampling units. students.Random sampling method was used. Sampling procedure. C.Secondary data are those which have already been collected by someone else and which already had been passed through the statistical processes. I had collected secondary data through Magazines. Websites. Values. service class. the application of these categories to raw data through coding. 1 had collected Primary data by conducting surveys through Questionnaire. D.

3. The possibility of respondents being biased cannot be ruled out.1. 4. Some people were reluctant to fill the questionnaire. They were not willing to disclose their investment plans. . The sample size is small as compared to the population. Due to limited time countrywide survey was not possible. so it may not he the true representative. Hence only Jalandhar city has been taken for the study. 2.


8% are unaware about it.4.2% 39. Do you know about various financial institutions? The objective of this question is to know how many people are familier with them Responses Yes No 60.Q1.1 Percentage of Respondents Interpretation: From the above data we can conclude that 60. 4.1 Percentage of Familier people Chart No.2% people are aware of different financial institutions while 39. .8% % Age of Respondents Table No.

000% whereas 27. Q.2 Monthly income invested Interpretation: From the above data we can conclude that 42.Q. 000. Various Instruments Savings RDs 6.33% Table No. 000. The objective of this question is to know that how much of the monthly income people invest.67% 5. 000 42.000 30% 27.000 More than 10.2 Monthly income invested.07% % Age of Responses .5.000 .2 Monthly income invested Chart No.000-10. 30% of people invest Rs.5.33% of people invest their monthly income more than 10.5.10. The objective of this question is to find out where people generally like to invest or save.67% of people invest their monthly income less than Rs. 4. 4.3 Various options for investment and savings.76% 42. Responses % Age of Respondents Less than Rs.

76% Table No.59% in RBI Bonds.53% Shares Mutual Funds Post Office 21.4 Awareness about Mutual Funds . 3.4 Awareness about Mutual Fund as a source of investment. 4.7% in shares.FDs RBI 20.76% in RDs. Q. 0.59% 4. The objective of this question is to know whether people are aware about that Mutual Fund is also an alternate source of investing their money.7% 3. 4. 4. Response Yes No 37% 63% % Age of Respondents Table No.3 Options for investing or savins Interpretation: From the data we can conclude that 42.59% in FDs.3 Options for investing or saving Chart No.53% in Mutual Funds and 21.76% in Post Office Deposits.05% people like to invest in savings account. 6. 20. 4.59% 0.

Percentage of investors in Mutual Funds. Q5.5Percentage of investors in Mutual Funds .5 Percentage of investors in Mutual Funds Chart No. 4.14% 67.4 Awareness about Mutual Funds Interpretation: From the above data we can conclude that only 37 % people are aware about this fact while remaining 63% people are unaware of this.4.CHART NO.86% Table No. Response Yes No % Age of Respondents 32. 4.

6 Percentage of investors in different types Interpretation: From the above data we can conclude that 87% of people invest in open-ended mutual funds whereas only 13 % of people invest in close-ended mutual funds. The objective of this question is to find out the various factors that persuade the people to invest in Mutual Funds. 4.Interpretation: From the above data we can conclude that only 32.6Percentage of investors in different types Chart No. Q. . Responses % Age of Responses Open ended 87% Close ended 13% Table No.6 Preferable type of mutual fund for investment. 4. Q.14% people have invested their money in Mutual Funds. The objective of this question is to find out the type of Mutual Fund in which the people generally invest.7 a) Various factors persuade to invest in Mutual Funds.

7a) Various factors persuading to invest Chart No. The objective of this question is to know why people are not satisfied with their Mutual Fund investment.7a) Various factors persuading to invest Interpretation: From the above data we can conclude that 32% of people are influenced by liquidity and flexibility factor.Factors % Age of Respondents 32% Liquidity and Flexibility Tax benefits 40% Less investment risks Safety 12% Fixed & Regular income 8% 8% Table No. 40% by tax benefits. 4.7b Reasons of dissatisfaction. 8% by less investment risk and fixed and regular income both and 12% by safety factor. Q. 4. Factors % Age of Respondents 13% Irregular income .

4.Other alternatives 19% Poor service 6% Risks 49% Any other reason 13% Table No. 6% because of poor service and 13% because of irregular income and other reasons. The objective of this question is to know whether people are aware that Mahindra & Mahindra acts as an advisory agent not only for one particular mutual funds but also for other Mutual funds of various banks and institutions. Responses Yes No % Age of Respondents 26.34% . Q.7b) Reasons of dissatisfaction Chart No.7b) Reasons of dissatisfaction Interpretation: From the above data we can conclude that 49% of people are not satisfied with their investment in Mutual Funds because of risk involved. 19% because of other alternatives available. 4.66% 73.8 Awareness regarding advisory services of Mahindra & Mahindra.

4.9% 71.8 Awareness regarding advisory services of bank Interpretation: From the above data we can conclude that only 26. Chart No.Table No. 4.1% % Age of Respondents Table No. 4. Q9 Interest of people about their investments taken cared by Mahindra & Mahindra.9 Investments taken cared bv Mahindra & Mahindra .34% are unaware about this. The objective of this question is to know whether people are interested that Mahindra & Mahindra should take of their investments. Responses Yes No 28.8 Awareness regarding advisory services of Mahindra & Mahindra.66% people are aware of this fact of Mahindra & Mahindra while 73.

4.9% people are interested that Mahindra & Mahindra should take care of their investments while 71. Responses Very risky Risky 12 Neutral Low risk % Age of Respondents 65.10 Fear of risk .33 3.9 Investments taken cared by bank Interpretation: From the above data we can conclude that only 28.6 Table No.1% people not show any interest.10 Fear of risk involved in Mutual Funds The objective of this question is to know how risky they find Mutual Funds are.Yes No Chart No. Q. 4.3 2.6 No response 16.

6% gave no response.3% % Age of Respondents 80.11 Awareness regarding tax schemes Interpretation: From the above data we can conclude that only 19. 3.11 Awareness regarding tax schemes YES NO Chart No. Q 11.Chart No. The objective of this question is to know the awareness level of people regarding the tax exemptions while investing. 12% find it risky.3% people are aware of the rebates in Mutual funds while 80. . 4. Awareness regarding various tax schemes.67% people do not have any knowledge.6% find low risk while 16. only'2. 4.10 Fear of risk Interpretation: From the above data we can conclude that 65.67% Table No. Responses Yes No 19. 4.33% find it neutral.33% people find Mutual funds very risky.

12 Income generation by Mutual funds . Responses Yes No 26% 74% % Age of Respondents Table No.Q.12 Income generated by investing in Mutual funds. The objective of this question is to know the awareness level of people regarding income generated by investing in various mutual funds. 4.

12Income generation bv Mutual funds Interpretation: From the above data we can conclude that 26% people know that they can earn regular income while investing in Mutual funds.13 Satisfaction level of people. 4.Chart No. The objective of this question is to find the satisfaction level of the people for the services provided by Mahindra & Mahindra Responses % Age of Respondents . Q.

21% find it good whereas 5% people are also their who are not satisfied with the services of Mahindra & Mahindra CONCLUSION From this study it is observed that few people like to invest in the Mutual Funds because of ignorance.33% of the people are aware of the fact that Mutual . 4.13 Satisfaction level regarding services of Mahindra & Mahindra Chart No. 50% analyzed find the services of the Mahindra & Mahindra very good.13 Satisfaction level regarding services of Mahindra & Mahindra Interpretation: from the above data we can conclude that half of the people i. About half of the people invest more than 10% of their income in various investments avenues. 24% find it excellent. lack of knowledge or due to loss in faith. Table No. 4.Excellent Very good Good 21 Fair 5 24 50 . Saving accounts and fixed deposits are the most preferred investment avenues followed by the Post Office Savings Only 37.e.

The tax benefits and liquidity and flexibility factors involved persuade most of the people to invest in Mutual funds along with the factors like fixed and regular income. Templeton Birla etc. About 27 % people know about this that Mahindra & Mahindra acts as an advisory agent not only in Single Mutual Fund but also in other mutual funds offered by Standard Chartered. From this survey it is clear that besides providing various facilities by Mahindra & Mahindra and other private Brokers most of the people still have their faith in government banks. However most of the people are satisfied with the working of the Mutual Funds. About 65% of the people considered that to invest in Mutual Funds is a very risky task. 88 and only 26% of the people have the knowledge that they can earn regular income by investing in Mutual funds. SUGGESTIONS . Most of the people like to invest in the open-ended type of Mutual Funds. Kotak Mahindra. Only 28% of the people know that they can avail rebate under sec.14 % of people have actually invested in Mutual Funds.Fund is also a source of investing their money and only 32. Prudential 1C 1C I.

? The customer should be fully satisfied and delighted so that they go a long way with Mahindra & Mahindra . This would keep it know its customer better and it will get more information about the competitors and the forces affecting the market.After the analysis of the consumer awareness level of the Mahindra & Mahindra about mutual funds along with other products and services following suggestions can be given: ? The Mahindra & Mahindra should try to improve its market intelligence system. ? The Mahindra & Mahindra should increase its number of branches not only in urban areas but also in rural and semi-urban areas for the ease of the public. ? The Mahindra & Mahindra should increase its advertising budget to get the benefits of good advertising so that consumers should aware of their existing products and services as well as new one.



K Bansal. 2003 Huji Mehndi Raja. 2003 WEBSITES: . 2000 L. the ICFAI Journal of Applied Finance Dian Vujovich & Michael Lippu. amfiindia. "Mutual Fund Offer Wide Net for Investors".com www. Safar.BIBLIOGRAPHY Bana Verma. -McGraw Hill Gordon & Natrajan. Himalaya Publishing House. " Mutual Fund Performance: Indian Studies". "Straight Talk about Mutual Fund". "Financial Markets and Services".Mahindra &Mahindra. Unistar Books. " Merchant Banking and Financial Services".



000-10.Have you ever invested your money in Mutual Funds? a) Yes b) No Q.5. Jalandhar conducting a survey on the 'Consumer Perception about Mutual Funds' Kindly cooperate in filling this questionnaire. of the Apeejay Institute of Management. ……………………………………. Q.4 Do you know Mutual fund is also a source of investing your money? a)Yes b) No Q5.3 In what type of instrument you generally invest or save your money a) b) c) d) Savings e) Shares Recurring deposits f) Mutual Funds Fixed deposits RBI Bonds g) Post Office Deposits h) Other (please specify)…….6 In what type of Mutual Fund you have invested? a) Open ended b) Close ended .000 b) 5. 10..000 Q.. Your information will be kept confidential Q 1 Do you familier with Mahindra & Mahindra? a) Yes b) No Q 2 How much of your monthly income do you invest? a) Less than Rs.000 c) More than Rs.QUESTIONNAIRE I am the student of MBA.

Q. then please state the reason why? a) b) c) d) e) Low income Other alternatives Poor service Risks Other (please specify) Q.9 Would you like that Mahindra & Mahindra should take of your investments9 a) Yes b) No Q. then what factors persuade you to invest in mutual funds? a) b) c) Liquidity and flexibility . safety and liquidity9 a) Yes b)No Q . I I d) Safety e) More tax benefits Fixed and regular income G Less investment risks f) Any Other (specify) .7 (b) If no. 10 What do you think about 'fear of risk' in Mutual Fund a)Very Risky b) Risky c) Neutral d)Low e) Very low .8 Are you aware that the advices made by Mahindra & Mahindra in Mutual Funds are made after understanding the customer appetite of risk.7 (a) Are you satisfied with your Mutual Fund investment? If yes . return. Q..

88 up to Rs 10. AGE……………………………………… SEX………………………………………. …………………………………. 12 Do you know that you can earn regular income in the form of Dividends. Dividend Reinvestment Option by investing in various Mutual Funds schemes? a) Yes D b) No D Q. 13 How do you find the services provided by the Mahindra & Mahindra? a) Excellent b) Very Good c) Good d) Fair e) Poor PERSONAL INFORMATION NAME……………………………………. OCCUPATION…………………………… TEL. 11 Are you aware of the fact that you can avail rebate under sec. NO. .Q. MIP. 000 by investing in Mutual Funds under ELSS scheme9 a) Yes D b) No D Q.. E-MAIL ID ……………………………….

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