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0 INTRODUCTION TO THE TOPIC

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MUTUAL FUND INTRODUCTION

A mutual fund is a form of collective investment that pools money from many investors and invests their money in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager trades the fund's underlying securities, realizing capital gains or losses, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value per share (NAV), is calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. Legally known as an "open-end company" under the Investment Company Act of 1940 (the primary regulatory statute governing investment companies), a mutual fund is one of three basic types of investment companies available in the United States. Outside of the United States (with the exception of Canada, which follows the U.S. model), mutual fund is a generic term for various types of collective investment vehicle. In the United Kingdom and Western Europe (including offshore jurisdictions), other forms of collective investment vehicle are prevalent, including unit trusts, open-ended investment companies (OEICs), SICAVs and unitized insurance funds. In Australia the term "mutual fund" is generally not used; the name "managed fund" is used instead. However, "managed fund" is somewhat generic as the definition of a managed fund in Australia is any vehicle in which investors' money is managed by a third party (NB: usually an investment professional or organization). Most managed funds are open-ended (i.e., there is no established maximum number of shares that can be issued); however, this need not be the case. Additionally the Australian government introduced a compulsory superannuation/pension scheme which, although strictly speaking a managed fund, is rarely identified by this term and is instead called a "superannuation fund"

because of its special tax concessions and restrictions on when money invested in it can be accessed.

HISTORY
Massachusetts Investors Trust was founded on March 21, 1924, and, after one year, had 200 shareholders and $392,000 in assets. The entire industry, which included a few closed-end funds, represented less than $10 million in 1924. The stock market crash of 1929 slowed the growth of mutual funds. In response to the stock market crash, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the Securities and Exchange Commission (SEC) and provide prospective investors with a prospectus that contains required disclosures about the fund, the securities themselves, and fund manager. The SEC helped draft the Investment Company Act of 1940, which sets forth the guidelines with which all SECregistered funds today must comply. With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s, there were approximately 270 funds with $48 billion in assets. The first retail index fund, the First Index Investment Trust, was formed in 1976 and headed by John Boggle, who conceptualized many of the key tenets of the industry in his 1951 senior thesis at Princeton University. It is now called the Vanguard 500 Index Fund and is one of the largest mutual funds ever with in excess of $100 billion in assets. One of the largest contributors of mutual fund growth was individual retirement account (IRA) provisions added to the Internal Revenue Code in 1975, allowing individuals (including those already in corporate pension plans) to contribute $2,000 a year. Mutual funds are now popular in employer-sponsored defined contribution retirement plans (401(k) s), IRAs and Roth IRAs.

As of April 2006, there are 8,606 mutual funds that belong to the Investment Company Institute (ICI), the national association of investment companies in the United States, with combined assets of $9.207 trillion.

MUTUAL FUNDS IN INDIA

Mutual Fund is an instrument of investing money. Nowadays, bank rates have fallen down and are generally below the inflation rate. Therefore, keeping large amounts of money in bank is not a wise option, as in real terms the value of money decreases over a period of time. One of the options is to invest the money in stock market. But a common investor is not informed and competent enough to understand the intricacies of stock market. This is where mutual funds come to the rescue. A mutual fund is a group of investors operating through a fund manager to purchase a diverse portfolio of stocks or bonds. Mutual funds are highly cost efficient and very easy to invest in. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading costs than if they tried to do it on their own. Also, one doesn't have to figure out which stocks or bonds to buy. But the biggest advantage of mutual funds is diversification. Diversification means spreading out money across many different types of investments. When one investment is down another might be up. Diversification of investment holdings reduces the risk tremendously.

MUTUAL FUNDS INDUSTRY IN INDIA

The origin of mutual fund industry in India is with the introduction of the concept of mutual fund by UTI in the year 1963. Though the growth was slow, but it accelerated from the year 1987 when non-UTI players entered the industry. In the past decade, Indian mutual fund industry had seen a dramatic improvements, both quality wise as well as quantity wise. Before, the monopoly of the market had seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993 and till April 2004, it reached the height of 1,540 bn. 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 banking industry. The main reason of its poor growth is that the mutual fund industry in India is new in the country. Large sections of Indian investors are yet to be intellectuated with the concept. Hence, it is the prime responsibility ofall mutual fund companies, to market 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.

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 5

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)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Can bank 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 in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets under management.

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 UTI 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. The 1993 SEBI (Mutual Fund) Regulations were substituted by a more comprehensive and revised Mutual Fund Regulations in 1996. The industry now functions under the SEBI (Mutual Fund) Regulations 1996. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of assets under management was way ahead of other mutual funds.

FOURTH PHASE - SINCE FEBRUARY 2003

this phase had bitter experience for UTI. It was bifurcated into two separate entities. One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29, 835 crores (as on January 2003). 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.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

With the increase in mutual fund players in India , a need for mutual fund association in India was generated to function as a non-profit organization. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders.

THE OBJECTIVES OFASSOCIATION OF MUTUAL FUND IN INDIA

The Association of Mutual Funds of India works with 30 registered AMCs of the

country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows:

This mutual fund association of India maintains a high professional and ethical standards in all areas of operation of the industry.

It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association.

AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.

Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors. It implements a programmed of training and certification for all intermediaries and other engaged in the mutual fund industry.

AMFI undertakes all India awareness programmed for investors in order to promote proper understanding of the concept and working of mutual funds.

At last but not the least association of mutual fund of India also disseminate informations on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies. THE SPONSERS OF ASSOCIATION OF MUTUAL FUND IN

INDIA

NET ASSETS VALUE (NAV)

The net asset value, or NAV, is the current market value of a fund's holdings, usually expressed as a per-share amount. For most funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day. Open-end funds sell and redeem their shares at the NAV, and so a process order only after the NAV is determined. Closed-end funds (the shares of which are traded by investors) may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by the different classes. Some mutual funds own securities which are not regularly traded on any formal exchange. These may be shares in very small or bankrupt companies; they may be derivatives; or they may be private investments in unregistered financial instruments (such as stock in a non-public company). In the absence of a public market for these securities, it is the responsibility of the fund manager to form an estimate of their value when computing the NAV. How much of a fund's assets may be invested in such securities is stated in the fund's prospectus.

FEATURES OF THE MUTUALFUND

Some keys regarding this are as under9

 Its a kind of security. Its the term which is less risky in comparison to the equity. Its a kind of diversified portfolio investment. Portfolio is being manage by the fund manager. Its an indirect investment in the equity. Its a pool of money as well. Its registered under the SEBI (Security Exchange Board Of India) & managed by the fund manager to get the higher returns. These are some key features regarding the mutual fund.

OPTION OF INVESTMENT IN THE MUTUAL FUND

These are as under-

GROWTH FUND
Its the term in which the mutual fund is being put into the growth option. The purpose of investment is for long term with which the investors can get higher returns in the future.

DIVIDEND OPTION Its the term which is divided into two parts which are as under10

REINVEST OPTION

Its the term which the company provides the opportunities to invest again the same fund in the sequential manner. PAY OUT OPTION

Its the term which is generally company provides the opportunity to get back their profits in the systematic way.

WAY OF INVESTMENT IN THE MUTUAL FUND Some key ways regarding this are as under LUMP SUM INVESTMENT Its the kind of term under which the lump sum amount invests by the investors in a systematical way. SIP (SYSTEMATIC INVESTMENT PLAN) Its the kind of term under which we can ideally invest our money in the systematic & small lots which is quite secure & safe way to the investment

TYPES OF MUTUAL FUNDS

On the basis of their structure and objective, mutual funds can be classified into following major types: 11

 BY INVESTMENT OBJECTIVE a. Growth Schemes b. Income Schemes c. Balanced Schemes d. Money Market Schemes

OTHER SCHEMES
a. Tax Saving Schemes b. Special Schemes c. Index Schemes d. Sector Specific Schemes

CLOSED-END MUTUAL FUNDS

A closed-end mutual fund has a set number of shares issued to the public through an initial public offering. These funds have a stipulated maturity period generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. Once underwritten, closed-end funds trade on stock exchanges like stocks or bonds. The market price of closed-end funds is determined by supply and demand and not by net-asset value (NAV), as is the case in open-end funds. Usually closed mutual funds trade at discounts to their underlying asset value.

OPEN END MUTUAL FUND

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An open-end mutual fund is a fund that does not have a set number of shares. It continues to sell shares to investors and will buy back shares when investors wish to sell. Units are bought and sold at their current net asset value. Open-end funds keep some portion of their assets in short-term and money market securities to provide available funds for redemptions. A large portion of most open mutual funds is invested in highly liquid securities, which enables the fund to raise money by selling securities at prices very close to those used for valuations. The term mutual fund is the common name for an open-end investment company. Being open-ended means that, at the end of every day, the fund issues new shares to investors and buys back shares from investors wishing to leave the fund. Mutual funds may be legally structured as corporations or business trusts but in either instance are classed as open-end investment companies by the SEC.

LARGE CAP FUNDS

Large cap funds are those mutual funds, which seek capital appreciation by investing primarily in stocks of large blue chip companies with above-average prospects for earnings growth. Different mutual funds have different criteria for classifying companies as large cap. Generally, companies with a market capitalization in excess of Rs 1000 crore are known large cap companies. Investing in large caps is a lower risk-lower return proposition (vis--vis mid cap stocks), because such companies are usually widely researched and information is widely available.

MID CAP FUNDS

Mid cap funds are those mutual funds, which invest in small / medium sized companies. As there is no standard definition classifying companies as small or 13

medium, each mutual fund has its own classification for small and medium sized companies. Generally, companies with a market capitalization of up to Rs 500 crore are classified as small. Those companies that have a market capitalization between Rs 500 crore and Rs 1,000 crore are classified as medium sized. Big investors like mutual funds and Foreign Institutional Investors are increasingly investing in mid caps nowadays because the price of large caps has increased substantially. Small / mid sized companies tend to be under researched thus they present an opportunity to invest in a company that is yet to be identified by the market. Such companies offer higher growth potential going forward and therefore an opportunity to benefit from higher than average valuations. But mid cap funds are very volatile and tend to fall like a pack of cards in bad times. So, caution should be exercised while investing in mid cap mutual funds.

EQUITY MUTUAL FUNDS

Equity mutual funds are also known as stock mutual funds. Equity mutual funds invest pooled amounts of money in the stocks of public companies. Stocks represent part ownership, or equity, in companies, and the aim of stock ownership is to see the value of the companies increase over time. Stocks are often categorized by their market capitalization (or caps), and can be classified in three basic sizes: small, medium, and large. Many mutual funds invest primarily in companies of one of these sizes and are thus classified as largecap, mid-cap or small-cap funds. Equity fund managers employ different styles of stock picking when they make investment decisions for their portfolios. Some fund managers use a value approach to stocks, searching for stocks that are undervalued when compared

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to other, similar companies. Another approach to picking is to look primarily at growth, trying to find stocks that are growing faster than their competitors, or the market as a whole. Some managers buy both kinds of stocks, building a portfolio of both growth and value stocks

BALANCED FUND
Balanced fund is also known as hybrid fund. It is a type of mutual fund that buys a combination of common stock, preferred stock, bonds, and short-term bonds, to provide both income and capital appreciation while avoiding excessive risk.

Balanced funds provide investor with an option of single mutual fund that combines both growth and income objectives, by investing in both stocks (for growth) and bonds (for income). Such diversified holdings ensure that these funds will manage downturns in the stock market without too much of a loss. But on the flip side, balanced funds will usually increase less than an all-stock fund during a bull market.

GROWTH FUNDS
Growth funds are those mutual funds that aim to achieve capital appreciation by investing in growth stocks. They focus on those companies, which are experiencing significant earnings or revenue growth, rather than companies that pay out dividends. Growth funds tend to look for the fastest-growing companies in the market. Growth managers are willing to take more risk and pay a premium for their stocks in an effort to build a portfolio of companies with above-average earnings momentum or price appreciation.

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In general, growth funds are more volatile than other types of funds, rising more than other funds in bull markets and falling more in bear markets. Only aggressive investors, or those with enough time to make up for short-term market losses, should buy these funds.

EXCHANGE TRADED FUNDS

Exchange Traded Funds (ETFs) represent a basket of securities that are traded on an exchange. An exchange traded fund is similar to an index fund in that it will primarily invest in the securities of companies that are included in a selected market index. An ETF will invest in either all of the securities or a representative sample of the securities included in the index. The investment objective of an ETF is to achieve the same return as a particular market index. Exchange traded funds rely on an arbitrage mechanism to keep the prices at which they trade roughly in line with the net asset values of their underlying portfolios.

VALUE FUNDS
Value funds are those mutual funds that tend to focus on safety rather than growth, and often choose investments providing dividends as well as capital appreciation. They invest in companies that the market has overlooked, and stocks that have fallen out of favor with mainstream investors, either due to changing investor preferences, a poor quarterly earnings report, or hard times in a particular industry. Value stocks are often mature companies that have stopped growing and that use their earnings to pay dividends. Thus value funds produce current income (from the dividends) as well as long-term growth (from capital appreciation once the stocks become popular again). They tend to have more conservative and less volatile returns than growth funds. 16

MONEY MARKET MUTUAL FUNDS

A money market fund is a mutual fund that invests solely in money market instruments. Money market instruments are forms of debt that mature in less than one year and are very liquid. Treasury bills make up the bulk of the money market instruments. Securities in the money market are relatively risk-free. Money market funds are generally the safest and most secure of mutual fund investments. The goal of a money-market fund is to preserve principal while yielding a modest return. Money-market mutual fund is akin to a high-yield bank account but is not entirely risk free. When investing in a money-market fund, attention should be paid to the interest rate that is being offered.

SECTOR MUTUAL FUNDS

Sector mutual funds are those mutual funds that restrict their investments to a particular segment or sector of the economy. These funds concentrate on one industry such as infrastructure, heath care, utilities, pharmaceuticals etc. The idea is to allow investors to place bets on specific industries or sectors, which have strong growth potential. These funds tend to be more volatile than funds holding a diversified portfolio of securities in many industries. Such concentrated portfolios can produce tremendous gains or losses, depending on whether the chosen sector is in or out of favor.

INDEX FUNDS
An index fund is a type of mutual fund that builds its portfolio by buying stock in all the companies of a particular index and thereby reproducing the

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performance of an entire section of the market. The most popular index of stock index funds is the Standard & Poor's 500. An S&P 500 stock index fund owns 500 stocks-all the companies that are included in the index. Investing in an index fund is a form of passive investing. Passive investing has two big advantages over active investing. First, a passive stock market mutual fund is much cheaper to run than an active fund. Second, a majority of mutual funds fail to beat broad indexes such as the S&P 500.

FUNDS OF FUNDS

Funds of funds (FoF) are mutual funds which invest in other underlying mutual funds (i.e., they are funds comprised of other funds). The funds at the underlying level are typically funds which an investor can invest in individually. A fund of funds will typically charge a management fee which is smaller than that of a normal fund because it is considered a fee charged for asset allocation services. The fees charged at the underlying fund level do not pass through the statement of operations, but are usually disclosed in the fund's annual report, prospectus, or statement of additional information. The fund should be evaluated on the combination of the fund-level expenses and underlying fund expenses, as these both reduce the return to the investor. Most FoFs invest in affiliated funds (i.e., mutual funds managed by the same advisor), although some invest in funds managed by other (unaffiliated) advisors. The cost associated with investing in an unaffiliated underlying fund is most often higher than investing in an affiliated underlying because of the investment management research involved in investing in fund advised by a different advisor. Recently, FoFs have been classified into those that are actively managed (in which the investment advisor reallocates frequently among the underlying funds in order to adjust to changing market conditions) and those that are passively

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managed (the investment advisor allocates assets on the basis of on an allocation model which is rebalanced on a regular basis). The design of FoFs is structured in such a way as to provide a ready mix of mutual funds for investors who are unable to or unwilling to determine their own asset allocation model. Fund companies such as TIAA-CREF, Vanguard, and Fidelity have also entered this market to provide investors with these options and take the "guess work" out of selecting funds. The allocation mixes usually vary by the time the investor would like to retire: 2020, 2030, 2050, etc. The more distant the target retirement date, the more aggressive the asset mix.

BOND FUNDS

Bond funds account for 18% of mutual fund assets. Bond funds include term funds, which have a fixed set of time (short-, medium-, or long-term) before they mature. Municipal bond funds generally have lower returns, but have tax advantages and lower risk. High-yield bond funds invest in corporate bonds, including high-yield or junk bonds. With the potential for high yield, these bonds also come with greater risk.

HEDGE FUNDS

Hedge funds in the United States are pooled investment funds with loose SEC regulation and should not be confused with mutual funds. Certain hedge funds are required to register with SEC as investment advisers under the Investment Advisers Act. The Act does not require an adviser to follow or avoid any particular investment strategies, nor does it require or prohibit specific investments. Hedge funds typically charge a management fee of 1% or more, plus performance fee of 20% of the hedge funds profits. There may be a "lock-up" period, during which an investor cannot cash in shares.

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RISK OF MUTUAL FUNDS

It is quite difficult to compare a fund's risk adjusted return. But there are a couple of ways to do so. A fund's Sharpe ratio, named after its inventor, Nobel Prize winner William F. Sharpe, essentially shows you how much return the fund earned for each unit of risk that it took, and it's easy to compare different funds against each other this way. Lots of websites will display a fund's Sharpe ratio, usually under a category called "Modern Portfolio Statistics." There's also Morningstar risk, which is a variation of the Sharpe measure based on how often a fund underperformed Treasury bills. And there's beta, which shows how much the fund moves relative to the volatility of the market. But ultimately the real risk is you: If your fund goes down a lot, will you sell? If it goes up, will you buy more then? Most of the risk of investing isn't in your investments, it's in you.

RISK FACTOR
Investments in securities are subject to market risk. There is no assurance or guarantee that the objectives of any of the schemes will be achieved. The investment may not be suited to all categories of investors. The named of the schemes do not in any manner indicate there prospectus returns. The performance in the equity schemes may be adversely affected by the performance of individual. 20

 The debt investments and other fixed income securities may be subject to interest rote risk liquidity risk, credit risk and investment risk. Liquidity in these investment may affected by trading volumes settlements periods and transfer process. Technology stocks and some of the investment in niche sectors run the risk of volatility, high valuation, obsolescence and low liquidity. The scheme may use derivative instrument like index features, stock features and option contract, warrants, convertible securities, swap agreements or any derivative instruments for the purpose of hedging and portfolio balancing, as permitted under the regulations and guidelines. The use of a derivative requires on understanding not only of the underlying instruments but of the derivatives itself. Derivatives require the maintenance of adequate controls to monitor the transactions entered Into, the ability to assess the risk that a derivative adds to the portfolio and the ability to forecast price or interest rate movement correctly. Schemes using derivative/ future and option. Some of the risk relate to miss pricing or the improper valuation of derivative/futures and options and the inability to correlate the positions with underlying assets, rates, and indices. Also the derivatives/ future and options markets are nascent in India. In the case of stock lending, risk relate to the defaults from counter parties with regard to securities lent and the corporate benefits accruing thereon, inadequacy of the collateral and settlement risk. The portfolio manager is not responsible or liable for any loss resulting from the operations of the scheme. The performance of the scheme may be affected by change in Government Policies. General levels of interest rates and risk associated with trading volumes, liquidity and settlement system in equity and debt markets.

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 The scheme may invest in non-publicity offered debt securities and unlisted equities. This may expose the scheme to liquidity risks. Engaging in securities lending is subject to risks relayed to fluctuation in collateral value/settlement/liquidity/counter party.

TIPS ON MUTUAL FUND INVESTING

Millions of investors have come to rely on mutual funds as their primary investments. The growth of funds has been explosive, with individuals, retirement plans and others putting well over $1 trillion in the funds in the 90's. If you are thinking of investing in a mutual fund, you should remember that they are only one of the many types of investments and that, as with any investment, you should know and understand the nature and risks of mutual funds and options available to you before you invest any of your money. You can earn money out of a fund in basically three ways. First, a fund may receive income in the form of dividends and interest on the securities it owns which it pays to its shareholders in the form of dividends. Second, the price of the securities a fund owns may increase. When a fund sells a security that has increased in price, the fund has a capital gain. At the end of the year, most funds distribute these capital gains (minus any capital losses) to investors. Third, if a fund does not sell but holds on to securities that have increased in price, the value of its shares (NAV) increases.

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 The higher NAV reflects the higher value of your investment. If you sell your shares, you make a profit (this also is a capital gain). Today there is a bewildering array of funds on offer. So how does one choose a well performing fund. There is one golden rule of Mutual fund investing- When small stocks do better than big ones, funds will beat the market. When big ones do better, the market will outperform the funds. If you think small stocks are due for a run, then you would expect actively managed funds to beat the indexes. But before you invest it is better to do some background work:

KNOW YOURSELF:
Before you invest, decide whether the goals and risks of any fund you are considering are a good fit for you. You take risks when you invest in any mutual fund. You may lose some or all of the money you invest (your principal), because the securities held by a fund go up and down in value. What you earn on your investment also may go up or down. A portfolio's asset allocation or 'mix of funds' should represent one's tolerance for risk and time horizon. An investor should establish what percentage to invest in stocks, bonds, cash, etc. before choosing a portfolio of worthy funds. In fact, searching for funds without considering asset allocation may lead to a portfolio of funds that are all invested in the same thing. A good portfolio diversifies into different assets to hedge against unforeseen market declines. Which kind of fund is a good investment for you is trickier; the best answer is, a fund whose manager is doing something you understand and are comfortable with as a long-term

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investment. Read some annual reports; get a feel for the people who run the fund; see if they think the way you do. Or buy an index fund, which is run on autopilot.

ADVANTAGES OF MUTUAL FUNDS

Since their creation, mutual funds have been a popular investment vehicle for investors. Their simplicities along with other attributes provide great benefit to investors with limited knowledge, time, or money. To help you decide whether mutual funds are best for you and your situation, we are going to look at some reasons why you might want to consider investing in mutual funds.

1. DIVERSIFICATION
One rule of investing that both large and small investors should follow is asset diversification. Used to manage risk, diversification involves the mixing of investments within a portfolio. For example, by choosing to buy stocks in the retail sector and offsetting them with stocks in the industrial sector, you can reduce the impact of the performance of any one security on your entire portfolio. To achieve a truly diversified portfolio, you may have to buy stocks with different

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capitalizations from different industries and bonds having varying maturities from different issuers. For the individual investor this can be quite costly. By purchasing mutual funds, you are provided with the immediate benefit of instant diversification and asset allocation without the large amounts of cash needed to create individual portfolios. One caveat (beware), however, is that simply purchasing one mutual fund might not give you adequate diversification - check to see if the fund is sector or industry specific. For example, investing in an oil and energy mutual fund might spread your money over fifty companies, but if energy prices fall, your portfolio will likely suffer.

2. ECONOMIES OF SCALE
The easiest way to understand economies of scale is by thinking about volume discounts: in many stores the more of one product you buy, the cheaper that product becomes. For example, when you buy a dozen donuts, the price per donut is usually cheaper than buying a single one. This occurs also in the purchase and sale of securities. If you buy only one security at a time, the transaction fees will be relatively large. Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Imagine if you had to buy the 10-20 stocks needed for diversification. The commission charges alone would eat up a good chunk of your savings. Add to this the fact that you would have to pay more transaction fees every time you wanted to modify your portfolio - as you can see the costs begin to add up. Mutual funds are able to make transactions on a much larger scale (and cheaper).

3. DIVISIBILITY
Many investors don't have the exact sums of money to buy round lots of 25

securities. One to two hundred dollars is usually not enough to buy a round lot of a stock, especially after deducting commissions. Investors can purchase mutual funds in smaller denominations, ranging from $100 to $1000 minimums. So, rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds. This leads us to the next advantage

4. LIQUIDITY
Another advantage of mutual funds is the ability to get in and out with relative ease. You can sell mutual funds at any time as they are as liquid as regular stocks. Both the liquidity and smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of dollar-cost averaging.

5. PROFESSIONAL MANAGEMENT
when you buy a mutual fund, you are also choosing a professional these investment vehicles can experience market fluctuations and sometimes provide returns below the overall market. Also, the advantages gained from mutual funds are not free: many of them carry loads, annual expense fees and penalties for early withdrawal. In the next article we will take a closer look at some of these drawbacks so you can decide if mutual funds are right for you. Money manager. This manager will use the money that you invest to buy and sell stocks that he or she has carefully researched. Therefore, rather than having to research thoroughly every investment before you decide to buy or sell, you have a mutual fund's money manager to handle it for you. As with any investment, there are risks involved in buying mutual funds.

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DISADVANTAGES OF MUTUAL FUNDS

Like many investments, mutual funds offer advantages and disadvantages, which are important for you to consider and understand before you decide to buy. Here we explore some of the drawbacks of mutual funds.

1. FLUCTUATING RETURNS
Mutual funds are like many other investments without a guaranteed return. There is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved - just because a professional manager is looking after the fund, that doesn't mean the performance will be stellar. Another important thing to know is that mutual funds are not guaranteed by the U.S. government, so in the case of dissolution, you won't get anything back. This is especially important for investors in money market funds. Unlike a bank deposit, a mutual fund will not be FDIC insured.

2.DIVERSIFICATION
At the other extreme, just because you own mutual funds doesn't mean you are Although diversification is one of the keys to successful investing, many mutual fund investors tend to over diversify. The idea of diversification is to reduce the risks associated with holding a single security; over diversification (also known as diversification) occurs when investors acquire many funds that are highly related and so don't get the risk reducing benefits of diversification.

automatically diversified. For example, a fund that invests only in a particular industry or region is still relatively risky.

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3. CASH, CASH AND MORE CASH

As you know already, mutual funds pool money from thousands of investors, so everyday investors are putting money into the fund as well as withdrawing investments. To maintain liquidity and the capacity to accommodate withdrawals, funds typically have to keep a large portion of their portfolio as cash. Having ample cash is great for liquidity, but money sitting around as cash is not working for you and thus is not very advantageous. 4. COSTS Mutual funds provide investors with professional management; however, it comes at a cost. Funds will typically have a range of different fees that reduce the overall payout. In mutual funds the fees are classified into two categories: shareholder fees and annual fund-operating fees. The shareholder fees, in the forms of loads and redemption fees, are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage - usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn't make money these fees only magnify losses.

5.MISLEADINGADVERTISEMENT
The misleading advertisements of different funds can guide are under the discretion solely of the fund manager. investors down the wrong path. Some funds may be classified as small-cap or income. The SEC requires funds to shave at least 80% of assets in the particular type of investment implied in their names. The remaining assets The different categories that qualify for the required 80% of the assets, however, may be vague and wide-ranging. A fund can therefore manipulate prospective 28

investors by using names that are attractive and misleading. Instead of labeling itself a small cap, a fund may be sold under the heading growth fund. Or, the "Congo High-Tech Fund" could be sold with the title "International High-Tech.

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2.0 SCOPE OF THE STUDY

Scope of the study means the area of the study to which this project is limited. In other words, Scope means the length and breadth of the study.

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A big boom has been witnessed in Mutual Fund Industry in recent times. A large number of new players have entered the market and trying to gain market share in this rapidly improving market. The study will help to know the preferences of the customers, which company, portfolio, mode of investment, option for getting return and so on they prefer. This project report may help the company to make further planning and strategy. Some keys are as under Its being helpful to know about the different types of customer needs belong to the different classes. Its helpful to know about the different types of portfolio investment as well. Its being helpful to know about the different types of strategies adopted by the different companies in the recent market conditions. Its also helpful to know that how can we increasing the return in the current fluctuating market condition as well for the different time period requirement.

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3.0 USEFULNESS AND IMPORTANCE OF STUDY

The importance and usefulness of the study is discussed as under: To study the preference of investors regarding mutual funds. To know the awareness of investors about mutual funds. Analyzing rationale behind choosing some Mutual funds and their attractiveness to individual investors. To emphasizing the kind of secured & safe profit structure for the small investors. To grapping the area of errors & converting them to the positives for their investors. Through the help of this we can emphasizing to create the faith of the customer in the securities market. These are some terms which is concerned with the scope of the research.

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RELIGARE ENTERPRISE LIMITED

Religare Enterprises Limited (REL) is a global financial services group promoted by the RANBAXY group, with a presence across Asia, Africa, Middle East, Europe and the Americas. In India, RELs largest market, the group offers a wide array of products and services ranging from insurance, asset management, broking and lending solutions to investment banking and wealth management. The group has also pioneered the concept of investments in alternative asset classes such as arts and films .With 10,000 plus employees across multiple geographies, REL serves over a million clients, including corporate and institutions, high net worth families and individuals, and retail investors. Basically this company focusing the securities market, but this company also dealing in the insurance sectors also. This company is a multinational company which currently run in six countries. The company comes up in the banking sector to expand their business as well. It will recently launch in the near future at lastly 2011-12 financial year. Through the help of this company gives the opportunity to their investors to save their money without giving any cost to open the saving account as well. In near future company also come up the kind of mutual fund in which very small prospective investors can save their money through the help of the small secured investment as well.

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HISTORICAL BACKGROUND OF THE GROUP

The Company was originally incorporated as Vajreshwari Cosmetics Private Limited on January 30, 1984. The name of Company was subsequently changed to Religare Enterprises Private Limited pursuant to a special resolution of the shareholders dated January 10, 2006. The fresh certificate of incorporation consequent to the change of name was granted to the Company on January 31, 2006, by the Registrar of Companies, Punjab, Himachal Pradesh & Chandigarh at Jalandhar. The status of the Company was changed to a public limited company by a special resolution of the members dated July 14, 2006. The fresh certificate of incorporation consequent to the change of name was granted to the Company on August 11, 2006, by the Registrar of Companies, NCT at New Delhi. At the time of incorporation, the main object of the Company was to purchase, sell, import, export,manufacture,pack, replace or otherwise deal in all types of tooth paste, tooth brush, face powder, face cream and other cosmetics. Religare has a pan India presence, 1837* locations across 498* cities and towns. It also currently operates from nine international locations following its acquisition of London's brokerage & investment firm, Hichens, Harrison & Co. plc. (Now Religare Hichens, Harrison Plc).

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 VISION & MISSION Vision & mission are the key term for the succession of the every company. If the vision is right than we have to emphasizing on the effective establishment of the mission as well , because this is the key with which we can get our vision successfully. The RELIGARE vision & mission are as under

VISION - To build Religare as a globally trusted brand in the

financial services domain.

MISSION - Providing complete financial care driven by the core

values of diligence and transparency.

BRAND ESSENCE - Core brand essence is Diligence and

Religare is driven by ethical and dynamic processes for wealth creation.

These are company vision & mission in which company mainly emphasize to achieve this.

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NOW WHAT DOES RELIGARE MEAN?

NAME
Religare is a Latin word that translates as 'to bind together'. This name has been chosen to reflect the integrated nature of the financial services the company offers.

SYMBOL
The Religare name is paired with the symbol of a four-leaf clover. Traditionally, it is considered good fortune to find a four-leaf clover as there is only one four-leaf clover for every 10,000 three-leaf clovers found. For Religare, each leaf of the clover has a special meaning. It is a symbol of Hope. Trust. Care. Good Fortune. For the world, it is the symbol of Religare. The first leaf of the clover represents Hope. The aspirations to succeed. The dream of becoming. Of new possibilities. It is the beginning of every step and the foundation on which a person reaches for the stars.

The second leaf of the clover represents Trust. The ability to place ones own faith in another. To have a relationship as partners in a team. To accomplish a given goal with the balance that brings satisfaction to all, not in the binding, but in the bond that is built. The third leaf of the clover represents Care. The secret ingredient that is the cement in every relationship. The truth of feeling that underlines sincerity and the triumph of diligence in every aspect. From it springs true warmth of service and the ability to adapt to evolving environments with consideration to all.

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The fourth and final leaf of the clover represents Good Fortune. Signifying that rare ability to meld opportunity and planning with circumstance to generate those often looked for remunerative moments of success.

Hope. Trust. Care. Good Fortune. All elements perfectly combine in the emblematic and rare, four-leaf clover to visually symbolize the values that bind together and form the core of the Religare vision.

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CORPORATE STRUCTURE

Our organization is led by individual who are professional and leaders in every sense of the world. Experts in their respective domain, esteem members of our Board of Directors are:

Name
Mr. Harpal Singh Chairman Mr. Vinay Kumar Kaul Mr. Malvinder Mohan Singh Mr. Shivinder Mohan Singh Mr. Sunil Godhwani

Designation

Director Director Director M.D

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STRUCTURE OF THE ORGANIZATION

The company owes its success to its strong management team, most of which has been there since its inception.

Organization Structure:

National Sales and Marketing Head

Vice President-Investment Assistant Vice President-Investment Zonal manager investment Senior Investment manager Manager Investment

Vice President-Sales Assistant Vice President-Sales Regional Sales Head Branch Manager Team Leader

Relationship Manager Associate Relationship Manager Asst. Relationship Managers

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Relationship Executive.

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5.0 RESEARCH DESIGN

Research in common parlance refers to search of knowledge. In other words, research means a search for facts-answers to questions and solution to the problem. It is a purposive investigation. It is an organized inquiry. The advanced learners dictionary of current English lays down the meaning of research as a careful investigation or inquiry especially through search for new facts in any branch of knowledge. Research Design is the framework or plan for a study that is used as a guide in collecting and analyzing the data. It is blueprint that is followed in completing a study. In other words, it is the framework of the project that stipulates what information is to be collected from which sources by what procedures. Designing is preliminary step in every activity. It provides a picture for the whole before starting of the work.

RESEARCH PROCESS FOLLOWED

FF

Review the Literature

Review concepts & theories Define research problem Review previous research findings

Formulate hypothesis

Design research (including sample design

Collect Data

Analyze Data

Interpret & Report Writing

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Where F = feed back [Helps in controlling the sub-system to which it is transmitted]FF = feed forward [Serves the vital function of providing criteria for evaluation]

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5.1 METHODOLOGY ADOPTED

Research methodology may be understood as all those methods/techniques that are used for conduction of research. Thus it refers to the methods the researchers use in performing research operations. In other words, all those methods, which are used by the researchers during the course of studying his research problem, are termed as research methods. Since the object of research is to arrive at a solution for a given problem, the available data and the unknown aspects of the problem have to be related to each other to make a solution possible.

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5.2 OBJECTIVES OF THE STUDY

The objectives of this project are as under:

Analyzing rationale behind choosing some Mutual funds and their attractiveness to individual investors. To study the preference of investors regarding mutual funds. To know the awareness of investors about mutual funds. To preparing the strategies with which small customer market can be generated as well. Removing the kind of errors occurs as well as to gain some competitive advantage as well.

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 Through the help of this we can also emphasize the reason of the investors investment in the securities as well.

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5.3 TOOLS AND TECHNIQUES USED

Tools & Techniques means the methods & ways that how the data for the research is collected and analyzed in order to fulfill the objective of the research work.

DATA COLLECTION METHOD:

Primary data by questionnaire and secondary data through internet. Collection of the data through Questionnaire which is attached with this report.

SAMPLING
Sampling may be defined as the selection of some part of an aggregate or totality on the basis of which a judgment or inference about the aggregate or totality is made. In other words, it is the process of obtaining information about an entire population by examining only a part of it. In most of the research work and surveys, the usual approach happens to be to make generalizations or to draw inferences based on samples are taken. The researcher quit often selects only a 50

few items from the universe for his study purposes. All this is done on the assumption that the sample data will enable him to estimate the population parameter. The items so selected constitute what is technically called a sample, their selection process or technique is called sample design and the survey conducted on the basis of sample is described as sample survey. Sample should be truly representative of population characteristics without any bias so that it may result in valid and reliable conclusions.

TYPES OF SAMPLES
There are two types of samples: PROBABILITY SAMPLES Probability samples are those based on simple random sampling, systematic random sampling, stratified sampling, cluster sampling. NON-PROBABILITY SAMPLES: Non-probability samples are those based on convenience sampling, judgment sampling and quota sampling.

NEED FOR SAMPLING

Sampling is used in practice for a variety of reasons such as: 1. Sampling can save time and money. A sample study is usually less expensive than a census study and produces results at a relatively faster speed.

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2. Sampling may enable more accurate measurements for a sample study is generally conducted by trained and experienced investigations. 3. Sampling remains the only way when population contains infinitely many members. 4. Sampling remains the only choice when a test involves the destruction of the item sunder study. 5. Sampling usually enables to estimate concerning some characteristic of the population.

COLLECTION OF SECONDARY DAATA

Providing the following: Information on the current situation and trends of the financial market. Information on the current situation and preference of investors investment.

In the beginning the data has been collected randomly from all the sources. This data has been collected from Newspaper, Magazines, ICFAI journal of Management Research and various other journals, books and from Internet. Then data has been compiled, studied and analyzed. The authenticity of the data collected has been crosschecked by collecting the same data from the various sources. Moreover, most of the data has been collected from the reliable sources. A detailed analyses of the data collected has been done with the help of Microsoft excel and result of analysis is shown in the form of tables, charts & graphs At the end findings and result of the analysis has been discussed.

PRIMARY DATA COLLECTION:

Primary data has been collected by using questionnaire. The methodology used is given below:

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DATA COLLECTION METHODOLOGY:

Sampling Frame: clients visiting Sampling Unit: Respondents visiting Sampling Size: 100 clients Sampling Type: Convenience sampling.

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5.4 GEOGRAPHICAL AREA COVERED

The survey for this project was conducted in following places: I went to collect this data from the service as well as business class people. The result was quit positive regarding the product. Most of the people choose this product due to its secured returns . Generally the data for this project was consider from the door to door clients belong to different places in Mathura region, through the company past data, & the rest of the data was collected from the internet ,newspapers, & journals as well. These are the key areas with which the data was collected.

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6.0 DATA ANALYSIS AND INTERPRETATION

The data, after collection, has to be processed and analyzed in accordance with the objective laid down for the purpose of the research work. This is essential for ensuring that we have all relevant data for making contemplated comparisons and analysis. The term analysis refers to the computation of certain measures like editing, coding, classification and tabulation of collected data so that they are amenable to analysis along with searching for patterns of relationship that exist among data-groups. The term interpretation refers to the task of drawing inferences from the collected data after an analytical and/or experimental study. In fact, it is a search for broader meaning of research findings. There are various methods of analyzing the data. But in this project work, I used Pie charts for analyzing the collected data, which is prepared by using Excel Sheet. In this project work, Pie charts are prepared with the help of collected data, which is being collected through [PRIMARY sources]. The graphical presentation of the data is helpful in understanding the each & every aspect of the collected data very easily.

The data is being fresh & quit effective for the understanding of the visitors in a systematic & smooth way. Pie charts showing the necessary information along with their description or interpretation of the data ,which is quit effective & understanding of the visitors as well as researchers as well.

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1. Personal Details:
(a). Name:(b). Add: Phone:(c). Age:(d). Qualification:Graduation/PG Under Graduate Others

TABLE
Graduation/PG Under Graduate Others Total 55% 25% 20% 100

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INTERPRETATION
In the above diagram we see that 55% are the graduate & post graduate,25% are under graduate,& others are 20%. Who are the participators in this data collection program.

(e). Occupation. Pl tick ()

Govt. Ser Pvt. Ser

Business

Agriculture

Others

Occupation Govt. Ser Pvt. Ser Business

Percentage 10 38 45

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Agriculture Others

5 2

INTERPRETATION
In the above tables & diagram we seen that 10% occupied people are from government sector,38% from private sector,45% are from business sector,5% are from agriculture sector,& 2% are from other sector who are the participator in this session.

(f). What is your monthly family income approximately? Pl tick ().

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Up to

Rs. 10,001

Rs. 15,001 to 20,000

Rs. 20,001 to 30,000

Rs. 30,001 and above

Rs.10,000 to 15000

Monthly Income Up to Rs.10,000 Rs. 10,001 to 15000 Rs. 15,001 to 20,000 Rs. 20,001 to 30,000

Percentage 10 18 20 35

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Rs. 30,001 and above

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INTERPRETATION
Through the help of the above table & chart we can see that 10% are belong up to 10000 ,18% are belong to the 10001-15000 income,20% are 15001-20000,35% are 20001-30000,17% are up to 30001 & above income group customers are the part of this survey.

2What kind of investments you have made so far? Pl tick (). All applicable.

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a. Saving account e. Post OfficeNSC, etc

b. Fixed deposits f. Shares/Debentures

c. Insurance d. Mutual g. Gold/ Silver Fund h. Real Estate

investments . Saving account Fixed deposits Insurance . Mutual Fund Post Office-NSC, etc Shares/Debentures . Gold/ Silver Real Estate

percentage 12 22 10 10 15 8 18 5

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INTERPRETATION
Through the help of the above data showing by table & chart we can see that 12% peoples are invested their money in the saving bank account,22% are invested their money in the fixed deposit,10% invested their money in the insurance,10% invested their amount in mutual fund,15% invested their fund in post offices NSE,etc.,8% are invested their fund in shares & debentures,18% invested their fund in Gold & Silver & 5% people invested their fund in the Real estate sector.

3While investing your money, which factor will you prefer? . (a) Liquidity (b) Low Risk (c) High Return (d) Trust

factor Liquidity ) Low Risk High Return Trust

Percentage 12 42 28 18

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INTERPRETATION
Through the help of the above chart & table we see that 12% prefer liquidity,42% prefer low risk ,28% prefer high return,18% prefer trust level is being increases upon the company.

4Are you aware about Mutual Funds and their operations? Pl tick (). Yes No

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Awareness

Percentage

Yes

92

No

INTERPRETATION

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92% people are aware with the mutual fund & rest 8% are unaware with the mutual fund & their operations as well.

5. If yes, how did you know about Mutual Fund? a. b. Peer c. Banks d. Financial Advisors

Advertisement Group

TABLE 5.5 Source AWARENESS Advertisement Peer Group Banks Financial Advisors PERCENTAGE 20 12 32 36

GRAPHICAL PRESENTATION

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INTERPRETATION
20% people are aware with the advertisement,12% aware with the peer group,32% aware with the banks, & 36% are aware with the financial advisors about t5he mutual fund.

6. Have you ever invested in Mutual Fund? Pl tick (). Yes No

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Investment Yes No

Percentage 44 56

INTERPRETATION
44% people are invested in mutual fund & 56% people are not invested in mutual fund ever.

7. If not invested in Mutual Fund then why?

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(a) Not aware of MF (b) Higher risk (c) Not any specific reason Percentage 27 33 40

Not aware of MF High Risk Not any specific reason

INTERPRETATION
40% of people have not any specific reasons, 27% people are not aware about mutual fund , & 33% are thought that the risk factor is being high in this.

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8. If yes, in which Mutual Fund you have invested? Pl. tick (). All

applicable.

a. SBIMF

b. UTI

c. HDFC

d. Reliance

e. Kotak

f. Other. Specify

Types of mutual fund SBIMF UTI HDFC RELIANCE KOTAK speicify

percentage 21 16 23 20 12 8

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INTERPRETATION
21% invested in SBIMF,16% in UTI,23% in HDFC,20% in RELIANCE,12% in KOTAK, 8% are other specify company mutual fund.

9. When you plan to invest your money in asset management co. which AMC will you prefer?

a. SBIMF b. UTI

c. Reliance

d. HDFC

e. Kotak

f. ICICI

COMPANIES SBIMF UTI RELIANCE HDFC

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PERCENTAGE 22 17 31 13

KOTAK ICICI

9 8

INTERPRETATION
22% in SBIMF,17% in UTI,31% in RELIANCE,13% in HDFC, 9% in KOTAK,8% in ICICI people prefer to invest their money in the various companies.

10. Which Channel will you prefer while investing in Mutual Fund? (a) Financial Advisor CHANNELS
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(b) Bank

(c) AMC PERCENTAGE

FINANCIAL ADVISOR BANK AMC

43 31 26

INTERPRETATION
43% invested through their financial advisor,31% invested through their banks,through the help of AMC 26% .

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11. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick (). a. One Time Investment b. Systematic Investment Plan (SIP)

MODE OF INVESTMENT ONE TIME INVESMENT SIP

PERCENTAGE 37 63

INTERPRETATION
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37% people prefer invest one time investment, & 63% people prefer systematic investment plan.

12. When you want to invest which type of funds would you choose?

a. Having only debt portfolio

b. Having debt & equity portfolio.

c. Only equity portfolio.

TYPE OF FUNDS HAVING ONLY DEBT PORTFOLIO HAVIMG DEBT & EQUITY PORTFOLIO ONLY EQUITY PORTFOLIO

PERCENTAGE 25

31

44

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INTERPRETATION
25% having only debt portfolio,31% having debt & equity portfolio,44% have only equity portfolio for the investment.

13 How would you like to receive the returns every year? Pl. tick ().

a. Dividend payout

b. Dividend reinvestment

c. Growth in NAV

RETURN DIVIDEND DIVIDEND RE-INVESTMENT

PERCENTAGE 26 33

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GROWTH IN NAV

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INTERPRETATION
26% people receive the return in the dividend form ,33% people receive the return in the dividend re investment ,& 41% people receive the return in the form of growth in NAV.

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ANALYSIS OF THE DATA

Through the help of the questionnaire some fresh primary data are collected. In the above description we see that mostly people are graduate & post graduate & having good income status as well & out of these mostly people prefer to invest their money in the gold. In these people group a huge ratio is being aware with the mutual fund & they are aware with their banks & through their financial advisor as well. An effective ratio of the people are invested ever in the mutual fund but, rest of the people are not invested in the mutual fund they have not any specific reason. HDFC mutual fund is the highest invested & preferable mutual fund according to the survey. Mostly people invested their money through their financial advisors in the mutual fund. A huge ratio of the people are invested their money in the mode of SIP( systematic investment plan) A huge ratio of the people chooses the equity portfolio for the investment. These people generally want to receive the return in the form of growth in NAV. In their invested fund.

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7.0 FINDINGS
After analyzing & interpreting the data received from the respondents, following findings have been drawn:

From Correlation test, it is found there exist a positive correlation between

the income percentage on investment and the participation in cash market. From One Way ANOVA it is found that there is significant difference

between the annual income and the income percentage towards investment. From the Multiple Response test, it is found that the investors who invest

around 5-10% of their investment mostly considers the market risk(18%) as the major risk which prevails in the market. From the Multiple Response test, it is found that the investors whose

investment is around 10% of their income, consider that the affordable margin amount for investment in Derivatives is up to Rs10000/-. Most of the aggressive investors are in 21-40 yr. age group. They should

be concentrated as prospective clients.

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8.0 RECOMMENDATIONS & SUGGESTIONS

Some key recommendations regarding are as under The company should prepare the sound investment policies for their different class customer to invest their fund. The company should focus the network marketing system to always keep them in their hand. Company should focus the cheaper way of the advertisement for their products & services. Companies should focuses on the preparation of the honest, & exploit less policies for their customers.

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9.0 CONCLUSION
On the basis of the findings obtained from the study we may conclude that A mutual fund brings together a group of people and invests their money in stocks, bonds, and other securities. The advantages of mutual are professional management, diversification, economies of scale, simplicity and liquidity. The disadvantages of mutual are high costs, over-diversification, possible tax consequences, and the inability of management to guarantee a superior return. There are many, many types of mutual funds. You can classify funds based on asset class, investing strategy, region, etc. Mutual funds have lots of costs. Costs can be broken down into ongoing fees (represented by the expense ratio) and transaction fees (loads). The biggest problems with mutual funds are their costs and fees. Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party. Mutual fund ads can be very deceiving.

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9.1 LIMITATIONS OF THE STUDY

In the entire course of the project, data was collected and interpreted with outmost reliability and consistency. But due to subjectivity and prejudice of a few respondents, certain limitations were faced, which are: Answers of the questionnaire depend upon the belief of customers, which may differ from reality. The survey is conducted considering the time constraints. The sample size during this time period may not be adequate. A chance of wrong answer may not be ruled out. Some respondents were reluctant to give answers. Small sample size chosen can not represent the whole population.

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