A

PROJECT REPORT
ON

'Consumer Perception towards Mutual Funds'

Submitted To

KURUKSHETRA UNIVERSITY, KURUKSHETRA

In the partial fulfillment of the requirement for the degree of
MASTER OF BUSINESS ADMINISTRATION (MBA)

Under the Supervision of

Dr. Sudesh
Professor

Submitted By

USM, KUK

Toni
MBA (4 th Semester)
Roll No:-106
Session 2013-15

UNIVERSITY SCHOOL OF MANAGEMENT

KURUKSHETRA UNIVERSITY, KURUKSHETRA
(Established by the State Legislature Act XII of 1956)
(A Grade NAAC Accredited)

UNIVERSITY SCHOOL OF MANAGEMENTPh. No. 01744-238565

KURUKSHETRA UNIVERSITY KURUKSHETRA

Ext. No.

(ESTABLISHED BY THE STATE LEGISLATURE ACT XII OF 1956)

e-mail:-

2526, 2527
chairperson.usom@kuk.ac.in

(A GRADE, NAAC ACCREDITED)

chairman_usmkuk@yahoo.com

Dated: ________________

CERTIFICATE
This is to certify that Mr. Toni has worked under my guidance on the topic 'Consumer
Perception towards Mutual Funds' The Project is original work to the best of my knowledge &
belief. This work has not been submitted for any other degree/diploma exam elsewhere. The
Project work is upto the standard expected from an MBA student and I recommend this for
evaluation.

Dr. Sudesh
( Professor)

DECLARATION
I Toni, Roll No.-106, MBA student of university school of management, hereby declare that the
Research Report entitled 'Consumer Perception towards Mutual Funds' is an original work
done by me under the guidance of Dr. Sudesh, Professor, University School of Management,
Kurukshetra University in partial fulfillment of M.B.A Degree during academic year 2013-15.
All the data represented in this project is true and correct to the best of my knowledge & belief.
This work has not been submitted for any other degree/diploma examination elsewhere.

Toni

ACKNOWLEDGEMENT

I am very thankful to Dr. B.S. Bodla, (Chairman), University School of Management,

Kurukshetra University, for allowing me to work on this project work and for his kind help
always.
I am very thankful to Dr. Sudesh, Professor, University School of Management, Kurukshetra
University for her most valuable help and creative suggestions at all stages of my work. Her
learned advice and guidance always kindled inspiration in the face of difficulties encountered in
the course of this research work.
I am also thankful to the students who devoted their precious time and their kind help always. I
am highly grateful to my all lecturers and dedicated staff of University School of Management,
Kurukshetra University their kind help from time to time.
I am also thankful to the respondents, all my friends for their kind and valuable guidance, whom
I consulted for my present work.

Toni

TABLE OF CONTENTS

1. Introduction ..6-18
2. Research objectives and Methodology .....19-20
3. Analysis And Interpretation ....21-23
4. Findings and Conclusion ..24-64
5. Suggestions ..65-75
6. Bibliography ....76
7. Annexure78

CHAPTER-1
INTRODUCTION

INTRODUCTION OF MUTUAL FUNDS

Mutual funds are basically financial intermediaries, which collect the savings of investors and
invest them in a large and well-diversified portfolio of securities such as money market
instruments, corporate and government bonds and equity shares of joint stock companies.
A mutual fund is a pool of common funds invested by different investors, who have no contact
with each other. Mutual funds are conceived as institutions for providing small investors with
avenues of investments in the capital market. Since small investors generally do not have
adequate time, knowledge, experience and resources for directly accessing the capital market,
they have to rely on an intermediary, which undertakes informed investment decisions and
provides consequential benefits of professional expertise. The raison of mutual funds is their
ability to bring down the transaction costs.
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. The advantages for the
investors are reduction in risk, expert professional management, diversified portfolios, liquidity
of investment and tax benefits. By pooling their assets through mutual funds, investors achieve
economies of scale. The interests of the investors are protected by the SEBI, which acts as a
watchdog. Mutual funds are governed by the SEBI (Mutual Funds) Regulations, 1996.
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 are generally classified by their principal investments. The four main categories of
funds are money market funds, bond or fixed income funds, stock or equity funds, and hybrid
funds. Funds may also be categorized as index (or passively managed) or actively managed.
Investors in a mutual fund pay the funds expenses, which reduce the fund's returns and
performance. There is controversy about the level of these expenses.

HISTORY OF THE INDIAN MUTUAL FUND INDUSTRY

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
Canara 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
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 September, 2004,
there were 29 funds, which manage assets of Rs.1, 53, 108 crores under 421 schemes.
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.

CLASSIFICATION OF MUTUAL FUND SCHEMES:

Any mutual fund has an objective of earning income for the investors and/ or getting increased
value of their investments. To achieve these objectives mutual funds adopt different strategies
and accordingly offer different schemes of investments. On this basis the simplest way to
categorize schemes would be to group these into two broad classifications:

OPERATIONAL AND PORTFOLIO CLASSIFICATION:

Operational classification highlights the two main types of schemes, i.e., open-ended and closeended which are offered by the mutual funds.
Portfolio classification projects the combination of investment instruments and investment
avenues available to mutual funds to manage their funds. Any portfolio scheme can be either
open ended or close ended.

Operational Classification:
Open Ended Schemes: As the name implies the size of the scheme (Fund) is open i.e.,
not specified or pre-determined. Entry to the fund is always open to the investor who can
subscribe at any time. Such fund stands ready to buy or sell its securities at any time. It
implies that the capitalization of the fund is constantly changing as investors sell or buy
their shares. Further, the shares or units are normally not traded on the stock exchange but
are repurchased by the fund at announced rates. Open-ended schemes have comparatively
better liquidity despite the fact that these are not listed. The reason is that investors can
any time approach mutual fund for sale of such units. No intermediaries are required.

Moreover, the realizable amount is certain since repurchase is at a price based on

declared net asset value (NAV). No minute to minute fluctuations in rates haunt the
investors. The portfolio mix of such schemes has to be investments, which are actively
traded in the market. Otherwise, it will not be possible to calculate NAV. This is the
reason that generally open-ended schemes are equity based. Moreover, desiring
frequently traded securities, open-ended schemes hardly have in their portfolio shares of
comparatively new and smaller companies since these are not generally traded. In such
funds, option to reinvest its dividend is also available. Since there is always a possibility
of withdrawals, the management of such funds becomes more tedious as managers have
to work from crisis to crisis. Crisis may be on two fronts, one is, that unexpected
withdrawals require funds to maintain a high level of cash available every time implying
thereby idle cash. Fund managers have to face questions like what to sell. He could very
well have to sell his most liquid assets. Second, by virtue of this situation such funds may
fail to grab favorable opportunities. Further, to match quick cash payments, funds cannot
have matching realization from their portfolio due to intricacies of the stock market.
Thus, success of the open-ended schemes to a great extent depends on the efficiency of
the capital market and the selection and quality of the portfolio.
Close Ended Schemes: Such schemes have a definite period after which their shares/
units are redeemed. Unlike open-ended funds, these funds have fixed capitalization, i.e.,
their corpus normally does not change throughout its life period. Close ended fund units
trade among the investors in the secondary market since these are to be quoted on the
stock exchanges. Their price is determined on the basis of demand and supply in the
market. Their liquidity depends on the efficiency and understanding of the engaged
broker. Their price is free to deviate from NAV, i.e., there is every possibility that the
market price may be above or below its NAV. If one takes into account the issue
expenses, conceptually close ended fund units cannot be traded at a premium or over
NAV because the price of a package of investments, i.e., cannot exceed the sum of the
prices of the investments constituting the package. Whatever premium exists that may
exist only on account of speculative activities. In India as per SEBI (MF) Regulations
every mutual fund is free to launch any or both types of schemes.

Portfolio Classification of Funds:

Following are the portfolio classification of funds, which may be offered. This classification may
be on the basis of (A) Return, (B) Investment Pattern, (C) Specialized sector of investment, (D)
Leverage and (E) Others.
Return based classification:
To meet the diversified needs of the investors, the mutual fund schemes are made to enjoy a good
return. Returns expected are in form of regular dividends or capital appreciation or a
combination of these two.

1. Income Funds: For investors who are more curious for returns, Income funds are floated.
Their objective is to maximize current income. Such funds distribute periodically the
income earned by them. These funds can further be spitted up into categories: those that
stress constant income at relatively low risk and those that attempt to achieve maximum
income possible, even with the use of leverage. Obviously, the higher the expected
returns, the higher the potential risk of the investment.
2. Growth Funds: Such funds aim to achieve increase in the value of the underlying
investments through capital appreciation. Such funds invest in growth oriented securities
which can appreciate through the expansion production facilities in long run. An investor
who selects such funds should be able to assume a higher than normal degree of risk.
3. Conservative Funds: The fund with a philosophy of all things to all issue offer
document announcing objectives as: (i) To provide a reasonable rate of return, (ii) To
protect the value of investment and, (iii) To achieve capital appreciation consistent with
the fulfillment of the first two objectives. Such funds which offer a blend of immediate
average return and reasonable capital appreciation are known as middle of the road
funds. Such funds divide their portfolio in common stocks and bonds in a way to achieve
the desired objectives. Such funds have been most popular and appeal to the investors
who want both growth and income.
Investment Based Classification:
Mutual funds may also be classified on the basis of securities in which they invest. Basically, it is
renaming the subcategories of return based classification.
1. Equity Fund: Such funds, as the name implies, invest most of their investible shares in
equity shares of companies and undertake the risk associated with the investment in
equity shares. Such funds are clearly expected to outdo other funds in rising market,
because these have almost all their capital in equity. Equity funds again can be of
different categories varying from those that invest exclusively in high quality blue chip
companies to those that invest solely in the new, unestablished companies. The strength
of these funds is the expected capital appreciation. Naturally, they have a higher degree of
risk.
2. Bond Funds: such funds have their portfolio consisted of bonds, debentures, etc. this
type of fund is expected to be very secure with a steady income and little or no chance of
capital appreciation. Obviously risk is low in such funds. In this category we may come
across the funds called Liquid Funds which specialize in investing short-term money
market instruments. The emphasis is on liquidity and is associated with lower risks and
low returns.
3. Balanced Fund: The funds, which have in their portfolio a reasonable mix of equity and
bonds, are known as balanced funds. Such funds will put more emphasis on equity share

investments when the outlook is bright and will tend to switch to debentures when the
future is expected to be poor for shares.

WHY MUTUAL FUNDS?

Mutual Funds are becoming a very popular form of investment characterized by many
advantages that they share with other forms of investments and what they possess uniquely
themselves. The primary objectives of an investment proposal would fit into one or combination
of the two broad categories, i.e., Income and Capital gains. How mutual fund is expected to be
over and above an individual in achieving the two said objectives, is what attracts investors to
opt for mutual funds. Mutual fund route offers several important advantages.
Diversification: A proven principle of sound investment is diversification, which is the idea of
not putting all your eggs in one basket. By investing in many companies the mutual funds can
protect themselves from unexpected drop in values of some shares. The small investors can
achieve wide diversification on his own because of many reasons, mainly funds at his disposal.
Mutual funds on the other hand, pool funds of lakhs of investors and thus can participate in a
large basket of shares of many different companies. Majority of people consider diversification
as the major strength of mutual funds.
Expertise Supervision: Making investments is not a full time assignment of investors. So they
hardly have a professional attitude towards their investment. When investors buy mutual fund
scheme, an essential benefit one acquires is expert management of the money he puts in the fund.
The professional fund managers who supervise funds portfolio take desirable decisions viz.,
what scrips are to be bought, what investments are to be sold and more appropriate decision as
to timings of such buy and sell. They have extensive research facilities at their disposal, can
spend full time to investigate and can give the fund a constant supervision. The performance of
mutual fund schemes, of course, depends on the quality of fund managers employed.
Liquidity of Investment: A distinct advantage of a mutual fund over other investments is that
there is always a market for its unit/ shares. Moreover, Securities and Exchange Board of India
(SEBI) requires the mutual funds in India have to ensure liquidity. Mutual funds units can either
be sold in the share market as SEBI has made it obligatory for closed-ended schemes to list
themselves on stock exchanges. For open-ended schemes investors can always approach the fund
for repurchase at net asset value (NAV) of the scheme. Such repurchase price and NAV is
advertised in newspaper for the convenience of investors.
Reduced risks: Risk in investment is as to recovery of the principal amount and as to return on it.
Mutual fund investments on both fronts provide a comfortable situation for investors. The expert
supervision, diversification and liquidity of units ensured in mutual funds reduces the risks.
Investors are no longer expected to come to grief by falling prey to misleading and motivating
headline leads and tips, if they invest in mutual funds.
Safety of Investment: Besides depending on the expert supervision of fund managers, the
legislation in a country (like SEBI in India) also provides for the safety of investments. Mutual

funds have to broadly follow the laid down provisions for their regulations, SEBI acts as a
watchdog and attempts whole heatedly to safeguard investors interests.
Tax Shelter: Depending on the scheme of mutual funds, tax shelter is also available. As per the
Union Budget-2015, income earned through dividends from mutual funds is 100% tax-free at the
hands of the investors.
Minimize Operating Costs: Mutual funds having large invisible funds at their disposal avail
economies of scale. The brokerage fee or trading commission may be reduced substantially. The
reduced operating costs obviously increase the income available for investors.
Investing in securities through mutual funds has many advantages like option to reinvest
dividends, strong possibility of capital appreciation, regular returns, etc. Mutual funds are also
relevant in national interest. The test of their economic efficiency as financial intermediary lies in
the extent to which they are able to mobilize additional savings and channeling to more
productive sectors of the economy.

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.

75% of the unit holders with the prior approval of SEBI can terminate AMC of the fund.

75% of the unit holders can pass a resolution to wind-up the scheme

Broad Guidelines Issued by SEBI for a MF: SEBI is the regulatory authority of Mutual Funds. 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).

Mutual Funds need to set up a Board of Trustees and Trustee Companies. They should
also have their Board of Directors.

The net worth of the AMCs should be at least Rs.5 crore.

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.

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.
ROLE OF A FUND MANAGER
Fund managers are responsible for implementing a consistent investment strategy that reflects
the goals and objectives of the fund. Normally, fund managers monitor market and economic
trends and analyze securities in order to make informed investment decisions. Thus the role of
fund manager is very crucial.

ACCOUNT STATEMENT
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 recording of entries would be similar to the
passbook entries in the bank. In mutual fund terminology it is called Account Statement.
After investing in a mutual fund investor gets an account statement, which shows his holding
and the price at which bought units. The account statement is computer generated and cannot be
traded or transferred. The account statement shows the: -Shares holding details

holding details

the number of units outstanding

value of the holdings

All transactions relating to purchase units, redemption of units, dividend, reinvestment, etc are
shown in the account statement.

MUTUAL FUND STRUCTURE

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.
These regulations have since been replaced by the SEBI (Mutual Funds) Regulations, 1996. The
structure indicated by the new regulations is indicated as under.

THE SPONSOR: The Sponsor is the creator of the fund, establishes the mutual fund and gets it
registered with SEBI and will typically hold a number of voting shares (perhaps 100) in the
fund, but these are not entitled to any distributions or share in the equity. All of the equity
belongs to the investors, typically in the form of non-voting "preferred redeemable shares" The
voting shares generally control management of the fund, apart from limited major decisions. 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, which is formed for managing the assets of the Trust.
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, 1908. The supervisory role is fulfilled by the Board of Trustees of
the Investment Company. The board of trustees manages the MF and the sponsor executes the
trust deeds in favour of the trustees. 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.
THE ASSET MANAGEMENT COMPANY (AMC): The company that manages a mutual
fund is called an AMC. For all practical purposes, it is an organized form of a "money
portfolio manager". An AMC may have several mutual fund schemes with similar or varied
investment objectives. The AMC hires a professional money manager, who buys and sells
securities in line with the fund's stated objective.
All Asset Management Companies (AMCs) are regulated by SEBI and/or the RBI (in case the
AMC is promoted by a bank). In addition, every mutual fund has a board of directors that
represents the unit holders' interests in the mutual fund.
This entity that undertakes the designing and marketing of schemes, raises money from the
public under the schemes and manages the money on behalf of its owners. To segregate the
collected funds from this entity's own funds, the corpus is placed in a legal vehicle. It is the
character of this legal vehicle that determines the character of the Fund itself. Irrespective of the
nature of the structure, what is more fundamental is that in view of the fiduciary role of the AMC
or the fund manager towards the public, there is a need for supervision of the activities of the
AMC or fund manager by a separate body. The assets of the Trust comprise of properties of the
schemes, which are floated by the asset management company with the approval of the Trustees
Schemes may have different characteristics - they may be open or closed ended or may have a
particular investment focus or portfolio composition. Finally, the safe custody of assets of the
Trust is entrusted to one or more custodians.
THE CUSTODIAN: Custodian holds the fund's cash and investment assets. 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. Where a broker acts as de facto
custodian, it usually charges on a transactional basis.

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, keeps the books
and records of the fund, and calculates the NAV. Depending on the complexity of the fund, the
administrator's fees could be as little as a few thousand dollars a year or as much as 0.5 to 0.65
% of the NAV per annum. Sometimes the administrator's fees are included within the
management fee. In certain situations, the administrator subcontracts a part of the work,
particularly the NAV certification, to the investment manager.

REGULATIONS OF MUTUAL FUNDS IN INDIA

In India SEBI and RBI act as regulators of mutual fund.
SEBI (Mutual Fund) REGULATIONS,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.

The offer document shall contain adequate disclosure to enables the investor to make
informed decision.

Advertisement in respect of schemes should be in conformity with the SEBI prescribed

advertisement code, and discloses the method and periodicity of the valuation of
investment sales and repurchase in addition to the investment objectives.

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 closure of
subscription. However, listing is not mandatory in case the scheme provides for monthly
income or caters to the special classes of persons like senior citizen, women, children,
and physically handicapped. 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.

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, redemption, and
periodicity is disclosed in the offer document.

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.

Units of a close ended scheme may be rolled over by passing resolution by a

majority of the shareholders.

No scheme other than unit linked schemes can be opened for more than 45 days.

The AMC must specify in the offer document about the minimum subscription and the
extent of over subscription, which is intended to be retained. In the case of over
subscription, all applicants applying up to 500 units must be given full allotment
subjected to over subscription.

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.
Guaranteed returns can be provided in a scheme if such returns are fully guaranteed by
The AMC or sponsor. In such cases, there should be a statement indicating the name of
The person, and the manner in which the guarantee is to be made must be stated in the
Offer document.

A close ended scheme shall be wound up on redemption date, unless it is rolled over, 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, requires the scheme to be wound up: or if SEBI,
so directed in the interest of investors.

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.

Every asset management company for each scheme shall keep and maintain proper
books of account, records and document, 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, record, and document are maintained.

The financial year for all the schemes shall end as on march 31 of each year. Every
mutual fund or the asset management company shall prepare in respect of scheme and
the fund as specific in eleventh schedule.

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.

On and from the date of suspension of the certificate or the approval as the may be, the
mutual fund trustees or asset management company, shall cease to carry on any activity
as a mutual fund, trustee or asset management company , during the period of
suspension, and shall be subjected to the directions of the board with regard to any
records, documents, or securities that may be in its custody or control, relating to its
activities as mutual fund, trustee, or asset management company.

SEBI Guidelines (2012-13) 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. Mutual funds are also required to disclose the investment in various
types of instruments .

Percentage of in each script to the total NAV illiquid and non performing assets,
investments in derivatives and in ADRs and GDRs.

To enable the investor to make informed investment decision, mutual funds have
been directed to fully revise and update offer document and memorandum at
least once in two years.

Bring uniformity in disclosure of various categories of advertisements, with a view to

ensuring consistency and comparability across schemes of various mutual funds.

Reduce initial offer period from a maximum of 45 days to 30 days.

Dispatch statement of account once the minimum subscription amount specified

in offer document is received even before the closure of the issue.

Invest in mortgaged backed securities of investment grade given by credit rating agency.

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.

Disclose information in a revised format on unit capital, reserves, performance in terms

of dividend and rise/fall in NAV during the half year period annualized yield over the
last 1, 3, 5 years in addition to percentage of management fee, percentage of recurring
expenses to net asset, investment made in associate companies, payment made to
associate companies, payment made to associate companies for their services, and
detail of large holding, since their operation.

Declare their NAVs and sale/repurchase prices of all schemes updated on regular basis
on the AMFI website by 8.00 PM and declare NAVs of their close ended schemes on
every Wednesday.

The format for unaudited half yearly result for the mutual funds has been revised by
SEBI. 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. These results shall also
be put in their websites by mutual fond.

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. Otherwise, a
fresh offer document along with filing fee shall be filled with SEBI.

Mutual funds are required to disclose large unit-holding in the scheme, which are over
25% of the NAV.

RBI as supervisor of bank owned Mutual Funds

The first non-UTI mutual funds were started by public sector banks. Banks come under
the regulatory jurisdiction of RBI. So Bank owned mutual funds are regulated by RBI,
but it has been clarified that all the mutual funds, being primarily capital market players
come under the regulatory framework of SEBI. Thus, the bank owned fund continue to
be under the joint supervision of both RBI and SEBI. It is generally understood that all
market related and investor related activities of the fund are to be supervised by SEBI,
while any issue concerning the ownership of the AMC by bank fall under the regulatory
ambit of RBI. But RBI on bank fund should not conflict with SEBI guidelines.

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. So money market mutual funds were regulated by RBI
guidelines till 23.11.1995. 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, i.e. SEBI (MF) regulations, 1996. However RBI does retain the right to decide
whether mutual funds will be allowed to access inter-call money market. Accordingly, RBI has
placed certain restrictions through latest credit policy, with the intention of moving toward a
pure inter bank money market.

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. It is the worth of an investment with an open-end mutual fund
quoted in terms of its net asset value. That is also the amount an investor can expect if he or she
were to sell his or her units back to the issuer. Daily closing prices of all securities held by the
fund are used as a starting point. Subtract this amount for liabilities (including expenses and
commissions). And divide the result by the number of outstanding shares.
If the realizable worth of the portfolio is Rs 12 million, divided it by shares outstanding, let's say
one million units, then the NAV is Rs 12 (12/1).
If a fund's NAV a year ago was Rs 10.5 and is currently Rs 12, then your pre-tax return is 14.28
percent((12-10.5)/(10.5)*100).
An NAV signifies nothing more than the current worth of a portfolio. The NAV of a fund only
starts to make sense when compared to a benchmark index. First, it tells you the extent to which
the securities that comprise the fund's portfolio have outperformed or under performed the
index. Second, the use of certain statistical measures can also tell you whether a fund was able
to derive above-average, risk-returned schemes.
Having said this, a fund's historical NAV performance is not the best indicator of its future
performance. For equity funds, this NAV changes almost everyday with fluctuations in stock
prices. While the NAV of a
fixed-income fund is driven more by changes in rate of interest. On its own, a rising NAV only
means that assets, which form a part of the fund's portfolio, are rising and vice-versa.

.
TYPES OF LOADS
The AMC that manages your mutual fund has to bear a number of expenses. So it recovers part
of these expenses from its investors, for whom it is doing the favour of managing funds. It is
broken into two parts: annual management fee (up to 1.25 per cent for funds less than Rs 1
billion and one per cent for funds above Rs. 1 billion) and entry & exit loads.
ENTRY LOAD:
Loads normally apply to only open-ended schemes. An entry load is also called the sales load.
which is mainly to help the AMC recover expenses relating to sales literature, distribution,
advertising and agent/broker commissions. The price at which an investor buys into the fund is
a function of both the NAV and sales load. An entry load is an additional cost that an investor

pays at the point of entry. Assume that your proposed investment is Rs. 10, OOO/-. Also
assume that the current NAV of the fund is Rs. 12.00 and that the entry load is Rs.0.50. Then
you will receive 10000/12.50 = 800 units. The entry load could be different for each scheme; it
would also depend on the amount of investment and the time period of investment.
EXIT LOAD:
On the other hand, exit load (if you withdraw within a specified period) is charged while
redeeming your units. The latter is for more logical reasons, especially with income or money
market funds, where a quick withdrawal by too many investors can put pressure on the fund's
asset maturity profile. So to ensure that longer-term investors are not penalized, short-term
investors are charged an exit load. An exit load is levy that an investor pays at the point of exit.
This is levied to dissuade investors from exiting the fund. Assume that the current NAV of the
fund is Rs. 12.00 and that the exit load is Rs.0.50. Now if you sell 800 units then you stand to
receive 800X11.5 = Rs. 9200. The exit load could be different for each scheme. It would also
depend on the amount of investment and the time period of investment.

VARIOUS PLANS OF MUTUAL FUNDS

That depends on the strategy of the concerned scheme. 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 Reinvestment Plan is a plan where these dividends are reinvested in thescheme

itself.
A Growth Plan is one where no dividends are declared and the investor only gains
through capital appreciation in the NAV of the fund.

The term 'growth' is often used in a very generic sense to denote every equity mutual fund. Also
'growth' in fixed income funds, comes from reinvesting dividends. That's why in such fixed
income funds, investors have an option, and they can choose either growth through
reinvestment of dividends, or regular income by ticking on the income option.

SYSTEMATIC INVESTMENT PLAN

Besides these three plans there is one another plan whish is becoming popular that is

systematic investment plan. 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. Today many funds are offering this facility.
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, it reduces your overall cost of acquisition by a process of
rupee-cost averaging. This means that at lower prices you end up getting more units for
the same investment.

HOW MUTUAL FUND WORKS

For retail investor who does not have the time and expertise to analyze and invest in stocks and
bonds, mutual funds offer a viable investment alternative.
One can purchase shares in some mutual funds by contacting the fund directly or other mutual
fund shares are sold mainly through brokers, banks, financial planners, or insurance agents. All
mutual funds will redeem (buy back) the shares on any business day and must send the payment
within seven days. One can invest by approaching a registered broker of Mutual funds or the
respective offices of the Mutual funds in that particular town/city. 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.
The mutual fund issues shares of stock and bonds (just like any other corporation) to investors
in exchange for cash. It is interesting to note that funds do not issue a pre-determined amount of

do most corporations; new shares are issued as each new investment is made. Investors thus
become part owners of the fund itself, and thereby the assets of the fund. The fund, in turn, uses
investors' cash to purchase securities, such as stocks and bonds. The primary assets of a fund are
the securities it invests in (other assets, such as equipment, are a relatively small part of the total
assets of a fund).
Following are the various descriptions needed for the working of mutual fund:
PRICING AND VALUATION DESCRIPTION.
The value of the shares of an open-end mutual fund is readily determined Each day, the accounting
staff of a fund simply adds up the value of all the securities in the portfolio, adds in other assets,
deducts liabilities, and comes up with a net overall value. It is then a simple matter to divide the
net assets by the number of shares outstanding. This is called the net asset value, and is the price at
which investors buy and sell shares from the fund. The net asset value is listed in the financial
section of many major newspapers.'
LOAD AND NO-LOAD FUNDS DESCRIPTION
A load, or loaded, fund is one that has a sales charge. A no-load fund has no sales charge. As noted
above, not all funds have sales charges. Those that do simply add them on to the net asset value of
the fund, thus coming up with a new, higher offering price per share It is important to note that the
underlying value of the fund's shares do not change, and further, that an investor selling shares will
still receive only the net asset value A no-load fund is simpler. The net asset value is used for both
the purchase price and the selling price. Therefore, the two prices are always identical. In the case
of a load fund, the broker usually takes care of the details for you. In the case of a no-load fund,
investors usually deal directly with the fund in question.
BUYING AND SELLING FUND SHARES DESCRIPTION.
When you buy shares, 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. When you sell your
shares, the fund will pay you the NAV minus any fee the fund assesses at the time of redemption,
such as a deferred (or back-end) sales load or redemption fee. A fund's NAV goes up or down daily
as its holdings change in value.
FUND OBJECTIVES AND PROSPECTUS DESCRIPTION
A fund's objective, described in the prospectus, gives broad indications of the types of
investments a fund may make. The most important aspect of a fund is its investment objective.
The fund's objective tells investors the goals the fund seeks to achieve, and a good deal about how
it intends to achieve them. A balanced fund will generally hold stocks and bonds. A fund seeking
growth fund will utilize stocks. A fund seeking income with little or no concern for growth will
generally hold bonds. The objective of a fund is so fundamental that it generally determines the

category into which a fund will be assigned. Listed below are some examples of major investment
objective categories: >

Preservation of Capital & LiquidityAchieved by investing in very short-term bonds

>

IncomeAchieved by investing in bonds

>

BalancedAchieved by investing in bonds and stocks

>

GrowthAchieved 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.
The prospectus must explain the programs and policies the management follows to achieve the
fund's investment goals. 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.
Dividend Payments A fund may earn income in the form of dividends and interest on the
securities in its portfolio. The fund then pays its shareholders nearly all of the income (minus
disclosed expenses) it has earned in the form of dividends.
Capital Gains Distributions They are paid from any profits the fund realizes from selling
investments. 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 DISTRIBUTIONS (minus any capital losses) to investors.
Increased NAV If the market value of a fund's portfolio increases after deduction of expenses
and liabilities, then the value (NAV) of the fund and its shares increases. The higher NAV
reflects the higher value of your investment.
With respect to dividend payments and capital gains distributions, funds usually will give a
choice: the fund can send a check or other form of payment, or the dividends or distributions
reinvested in the fund to buy more shares (often without paying an additional sales load.
A fund may sell investments for a number of reasons:

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
fund .

INFORMATION NEEDS TO EVALUATE MUTUAL FUNDS

There are three key pieces of information that help to evaluate a mutual fund.

PAST PERFORMANCE: It measures the fund's historical returns, whether the returns are
consistent, and how they stack up against the returns of comparable funds. While there's no
guarantee that a fund's future performance will equal its current or past record.

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. But if you're investing to meet short-term goals or preserve capital,
you may want a fund that poses less risk to principal.
COST: It measures how much you pay in sales charges or commissions, fees, and annual
asset-based expenses. Since these costs directly affect your return, you may want to
compare the expense ratios and sales charges of various funds as part of your evaluation
process. Higher fees may correlate with higher risk if the fund manager takes added risk to
help reduce the impact of fees on return.

FACTORS TO CONSIDER
Thinking about long-term investment strategies and tolerance for risk can help to decide what
type of fund is best suited. But one should also consider the effect that fees and taxes will have
on the returns over time.
DEGREES OF RISK
Mutual fund investments are not totally risk free. In fact, 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. A very important risk
involved in mutual fund investments is the market risk. When the market is in doldrums, most of
the equity funds will also experience a downturn. However, the company specific risks are largely
eliminated due to professional fund management
All funds carry some level of risk. One can lose some or all of the money invests principal
-because the securities held by a fund go up and down in value. Dividend or interest payments
may also fluctuate as market conditions change.
Before investing, 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. Financial theorystates that an investor can reduce his total risk by holding a portfolio of assets instead of only one
asset. This is because by holding all your money in just one asset, the entire fortunes of your
portfolio depend on this one asset. By creating a portfolio of a variety of assets, this risk is
substantially reduced.

HOW SAFE ARE MUTUAL FUNDS:

As financial intermediaries, they do not come without risk. Also when defined in terms of losing
money, the risk in mutual funds is not dramatically different than that present in other financial
instruments. Still, they are relatively safer and offer a more convenient way on investing.
With mutual funds you can control risk by choosing a fund that given your risk profile., you
believe is the best. On the other hand, picking stocks individually that will both meet your
objectives and match your profile can be tough.
A mutual fund portfolio is also easier to monitor than individual shares. They also come
without
systemic risks (like bad deliveries). They offer quick liquidity Most private mutual funds can
be
redeemed in three to four working days, unlike a fixed deposit that is more likely to be received a
month after its maturity, or an equity share after the end of its settlement period (or depending up
on your broker). This too cuts the overall risk associated with investing, often not so visible and
hence not accounted by many investors.
TAX CONSEQUENCES
When an individual stock or bond is bought and hold, income tax has to be paid each year
on the dividends or interest received.
Mutual funds are different. When you buy and hold mutual fund shares, you will owe income tax
on any ordinary dividends in the year you receive or reinvest them. And, in addition to owing
taxes on any personal capital gains when you sell your shares, you may also have to pay taxes
each year on the fund's capital gains. That's because 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 - - such as a municipal bond fund - - some or all of your
dividends will be exempt from federal (and sometimes state and local) income tax.
But if you receive a capital gains distribution, 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. SEC rules
require mutual funds to disclose in their prospectuses after-tax returns. In calculating after-tax
returns, mutual funds must use standardized formulas similar to the ones used to calculate beforetax average annual total returns. When comparing funds, be sure to take taxes into account.

RETURNS
As per SEBI Regulations, mutual funds are not allowed to assure returns. However, 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. But in general, 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, short-term abnormal profits will not be sustainable in the long run. 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.

ADVANTAGES AND DISADVANTAGES

Every investment has advantages and disadvantages. But it's important to remember that features
that matter to one investor may not be important to you. Whether any particular feature is an
advantage for you will depend on your unique circumstances. For some investors, mutual funds
provide an attractive investment choice because they generally offer the following advantages:

Professional Management Professional money managers research, select, and monitor

the performance of the securities the fund purchases.

Diversification - - Diversification is an investing strategy that can be neatly summed up as

"Don't put all your eggs in one basket." Spreading your investments across a wide range of
companies and industry sectors can help lower your risk if a company or sector fails. Some
investors find it easier to achieve diversification through ownership of mutual funds rather
than through ownership of individual stocks or bonds.

Affordability - - Some mutual funds accommodate investors who don't have a lot of
money to invest by setting relatively low amounts for initial purchases, subsequent
monthly purchases or both.

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, regular withdrawal plans and dividend
reinvestment plans, you can systematically invest or withdraw funds according to your
needs and convenience.

Easy entry and exit -- Filling a mutual fund application or a redemption form is all that

it takes while entering or exiting a mutual fund. But with equity shares, you need to
have an account with a stockbroker (for buying & selling) and another with a depository
participant. Some investors may find this cumbersome.

Tax benefits Section 88 for Equity Linked Saving Schemes, ability to reinvest your
proceeds from capital gains into mutual funds under section 54EA & 54EB and tax-free
status for equity oriented funds for three years starting from April 1, 1999 are popular
benefits that investors in mutual funds can avail of.

TransparencyOne get regular information on the value of the investment in addition to

disclosure on the specific investments made by ones scheme, the proportion invested in
each class of assets and the fund manager's investment strategy and outlook.

Well RegulatedAll Mutual Funds are registered with SEBI and they function within
the provisions of strict regulations designed to protect the interests of investors. The
operations of Mutual Funds are regularly monitored by SEBI.

But mutual funds also have features that some investors might view as Disadvantages, such as:

Costs Despite Negative Returns -- Investors must pay sales charges, annual fees, and other
expenses regardless of how the fund performs. And, depending on the timing of their
investment, 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.

Lack of Control - - Investors typically cannot ascertain the exact make-up of a fund's
portfolio at any given time, nor can they directly influence which securities the fund
manager buys and sells or the timing of those trades.

Price Uncertainty - - With an individual stock, you can obtain real-time (or close to real
time) pricing information with relative ease by checking financial websites or by
calling your broker. You can also monitor how a stock's price changes from hour to hour
or even second to second. By contrast, with a mutual fund, 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. In general, mutual
funds must calculate their NAV at least once every business day.

CHAPTER 2
RESEACH OBJECTIVES
AND METHODOLOGY

OBJECTIVES OF STUDY
Following are the objectives of the study:
1. To check factors considered by investors while investing in mutual funds.
2. To check the satisfaction level of investors towards mutual funds.
3. To know about investors' investment preferences towards mutual fund houses.
4. To check awareness level of people towards mutual funds.

RESEARCH METHODOLOGY
Research Methodology - is a way to systematically solve the research problem. The Research
Methodology includes the various methods and techniques for conducting a research Marketing
Research is the systemic design, collection, analysis and reporting of data and finding relevant
solution to a specific marketing situation or problem."
D. Slesinger and M. Stephonson in the encyclopedia of Social Sciences define research as "the
manipulation of things, concepts or symbols for the purpose of generalizing to extend, correct or
verify knowledge, whether that knowledge aids in construction of theory or in the practice of an
art."
Research is, thus, an original contribution to the existing stock of knowledge making for its
advancement. The purpose of Research is to discover answers to he questions through the
application of scientific procedures. My project had a specific framework for collecting data in an
effective manner. Such framework is called 'Research Design". I follow the research process
consisted of following steps:
A. Defining the problems and research objectives: It is said, " a problem well defined is half
solved." The first step done was to define the project under study and decided the research
objective. The objective of my research was to know the customer Perception towards
mutual funds.
B. Developing the research plan: The second stage of my study consisted of developing the
most efficient plan for gathering the relevant data. The method adopted by me for carrying
out study was as followed:
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 unitsThe population that was targeted consists of businessmen, teachers, bank employees, etc.
Sample sizeThe sample size for my study was -50
Sampling procedureRandom sampling method was used.

C. Data Collection:
Information was collected from both Primary and Secondary data
Primary sourcesPrimary data are those, which are collected afresh and for the first time, and thus happen to be
original in character. 1 had collected Primary data by conducting surveys through Questionnaire,
which includes close-ended questions.
Secondary sourcesSecondary 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, Newspapers, Books, Journals,etc.
D. Analysis of Data:
After collecting the data the analysis of data had been through various statistical tools
and techniques. The analysis of data required a number of closely related operations
such as establishment of categories, the application of these categories to raw data
through coding, tabulation and then drawing the statistical inferences. The unwieldy
data was condensed into few manageable groups and tables for further analysis. Thus it
helped to classify the raw data into some purposeful and usable categories.
E. Interpretations:
After analysis Interpretations were done i.e. 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. After
tabulation the analysis work of my project was based on the computation of various
statistical formulae-Percentages, Values, Pie charts and Graphs and Bar Diagrams.

LIMITATIONS
Besides following scientific methodologies the study has come across some limitations. These are:
1. The sample size is small as compared to the population, so it may not be the true
representative.
2. Due to limited time countrywide survey was not possible. Hence only Local Area has been
taken for the study.
3. Some people were reluctant to fill the questionnaire. They were not willing to disclose
their investment plans.
4. The possibility of respondents being biased cannot be ruled out.

CHAPTER 3
ANALYSIS AND
INTERPRETATION

Q-1 What is your monthly income ?

Responses

No of Respondents

Less than 10,000

10,000-20,000

12

20,000-30,000

16

More than 30,000

18

Total

50
Table 1.1

20
18

18
16

16
14
12

12
10
8
6
4

4
2
0

less than 10,000

10,000-20,000

20,000-30,000

more than 30,000

Fig 1.1

INTERPRETATION: 36% of the respondents have monthly income more than 30,000
and 8% of the respondents have monthly income less than 10,000 that means higher
income group of respondents have invested in different schemes of mutual fund .
Q-2. How much of your monthly income do you invest in mutual funds?

Responses

No of Respondents

Less than 5,000

26

5,000-10,000

22

10,000-15,000

More than 15,000

Total

50
Table 1.2

Monthly Income Invest in Mutual funds

30
26
25
22
20
15
10
5
2
0
less than 5,000

5,000- 10,000

10,000-15,000

0 15,000
more than

Fig 1.2

INTERPRETATION: Approximately 52% of the respondents invest their monthly

income less than 5,000 in mutual funds and 44% of the respondents invest their
monthly income between 5,000-10,000 in mutual funds and no one respondents
who invest more than 15,000 in mutual funds.
Q-3 In how many mutual fund house do you invest ?

Responses

No of Respondents

26

12

10

More than 3

Total

50
Table 1.3

30
26
25
20
15
12
10

10
5

2
0
1

more than 3

Fig 1.3

INTERPRETATION: Out of 50 respondents 26 respondents have invested in single

mutual fund, 12 have invested in two mutual funds and 10 respondents invested in
more than 3 mutual funds .it means maximum persons invest in single mutual funds.
Q-4. In which fund house do you generally invest ?

Responses

No of Respondents

UTI

18

Axis mutual fund

L&T mutual fund

SBI mutual fund

12

Other specify

TOTAL

50
Table 1.4

20
18

18

16
14

12

12
10
8

7
5

6
4
2
0

Fig 1.3

INTERPRETATION: Out of 50 respondents 18 respondents have invested in UTI

mutual funds, 12 respondents have invested in SBI mutual fund ,8 respondents invest
in axis mutual fund and 5 respondents who are invested in other mutual funds.
Q-5 In which type of fund house do you generally invest ?

Responses

No of Respondents

Debt oriented

14

Equity oriented

24

Balanced fund

Money market fund

Total

50
Table 1.5

30
24

25
20
14

15
10

Balanced Fund

Money market Fund

5
0
Debt oriented

Equity oriented

fig 1.5
INTERPRETATION: Most of respondents generally invest in equity oriented fund
house which show in fig 1.5 , some of take debt oriented . Out of 50 respondents 24
respondents take equity oriented, 14 respondents take debt oriented ,others
respondents take equal balanced fund and money market fund.

Q-6. Important factors to you consider before choosing an investment ?

Responses

No of Respondents

Risk

16

Return

18

Liquidity

Marketability

Total

50
Table 1.6

20
18

18
16

16

14
12
10

6
4
2
0
Risk

Return

Liquidity

Marketability

Fig 1.6

INTERPRETATION: Most of respondents generally want of return on their investment.

Out of 50 respondents 18 respondents want return on investment, 16 respondents
want taken risk on investment, others respondents want to take equal Liquidity and
Marketability.
Q-7. What is your purpose for investing in mutual funds ?

Responses

No of Respondents

Tax benefits

Regular income

14

Growth

26

Risk diversification

Total

50
Table 1.7

30
26
25
20
14

15
10

5
2
0
Tax benefits

Regular income

Growth

Risk diversification

Fig 1.7

INTERPRETATION: Out of 50 respondents 26 respondents purpose for investing in

mutual funds for growth of mone, 14 respondents want regular income facility, 8
respondents purpose for take tax benefits,

and others respondents want risk

diversification facility.
Q-8. What is your expected return ?

Responses

No of Respondents

5%- 10%

14

10%- 15%

16

15%- 20%

18

Above 20%

Total

50
Table 1.8

20
18

18
16

16
14

14
12
10
8
6
4

2
0
5%-10%

10%-15%

15%-20%

above20%

Fig 1.8

INTERPRETATION: Approximately 18 respondents out of 50 respondents want

expected return between 15%-20%, 16 respondents want expected return between
10%-15%, 14 respondents want expected return between 5%-10% and others
respondents want return above 20%.
Q-9. what is your risk bearing capacity ?

Responses

No of Respondents

Less than 5%

30

5%- 10%

16

10%- 15%

Above 15%

Total

50
Table 1.9

35
30

30
25
20

16
15
10
4

5
0
less than 5%

5%-10%

10%-15%

0 15%
above

Fig 1.9

INTERPRETATION: Out of 50 respondents 30 availed risk bearing capacity less than

5%, 16 respondents have risk bearing capacity between 5%-10%, 4 respondents have
risk bearing capacity between 10%-15%, no one who s risk bearing capacity above
15%.

Q-10. what is your primary goal of your investment ?

Responses

No of Respondents

Children education

Retirement benefits

24

Marital purpose

Housing

12

Total

50

Table 1.10

30
24

25
20
15

12
10

8
6

5
0
children education Retirement benefits

Marital purpose

Housing

Fig 1.10

INTERPRETATION: Most the respondents primary goal of invest retirement benefits after
retirement. Out of 50 respondents 24 respondents invest for retirement benefits, 12 respondents
purpose for investing in mutual funds is take house ,8 respondents want invest for children
education, others invest for martial purpose.
Q-11. What is your future corpus ?

Responses

No of Respondents

Less than 3 lakh

10

3 lakh- 6 lakh

24

6 lakh- 9 lakh

10

More than 9 lakh

Total

50
Table no 1.11

30
24

25
20
15
10

10

10
6

5
0
less than 3 lakh

3 lakh -6 lakh

6 lakh -9 lakh

more than 9 lakh

Fig 1.11

INTERPRETATION: Out of 50 respondents 24 respondents future corpus between 3

lakh 6 lakh, 10 respondents have future corpus less than 3 lakh, and others 10
respondents future corpus have between 6lakh- 9 lakh.
Q-12. What is your time horizon for investment ?

Responses

No of Respondents

Less than 1 year

1 year- 2 year

12

2 year- 3 year

20

More than 3 year

16

Total

50
Table 1.12

25
20

20

16
15
12
10

5
2
0
less than 1 year

1year - 2 year

2 year -3year

more than 3 year

Fig 1.12

INTERPRETATION: Generally most of the respondents time horizon for investing 2

year- 3 year. Out of 50 respondents 20 respondents invest after 2 year to 3 year, 16
respondents invest for more than 3 year ,12 respondents invest between 1 year 2
year.
Q-13. How do you intend to use the income earned from investment ?

Responses
Reinvest

No of Respondents
between

20%-80%

of 26

earning from investment

Reinvest total earnings

16

Receive 80% and remaining reinvest

TOTAL

50
Table 1.13

30

26

25
20

16

15
8

10
5
0

Fig 1.13

INTERPRETATION: Out of 50 respondents 26 respondents want reinvest between

20% -80% of earning , 16 respondents want reinvest total earnings, 8 respondents
fever on receive 80% and remaining reinvest in mutual funds.
Q-14. How do you fine the services provided by the mutual fund houses ?

Responses

No of Respondents

Excellent

Very good

24

Good

10

Fair

10

Poor

Nil

TOTAL

50
Table 1.14

30
24

25
20
15
10

10

10

Good

Fair

6
5
0
Excellent

Very good

0
Poor

Fig 1.14
INTERPRETATION:Out of 50 respondents 24 respondents very good response service
provided by mutual funds , 6 respondents who tell excellent services provided by
mutual funds , others respondents equal response about good and fair.

CHAPTER 4
FINDINGS AND
CONCLUSION

FINDINGS

Investors consider risk, return, liquidity and marketability while investing the funds. Out of
this investors mostly consider return with expected return of 15 to 20 percent.
Most of the investors are satisfied with mutual fund houses because they are fulfilling the
goal of investors for investment. Almost 50% investors are highly satisfied with the
performance of fund houses.
Most of the investors prefer government mutual fund houses like UTI because it is giving the
expected return to the investors. 36% of the investors prefer to invest in UTI mutual fund
house.
Most of the investors are fully aware about mutual fund houses.Few investors do not know
the procedure of investment but they are still investing in mutual fund houses.
The purpose of most of the investors to invest in mutual fund is growth of the money with the
primary goal of retirement benefits.
Most of the investors are risk averse. They do not want to take risk. Most of the investors
have risk bearing capacity of less than 5%.
Most of the investors reinvest between 20%to 80% of earnings from investment. Around
50% investors reinvest their20 to 80% earnings from investment

CONCLUSION
From this study it is observed that few people like to invest in the Mutual Funds because of
ignorance, lack of knowledge or due to loss in faith. About half of the people invest less than 5000/of their income in various investments avenues. Equity oriented and Debt oriented are the most
preferred investment avenues in mutual funds industry.
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. About 60% of the people risk
bearing capacity is less than 5% in Mutual Funds. However most of the people are satisfied with the
working of the Mutual Funds. A mutual fund brings together a group of people and invests their
money in stocks, bonds, and other securities. The advantages of mutual funds 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. The biggest problems with mutual funds are their costs
and fees.

CHAPTER 5
SUGGESTIONS

SUGGESTIONS
After the analysis of the consumer perception towards mutual funds along with other products
and services following suggestions can be given: The Mutual fund industry should try to improve its market intelligence system. This would
keep it know its customer better and it will get more information about the competitors and
the forces affecting the market.

The Mutual fund industry 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.

The Mutual fund industry 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 customer should be fully satisfied and delighted so that they go a long way with Mutual
fund industry.

CHAPTER 6
BIBLIOGRAPHY

BIBLIOGRAPHY
The Times of India Newspapar
Financial Services I.M Pandey
WEBSITES:
http://www.mutualfundindia.com/
http://www.rediff.com/getahead/2005/sep/21fund.htm

http://www.moneycontrol.com/mutualfundindia/
http://www.wikipedia.org/

CHAPTER 7
ANNEXURE

QUESTIONNAIRE
I am the student of MBA, University School of Management, Kurukshetra University, Kurukshetra
conducting a survey on the 'Consumer Perception about Mutual Funds' Kindly cooperate in filling
this questionnaire. Your information will be kept confidential.
Q.1 What is your monthly income?
a) less than 10,000
c) 20000-30000

b) 10000-20000
d) more than 30000

Q.2 How much of your monthly income do you invest in mutual funds ?
a) less than 5000
b) 5000-10000
c) 10000-15000
d) more than 15000

Q.3 In how many mutual fund house do you invest?

a) 1
b) 2
c) 3
d) more than 4
Q.4 In which fund house do you generally invest?
a) UTI
b) Axis mutual fund
c) L&T mutual fund
d) SBI mutual fund
e) other specify..
Q.5 In which type of fund house do you generally invest?
a) Debt oriented
b) Equity oriented
c) Balanced fund
d) Money market fund
Q.6 Important factors to you consider before choosing an investment ?
a) Risk
b) Return
c) Liquidity
d) Marketability
Q.7 What is your purpose for investing in mutual funds?
a) Tax benefits
b) Regular income
c) Growth
d) Risk diversification
Q.8 What is your expected return?
a) 5%-10%
c) 15% -20%

b) 10%- 15%
d) above 20%

Q.9 What is your risk bearing capacity?

a) less than 5%
c) 10%-15%

b) 5%- 10%
d) above 15%

Q.10 What is your primary goal of your investment?

a) Education
b) Retirement benefits
c) Marital purpose
d) Housing

Q.11 What is your future corpus?

a) less than 3 lakh
c) 6 lakh-9 lakh

b)3 lakh-6 lakh

d)more than 9 lakh

Q.12 What is your time horizon for investment?

a) less than 1 year
b)1year-2 year
c) 2 year-3 year
d) more than 3 year

Q.13 How do you intend to use the income earned from investment?
a) Reinvest between 20-80% of earnings from investment
b) Reinvest total earnings
c) Receive 80% and remaining reinvest.
Q. 14 How do you find the services provided by the mutual fund houses?
a) Excellent
c) Good
e) Poor

b) Very Good
d) Fair

PERSONAL INFORMATION
NAME.AGE
SEX.OCCUPATION