A PROJECT REPORT

ON
MUTUAL FUNDS IS THE BETTER
INVESTMENTS PLAN
Submitted in patia! "u!"i!!ment "#
MASTER OF BUSINESS ADMIMISTRATION
P#$amme #"
INSTITUTE OF MANA%EMENT TECHNOLO%&
%HA'IABAD
Bat()*++,-+.
Submitted b/ 0- Unde %uidan(e 0-
A1HILESH MISHRA CA SHARAD CHAUHAN
MBA2 T)ee &ea P#$amme3 Mana$e A((#unt4
Bat() 2*++,-*++.3 Uttam Su$a Mi!!4
Limited
En#!ment N#-,*5+*6.7 C#p#te #""i(e N#ida

Depatment #" Bu4ine44 Mana$ement
INSTITUTE OF MANA%EMENT TECHNOLO%&
%HA'IABAD
AC1NO8LED%EMENT
With regard to my Project with Mutual Fund I would like to thank each and every one
who offered help, guideline and support whenever required
First and foremost I would like to e!press gratitude to Manager "#I
kanwali $oad %ehradoon and other staffs for their support and guidance in the Project
work I am e!tremely grateful to my guide, CA S)aad C)au)an for their valua&le
guidance and timely suggestions I would like to thank all faculty mem&ers of 'ttam
"ugar Mills (imited for the valua&le guidance) support
I would also like to e!tend my thanks to my mem&ers and friends for their
support specially M*+ +nuj Panday officer I,'ttam "ugar Mills (imited
"haranpur ) Mr $ajeev -oyal consultant, "ales ta!, income ta! +nd lastly, I would
like to e!press my gratefulness to the parent.s for seeing me through it all
A1HILESH MISHRA


CERTIFICATE
,his is to certify that Mr +khilesh Mishra a student of IM,/*%( -ha0i&ad has completed
project work on MUTUAL FUNDS IS THE BETTER INVESTMENTS PLAN under my
guidance and supervision
I certify that this is an original work and has not &een copied from any source
"ignature of -uide
1ame of Project -uide CA S)aad C)au)an
%ate/
DECLERATION
I here&y declare that this Project $eport entitled 2,34 M','+( F'1% I" #4,,4$
I154",M41, P(+1 in "#I Mutual Fund su&mitted in the partial fulfillment of the
requirement of Master of #usiness +dministration 6M#+7 of I1",I,',4 8F
M+1+-4M4, ,4*318(8-9, -3+:I+#+% is &ased on primary ) secondary
data found &y me in various departments, &ooks, maga0ines and we&sites ) *ollected
&y me in under guidance of *+ "harad *hauhan
%+,4; +<3I(4"3 MI"3$+
M#+ 6,hree 9ears7
4nrollment 1o=>?@>ABC


E9ECUTIVE SUMMAR&
In few years Mutual Fund has emerged as a tool for ensuring one.s financial well
&eing Mutual Funds have not only contri&uted to the India growth story &ut have also
helped families tap into the success of Indian Industry +s information and awareness
is rising more and more people are enjoying the &enefits of investing in mutual funds
,he main reason the num&er of retail mutual fund investors remains small is that nine
in ten people with incomes in India do not know that mutual funds e!ist #ut once
people are aware of mutual fund investment opportunities, the num&er who decide to
invest in mutual funds increases to as many as one in five people ,he trick for
converting a person with no knowledge of mutual funds to a new Mutual Fund
customer is to understand which of the potential investors are more likely to &uy
mutual funds and to use the right arguments in the sales process that customers will
accept as important and relevant to their decision
,his Project gave me a great learning e!perience and at the same time it gave me
enough scope to implement my analytical a&ility ,he analysis and advice presented in
this Project $eport is &ased on market research on the saving and investment practices
of the investors and preferences of the investors for investment in Mutual Funds ,his
$eport will help to know a&out the investors. Preferences in Mutual Fund means +re
they prefer any particular +sset Management *ompany 6+M*7, Which type of
Product they prefer, Which 8ption 6-rowth or %ividend7 they prefer or Which
Investment "trategy they follow 6"ystematic Investment Plan or 8ne time Plan7 ,his
Project as a whole can &e divided into two parts
,he first part gives an insight a&out Mutual Fund and its various aspects, the *ompany
Profile, 8&jectives of the study, $esearch Methodology 8ne can have a &rief
knowledge a&out Mutual Fund and its &asics through the Project
,he second part of the Project consists of data and its analysis collected through
survey done on >@@ people For the collection of Primary data I made a questionnaire
and surveyed of >@@ people I also taken interview of many People those who were
coming at the "#I #ranch where I done my Project I visited other +M*s in
%ehradoon to get some knowledge related to my topic I studied a&out the products
and strategies of other +M*s in %ehradoon to know why people prefer to invest in
those +M*s ,his Project covers the topic 2,34 M','+( F'1% I" #4,,4$
I154",M41, P(+1 ,he data collected has &een well organi0ed and presented I
hope the research findings and conclusion will &e of use
CONTENTS

+cknowledgement
%eclaration
4!ecutive "ummary

*hapter / ? I1,$8%'*,I81
*hapter / > *8MP+19 P$8FI(4
*hapter / D 8#E4*,I54" +1% "*8P4
*hapter / F $4"4+$*3 M4,38%8(8-9
*hapter / = %+,+ +1+(9"I" +1% I1,4$P$4,+,I81
*hapter / A FI1%I1-" +1% *81*('"I81"
*hapter / G "'--4",I81" ) $4*8MM41%+,I81"
#I#(I8-$+P39

MUTUAL FUNDS

ALL ABOUT MUTUAL FUNDS
8HAT IS MUTUAL FUND
B& STRUCTURE
B& NATURE
E:UIT& FUND
DEBT FUNDS
B& INVESTMENT OBJECTIVE
OTHER SCHEMES
PROS ; CONS OF INVESTIN% IN MUTUAL FUNDS
ADVANTA%ES OF INVESTIN% MUTUAL FUNDS
DISADVANTA%ES OF INVESTIN% MUTUAL FUNDS
MUTUAL FUNDS INDUSTR& IN INDIA
MAJOR PLA&ERS OF MUTUAL FUNDS IN INDIA
HISTOR& OF THE INDIAN MUTUAL FUND INDUSTR&
CATE%ORIES OF MUTUAL FUNDS
INVESTMENT STRATE%IES
8OR1IN% OF A MUTUAL FUND
%UIDELINES OF THE SEBI FOR MUTUAL FUND
COMPANIES DISTRIBUTION CHANNELS
DOES FUND PERFORMANCE AND RAN1IN% PERSIST<
PORTFOLIO ANAL&SIS TOOLS
RESEARCH REPORT
OBJECTIVE OF RESEARCH
SCOPE OF THE STUD&
DATA SOURCES
SAMPLIN%
DATA ANAL&SIS
:UESTIONNAIRE


*hapter / ?
Introduction
INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS
ASPECTS=
Mutual fund is a trust that pools the savings of a num&er of investors who share a
common financial goal ,his pool of money is invested in accordance with a stated
o&jective ,he joint ownership of the fund is thus 2Mutual, ie the fund &elongs to all
investors ,he money thus collected is then invested in capital market instruments
such as shares, de&entures and other securities ,he income earned through these
investments and the capital appreciations reali0ed are shared &y its unit holders in
proportion the num&er of units owned &y them ,hus a Mutual Fund is the most
suita&le investment for the common man as it offers an opportunity to invest in a
diversified, professionally managed &asket of securities at a relatively low cost +
Mutual Fund is an investment tool that allows small investors access to a well/
diversified portfolio of equities, &onds and other securities 4ach shareholder
participates in the gain or loss of the fund 'nits are issued and can &e redeemed as
needed ,he funds 1et +sset value 61+57 is determined each day
Investments in securities are spread across a wide cross/section of industries and
sectors and thus the risk is reduced %iversification reduces the risk &ecause all stocks
may not move in the same direction in the same proportion at the same time Mutual
fund issues units to the investors in accordance with quantum of money invested &y
them Investors of mutual funds are known as unit holders
When an investor su&scri&es for the units of a mutual fund, he &ecomes part owner of
the assets of the fund in the same proportion as his contri&ution amount put up with
the corpus 6the total amount of the fund7 Mutual Fund investor is also known as a
mutual fund shareholder or a unit holder
+ny change in the value of the investments made into capital market instruments
6such as shares, de&entures etc7 is reflected in the 1et +sset 5alue 61+57 of the
scheme 1+5 is defined as the market value of the Mutual Fund schemeHs assets net of
its lia&ilities 1+5 of a scheme is calculated &y dividing the market value of schemeHs
assets &y the total num&er of units issued to the investors
ADVANTA%ES OF MUTUAL FUND
Portfolio %iversification
Professional management
$eduction I %iversification of $isk
(iquidity
Fle!i&ility ) *onvenience
$eduction in ,ransaction cost
"afety of regulated environment
*hoice of schemes
,ransparency
DISADVANTA%E OF MUTUAL FUND
1o control over *ost in the 3ands of an Investor
1o tailor/made Portfolios
Managing a Portfolio Funds
%ifficulty in selecting a "uita&le Fund "cheme
HISTOR& OF THE INDIAN MUTUAL FUND INDUSTR&
,he mutual fund industry in India started in ?CAD with the formation of 'nit ,rust of
India, at the initiative of the -overnment of India and $eserve #ank ,hough the
growth was slow, &ut it accelerated from the year ?CBG when non/',I players entered
the Industry
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
&oth qualities wise as well as quantity wise #efore, the monopoly of the market had
seen an ending phaseJ the +ssets 'nder Management 6+'M7 was $sAG &illion ,he
private sector entry to the fund family raised the +um to $s FG@ &illion in March
?CCD and till +pril >@@FJ it reached the height if $s ?=F@ &illion
,he Mutual Fund Industry is o&viously growing at a tremendous space with the
mutual fund industry can &e &roadly put into four phases according to the
development of the sector 4ach phase is &riefly descri&ed as under
Fi4t P)a4e > 576?-.@
'nit ,rust of India 6',I7 was esta&lished on ?CAD &y an +ct of Parliament &y the
$eserve #ank of India and functioned under the $egulatory and administrative control
of the $eserve #ank of India In ?CGB ',I was de/linked from the $#I and the
Industrial %evelopment #ank of India 6I%#I7 took over the regulatory and
administrative control in place of $#I ,he first scheme launched &y ',I was 'nit
"cheme ?CAF +t the end of ?CBB ',I had $sA,G@@ crores of assets under
management
Se(#nd P)a4e > 57.@-577A 2Ent/ #" Pub!i( Se(t# Fund43
?CBG marked the entry of non/ ',I, pu&lic sector mutual funds set up &y pu&lic sector
&anks and (ife Insurance *orporation of India 6(I*7 and -eneral Insurance
*orporation of India 6-I*7 "#I Mutual Fund was the first non/ ',I Mutual Fund
esta&lished in Eune ?CBG followed &y *an&ank Mutual Fund 6%ec BG7, Punja&
1ational #ank Mutual Fund 6+ug BC7, Indian #ank Mutual Fund 61ov BC7, #ank of
India 6Eun C@7, #ank of #aroda Mutual Fund 68ct C>7 (I* esta&lished its mutual fund
in Eune ?CBC while -I* had set up its mutual fund in %ecem&er ?CC@+t the end of
?CCD, the mutual fund industry had assets under management of $sFG,@@F crores
T)id P)a4e > 577A-*++A 2Ent/ #" PiBate Se(t# Fund43
?CCD was the year in which the first Mutual Fund $egulations came into &eing, under
which all mutual funds, e!cept ',I were to &e registered and governed ,he erstwhile
<othari Pioneer 6now merged with Franklin ,empleton7 was the first private sector
mutual fund registered in Euly ?CCD
,he ?CCD "4#I 6Mutual Fund7 $egulations were su&stituted &y a more comprehensive
and revised Mutual Fund $egulations in ?CCA ,he industry now functions under the
"4#I 6Mutual Fund7 $egulations ?CCA +s at the end of Eanuary >@@D, there were DD
mutual funds with total assets of $s ?,>?,B@= crores
F#ut) P)a4e > 4in(e Febua/ *++A
In Fe&ruary >@@D, following the repeal of the 'nit ,rust of India +ct ?CAD ',I was
&ifurcated into two separate entities 8ne is the "pecified 'ndertaking of the 'nit
,rust of India with assets under management of $s>C,BD= crores as at the end of
Eanuary >@@D, representing &roadly, the assets of '" AF scheme, assured return and
certain other schemes
,he second is the ',I Mutual Fund (td, sponsored &y "#I, P1#, #8# and (I* It is
registered with "4#I and functions under the Mutual Fund $egulations consolidation
and growth +s at the end of "eptem&er, >@@F, there were >C funds, which manage
assets of $s?=D?@B crores under F>? schemes
CATE%ORIES OF MUTUAL FUND0

Mutual funds can &e classified as follow ;
Ba4ed #n t)ei 4tu(tue0
8pen/ended funds; Investors can &uy and sell the units from the fund, at any point of
time
*lose/ended funds; ,hese funds raise money from investors only once ,herefore,
after the offer period, fresh investments can not &e made into the fund If the fund is
listed on a stocks e!change the units can &e traded like stocks 64g, Morgan "tanley
-rowth Fund7 $ecently, most of the 1ew Fund 8ffers of close/ended funds provided
liquidity window on a periodic &asis such as monthly or weekly $edemption of units
can &e made during specified intervals ,herefore, such funds have relatively low
liquidity
Ba4ed #n t)ei inBe4tment #bCe(tiBe0
EDuit/ "und4; ,hese funds invest in equities and equity related instruments With
fluctuating share prices, such funds show volatile performance, even losses 3owever,
short term fluctuations in the market, generally smoothens out in the long term,
there&y offering higher returns at relatively lower volatility +t the same time, such
funds can yield great capital appreciation as, historically, equities have outperformed
all asset classes in the long term 3ence, investment in equity funds should &e
considered for a period of at least D/= years It can &e further classified as;
i3 IndeE "und4/ In this case a key stock market inde!, like #"4 "ense! or 1ifty is
tracked ,heir portfolio mirrors the &enchmark inde! &oth in terms of composition
and individual stock weightages
ii3 EDuit/ diBe4i"ied "und4- ?@@K of the capital is invested in equities spreading
across different sectors and stocks
iiiF3 DiBidend /ie!d "und4- it is similar to the equity diversified funds e!cept that they
invest in companies offering high dividend yields
iB3 T)emati( "und4- Invest ?@@K of the assets in sectors which are related through
some theme
eg /+n infrastructure fund invests in power, construction, cements sectors etc
B3 Se(t# "und4- Invest ?@@K of the capital in a specific sector eg / + &anking
sector fund will invest in &anking stocks
Bi3 ELSS/ 4quity (inked "aving "cheme provides ta! &enefit to the investors
Ba!an(ed "und0 ,heir investment portfolio includes &oth de&t and equity +s a result, on
the risk/return ladder, they fall &etween equity and de&t funds #alanced funds are the ideal
mutual funds vehicle for investors who prefer spreading their risk across various instruments
Following are &alanced funds classes;
i3 Debt-#iented "und4 -Investment &elow A=K in equities
ii3 EDuit/-#iented "und4 -Invest at least A=K in equities, remaining in de&t
Debt "und0 ,hey invest only in de&t instruments, and are a good option for investors
averse to idea of taking risk associated with equities ,herefore, they invest
e!clusively in fi!ed/income instruments like &onds, de&entures, -overnment of India
securitiesJ and money market instruments such as certificates of deposit 6*%7,
commercial paper 6*P7 and call money Put your money into any of these de&t funds
depending on your investment hori0on and needs
i3 LiDuid "und4- ,hese funds invest ?@@K in money market instruments, a large
portion &eing invested in call money market
ii3 %i!t "und4 ST- ,hey invest ?@@K of their portfolio in government securities of and
,/&ills
iii3 F!#atin$ ate "und4 - Invest in short/term de&t papers Floaters invest in de&t
instruments which have varia&le coupon rate
iB3 Abita$e "und- ,hey generate income through ar&itrage opportunities due to mis/
pricing &etween cash market and derivatives market Funds are allocated to equities,
derivatives and money markets 3igher proportion 6around G=K7 is put in money
markets, in the a&sence of ar&itrage opportunities
B3 %i!t "und4 LT- ,hey invest ?@@K of their portfolio in long/term government
securities
Bi3 In(#me "und4 LT- ,ypically, such funds invest a major portion of the portfolio in
long/term de&t papers
Bii3 MIP4- Monthly Income Plans have an e!posure of G@K/C@K to de&t and an
e!posure of ?@K/D@K to equities
Biii3 FMP4- fi!ed monthly plans invest in de&t papers whose maturity is in line with
that of the fund
INVESTMENT STRATE%IES
5= S/4temati( InBe4tment P!an0 under this a fi!ed sum is invested each month on a
fi!ed date of a month Payment is made through post dated cheques or direct de&it
facilities ,he investor gets fewer units when the 1+5 is high and more units when
the 1+5 is low ,his is called as the &enefit of $upee *ost +veraging 6$*+7
*= S/4temati( Tan4"e P!an0 under this an investor invest in de&t oriented fund and
give instructions to transfer a fi!ed sum, at a fi!ed interval, to an equity scheme of the
same mutual fund
A= S/4temati( 8it)daGa! P!an0 if someone wishes to withdraw from a mutual fund
then he can withdraw a fi!ed amount each month
RISK V/S. RETURN:
*hapter L >
*ompany Profile
INTRODUCTION TO SBI MUTUAL FUND
"#I Funds Management Pvt (td is one of the leading fund houses in the
country with an investor &ase of over FA million and over >@ years of rich
e!perience in fund management consistently delivering value to its investors
"#I Funds Management Pvt (td is a joint venture &etween H,he "tate #ank of
IndiaH one of IndiaHs largest &anking enterprises, and "ociMtM -MnMrale +sset
Management 6France7, one of the worldHs leading fund management companies
that manages over '"N =@@ #illion worldwide
,oday the fund house manages over $s >B=@@ crores of assets and has a diverse
profile of investors actively parking their investments across DA active schemes
In >@ years of operation, the fund has launched DB schemes and successfully
redeemed ?= of them, and in the process, has rewarded our investors with
consistent returns "chemes of the Mutual Fund have time after time
outperformed &enchmark indices, honored us with ?= awards of performance
and have emerged as the preferred investment for millions of investors ,he
trust reposed on us &y over FA million investors is a genuine tri&ute to our
e!pertise in fund management
"#I Funds Management Pvt (td serves its vast family of investors through a
network of over ?D@ points of acceptance, >B Investor "ervice *entres, FA
Investor "ervice %esks and =A %istrict 8rgani0ers "#I Mutual is the first &ank/
sponsored fund to launch an offshore fund L $esurgent India 8pportunities Fund
-rowth through innovation and sta&le investment policies is the "#I MF credo
PRODUCTS OF SBI MUTUAL FUND
4quity schemes
,he investments of these schemes will predominantly &e in the stock markets
and endeavor will &e to provide investors the opportunity to &enefit from the
higher returns which stock markets can provide 3owever they are also
e!posed to the volatility and attendant risks of stock markets and hence should
&e chosen only &y such investors who have high risk taking capacities and are
willing to think long term 4quity Funds include diversified 4quity Funds,
"ectoral Funds and Inde! Funds %iversified 4quity Funds invest in various
stocks across different sectors while sectoral funds which are speciali0ed
4quity Funds restrict their investments only to shares of a particular sector and
hence, are riskier than %iversified 4quity Funds Inde! Funds invest passively
only in the stocks of a particular inde! and the performance of such funds
move with the movements of the inde!
Magnum *8MM+ Fund
Magnum 4quity Fund
Magnum -lo&al Fund
Magnum Inde! Fund
Magnum Midcap Fund
Magnum Multicap Fund
Magnum Multiplier plus ?CCD
Magnum "ectoral Funds 'm&rella
M"F'/ 4merging #usiness Fund
M"F'/ I, Fund
M"F'/ Pharma Fund
M"F'/ *ontra Fund
M"F'/ FM*- Fund
"#I +r&itrage 8pportunities Fund
"#I #lue chip Fund
"#I Infrastructure Fund / "eries I
"#I Magnum ,a!gain "cheme ?CCD
"#I 814 India Fund
"#I ,+O +%5+1,+-4 F'1% / "4$I4" I
%e&t schemes
%e&t Funds invest only in de&t instruments such as *orporate #onds,
-overnment "ecurities and Money Market instruments either completely
avoiding any investments in the stock markets as in Income Funds or -ilt
Funds or having a small e!posure to equities as in Monthly Income Plans or
*hildrenHs Plan 3ence they are safer than equity funds +t the same time the
e!pected returns from de&t funds would &e lower "uch investments are
advisa&le for the risk/averse investor and as a part of the investment portfolio
for other investors
Magnum *hildren.s &enefit Plan
Magnum -ilt Fund
Magnum Income Fund
Magnum Insta *ash Fund
Magnum Income Fund/ Floating $ate Plan
Magnum Income Plus Fund
Magnum Insta *ash Fund /(iquid Floater Plan
Magnum Monthly Income Plan
Magnum Monthly Income Plan / Floater
Magnum 1$I Investment Fund
"#I Premier (iquid Fund
#+(+1*4% "*34M4"
Magnum #alanced Fund invests in a mi! of equity and de&t investments
3ence they are less risky than equity funds, &ut at the same time provide
commensurately lower returns ,hey provide a good investment opportunity to
investors who do not wish to &e completely e!posed to equity markets, &ut is
looking for higher returns than those provided &y de&t funds
Magnum #alanced Fund
COMPETITORS OF SBI MUTUAL FUND
"ome of the main competitors of "#I Mutual Fund in %ehradoon are as
Follows;
i I*I*I Mutual Fund
ii $eliance Mutual Fund
iii ',I Mutual Fund
iv #irla "un (ife Mutual Fund
v <otak Mutual Fund
vi 3%F* Mutual Fund
vii "undaram Mutual Fund
viii (I* Mutual Fund
i! Principal
! Franklin ,empleton

A8ARDS AND ACHIEVEMENTS
"#I Mutual Fund 6"#IMF7 has &een the proud recipient of the I*$+ 8nline +ward /
B times, *1#* ,5 / ?B *risil +ward >@@A / F +wards, ,he (ipper +ward 69ear
>@@=/>@@A7 and most recently with the *1#* ,5 / ?B *risil Mutual Fund of the 9ear
+ward >@@G and = +wards for our schemes
*hapter / D
8&jectives and scope
OBJECTIVES OF THE STUD&
? ,o find out the Preferences of the investors for +sset Management
*ompany
> ,o know the Preferences for the portfolios
D ,o know why one has invested or not invested in "#I Mutual fund
F ,o find out the most preferred channel
= ,o find out what should do to &oost Mutual Fund Industry
S(#pe #" t)e 4tud/
+ &ig &oom has &een witnessed in Mutual Fund Industry in resent times + large
num&er of new players have entered the market and trying to gain market share in this
rapidly improving market
,he research was carried on in %ehradoon I had &een sent at one of the &ranch of
"tate #ank of India %ehradoon where I completed my Project work I surveyed on my
Project ,opic 2+ study of preferences of the Investors for investment in Mutual Fund
on the visiting customers of the "#I #oring *anal $oad #ranch
,he 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 ,his
project report may help the company to make further planning and strategy

*hapter L F
$esearch Methodology
RESEARCH METHODOLO%&
,his report is &ased on primary as well secondary data, however primary data
collection was given more importance since it is overhearing factor in attitude studies
8ne of the most important users of research methodology is that it helps in identifying
the pro&lem, collecting, analy0ing the required information data and providing an
alternative solution to the pro&lem It also helps in collecting the vital information that
is required &y the top management to assist them for the &etter decision making &oth
day to day decision and critical ones
Data 4#u(e40
$esearch is totally &ased on primary data "econdary data can &e used only for the
reference $esearch has &een done &y primary data collection, and primary data has
&een collected &y interacting with various people ,he secondary data has &een
collected through various journals and we&sites
Duati#n #" Stud/0
,he study was carried out for a period of two months, from D@
th
May to D@
th
Euly >@@B
Samp!in$0
Samp!in$ p#(edue0
,he sample was selected of them who are the customersIvisitors of "tate #ank if
India, #oring *anal $oad #ranch, irrespective of them &eing investors or not or
availing the services or not It was also collected through personal visits to persons, &y
formal and informal talks and through filling up the questionnaire prepared ,he data
has &een analy0ed &y using mathematicalI"tatistical tool
Samp!e 4iHe0
,he sample si0e of my project is limited to >@@ people only 8ut of which only ?>@
people had invested in Mutual Fund 8ther B@ people did not have invested in Mutual
Fund
Samp!e de4i$n0
%ata has &een presented with the help of &ar graph, pie charts, line graphs etc
Limitati#n0

"ome of the persons were not so responsive
Possi&ility of error in data collection &ecause many of investors may have not
given actual answers of my questionnaire
"ample si0e is limited to >@@ visitors of "tate #ank of India , #oring *anal $oad
#ranch, %ehradoon out of these only ?>@ had invested in Mutual Fund ,he
sample
si0e may not adequately represent the whole market
"ome respondents were reluctant to divulge personal information which can
affect the validity of all responses
,he research is confined to a certain part of %ehradoon
*hapter L =
%ata +nalysis
)
Interpretation
ANAL&SIS ; INTERPRETATION OF THE DATA
5= 2a3 A$e di4tibuti#n #" t)e InBe4t#4 #" De)ad##n
+ge -roup PQ D@ D?/D= DA/F@ F?/F= FA/=@ R=@
1o of
Investors
?> ?B D@ >F >@ ?A
Intepetati#n0
12
18
30
24
20
16
0
5
10
15
20
25
30
35
<=30 31-35 36-40 41-45 46-50 >50
Age gro! o" #$e I%&e'#or'
I
%
&
e
'
#
o
r
'

(
%
&
e
'
#
e
)

(
%

M

*
+

F

%
)
+ccording to this chart out of ?>@ Mutual Fund investors of %ehradoon the most are
in the age group of DA/F@ yrs ie >=K, the second most investors are in the age group
of F?/F=yrs ie >@K and the least investors are in the age group of &elow D@ yrs
2b3= Edu(ati#na! :ua!i"i(ati#n #" inBe4t#4 #" De)ad##n
Edu(ati#na! :ua!i"i(ati#n Numbe #" InBe4t#4
-raduateI Post -raduate BB
'nder -raduate >=
8thers G
,otal ?>@

,1-
23-
6-
.r*)*#e/0o'# .r*)*#e U%)er .r*)*#e O#$er'
Intepetati#n0
8ut of ?>@ Mutual Fund investors G?K of the investors in %ehradoon are
-raduateIPost -raduate, >DK are 'nder -raduate and AK are others 6under 3"*7
(3= O((upati#n #" t)e inBe4t#4 #" De)ad##n

35
45
30
4
6
0
10
20
30
40
50
.o&#1
Ser&(2e
0&#1
Ser&(2e
B'(%e'' Agr(2+#re O#$er'
O22!*#(o% o" #$e 2'#o3er'
N
o
1

o
"

I
%
&
e
'
#
o
r
'
O((upati#n N#= #" InBe4t#4
-ovt "ervice D@
Pvt "ervice F=
#usiness D=
+griculture F
8thers A
Intepetati#n0
In 8ccupation group out of ?>@ investors, DBK are Pvt 4mployees, >=K are
#usinessman, >CK are -ovt 4mployees, DK are in +griculture and =K are in
others
2d3= M#nt)!/ Fami!/ In(#me #" t)e InBe4t#4 #" De)ad##n=
In(#me %#up N#= #" InBe4t#4
PQ?@,@@@ =
?@,@@?/?=,@@@
?>
?=,@@?/>@,@@@
>B
>@,@@?/D@,@@@
FD
RD@,@@@
D>
5
12
28
43
32
0
5
10
15
20
25
30
35
40
45
50
<=10 10-15 15-20 20-30 >30
I%2o3e .ro! o" #$e I%&e'#or'% 4R'1 (% T$15
N
o
1

o
"

I
%
&
e
'
#
o
r
'
Intepetati#n0
In the Income -roup of the investors of %ehradoon, out of ?>@ investors,
DAK investors that is the ma!imum investors are in the monthly income
group $s >@,@@? to $s D@,@@@, "econd one ie >GK investors are in the
monthly income group of more than $s D@,@@@ and the minimum investors
ie FK are in the monthly income group of &elow $s ?@,@@@
2*3 InBe4t#4 inBe4ted in di""eent Iind #" inBe4tment4=
<ind of Investments 1o of $espondents
"aving +I*
?C=
Fi!ed deposits ?FB
Insurance ?=>
Mutual Fund ?>@
Post office 61"*7 G=
"haresI%e&entures =@
-oldI"ilver D@
$eal 4state A=
165
148
152
120
,5
50
30
65
0 50 100 150 200 250
S
*
&
(
%
g

A
/
2
I
%
'

r
*
%
2
e
0
o
'
#

O
"
"
(
2
e
4
N
S
C
5
.
o
+
)
/
S
(
+
&
e
r
7
(
%
)
'

o
"

I
%
&
e
'
#
3
e
%
#
No1o" Re'!o%)e%#'
Intepetati#n0 From the a&ove graph it can &e inferred that out of >@@ people,
CG=K people have invested in "aving +Ic, GAK in Insurance, GFK in Fi!ed %eposits,
A@K in Mutual Fund, DG=K in Post 8ffice, >=K in "hares or %e&entures, ?=K in
-oldI"ilver and D>=K in $eal 4state
A= Pe"een(e #" "a(t#4 G)i!e inBe4tin$
Factors 6a7 (iquidity 6&7 (ow $isk 6c7 3igh $eturn 6d7 ,rust
1o of
$espondents
F@ A@ AF DA

20%
30%
32%
18%
Liquidity Low Risk High Return Trust
Intepetati#n0
8ut of >@@ People, D>K People prefer to invest where there is 3igh $eturn, D@K
prefer to invest where there is (ow $isk, >@K prefer easy (iquidity and ?BK prefer
,rust
?= AGaene44 ab#ut Mutua! Fund and it4 Opeati#n4

67%
33%
Yes No

$esponse 9es 1o
1o of $espondents ?D= A=
Intepetati#n0
From the a&ove chart it is inferred that AGK People are aware of Mutual Fund and its
operations and DDK are not aware of Mutual Fund and its operations
,= S#u(e #" in"#mati#n "# (u4t#me4 ab#ut Mutua! Fund
S#u(e #" in"#mati#n N#= #" Re4p#ndent4
+dvertisement ?B
Peer -roup >=
#ank D@
Financial +dvisors A>
18
25
30
62
0
10
20
30
0
50
60
70
N
o
!

o
"

R
e
s
#
o
n
d
e
n
t
s
$d%ertise&ent 'eer (rou# )*nk +in*n,i*-
$d%isors
.our,e o" /n"or&*tion
Intepetati#n0
From the a&ove chart it can &e inferred that the Financial +dvisor is the most
important source of information a&out Mutual Fund 8ut of ?D= $espondents, FAK
know a&out Mutual fund ,hrough Financial +dvisor, >>K through #ank, ?CK
through Peer -roup and ?DK through +dvertisement
A InBe4t#4 inBe4ted in Mutua! Fund
Re4p#n4e N#= #" Re4p#ndent4
94" ?>@
18 B@
,otal >@@
8e'
60-
No
40-
Intepetati#n0
8ut of >@@ People, A@K have invested in Mutual Fund and F@K do not have invested
in Mutual Fund
@= Rea4#n "# n#t inBe4ted in Mutua! Fund
Rea4#n N#= #" Re4p#ndent4
1ot +ware
6,
3igher $isk
,
1ot any "pecific $eason
5+
81%
13%
6%
Not $w*re Higher Risk Not $ny
Intepetati#n0
8ut of B@ people, who have not invested in Mutual Fund, B?K are not aware of
Mutual Fund, ?DK said there is likely to &e higher risk and AK do not have any
specific reason
.= InBe4t#4 inBe4ted in di""eent A44et4 Mana$ement C#= 2AMC3
Name #" AMC N#= #" InBe4t#4
"#IMF
==
',I
G=
3%F*
D@
$eliance
G=
I*I*I Prudential
=A
<otak
F=
8thers
G@

,5
,5
56
55
45
30
,0
0 20 40 60 80
UTI
Re+(*%2e
ICICI
SBIMF
7o#*9
:DFC
O#$er'
N
*
3
e

o
"

A
M
C
No1 o" I%&e'#or'
Intepetati#n0
In %ehradoon most of the Investors preferred ',I and $eliance Mutual Fund 8ut of
?>@ Investors A>=K have invested in each of them, only FAK have invested in
"#IMF, FGK in I*I*I Prudential, DG=K in <otak and >=K in 3%F*
7= Rea4#n "# inBe4ted in SBIMF
$eason 1o of $espondents
+ssociated with "#I D=
#etter $eturn =
+gents +dvice ?=
6%
0%
27%
$sso,i*ted with .)/ )etter Return $gents $d%i,e
Intepetati#n0
8ut of == investors of "#IMF AFK have invested &ecause of its association with
#rand "#I, >GK invested on +gent.s +dvice, CK invested &ecause of &etter return
5+= Rea4#n "# n#t inBe4ted in SBIMF
Rea4#n N#= #" Re4p#ndent4
1ot +ware >=
(ess $eturn ?B
+gent.s +dvice >>
38%
28%
3%
Not $w*re Less Return $gent1s $d%i,e
Intepetati#n0
8ut of A= people who have not invested in "#IMF, DBK were not aware with "#IMF,
>BK do not have invested due to less return and DFK due to +gent.s +dvice
55= Pe"een(e #" InBe4t#4 "# "utue inBe4tment in Mutua! Fund
Name #" AMC N#= #" InBe4t#4
"#IMF
GA
',I
F=
3%F*
D=
$eliance
B>
I*I*I Prudential
B@
<otak
A@
8thers
G=

76
5
35
82
80
60
75
0 20 0 60 80 100
No! o" /n%estors
.)/2+
3T/
H4+5
Re-i*n,e
/5/5/ 'rudenti*-
6ot*k
7thers
N
*
&
e

o
"

$
2
5
Intepetati#n0
8ut of ?>@ investors, ABK prefer to invest in $eliance, AGK in I*I*I Prudential, ADK
in "#IMF, A>=K in 8thers, =@K in <otak, DG=K in ',I and >CK in 3%F* Mutual
Fund
5*= C)anne! Pe"eed b/ t)e InBe4t#4 "# Mutua! Fund InBe4tment
*hannel Financial +dvisor #ank +M*
1o of $espondents G> ?B D@
60%
15%
25%
+in*n,i*- $d%isor )*nk $25
Intepetati#n0
8ut of ?>@ Investors A@K preferred to invest through Financial +dvisors, >=K
through +M* and ?=K through #ank
5A= M#de #" InBe4tment Pe"eed b/ t)e InBe4t#4
Mode of Investment 8ne time Investment "ystematic Investment Plan 6"IP7
1o of $espondents GB F>
65%
35%
7ne ti&e /n%est&ent ./'
Intepetati#n0
8ut of ?>@ Investors A=K preferred 8ne time Investment and D= K Preferred through
"ystematic Investment Plan
5?= Pe"eed P#t"#!i#4 b/ t)e InBe4t#4
P#t"#!i# N#= #" InBe4t#4
4quity =A
%e&t >@
#alanced FF
6%
17%
37%
8quity 4e9t )*-*n,e
Intepetati#n0
From the a&ove graph FAK preferred 4quity Portfolio, DGK preferred #alance and
?GK preferred %e&t portfolio
5,= Opti#n "# $ettin$ Retun Pe"eed b/ t)e InBe4t#4
8ption %ividend Payout %ividend
$einvestment
-rowth
1o of $espondents >= ?@ B=
21%
8%
71%
4i%idend '*yout 4i%idend Rein%est&ent (rowth
Intepetati#n0
From the a&ove graph G?K preferred -rowth 8ption, >?K preferred %ividend Payout
and BK preferred %ividend $einvestment 8ption
56= Pe"een(e #" InBe4t#4 G)et)e t# inBe4t in Se(t#a! Fund4
Re4p#n4e N#= #" Re4p#ndent4
&e4 *,
N# 7,
21%
70%
Yes No
Intepetati#n0
8ut of ?>@ investors, GCK investors do not prefer to invest in "ectoral Fund &ecause
there is ma!imum risk and >?K prefer to invest in "ectoral Fund
*hapter L A
Findings and
*onclusion
Findin$4
In %ehradoon in the +ge -roup of DA/F@ years were more in
num&ers ,he second most Investors were in the age group of F?/F=
years and the least were in the age group of &elow D@ years
In %ehradoon most of the Investors were -raduate or Post -raduate
and &elow 3"* there were very few in num&ers
In 8ccupation group most of the Investors were -ovt employees,
the second most Investors were Private employees and the least were
associated with +griculture
In family Income group, &etween $s >@,@@?/ D@,@@@ were more in
num&ers, the second most were in the Income group of more than
$sD@,@@@ and the least were in the group of &elow $s ?@,@@@
+&out all the $espondents had a "aving +Ic in #ank, GAK Invested
in Fi!ed %eposits, 8nly A@K $espondents invested in Mutual fund
Mostly $espondents preferred 3igh $eturn while investment, the
second most preferred (ow $isk then liquidity and the least
preferred ,rust
8nly AGK $espondents were aware a&out Mutual fund and its
operations and DDK were not
+mong >@@ $espondents only A@K had invested in Mutual Fund and
F@K did not have invested in Mutual fund
8ut of B@ $espondents B?K were not aware of Mutual Fund, ?DK
told there is not any specific reason for not invested in Mutual Fund
and AK told there is likely to &e higher risk in Mutual Fund
Most of the Investors had invested in $eliance or ',I Mutual Fund,
I*I*I Prudential has also good #rand Position among investors,
"#IMF places after I*I*I Prudential according to the $espondents
8ut of == investors of "#IMF AFK have invested due to its
association with the #rand "#I, >GK Invested &ecause of +dvisor.s
+dvice and CK due to &etter return
Most of the investors who did not invested in "#IMF due to not
+ware of "#IMF, the second most due to +gent.s advice and rest
due to (ess $eturn
For Future investment the ma!imum $espondents preferred
$eliance Mutual Fund, the second most preferred I*I*I Prudential,
"#IMF has &een preferred after them
A@K Investors preferred to Invest through Financial +dvisors, >=K
through +M* 6means %irect Investment7 and ?=K through #ank
A=K preferred 8ne ,ime Investment and D=K preferred "IP out of
&oth type of Mode of Investment
,he most preferred Portfolio was 4quity, the second most was
#alance 6mi!ture of &oth equity and de&t7, and the least preferred
Portfolio was %e&t portfolio
Ma!imum 1um&er of Investors Preferred -rowth 8ption for returns,
the second most preferred %ividend Payout and then %ividend
$einvestment
Most of the Investors did not want to invest in "ectoral Fund, only
>?K wanted to invest in "ectoral Fund
C#n(!u4i#n
$unning a successful Mutual Fund requires complete understanding of the
peculiarities of the Indian "tock Market and also the psyche of the small
investors ,his study has made an attempt to understand the financial
&ehavior of Mutual Fund investors in connection with the preferences of
#rand 6+M*7, Products, *hannels etc I o&served that many of people
have fear of Mutual Fund ,hey think their money will not &e secure in
Mutual Fund ,hey need the knowledge of Mutual Fund and its related
terms Many of people do not have invested in mutual fund due to lack of
awareness although they have money to invest +s the awareness and
income is growing the num&er of mutual fund investors are also growing
2#rand plays important role for the investment People invest in those
*ompanies where they have faith or they are well known with them
,here are many +M*s in %ehradoon &ut only some are performing well
due to #rand awareness "ome +M*s are not performing well although
some of the schemes of them are giving good return &ecause of not
awareness a&out #rand $eliance, ',I, "#IMF, I*I*I Prudential etc they
are well known #rand, they are performing well and their +ssets 'nder
Management is larger than others whose #rand name are not well known
like Principle, "underam, etc
%istri&ution channels are also important for the investment in mutual
fund Financial +dvisors are the most preferred channel for the
investment in mutual fund ,hey can change investors. mind from one
investment option to others Many of investors directly invest their money
through +M* &ecause they do not have to pay entry load 8nly those
people invest directly who know well a&out mutual fund and its
operations and those have time
*hapter L G
"uggestions
+nd
$ecommendations
Su$$e4ti#n4 and Re(#mmendati#n4
,he most vital pro&lem spotted is of ignorance Investors should
&e made aware of the &enefits 1o&ody will invest until and unless
he is fully convinced Investors should &e made to reali0e that
ignorance is no longer &liss and what they are losing &y not
investing
Mutual funds offer a lot of &enefit which no other single option
could offer #ut most of the people are not even aware of what
actually a mutual fund isS ,hey only see it as just another
investment option "o the advisors should try to change their
mindsets ,he advisors should target for more and more young
investors 9oung investors as well as persons at the height of their
career would like to go for advisors due to lack of e!pertise and
time
Mutual Fund *ompany needs to give the training of the Individual
Financial +dvisors a&out the FundI"cheme and its o&jective,
&ecause they are the main source to influence the investors
#efore making any investment Financial +dvisors should first
enquire a&out the risk tolerance of the investorsIcustomers, their
need and time 6how long they want to invest7 #y considering these
three things they can take the customers into consideration
9ounger people aged under D= will &e a key new customer group
into the future, so making greater efforts with younger customers
who show some interest in investing should pay off
*ustomers with graduate level education are easier to sell to and
there is a large untapped market there ,o succeed however,
advisors must provide sound advice and high quality
"ystematic Investment Plan 6"IP7 is one the innovative products
launched &y +ssets Management companies very recently in the
industry "IP is easy for monthly salaried person as it provides the
facility of do the investment in 4MI ,hough most of the prospects
and potential investors are not aware a&out the "IP ,here is a large
scope for the companies to tap the salaried persons
BIBLIO%RAPH&
N;<S 0A0;RS
OUTLOO7 MON;8
T;L;=ISION C:ANN;L 4CNBC AA<A>5
MUTUAL FUND :AND BOO7
FACT S:;;T AND STAT;M;NT
<<<1SBIMF1COM
<<<1MON;8CONTROL1COM
<<<1AMFIINDIA1COM
<<<1ONLIN;R;S;ARC:ONLIN;1COM
<<<1 MUTUALFUNDSINDIA1COM


Mutua! Fund4
A!! Ab#ut Mutua! Fund4
#efore we understand what is mutual fund, it.s very important to know the area in which
mutual funds works, the &asic understanding of stocks and &onds
St#(I4 ; "tocks represent shares of ownership in a pu&lic company 4!amples of pu&lic companies
include $eliance, 81-* and Infosys "tocks are considered to &e the most common owned
investment traded on the market
B#nd4 ; #onds are &asically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is &ack over predetermined amounts
of time #onds are considered to &e the most common lending investment traded on the market
,here are many other types of investments other than stocks and &onds 6including annuities, real
estate, and precious metals7, &ut the majority of mutual funds invest in stocks andIor &onds
8)at I4 Mutua! Fund
+ mutual fund is just the connecting &ridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment o&jective ,he mutual fund
will have a fund manager who is responsi&le for investing the gathered money into specific securities
6stocks or &onds7 When you invest in a mutual fund, you are &uying units or portions of the mutual
fund and thus on investing &ecomes a shareholder or unit holder of the fund
Mutual funds are considered as one of the &est availa&le investments as compare to others
they are very cost efficient and also easy to invest in, thus &y pooling money together in a mutual
fund, investors can purchase stocks or &onds with much lower trading costs than if they tried to do it
on their own #ut the &iggest advantage to mutual funds is diversification, &y minimi0ing risk )
ma!imi0ing returns
,hus a Mutual Fund is the most suita&le investment for the common man as it offers an
opportunity to invest in a diversified, professionally managed &asket of securities at a relatively low
cost ,he flow chart &elow descri&es &roadly the working of a mutual fund
3nit Trust o" /ndi* is the "irst 2utu*- +und set u# under * se#*r*te *,t: 3T/ $,t in
1063: *nd st*rted its o#er*tions in 106 with the issue o" units under the s,he&e 3.;
6!
OBeBieG #" eEi4tin$ 4()eme4 eEi4ted in mutua! "und (ate$#/
Wide variety of Mutual Fund "chemes e!ists to cater to the needs such as financial position,
risk tolerance and return e!pectations etc ,he ta&le &elow gives an overview into the e!isting types
of schemes in the Industry
T/pe #" Mutua! Fund S()eme4
B& STRUCTURE
Open Ended S()eme4
+n open/end fund is one that is availa&le for su&scription all through the year ,hese do not
have a fi!ed maturity Investors can conveniently &uy and sell units at 1et +sset 5alue 6T1+5T7
related prices ,he key feature of open/end schemes is liquidity
C!#4e Ended S()eme4
+ closed/end fund has a stipulated maturity period which generally ranging from D to ?=
years ,he fund is open for su&scription only during a specified period Investors can invest in the
scheme at the time of the initial pu&lic issue and thereafter they can &uy or sell the units of the
scheme on the stock e!changes where they are listed In order to provide an e!it route to the
investors, some close/ended funds give an option of selling &ack the units to the Mutual Fund
through periodic repurchase at 1+5 related prices "4#I $egulations stipulate that at least one of the
two e!it routes is provided to the investor
InteBa! S()eme4
Interval "chemes are that scheme, which com&ines the features of open/ended and close/
ended schemes ,he units may &e traded on the stock e!change or may &e open for sale or
redemption during pre/determined intervals at 1+5 related prices
B& NATURE
5= EDuit/ "und0
,hese funds invest a ma!imum part of their corpus into equities holdings ,he structure of the
fund may vary different for different schemes and the fund manager.s outlook on different stocks
,he 4quity Funds are su&/classified depending upon their investment o&jective, as follows;
%iversified 4quity Funds
Mid/*ap Funds
"ector "pecific Funds
,a! "avings Funds 64(""7
4quity investments are meant for a longer time hori0on, thus 4quity funds rank high on the risk/
return matri!
*= Debt "und40
,he o&jective of these Funds is to invest in de&t papers -overnment authorities, private companies,
&anks and financial institutions are some of the major issuers of de&t papers #y investing in de&t
instruments, these funds ensure low risk and provide sta&le income to the investors %e&t funds are
further classified as;
%i!t Fund4; Invest their corpus in securities issued &y -overnment, popularly known as
-overnment of India de&t papers ,hese Funds carry 0ero %efault risk &ut are associated with
Interest $ate risk ,hese schemes are safer as they invest in papers &acked &y -overnment
In(#me Fund4; Invest a major portion into various de&t instruments such as &onds, corporate
de&entures and -overnment securities
MIP4; Invests ma!imum of their total corpus in de&t instruments while they take minimum
e!posure in equities It gets &enefit of &oth equity and de&t market ,hese scheme ranks
slightly high on the risk/return matri! when compared with other de&t schemes
S)#t Tem P!an4 2STP43; Meant for investment hori0on for three to si! months ,hese
funds primarily invest in short term papers like *ertificate of %eposits 6*%s7 and *ommercial
Papers 6*Ps7 "ome portion of the corpus is also invested in corporate de&entures
LiDuid Fund4; +lso known as Money Market "chemes, ,hese funds provides easy liquidity
and preservation of capital ,hese schemes invest in short/term instruments like ,reasury
#ills, inter/&ank call money market, *Ps and *%s ,hese funds are meant for short/term cash
management of corporate houses and are meant for an investment hori0on of ?day to D
months ,hese schemes rank low on risk/return matri! and are considered to &e the safest
amongst all categories of mutual funds
A= Ba!an(ed "und40 +s the name suggest they, are a mi! of &oth equity and de&t funds ,hey invest
in &oth equities and fi!ed income securities, which are in line with pre/defined investment o&jective
of the scheme ,hese schemes aim to provide investors with the &est of &oth the worlds 4quity part
provide growth and the de&t part provides sta&ility in returns
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
4ach category of funds is &acked &y an investment philosophy, which is pre/defined in the o&jectives
of the fund ,he investor can align his own investment needs with the funds o&jective and invest
accordingly
B& INVESTMENT OBJECTIVE
%#Gt) S()eme40 -rowth "chemes are also known as equity schemes ,he aim of these
schemes is to provide capital appreciation over medium to long term ,hese schemes
normally invest a major part of their fund in equities and are willing to &ear short/term
decline in value for possi&le future appreciation
In(#me S()eme40 Income "chemes are also known as de&t schemes ,he aim of these
schemes is to provide regular and steady income to investors ,hese schemes generally invest
in fi!ed income securities such as &onds and corporate de&entures *apital appreciation in
such schemes may &e limited
Ba!an(ed S()eme40 #alanced "chemes aim to provide &oth growth and income &y
periodically distri&uting a part of the income and capital gains they earn ,hese schemes
invest in &oth shares and fi!ed income securities, in the proportion indicated in their offer
documents 6normally =@;=@7
M#ne/ MaIet S()eme4; Money Market "chemes aim to provide easy liquidity,
preservation of capital and moderate income ,hese schemes generally invest in safer, short/
term instruments, such as treasury &ills, certificates of deposit, commercial paper and inter/
&ank call money
OTHER SCHEMES
TaE SaBin$ S()eme40 ,a!/saving schemes offer ta! re&ates to the investors under ta! laws
prescri&ed from time to time 'nder "ecBB of the Income ,a! +ct, contri&utions made to any
4quity (inked "avings "cheme 64(""7 are eligi&le for re&ate
IndeE S()eme40 Inde! schemes attempt to replicate the performance of a particular inde!
such as the #"4 "ense! or the 1"4 =@ ,he portfolio of these schemes will consist of only
those stocks that constitute the inde! ,he percentage of each stock to the total holding will &e
identical to the stocks inde! weightage +nd hence, the returns from such schemes would &e
more or less equivalent to those of the Inde!
Se(t# Spe(i"i( S()eme40 ,hese are the fundsIschemes which invest in the securities of only
those sectors or industries as specified in the offer documents eg Pharmaceuticals, "oftware,
Fast Moving *onsumer -oods 6FM*-7, Petroleum stocks, etc ,he returns in these funds are
dependent on the performance of the respective sectorsIindustries While these funds may
give higher returns, they are more risky compared to diversified funds Investors need to keep
a watch on the performance of those sectorsIindustries and must e!it at an appropriate time
T/pe4 #" etun4
,here are three ways, where the total returns provided &y mutual funds can &e enjoyed &y investors;
Income is earned from dividends on stocks and interest on &onds + fund pays out nearly all
income it receives over the year to fund owners in the form of a distri&ution
If the fund sells securities that have increased in price, the fund has a capital gain Most funds
also pass on these gains to investors in a distri&ution
If fund holdings increase in price &ut are not sold &y the fund manager, the fundHs shares
increase in price 9ou can then sell your mutual fund shares for a profit Funds will also
usually give you a choice either to receive a check for distri&utions or to reinvest the earnings
and get more shares
P#4 ; (#n4 #" inBe4tin$ in mutua! "und40
For investments in mutual fund, one must keep in mind a&out the Pros and cons of
investments in mutual fund
AdBanta$e4 #" InBe4tin$ Mutua! Fund40
5= P#"e44i#na! Mana$ement - ,he &asic advantage of funds is that, they are professional managed,
&y well qualified professional Investors purchase funds &ecause they do not have the time or the
e!pertise to manage their own portfolio + mutual fund is considered to &e relatively less e!pensive
way to make and monitor their investments
*= DiBe4i"i(ati#n - Purchasing units in a mutual fund instead of &uying individual stocks or &onds,
the investors risk is spread out and minimi0ed up to certain e!tent ,he idea &ehind diversification is
to invest in a large num&er of assets so that a loss in any particular investment is minimi0ed &y gains
in others
A= E(#n#mie4 #" S(a!e - Mutual fund &uy and sell large amounts of securities at a time, thus help to
reducing transaction costs, and help to &ring down the average cost of the unit for their investors
?= LiDuidit/ - Eust like an individual stock, mutual fund also allows investors to liquidate their
holdings as and when they want
,= Simp!i(it/ - Investments in mutual fund is considered to &e easy, compare to other availa&le
instruments in the market, and the minimum investment is small Most +M* also have automatic
purchase plans where&y as little as $s >@@@, where "IP start with just $s=@ per month &asis
Di4adBanta$e4 #" InBe4tin$ Mutua! Fund40
5= P#"e44i#na! Mana$ement/ "ome funds doesn.t perform in neither the market, as their
management is not dynamic enough to e!plore the availa&le opportunity in the market, thus many
investors de&ate over whether or not the so/called professionals are any &etter than mutual fund or
investor himself, for picking up stocks
*= C#4t4 L ,he &iggest source of +M* income, is generally from the entry ) e!it load which they
charge from an investors, at the time of purchase ,he mutual fund industries are thus charging e!tra
cost under layers of jargon
A= Di!uti#n / #ecause funds have small holdings across different companies, high returns from a few
investments often donHt make much difference on the overall return %ilution is also the result of a
successful fund getting too &ig When money pours into funds that have had strong success, the
manager often has trou&le finding a good investment for all the new money
?= TaEe4 / when making decisions a&out your money, fund managers donHt consider your personal
ta! situation For e!ample, when a fund manager sells a security, a capital/gain ta! is triggered,
which affects how profita&le the individual is from the sale It might have &een more advantageous
for the individual to defer the capital gains lia&ility
Mutua! Fund4 Indu4t/ in India
,he origin of mutual fund industry in India is with the introduction of the concept of mutual fund &y
',I in the year ?CAD ,hough the growth was slow, &ut it accelerated from the year ?CBG when non/
',I players entered the industry
In the past decade, Indian mutual fund industry had seen a dramatic improvements, &oth quality wise
as well as quantity wise #efore, the monopoly of the market had seen an ending phase, the +ssets
'nder Management 6+'M7 was $s AG&n ,he private sector entry to the fund family rose the +'M
to $s FG@ in in March ?CCD and till +pril >@@F, it reached the height of ?,=F@ &n
Putting the +'M of the Indian Mutual Funds Industry into comparison, the total of it is less than the
deposits of "#I alone, constitute less than ??K of the total deposits held &y the Indian &anking
industry
,he main reason of its poor growth is that the mutual fund industry in India is new in the country
(arge sections of Indian investors are yet to &e intellectuated with the concept 3ence, it is the prime
responsi&ility of all mutual fund companies, to market the product correctly a&reast of selling
,he mutual fund industry can &e &roadly put into four phases according to the development of the
sector 4ach phase is &riefly descri&ed as under
T)e maC# p!a/e4 in t)e Indian Mutua! Fund Indu4t/ ae0
MaC# P!a/e4 #" Mutua! Fund4 In India
Pei#d 2La4t;nb4p5 8eeI3
RanI S()eme Name Date NAV
2R4=3
La4t 5
8eeI
Sin(e
In(epti#n
5 EM *ore ?? Fund / "eries ? /
-rowth
Mar >A
, >@@B
BF= =?> /CFAF
* ,ata Indo/-lo&al Infrastructure
Fund / -rowth
Mar >A
, >@@B
B>A =@= /F@F>
A ,ata *apital #uilder Fund /
-rowth
Mar >A
, >@@B
?>FF =@D ?=D=
? "tandard *hartered 4nterprise
4quity Fund / -rowth
Mar >A
, >@@B
?F@G = >@C>
, %#" *hola Infrastructure Fund /
-rowth
Mar >A
, >@@B
C@? FA= /?G?G
6 I*I*I Prudential Fusion Fund /
"eries III / Institutional /
-rowth
Mar >A
, >@@B
?@> FA> >DAC
@ %"P Merrill (ynch Micro *ap
Fund / $egular / -rowth
Mar >A
, >@@B
CCD F=A /@B=
. I*I*I Prudential Fusion Fund /
"eries III / $etail / -rowth
Mar >A
, >@@B
?@?C F=? >>DC
7 %#" *hola "mall *ap Fund /
-rowth
Mar >A
, >@@B
ADA DG= /B?GB
5+ Principal Personal ,a!saver Mar >=
, >@@B
?>FAA DFF >CCG
55 #enchmark "plit *apital Fund /
Plan + / Preferred 'nits
Mar >A
, >@@B
?F?=? D?F ?DG?
5* I*I*I Prudential FMP / "eries
DD / Plan + / -rowth
Mar >A
, >@@B
CBC >C? /GBB
5A ,ata "IP Fund / "eries I /
-rowth
Mar >A
, >@@B
?@>= >DB >DC
5? "ahara $4+( Fund / -rowth Mar >=
, >@@B
GAF ?BA /FC=>
5, ,ata "IP Fund / "eries II /
-rowth
Mar >A
, >@@B
CCD ?=B /@CF
+ mutual fund is a professionally/managed firm of collective investments that pools money from
many investors and invests it in stocks, &onds, short/term money market instruments, andIor other
securitiesin other words we can say that + Mutual Fund is a trust registered with the "ecurities and
4!change #oard of India 6"4#I7, which pools up the money from individual I corporate investors
and invests the same on &ehalf of the investors Iunit holders, in equity shares, -overnment securities,
#onds, *all money markets etc, and distri&utes the profits
,he value of each unit of the mutual fund, known as the net asset value 61+57, is mostly
calculated daily &ased on the total value of the fund divided &y the num&er of shares currently issued
and outstanding ,he value of all the securities in the portfolio in calculated daily From this, all
e!penses are deducted and the resultant value divided &y the num&er of units in the fund is the fund.s
1+5
NAV J T#ta! Ba!ue #" t)e "undKKKKKK=
N#= #" 4)ae4 (uent!/ i44ued and #ut4tandin$
AdBanta$e4 #" a MF
L Mutual Funds provide the &enefit of cheap access to e!pensive stocks
L Mutual funds diversify the risk of the investor &y investing in a &asket of assets
L + team of professional fund managers manages them with in/depth research inputs
from investment analysts
L #eing institutions with good &argaining power in markets, mutual funds have access
to crucial corporate information, which individual investors cannot access
Hi4t#/ #" t)e Indian mutua! "und indu4t/0
,he mutual fund industry in India started in ?CAD with the formation of 'nit ,rust of India, at the
initiative of the -overnment of India and $eserve #ank ,he history of mutual funds in India can &e
&roadly divided into four distinct phases
Fi4t P)a4e > 576?-.@
'nit ,rust of India 6',I7 was esta&lished on ?CAD &y an +ct of Parliament &y the $eserve #ank of
India and functioned under the $egulatory and administrative control of the $eserve #ank of India
In ?CGB ',I was de/linked from the $#I and the Industrial %evelopment #ank of India 6I%#I7 took
over the regulatory and administrative control in place of $#I ,he first scheme launched &y ',I
was 'nit "cheme ?CAF +t the end of ?CBB ',I had $sA,G@@ crores of assets under management
Se(#nd P)a4e > 57.@-577A 2Ent/ #" Pub!i( Se(t# Fund43
?CBG marked the entry of non/ ',I, pu&lic sector mutual funds set up &y pu&lic sector &anks and (ife
Insurance *orporation of India 6(I*7 and -eneral Insurance *orporation of India 6-I*7 "#I Mutual
Fund was the first non/ ',I Mutual Fund esta&lished in Eune ?CBG followed &y *an&ank Mutual
Fund 6%ec BG7, Punja& 1ational #ank Mutual Fund 6+ug BC7, Indian #ank Mutual Fund 61ov BC7,
#ank of India 6Eun C@7, #ank of #aroda Mutual Fund 68ct C>7 (I* esta&lished its mutual fund in
Eune ?CBC while -I* had set up its mutual fund in %ecem&er ?CC@+t the end of ?CCD, the mutual
fund industry had assets under management of $sFG,@@F crores
T)id P)a4e > 577A-*++A 2Ent/ #" PiBate Se(t# Fund43
?CCD was the year in which the first Mutual Fund $egulations came into &eing, under which all
mutual funds, e!cept ',I were to &e registered and governed ,he erstwhile <othari Pioneer 6now
merged with Franklin ,empleton7 was the first private sector mutual fund registered in Euly ?CCD
,he ?CCD "4#I 6Mutual Fund7 $egulations were su&stituted &y a more comprehensive and revised
Mutual Fund $egulations in ?CCA ,he industry now functions under the "4#I 6Mutual Fund7
$egulations ?CCA +s at the end of Eanuary >@@D, there were DD mutual funds with total assets of $s
?,>?,B@= crores
F#ut) P)a4e > 4in(e Febua/ *++A
In Fe&ruary >@@D, following the repeal of the 'nit ,rust of India +ct ?CAD ',I was &ifurcated into
two separate entities 8ne is the "pecified 'ndertaking of the 'nit ,rust of India with assets under
management of $s>C,BD= crores as at the end of Eanuary >@@D, representing &roadly, the assets of
'" AF scheme, assured return and certain other schemes
,he second is the ',I Mutual Fund (td, sponsored &y "#I, P1#, #8# and (I* It is registered with
"4#I and functions under the Mutual Fund $egulations consolidation and growth +s at the end of
"eptem&er, >@@F, there were >C funds, which manage assets of $s?=D?@B crores under F>? schemes
Cate$#ie4 #" mutua! "und4 0

Mutual funds can &e classified as follow;
Ba4ed #n t)ei 4tu(tue 0
8pen/ended funds; Investors can &uy and sell the units from the fund, at any point of time
*lose/ended funds; ,hese funds raise money from investors only once ,herefore, after the
offer period, fresh investments can not &e made into the fund If the fund is listed on a stocks
e!change the units can &e traded like stocks 64g, Morgan "tanley -rowth Fund7 $ecently,
most of the 1ew Fund 8ffers of close/ended funds provided liquidity window on a periodic
&asis such as monthly or weekly $edemption of units can &e made during specified intervals
,herefore, such funds have relatively low liquidity
Ba4ed #n t)ei inBe4tment #bCe(tiBe 0
4quity funds; ,hese funds invest in equities and equity related instruments With fluctuating share
prices, such funds show volatile performance, even losses 3owever, short term fluctuations in the
market, generally smoothens out in the long term, there&y offering higher returns at relatively lower
volatility +t the same time, such funds can yield great capital appreciation as, historically, equities
have outperformed all asset classes in the long term 3ence, investment in equity funds should &e
considered for a period of at least D/= years It can &e further classified as;
i3 Inde! funds/ In this case a key stock market inde!, like #"4 "ense! or 1ifty is tracked ,heir
portfolio mirrors the &enchmark inde! &oth in terms of composition and individual stock
weightages
ii3 4quity diversified funds/ ?@@K of the capital is invested in equities spreading across different
sectors and stocks
iii3 %ividend yield funds/ it is similar to the equity diversified funds e!cept that they invest in
companies offering high dividend yields
iB3 ,hematic funds/ Invest ?@@K of the assets in sectors which are related through some theme
eg /+n infrastructure fund invests in power, construction, cements sectors etc
B3 "ector funds/ Invest ?@@K of the capital in a specific sector eg / + &anking sector fund will
invest in &anking stocks
Bi3 4(""/ 4quity (inked "aving "cheme provides ta! &enefit to the investors
Ba!an(ed "und0 ,heir investment portfolio includes &oth de&t and equity +s a result, on the risk/return
ladder, they fall &etween equity and de&t funds #alanced funds are the ideal mutual funds vehicle for
investors who prefer spreading their risk across various instruments Following are &alanced funds classes;
i7 %e&t/oriented funds /Investment &elow A=K in equities
ii7 4quity/oriented funds -Invest at least A=K in equities, remaining in de&t
Debt "und0 ,hey invest only in de&t instruments, and are a good option for investors averse to idea
of taking risk associated with equities ,herefore, they invest e!clusively in fi!ed/income
instruments like &onds, de&entures, -overnment of India securitiesJ and money market instruments
such as certificates of deposit 6*%7, commercial paper 6*P7 and call money Put your money into any
of these de&t funds depending on your investment hori0on and needs
i3 (iquid funds/ ,hese funds invest ?@@K in money market instruments, a large portion &eing
invested in call money market
ii3-ilt funds ",/ ,hey invest ?@@K of their portfolio in government securities of and ,/&ills
iii3Floating rate funds / Invest in short/term de&t papers Floaters invest in de&t instruments which
have varia&le coupon rate
iB3+r&itrage fund/ ,hey generate income through ar&itrage opportunities due to mis/pricing &etween
cash market and derivatives market Funds are allocated to equities, derivatives and money markets
3igher proportion 6around G=K7 is put in money markets, in the a&sence of ar&itrage opportunities
B3-ilt funds (,/ ,hey invest ?@@K of their portfolio in long/term government securities
Bi3 Income funds (,/ ,ypically, such funds invest a major portion of the portfolio in long/term de&t
papers
Bii3 MIPs/ Monthly Income Plans have an e!posure of G@K/C@K to de&t and an e!posure of ?@K/
D@K to equities
Biii3FMPs/ fi!ed monthly plans invest in de&t papers whose maturity is in line with that of the fund
InBe4tment 4tate$ie40
5= S/4temati( InBe4tment P!an0 under this a fi!ed sum is invested each month on a fi!ed date of a
month Payment is made through post dated cheques or direct de&it facilities ,he investor gets fewer
units when the 1+5 is high and more units when the 1+5 is low ,his is called as the &enefit of
$upee *ost +veraging 6$*+7
*= S/4temati( Tan4"e P!an0 under this an investor invest in de&t oriented fund and give
instructions to transfer a fi!ed sum, at a fi!ed interval, to an equity scheme of the same mutual fund
A= S/4temati( 8it)daGa! P!an0 if someone wishes to withdraw from a mutual fund then he can
withdraw a fi!ed amount each month
Risk v/s. return:
8#Iin$ #" a Mutua! "und 0
,he entire mutual fund industry operates in a very organi0ed way ,he investors, known as unit
holders,handover their savings to the +M*s under various schemes ,he o&jective of the investment
should match with the o&jective of the fund to &est suit the investors. needs ,he +M*s further
invest the funds into various securities according to the investment o&jective ,he return generated
from the investments is passed on to the investors or reinvested as mentioned in the offer document
8#Iin$
O"
Mutua! Fund



Mutua! Fund4
#efore we understand what is mutual fund, it.s very important to know the area in which
mutual funds works, the &asic understanding of stocks and &onds
St#(I4 ; "tocks represent shares of ownership in a pu&lic company 4!amples of pu&lic companies
include $eliance, 81-* and Infosys "tocks are considered to &e the most common owned
investment traded on the market
B#nd4 ; #onds are &asically the money which you lend to the government or a company, and in
return you can receive interest on your invested amount, which is &ack over predetermined amounts
of time #onds are considered to &e the most common lending investment traded on the market
,here are many other types of investments other than stocks and &onds 6including annuities, real
estate, and precious metals7, &ut the majority of mutual funds invest in stocks andIor &onds
8)at I4 Mutua! Fund
+ mutual fund is just the connecting &ridge or a financial intermediary that allows a group of
investors to pool their money together with a predetermined investment o&jective ,he mutual fund
will have a fund manager who is responsi&le for investing the gathered money into specific
securities 6stocks or &onds7 When you invest in a mutual fund, you are &uying units or portions of
the mutual fund and thus on investing &ecomes a shareholder or unit holder of the fund
Mutual funds are considered as one of the &est availa&le investments as compare to others
they are very cost efficient and also easy to invest in, thus &y pooling money together in a mutual
fund, investors can purchase stocks or &onds with much lower trading costs than if they tried to do it
on their own #ut the &iggest advantage to mutual funds is diversification, &y minimi0ing risk )
ma!imi0ing returns
,hus a Mutual Fund is the most suita&le investment for the common man as it offers an opportunity
to invest in a diversified, professionally managed &asket of securities at a relatively low cost ,he
flow chart &elow descri&es &roadly the working of a mutual fund
OBeBieG #" eEi4tin$ 4()eme4 eEi4ted in mutua! "und (ate$#/
Wide variety of Mutual Fund "chemes e!ists to cater to the needs such as financial position,
risk tolerance and return e!pectations etc ,he ta&le &elow gives an overview into the e!isting types
of schemes in the Industry
T/pe #" Mutua! Fund S()eme4
B& STRUCTURE
Open Ended S()eme4
+n open/end fund is one that is availa&le for su&scription all through the year ,hese do not have a
fi!ed maturity Investors can conveniently &uy and sell units at 1et +sset 5alue 6T1+5T7 related
prices ,he key feature of open/end schemes is liquidity
C!#4e Ended S()eme4
+ closed/end fund has a stipulated maturity period which generally ranging from D to ?=
years ,he fund is open for su&scription only during a specified period Investors can invest in the
scheme at the time of the initial pu&lic issue and thereafter they can &uy or sell the units of the
scheme on the stock e!changes where they are listed In order to provide an e!it route to the
investors, some close/ended funds give an option of selling &ack the units to the Mutual Fund
through periodic repurchase at 1+5 related prices "4#I $egulations stipulate that at least one of the
two e!it routes is provided to the investor
InteBa! S()eme4
Interval "chemes are that scheme, which com&ines the features of open/ended and close/
ended schemes ,he units may &e traded on the stock e!change or may &e open for sale or
redemption during pre/determined intervals at 1+5 related prices
B& NATURE
'nder this the mutual fund is categori0ed on the &asis of Investment 8&jective #y nature the mutual
fund is categori0ed as follow;
5= EDuit/ "und0
,hese funds invest a ma!imum part of their corpus into equities holdings ,he structure of the
fund may vary different for different schemes and the fund manager.s outlook on different stocks
,he 4quity Funds are su&/classified depending upon their investment o&jective, as follows;
%iversified 4quity Funds
Mid/*ap Funds
"ector "pecific Funds
,a! "avings Funds 64(""7
4quity investments are meant for a longer time hori0on, thus 4quity funds rank high on the risk/
return matri!
*= Debt "und40
,he o&jective of these Funds is to invest in de&t papers -overnment authorities, private companies,
&anks and financial institutions are some of the major issuers of de&t papers #y investing in de&t
instruments, these funds ensure low risk and provide sta&le income to the investors %e&t funds are
further classified as;
%i!t Fund4; Invest their corpus in securities issued &y -overnment, popularly known as
-overnment of India de&t papers ,hese Funds carry 0ero %efault risk &ut are associated with
Interest $ate risk ,hese schemes are safer as they invest in papers &acked &y -overnment
In(#me Fund4; Invest a major portion into various de&t instruments such as &onds, corporate
de&entures and -overnment securities
MIP4; Invests ma!imum of their total corpus in de&t instruments while they take minimum
e!posure in equities It gets &enefit of &oth equity and de&t market ,hese scheme ranks
slightly high on the risk/return matri! when compared with other de&t schemes
S)#t Tem P!an4 2STP43; Meant for investment hori0on for three to si! months ,hese
funds primarily invest in short term papers like *ertificate of %eposits 6*%s7 and *ommercial
Papers 6*Ps7 "ome portion of the corpus is also invested in corporate de&entures
LiDuid Fund4; +lso known as Money Market "chemes, ,hese funds provides easy liquidity
and preservation of capital ,hese schemes invest in short/term instruments like ,reasury
#ills, inter/&ank call money market, *Ps and *%s ,hese funds are meant for short/term cash
management of corporate houses and are meant for an investment hori0on of ?day to D
months ,hese schemes rank low on risk/return matri! and are considered to &e the safest
amongst all categories of mutual funds
A= Ba!an(ed "und4 0 +s the name suggest they, are a mi! of &oth equity and de&t funds ,hey
invest in &oth equities and fi!ed income securities, which are in line with pre/defined investment
o&jective of the scheme ,hese schemes aim to provide investors with the &est of &oth the worlds
4quity part provides growth and the de&t part provides sta&ility in returns
Further the mutual funds can be broadly classified on the basis of investment parameter viz,
4ach category of funds is &acked &y an investment philosophy, which is pre/defined in the o&jectives
of the fund ,he investor can align his own investment needs with the funds o&jective and invest
accordingly
B& INVESTMENT OBJECTIVE
%#Gt) S()eme40 -rowth "chemes are also known as equity schemes ,he aim of these
schemes is to provide capital appreciation over medium to long term ,hese schemes
normally invest a major part of their fund in equities and are willing to &ear short/term
decline in value for possi&le future appreciation
In(#me S()eme40 Income "chemes are also known as de&t schemes ,he aim of these
schemes is to provide regular and steady income to investors ,hese schemes generally invest
in fi!ed income securities such as &onds and corporate de&entures *apital appreciation in
such schemes may &e limited
Ba!an(ed S()eme40 #alanced "chemes aim to provide &oth growth and income &y
periodically distri&uting a part of the income and capital gains they earn ,hese schemes
invest in &oth shares and fi!ed income securities, in the proportion indicated in their offer
documents 6normally =@;=@7
M#ne/ MaIet S()eme4; Money Market "chemes aim to provide easy liquidity,
preservation of capital and moderate income ,hese schemes generally invest in safer, short/
term instruments, such as treasury &ills, certificates of deposit, commercial paper and inter/
&ank call money
OTHER SCHEMES
TaE SaBin$ S()eme40 ,a!/saving schemes offer ta! re&ates to the investors under ta! laws
prescri&ed from time to time 'nder "ecBB of the Income ,a! +ct, contri&utions made to any
4quity (inked "avings "cheme 64(""7 are eligi&le for re&ate
IndeE S()eme40 Inde! schemes attempt to replicate the performance of a particular inde!
such as the #"4 "ense! or the 1"4 =@ ,he portfolio of these schemes will consist of only
those stocks that constitute the inde! ,he percentage of each stock to the total holding will &e
identical to the stocks inde! weightage +nd hence, the returns from such schemes would &e
more or less equivalent to those of the Inde!
Se(t# Spe(i"i( S()eme40 ,hese are the fundsIschemes which invest in the securities of only
those sectors or industries as specified in the offer documents eg Pharmaceuticals, "oftware,
Fast Moving *onsumer -oods 6FM*-7, Petroleum stocks, etc ,he returns in these funds are
dependent on the performance of the respective sectorsIindustries While these funds may
give higher returns, they are more risky compared to diversified funds Investors need to keep
a watch on the performance of those sectorsIindustries and must e!it at an appropriate time
T/pe4 #" etun40
,here are three ways, where the total returns provided &y mutual funds can &e enjoyed &y investors;
Income is earned from dividends on stocks and interest on &onds + fund pays out nearly all
income it receives over the year to fund owners in the form of a distri&ution
If the fund sells securities that have increased in price, the fund has a capital gain Most funds
also pass on these gains to investors in a distri&ution
If fund holdings increase in price &ut are not sold &y the fund manager, the fundHs shares
increase in price 9ou can then sell your mutual fund shares for a profit Funds will also
usually give you a choice either to receive a check for distri&utions or to reinvest the earnings
and get more shares
P#4 ; (#n4 #" inBe4tin$ in mutua! "und40
For investments in mutual fund, one must keep in mind a&out the Pros and cons of
investments in mutual fund
AdBanta$e4 #" InBe4tin$ Mutua! Fund40
5= P#"e44i#na! Mana$ement - ,he &asic advantage of funds is that, they are professional managed,
&y well qualified professional Investors purchase funds &ecause they do not have the time or the
e!pertise to manage their own portfolio + mutual fund is considered to &e relatively less e!pensive
way to make and monitor their investments
*= DiBe4i"i(ati#n - Purchasing units in a mutual fund instead of &uying individual stocks or &onds,
the investors risk is spread out and minimi0ed up to certain e!tent ,he idea &ehind diversification is
to invest in a large num&er of assets so that a loss in any particular investment is minimi0ed &y gains
in others
A= E(#n#mie4 #" S(a!e - Mutual fund &uy and sell large amounts of securities at a time, thus help to
reducing transaction costs, and help to &ring down the average cost of the unit for their investors
?= LiDuidit/ - Eust like an individual stock, mutual fund also allows investors to liquidate their
holdings as and when they want
,= Simp!i(it/ - Investments in mutual fund is considered to &e easy, compare to other availa&le
instruments in the market, and the minimum investment is small Most +M* also have automatic
purchase plans where&y as little as $s >@@@, where "IP start with just $s=@ per month &asis
Di4adBanta$e4 #" InBe4tin$ Mutua! Fund40
5= P#"e44i#na! Mana$ement/ "ome funds doesn.t perform in neither the market, as their
management is not dynamic enough to e!plore the availa&le opportunity in the market, thus many
investors de&ate over whether or not the so/called professionals are any &etter than mutual fund or
investor himself, for picking up stocks
*= C#4t4 L ,he &iggest source of +M* income, is generally from the entry ) e!it load which they
charge from an investors, at the time of purchase ,he mutual fund industries are thus charging e!tra
cost under layers of jargon
A= Di!uti#n / #ecause funds have small holdings across different companies, high returns from a few
investments often donHt make much difference on the overall return %ilution is also the result of a
successful fund getting too &ig When money pours into funds that have had strong success, the
manager often has trou&le finding a good investment for all the new money
?= TaEe4 / when making decisions a&out your money, fund managers donHt consider your personal
ta! situation For e!ample, when a fund manager sells a security, a capital/gain ta! is triggered,
which affects how profita&le the individual is from the sale It might have &een more advantageous
for the individual to defer the capital gains lia&ility
%uide!ine4 #" t)e SEBI "# Mutua! Fund C#mpanie4 0
,o protect the interest of the investors, "4#I formulates policies and regulates the mutual
funds It notified regulations in ?CCD 6fully revised in ?CCA7 and issues guidelines from time to
time
"4#I approved +sset Management *ompany 6+M*7 manages the funds &y making
investments in various types of securities *ustodian, registered with "4#I, holds the securities
of various schemes of the fund in its custody
+ccording to "4#I $egulations, two thirds of the directors of ,rustee *ompany or &oard of
trustees must &e independent
,he +ssociation of Mutual Funds in India 6+MFI7 reassures the investors in units of mutual
funds that the mutual funds function within the strict regulatory framework Its o&jective is to
increase pu&lic awareness of the mutual fund industry +MFI also is engaged in upgrading
professional standards and in promoting &est industry practices in diverse areas such as
valuation, disclosure, transparency etc
D#(ument4 eDuied 2PAN mandat#/30
P##" #" identit/ ;
5= Photo P+1 card
*= In case of non/photo P+1 card in addition to copy of P+1 card any one of the following;
driving licenseIpassport copyI voter idI &ank photo pass &ook
Proof of address 6any of the following 7 ;latest telephone &ill, latest electricity &ill, Passport,
latest &ank pass&ookI&ank account statement, latest %emat account statement, voter id, driving
license, ration card, rent agreement
O""e d#(ument0 +n offer document is issued when the +M*s make 1ew Fund 8ffer61F87
Its advisa&le to every investor to ask for the offer document and read it &efore investing +n
:UESTIONNAIRE
A 4tud/ #" pe"een(e4 #" t)e inBe4t#4 "# inBe4tment in mutua! "und4=
5= Pe4#na! Detai!40
6a7 1ame;/

6&7 +dd; / Phone;/

6c7 +ge;/


6d7 Uualification;/


6e7 8ccupation Pl tick 6V7

-ovt "er Pvt "er #usiness +griculture 8thers

6g7 What is your monthly family income appro!imatelyS Pl tick 6V7
'p to
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$s ?@,@@? to
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$s ?=,@@? to
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$s >@,@@? to
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$s D@,@@? and
a&ove
-raduationIP- 'nder -raduate 8thers


*= What kind of investments you have made so farS Pl tick 6V7 +ll applica&le
a "aving account & Fi!ed deposits c Insurance d Mutual Fund
e Post 8ffice/1"*, etc f "haresI%e&entures g -oldI "ilver h $eal 4state

A= While investing your money, which factor will you preferS

6a7 (iquidity 6&7 (ow $isk 6c7 3igh $eturn 6d7 ,rust


?= +re you aware a&out Mutual Funds and their operationsS Pl tick 6V7 9es 1o

,= If yes, how did you know a&out Mutual FundS
a +dvertisement & Peer -roup c #anks d Financial +dvisors


6= 3ave you ever invested in Mutual FundS Pl tick 6V7 9es 1o


@= If not invested in Mutual Fund then whyS
6a7 1ot aware of MF 6&7 3igher risk 6c7 1ot any specific reason


. If yesL in which Mutual Fund you have investedS Pl tick 6V7 +ll applica&le
a "#IMF & ',I c 3%F* d $eliance e <otak f 8ther specify

7= If invested in "#IMF, you do so &ecause 6Pl tick 6V7, all applica&le7

a "#IMF is associated with "tate #ank of India
& ,hey have a record of giving good returns year after year
c +gent. +dvice

5+= If 18, invested in "#IMF, you do so &ecause 6Pl tick 6V7 all applica&le7

a 9ou are not aware of "#IMF
& "#IMF gives less return compared to the others
c +gent. +dvice

55 When you plan to invest your money in asset management co which +M* will you preferS


+ssets Management *o
a "#IMF
& ',I
c $eliance
d 3%F*
e <otak
f I*I*I
5* Which *hannel will you prefer while investing in Mutual Fund<

6a7 Financial +dvisor 6&7 #ank 6c7 +M*
5A= When you invest in Mutual Funds which mode of investment will you preferS Pl tick 6V7

a 8ne ,ime Investment & "ystematic Investment Plan 6"IP7

5?= When you want to invest which type of funds would you chooseS

a 3aving only de&t
portfolio
& 3aving de&t ) equity
portfolio
c 8nly equity portfolio


5,= 3ow would you like to receive the returns every yearS Pl tick 6V7

a %ividend payout & %ividend re/investment c -rowth in 1+5
56= Instead of general Mutual Funds, would you like to invest in sectorial fundsS
Please tick 6V7 9es 1o