DECLARATION

This is to declare that I have carried out this project work myself in part fulfillment of the
..Program of SCDL. The work is original, has not been copied from
anywhere else and has not been submitted to any other University/Institute for an award of any
degree / diploma.

Date:

Signature:

Place:

Name:

CONTENTS

SR NO.

Declaration

Executive Summary

2
4

Chapter-1

Introduction

1.What is mutual fund

5-28

2.Concept of mutual fund

3.Advantages and disadvantage of mutual fund
4.Histroy of indian mutual fund
5.Categories of mutual fund
a.based on their structure
b.based on investment objective
6.Pros and cons of investing in mutual funds
7.Mutual funds in india
8.Major players of mutual fund in india
9.Guidelines of sebi for mutual funds

29-33

Chapter-2

Data analysis & interpretation

Chapter-3

Fund Expense

34-37

Chapter-4

Objective and Scope

38-40

Chapter-5

Research Methodology

41-42

Chapter-6

Conclusion and Rational

43-45

Chapter-7

Suggestions & Recommendations & Bibliography

46-50

EXECUTIVE SUMMARY

In few years Mutual Fund has emerged as a tool for ensuring ones financial well
being. Mutual Funds have not only contributed to the India growth story but have
also helped families tap into the success of Indian Industry. As information and
awareness is rising more and more people are enjoying the benefits of investing in
mutual funds.
The main reason the number of retail mutual fund investors remains small is that
nine in ten people with incomes in India do not know that mutual funds exist. But
once people are aware of mutual fund investment opportunities, the number who
decide to invest in mutual funds increases to as many as one in five people.

This Project gave me a great learning experience and will help to know about the
investors Preferences in Mutual Fund means Are they prefer any particular Asset
Management Company (AMC), Which type of Product they prefer, Which Option
(Growth or Dividend) they prefer.

Mutual fund and its various aspects, the company profile, objectives of the study,
Research Methodology. one can have a brief knowledge about mutual fund and its
basis through the project.

Chapter-1
Introduction

INTRODUCTION TO MUTUAL FUND AND ITS

VARIOUS ASPECTS.

Mutual fund is a trust that pools the savings of a number of investors who share a
common financial goal. This pool of money is invested in accordance with a stated
objective. The joint ownership of the fund is thus Mutual, i.e. the fund belongs to
all investors. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income earned
through these investments and the capital appreciations realized are shared by its
unit holders in proportion the number of units owned by them. Thus a Mutual Fund
is the most suitable investment for the common man as it offers an opportunity to
invest in a diversified, professionally managed basket of securities at a relatively
low cost. A Mutual Fund is an investment tool that allows small investors access to
a well diversified portfolio of equities, bonds and other securities. Each
shareholder participates in the gain or loss of the fund. Units are issued and can be
redeemed as needed. The funds Net Asset value (NAV) is determined each day.

Investments in securities are spread across a wide cross-section of industries and

sectors and thus the risk is reduced. Diversification reduces the risk because 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 by them. Investors of mutual funds are known as unit holders.

When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets
of the fund in the same proportion as his contribution amount put up with the corpus (the total
amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit
holder.
Any change in the value of the investments made into capital market instruments (such as shares,
debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the
market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is
calculated by dividing the market value of scheme's assets by the total number of units issued to
the investors

The Duties & Functions of Fund Managers

When individuals and institutions invest in a fund, they actually invest in the fund's manager. He
is responsible for managing the fund's investments and ensuring that the fund's strategy is
aligned with its goals. He is also responsible for the overall operation of the fund, from customer
service to risk management. Therefore, investors should consider fund managers a key factor in
their selection of a fund.

Reporting-

Fund managers must ensure their funds' reporting requirements are met. Funds are designed with
different strategies and objectives and have different risks, policies and expenses. These details
are important to clients and regulators and should be clearly outlined in a prospectus. Fund
managers are responsible for ensuring that prospectuses and other documents are completed,
filed and distributed as regulations require
.

Compliance-

Fund managers must also ensure their funds operate in accordance with regulations outlined by
authorities, such as the Securities and Exchange Commission. Regulations can cover aspects of
the fund's business from getting clients to handling redemptions. For example, HedgeCo explains
that hedge funds are not allowed to use general solicitation or general advertisement to attract
new clients. If questions, concerns or problems arise, a fund manager may have to answer to the
fund's directors, investors or even regulators and legislators.

Growth and Performance-

People turn to funds because they want growth. Fund managers can only deliver it by putting
clients' money to work, so they have to decide where to invest. Their choices are shaped not only
by the rules and regulations applicable to the fund, but also by clients' expectations. Fund
managers are judged by how well their fund performs. At a minimum, they need to deliver
growth that exceeds interest rates and the rate of inflation to justify the risks of investing.
Wealth ProtectionFund managers have a responsibility to protect investors' money. Prudent investors are aware that
funds must take some risks to deliver growth but they do not expect reckless behavior. Therefore,
fund managers' choices to buy or sell assets are preceded by a lot of research and due diligence,
which can involve investigating companies or assets, attending industry events and employing
risk management techniques to assess investments. Fund managers also address risk by ensuring
asset portfolios are sufficiently diversified.

The Ways You Actually Make Money from Owning Mutual Funds
How you start making money when you invest in a mutual fund depends upon the type of fund
you own. If you own a stock fund, you already learned in Making Money from Investing in
Stocks that the biggest sources of potential profit are an increase in the stock price (capital gains)
or cash dividends paid to you for your pro-rata share of the company's distributed profits. If the
fund instead focused on investing in bonds, you are making money through interest income. If
the fund specializes in investing in real estate, you might be making money from rents, property
appreciation and profits from business operations, such as vending machines in an office
building.

The Three Keys to Making Money Through Mutual Fund

Investing
There are three major keys to making money through mutual fund investing. These are:

1.

Keep expenses low. The number one consideration when it comes to making money
from mutual funds is keeping your costs low. This is the reason so many financial advisers tell
their clients to invest in low cost index funds. These are often referred to as "dumb money"
because they have no portfolio manager. Instead, they hold a basket of stocks with similar
characteristics, such as those belong to an index like the Dow Jones Industrial Average. Why
is that important? Because saving even 1% over an investing lifetime can lead to enormous

wealth. If an 18 year old saved $5,000 per year, the difference between a 7% return and an 8%
return over 50 years is $836,206. That is real money by anyone's standards!
2.

Give yourself plenty of time to compound your wealth. The longer you money stays
invested, the more time you have to capture the power of compound interest.

3.

Don't invest in anything you don't understand. The first rule of making money, as Warren
Buffett has often quipped, is to never lose money. The second rule is to see rule #1. You
should know exactly what each of your mutual funds owns and why you are invested in it.

How A Mutual Fund Works?

A fund sponsor - generally a financial intermediary like sbi, icici organizes a mutual fund as a
corporation; however, it is not an operating company with employees and a physical place of
business in the traditional sense. A fund is a "virtual" company, which is typically externally
managed. It relies on third parties or service providers, either fund sponsor affiliates or
independent contractors, to manage the fund's portfolio and carry out other operational and
administrative activities.

The fund sponsor raises money from the investing public, who become fund shareholders. It then
invests the proceeds in securities (stocks, bonds and money market instruments) related to the
fund's investment objective. The fund provides shareholders with professional investment
management, diversification, liquidity and investing convenience. For these services, the fund
sponsor charges fees and incurs expenses for operating the fund, all of which are charged
proportionately against a shareholder's assets in the fund.
The most prevalent and well-known type of mutual fund operates on an open-ended basis. This
means that it continually issues (sells) shares on demand to new investors and existing
shareholders who are buying. It redeems (buys back) shares from shareholders who are selling.

Mutual fund shares are bought and sold on the basis of a fund's net asset value (NAV). Unlike a
stock price, which changes constantly according to the forces of supply and demand, NAV is
determined by the daily closing value of the underlying securities in a fund's portfolio (total net
assets) on a per share basis.

Definitions of key terms.

Net asset value

A fund's net asset value (NAV) equals the current market value of a fund's holdings minus the fund's
liabilities (sometimes referred to as "net assets"). It is usually expressed as a per-share amount,
computed by dividing net assets by the number of fund shares outstanding. Funds must compute
their net asset value according to the rules set forth in their prospectuses. Funds compute their NAV
at the end of each day that the New York Stock Exchange is open, though some funds compute
NAVs more than once daily.
Valuing the securities held in a fund's portfolio is often the most difficult part of calculating net asset
value. The fund's board typically oversees security valuation.

Expense ratio
The expense ratio allows investors to compare expenses across funds. The expense ratio equals the
12b-1 fee plus the management fee plus the other fund expenses divided by average daily net
assets. The expense ratio is sometimes referred to as the total expense ratio (TER).

Average annual total return

The SEC requires that mutual funds report the average annual compounded rates of return for one-,
five-and ten-periods using the following formula:[14]
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000 payment made at the beginning of
the one-, five-, or ten-year periods at the end of the one-, five-, or ten-year periods (or
fractional portion)

Turnover
Turnover is a measure of the volume of a fund's securities trading. It is expressed as a percentage of
average market value of the portfolio's long-term securities. Turnover is the lesser of a fund's
purchases or sales during a given year divided by average long-term securities market value for the
same period. If the period is less than a year, turnover is generally annualized.

The Advantages:
Diversification: A single mutual fund can hold securities from hundreds or
even thousands of issuers. This diversification considerably reduces the risk
of a serious monetary loss due to problems in a particular company or
industry.
Affordability: You can begin buying units or shares with a relatively small
amount of money (e.g., 500 for the initial purchase). Some mutual funds also
permits you to buy more units on a regular basis with even smaller
installments (e.g., 50 per month).
Professional Management: Many investors do not have the time or
expertise to manage their personal investments every day, to efficiently
reinvest interest or dividend income, or to investigate the thousands of
securities available in the financial markets. Mutual funds are managed by
professionals who are experienced in investing money and who have the
education, skills and resources to research diverse investment opportunities.

 Liquidity: Units or shares in a mutual fund can be bought and sold any
business day (that the market is open), thus, providing investors with easy
access to their money.
Flexibility: Many mutual fund companies manage several different funds
(e.g., money market, fixed-income, growth, balanced, sector, index and
global funds) and allow you to switch between these funds at little or no
charge. This enables you to change your portfolio balance as and when your
personal needs, financial goals or market conditions change.

The Disadvantages:

When you invest in a mutual fund you place your money in the hands of a
professional manager. The return on your investment depends heavily on
that managers skill and judgment.
Research has shown that few portfolio managers are able to out-perform the
market. Check the fund managers track record over a period of time when
selecting a fund.
Fees for fund management services and various administrative and sales
costs can reduce the return on your investment. These are charged, in almost
all cases, whether the fund performs well or not.

 Redeeming your mutual fund investment in the short-term could

significantly impact your return due to sales commissions and redemption
fees.

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. Though the
growth was slow, but it accelerated from the year 1987 when non-UTI players
entered the Industry.
In the past decade, Indian mutual fund industry had seen a dramatic improvement,
both qualities wise as well as quantity wise. Before, the monopoly of the market
had seen an ending phase; the Assets Under Management (AUM) was Rs67 billion.
The private sector entry to the fund family raised the Aum to Rs. 470 billion in
March 1993 and till April 2004; it reached the height if Rs. 1540 billion.
The Mutual Fund Industry is obviously growing at a tremendous space with the
mutual fund industry can be broadly put into four phases according to the
development ofthesector. Each phase is briefly described as under.
First Phase 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament by 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.6,700crores 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 Can bank Mutual Fund (Dec 87), Punjab
National Bank Mutual Fund (Aug 89), Indian Bank Mutual Fund (Nov 89), Bank
of India (Jun90), Bank of Baroda Mutual Fund (Oct 92). LIC established its mutual
fund in June1989 while GIC had set up its mutual fund in
December 1990.At the end of 1993, the mutual fund industry had
assets under management of Rs.47,004crores.
Third Phase 1993-2003 (Entry of Private Sector Funds)
1993 was the year in which the first Mutual Fund Regulations
came into being, under which all mutual funds, except UTI were to
be registered and governed. The erstwhile Kothari Pioneer (now
merged with Franklin Templeton) was the first private sector
mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a
more comprehensive and revised Mutual Fund Regulations in
1996. The industry now functions under the SEBI (Mutual Fund)
Regulations 1996. As at the end of January 2003, there were 33
mutual funds with total assets of Rs. 1,21,805crores.

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.29,835crores as at the end of January 2003,
representing broadly, the assets of US 64 scheme, assured return
and certain other schemes.
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. Consolidation and growth. As at the end
of September, 2004, there were 29 funds, which manage assets
of Rs.153108 crores under 421 schemes.

CATEGORIES OF MUTUAL FUND

Mutual funds can be classified as follow :

Based on their structure

 Open-ended funds: Investors can buy and sell the units from
the fund, at any point of time.
Close-ended funds: These funds raise money from investors
only once. Therefore,after the offer period, fresh investments can
not be made into the fund. If the fund is listed on a stocks
exchange the units can be traded like stocks (E.g., Morgan
Stanley Growth Fund). Recently, most of the New Fund Offers of
close-ended funds provided liquidity window on a periodic basis
such as monthly or weekly. Redemption of units can be made
during specified intervals. Therefore, such funds have relatively
low liquidity.

Based on their investment objective:

Equity funds: These funds invest in equities and equity related
instruments. With
fluctuating share prices, such funds show volatile performance,
even losses. However, short term fluctuations in the market,
generally smoothens out in the long term, thereby offering higher
returns at relatively lower volatility. At the same time, such funds
can yield great capital appreciation as, historically, equities have
outperformed all asset classes in the long term. Hence,
investment in equity funds should be considered for a period of at
least 3-5 years. It can be further classified as:
i) Index funds- In this case a key stock market index, like BSE
Sensex or Nifty is
tracked. Their portfolio mirrors the benchmark index both in terms
of composition and individual stock weightages.
ii) Equity diversified funds- 100% of the capital is invested in
equities spreading

across different sectors and stocks.

iii|) Dividend yield funds- it is similar to the equity diversified
funds except that they
invest in companies offering high dividend yields.
iv) Thematic funds- Invest 100% of the assets in sectors which
are related through
some theme.
e.g. -An infrastructure fund invests in power, construction,
cements sectors etc.
v) Sector funds- Invest 100% of the capital in a specific sector.
e.g. - A banking sector fund will invest in banking stocks.
vi) ELSS- Equity Linked Saving Scheme provides tax benefit to
the investors.
Balanced fund: Their investment portfolio includes both debt
and equity. As a result, on the risk-return ladder, they fall between
equity and debt funds. Balanced funds are the ideal mutual funds
vehicle for investors who prefer spreading their risk across various
instruments.
Following are balanced funds classes:
i)

Debt-oriented funds -Investment below 65% in equities.

ii) Equity-oriented funds -Invest at least 65% in equities,

remaining in debt.

Debt fund:They invest only in debt instruments, and are a good

option for investor savers to idea of taking risk associated with
equities. Therefore, they invest exclusively in fixed-income
instruments like bonds, debentures, Government of India
securities;and money market instruments such as certificates of
deposit (CD), commercial paper(CP) and call money. Put your
money into any of these debt funds depending on your
investment horizon and needs.
i) Liquid funds- These funds invest 100% in money market
instruments, a large
portion being invested in call money market.
ii) Gilt funds ST- They invest 100% of their portfolio in
government securities of andT-bills.
iii) Floating rate funds - Invest in short-term debt papers.
Floaters invest in debt
instruments which have variable coupon rate.
iv) Arbitrage fund- They generate income through arbitrage
opportunities due to mispricing between cash market and
derivatives market. Funds are allocated to equities,derivatives
and money markets. Higher proportion (around 75%) is put in
moneymarkets, in the absence of arbitrage opportunities.
v) Gilt funds LT- They invest 100% of their portfolio in long-term
government
securities.
vi) Income funds LT- Typically, such funds invest a major portion
of the portfolio in long-term debt papers.

vii) MIPs- Monthly Income Plans have an exposure of 70%-90%

to debt and an
exposure of 10%-30% to equities.
viii) FMPs- fixed monthly plans invest in debt papers whose
maturity is in line withthat of the fund.

Pros & cons of investing in mutual funds:

For investments in mutual fund, one must keep in mind about the
Pros and cons of investments in mutual fund.
Advantages of Investing Mutual Funds:
1. Professional Management - The basic advantage of funds is
that, they are professional managed,by well qualified
professional. Investors purchase funds because they do not have
the time or the expertise to manage their own portfolio. A mutual
fund is considered to be relatively less expensive
way to make and monitor their investments.
2. Diversification - Purchasing units in a mutual fund instead of
buying individual stocks or bonds,the investors risk is spread out
and minimized up to certain extent. The idea behind
diversification is to invest in a large number of assets so that a
loss in any particular investment is minimized by gains
in others.
3. Economies of Scale - Mutual fund buy and sell large amounts
of securities at a time, thus help to reducing transaction costs,
and help to bring down the average cost of the unit for their
investors.
4. Liquidity - Just like an individual stock, mutual fund also
allows investors to liquidate their holdings as and when they
want.

5. Simplicity - Investments in mutual fund is considered to be

easy, compare to other available in the market, and the minimum
investment is small. Most AMC also have automatic purchase
plans whereby as little as Rs. 2000, where SIP start with just Rs.50
per month basis.

Disadvantages of Investing Mutual Funds:

1. Professional Management- Some funds doesnt perform in
neither the market, as their management is not dynamic enough
to explore the available opportunity in the market, thus many
investors debate over whether or not the so-called professionals
are any better than mutual fund or investor himself, for picking up
stocks.
2. Costs The biggest source of AMC income, is generally from
the entry & exit load which they charge from an investors, at the
time of purchase. The mutual fund industries are thus charging
extra cost under layers of jargon.
3. Dilution - Because funds have small holdings across different
companies, high returns from a few investments often don't make
much difference on the overall return. Dilution is also the result of
a
fund getting too big. When money pours into funds that have had
strong success, the manager often has trouble finding a good
investment for all the new money.

4. Taxes - when making decisions about your money, fund

managers don't consider your personal tax situation. For example,
when a fund manager sells a security, a capital-gain tax is
triggered, which how profitable the individual is from the sale. It
might have been more advantageous for the individual to defer
the capital gains liability.

Mutual Funds Industry in India

The origin of mutual fund industry in India is with the introduction
of the concept of mutual fund by UTI in the year 1963. Though the
growth was slow, but it accelerated from the year 1987 when nonUTI players entered the industry.
In the past decade, Indian mutual fund industry had seen a
dramatic improvements, both quality wise as well as quantity
wise. Before, the monopoly of the market had seen an ending
phase, the Assets Under Management (AUM) was Rs. 67bn. The
private sector entry to the fund family rose the AUMRs. 470 in in
March 1993 and till April 2004, it reached the height of 1,540 bn.
Putting the AUM of the Indian Mutual Funds Industry into
comparison, the total of it is less than the deposits of SBI alone,
constitute less than 11% of the total deposits held by the Indian
banking industry.

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

The major players in the Indian Mutual Fund Industry are:

Ran
k

Scheme Name

Date

JM Core 11 Fund Series 1 -Growth

Tata Indo-Global
Infrastructure
Fund - Growth
Tata Capital Builder
Fund -Growth
Standard Chartered
Enterprise Equity
Fund Growth
DBS Chola
Infrastructure Fund
-Growth
ICICI Prudential
Fusion Fund
-Series III -

Mar 26
, 2008
Mar 26
, 2008

2
3
4
5
6

NAV
(Rs.)
8.45

Last 1
Week
5.12

Since
Inception
-94.64

8.26

5.05

-40.42

Mar 26
, 2008
Mar 26
, 2008

12.44

5.03

15.35

14.07

20.92

Mar 26
, 2008

9.01

4.65

-17.17

Mar 26
, 2008

10.2

4.62

23.69

7
8

9
10
11

12
13
14
15

Institutional -Growth
DSP Merrill Lynch
Micro Cap Fund Regular Growth
ICICI Prudential
Fusion Fund
-Series III - Retail
Growth
DBS Chola Small
Cap Fund -Growth
Principal Personal
Taxsaver
Benchmark Split
Capital Fund Plan A - Preferred
Units
ICICI Prudential
FMP Series 33 Plan A Growth
Tata SIP Fund Series I -Growth
Sahara R.E.A.L
Fund Growth
Tata SIP Fund Series II - Growth

Mar 26
, 2008

9.93

4.56

-0.85

Mar 26
, 2008

10.19

4.51

22.39

Mar 26
, 2008
Mar 26
, 2008
Mar 26
, 2008

6.36

3.75

-81.78

124.66

3.44

29.97

141.51

3.14

13.71

Mar 26
, 2008

9.89

2.91

-7.88

Mar 26
, 2008
Mar 25
, 2008
Mar 26
, 2008

10.25

2.38

2.39

7.64

1.86

-49.52

9.93

1.58

-0.94

Guidelines of the SEBI for Mutual Fund Companies :

To protect the interest of the investors, SEBI formulates policies
and regulates the mutual funds. It notified regulations in 1993
(fully revised in 1996) and issues guidelines from time to time.
SEBI approved Asset Management Company (AMC) manages the
funds by making investments in various types of securities.
Custodian, registered with SEBI, holds the securities of various
schemes of the fund in its custody
According to SEBI Regulations, two thirds of the directors of
Trustee Company or board of trustees must be independent.
The Association of Mutual Funds in India (AMFI) reassures the
investors in units of mutualfunds that the mutual funds function

within the strict regulatory framework. Its objective is to increase

public awareness of the mutual fund industry. AMFI also is
engaged in upgrading professional standards and in promoting
best industry practices in diverse areas such as
valuation, disclosure, transparency etc

Performance measures
Equity funds: the performance of equity funds can be measured
on the basis of: NAVGrowth, Total Return; Total Return with
Reinvestment at NAV, Annualized Returns and Distributions,
Computing Total Return (Per Share Income and Expenses, Per
Share Capital Changes, Ratios, Shares Outstanding), the Expense
Ratio, Portfolio Turnover Rate, Fund Size,Transaction Costs, Cash
Flow, Leverage.
Debt fund: likewise the performance of debt funds can be
measured on the basis of: Peer Group Comparisons, The Income
Ratio, Industry Exposures and Concentrations, NPAs,besides NAV
Growth, Total Return and Expense Ratio.
Liquid funds: the performance of the highly volatile liquid funds
can be measured on thebasis of: Fund Yield, besides NAV Growth,
Total Return and Expense Ratio.
Concept of benchmarking for performance evaluation:
Every fund sets its benchmark according to its investment
objective. The funds performance is measured in comparison with
the benchmark. If the fund generates a greater return than the
benchmark then it is said that the fund has outperformed
benchmark , if it is equal to benchmark then the correlation
between them is exactly 1. And if in case the return is lower than
the benchmark then the fund is said to be underperformed.

Chapter 2

Data Analysis
&
Interpretation

ANALYSIS & INTERPRETATION OF THE DATA

1. Preference of factors while investing

Factors

(a) Liquidity

(b) Low

(c) High

Risk

Return

(d) Trust

No. of

40

60

64

36

Respondents

18%
Liquidity

20%

32%
Low Risk

High 30%
Return

Trust

Interpretation:
Out of 200 People, 32% People prefer to invest where
there is High Return, 30% prefer to invest where there is
Low Risk, 20% prefer easy Liquidity and 18% prefer
Trust
2.Awareness
Operations

about

Mutual

Fund

and

its

Response

Yes

No

No. of Respondents

135

65

33%
Yes

No
68%

Interpretation:
From the above chart it is inferred that 67% People are aware of
Mutual Fund and its operations and 33% are not aware of Mutual
Fund and its operations.

3.Source of information for customers about

Mutual Fund

Source of information

No. of Respondents

Advertisement

18

Peer Group

25

Bank

30

Financial Advisors

62

No. of Respondents

70
60
50
40
2
2
30
1
20
25
18
10
0
Advertisement
Peer Group

4
4

3
3

62

30

BankFinancial Advisors

Source of Information

Interpretation:
From the above chart it can be inferred that the Financial Advisor
is the most important source of information about Mutual Fund.
Out of 135 Respondents, 46% know about Mutual fund Through

Financial Advisor, 22% through Bank, 19% through Peer Group

and 13% through Advertisement.

4.Investors invested in Mutual Fund

Response

No. of
Respondents

YES

120

NO

80

Total

200

No; 40%

Yes; 60%

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

5.Reason for not invested in Mutual Fund

Reason

No. of
Respondents

Not Aware

65

Higher Risk

Not any Specific

10

Reason

13% 6%
Not Aware

81%

Higher Risk

Not Any

Interpretation:
Out of 80 people, who have not invested in Mutual
Fund, 81% are not aware of Mutual Fund, 13% said
there is likely to be higher risk and 6% do not have any
specific reason.

Chapter 3
FUND EXPENSES

Expenses
Investors in a mutual fund pay the fund's expenses. These expenses fall into five categories:
management fee, distribution charges (sales loads and 12b-1 fees), the management fee,
securities transaction fees, shareholder transaction fees and fund services charges. Some of these
expenses reduce the value of an investor's account; others are paid by the fund and reduce net
asset value.
Recurring fees and expensesspecifically the 12b-1 fee, the management fee and other fund
expensesare included in a fund's total expense ratio (TER), often referred to simply the
"expense ratio". Because all funds must compute an expense ratio using the same method,
investors may compare costs across funds.
There is considerable controversy about the level of mutual fund expenses.

Management fee
The management fee is paid to the management company or sponsor that organizes the fund,
provides the portfolio management or investment advisory services and normally lends its brand
to the fund. The fund manager may also provide other administrative services. The management
fee often has breakpoints, which means that it declines as assets (in either the specific fund or in
the fund family as a whole) increase. The management fee is paid by the fund and is included in
the expense ratio.
The fund's board reviews the management fee annually. Fund shareholders must vote on any
proposed increase, but the fund manager or sponsor can agree to waive some or all of the
management fee in order to lower the fund's expense ratio.

Distribution charges
Distribution charges pay for marketing, distribution of the fund's shares as well as services to
investors. There are three types of distribution charges:

Front-end load or sales charge. A front-end load or sales charge is a commission paid to
a broker by a mutual fund when shares are purchased. It is expressed as a percentage of the

total amount invested or the "public offering price", which equals the net asset value plus the
front-end load per share. The front-end load often declines as the amount invested increases,
through breakpoints. The front-end load is paid by the shareholder; it is deducted from the
amount invested.

Back-end load. Some funds have a back-end load, which is paid by the investor when
shares are redeemed. If the back-end load declines the longer the investor holds shares, it is
called a contingent deferred sales charges (CDSC). Like the front-end load, the back-end
load is paid by the shareholder; it is deducted from the redemption proceeds.

12b-1 fees. Some funds charge an annual fee to compensate the distributor of fund shares
for providing ongoing services to fund shareholders. This fee is called a 12b-1 fee, after the
SEC rule authorizing it. The 12b-1 fee is paid by the fund and reduces net asset value.

A no-load fund does not charge a front-end load or back-end load under any circumstances and
does not charge a 12b-1 fee greater than 0.25% of fund assets.

Securities transaction fees

A mutual fund pays expenses related to buying or selling the securities in its portfolio. These
expenses may includebrokerage commissions. Securities transaction fees increase the cost basis
of investments purchased and reduce the proceeds from their sale. They do not flow through a
fund's income statement and are not included in its expense ratio. The amount of securities
transaction fees paid by a fund is normally positively correlated with its trading volume or
"turnover".

Shareholder transaction fees

Shareholders may be required to pay fees for certain transactions. For example, a fund may
charge a flat fee for maintaining an individual retirement account for an investor. Some funds
charge redemption fees when an investor sells fund shares shortly after buying them (usually
defined as within 30, 60 or 90 days of purchase); redemption fees are computed as a percentage
of the sale amount. Shareholder transaction fees are not part of the expense ratio.

 Fund services charges

A mutual fund may pay for other services including:

Board of directors or trustees fees and expenses

Custody fee: paid to a custodian bank for holding the fund's portfolio in safekeeping and
collecting income owed on the securities

Fund administration fee: for overseeing all administrative affairs such as preparing
financial statements and shareholder reports, SEC filings, monitoring compliance, computing
total returns and other performance information, preparing/filing tax returns and all expenses
of maintaining compliance with state blue sky laws

Fund accounting fee: for performing investment or securities accounting services and
computing the net asset value.

Professional services fees: legal and auditing fees

Registration fees: paid to the SEC and state securities regulators

Shareholder communications expenses: printing and mailing required documents to

shareholders such as shareholder reports and prospectuses

Transfer agent service fees and expenses: for keeping shareholder records, providing
statements and tax forms to investors and providing telephone, internet and or other investor
support and servicing

Other/miscellaneous fees

Controversy
Critics of the fund industry argue that fund expenses are too high. They believe that the market
for mutual funds is not competitive and that there are many hidden fees, so that it is difficult for
investors to reduce the fees that they pay. They argue that the most effective way for investors to
raise the returns they earn from mutual funds is to invest in funds with low expense ratios.

Fund managers counter that fees are determined by a highly competitive market and, therefore,
reflect the value that investors attribute to the service provided. They also note that fees are
clearly disclosed.

Chapter 4
Objectives and
scope

OBJECTIVES OF THE STUDY

1. To find out the Preferences of the investors for Asset

Management Company.
2. To know the Preferences for the portfolios.

3. To know why one has invested or not invested in SBI

Mutual fund
4. To find out the most preferred channel.
5. To find out what should do to boost Mutual Fund
Industry.

Scope of the study

A big boom has been witnessed in Mutual Fund Industry

in resent times. A large number of new players have
entered the market and trying to gain market share in
this rapidly improving market.

Chapter 5
Research
Methodology

RESEARCH METHODOLOGY
Research is a process through which we attempt to achieve
systematically and with the support of data the answer to a
question, the resolution of a problem, or a greater understanding

of a phenomenon. This process, which is frequently called

research methodology.

This report is based on primary as well secondary data, however

primary data collection was given more importance since it is
overhearing factor in attitude studies. One of the most important
users of research methodology is that it helps in identifying the
problem, collecting, analyzing the required information data and
providing an alternative solution to the problem .It also helps in
collecting the vital information that is required by the top
management to assist them for the better decision making both
day to day decision and critical ones.

Data sources:
Research is totally based on primary data. Secondary data can be
used only for the reference. Research has been done by primary
data collection, and primary data has been

collected by

interacting with various people. The secondary data has been

collected through various journals and websites.

Chapter 6
Conclusion &
Rationale

CONCLUSION

Running a successful Mutual Fund requires complete

understanding of the peculiarities of the Indian Stock
Market and also the psyche of the small investors. This
study has made an attempt to understand the financial
behavior of Mutual Fund investors in connection with the
preferences of Brand (AMC), Products, Channels etc.

observed that many of people have fear of Mutual Fund.

They think their money will not be secure in Mutual Fund.
They 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. As the awareness and income is growing the number
of mutual fund investors are also growing.
Brand plays important role for the investment. People
invest in those Companies where they have faith or they are
well known with them like-

Reliance, UTI, SBIMF, ICICI

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

RATIONALE
- A mutual fund portfolio can offer diversification across stocks
(a diversified equity fund invests in various stocks) and asset
classes ( a balanced fund/monthly income plan invests in both
equities an debt instruments).
- This rationale is fundamentally flawed. Despite being in the
midst of a seemingly endless rally, mutual fund can offer
investors many advantaged and continue to be the retail
investors best bet.
- Investing in equities is a rather complex process. It entails
studying, tracking and understanding factors like the economy
both domestic and global, interest rates, the political and
legal environment among others.
- Secondly, a mutual fund investors offers investors the benefits
of diversification. Any financial planner worth his salt will
vouch for the importance of holding a well-diversified portfolio.

Chapter 7
Suggestions &
Recommendations
&
Bibliography

SUGGESTIONS AND RECOMMENDATIONS

The most vital problem spotted is of ignorance. Investors

should be made aware of the benefits. Nobody will invest until
and unless he is fully convinced. Investors should be made to
realize that ignorance is no longer bliss and what they are
losing by not investing.

Mutual funds offer a lot of benefit which no other single option

could offer. But most of the people are not even aware of what
actually a mutual fund is? They only see it as just another
investment option. So the advisors should try to change their
mindsets. The advisors should target for more and more young
investors. Young investors as well as persons at the height of
their career would like to go for advisors due to lack of
expertise and time.

Mutual Fund Company needs to give the training of the

Individual Financial Advisors about the Fund/Scheme and its
objective, because they are the main source to influence the
investors.

should

Before

making

any

first

enquire

about

investment
the

risk

Financial
tolerance

Advisors
of

the

investors/customers, their need and time (how long they want

to invest). By considering these three things they can take the

customers into consideration.

Younger people will be a key new customer group into the

future, so making greater efforts with younger customers who
show some interest in investing should pay off.

To succeed however, advisors must provide sound advice and

high quality.

BIBLIOGRAPHY

NEWS PAPERS

OUTLOOK MONEY

TELEVISION CHANNEL (CNBC AAWAJ)

MUTUAL FUND HAND BOOK

FACT SHEET AND STATEMENT

WWW.SBIMF.COM

WWW.MONEYCONTROL.COM

WWW.AMFIINDIA.COM

WWW.ONLINERESEARCHONLINE.COM

 WWW. MUTUALFUNDSINDIA.COM

MUTUAL FUND

PROJECT REPORT BY
MS. PRIYA CHANDRA THUWAL
REGISTRATION NUMBER-201326250

SYMBIOSIS CENTRE FOR DISTANCE LEARNING (SCDL)

Symbiosis Bhavan, 1065-B Gokhale Cross Road,

Model Colony, Pune-411016

Website: www.scdl.net
2013-2015