A STUDY ON DIFFERENT INVESTMENT AVENUES IN MUTUAL FUNDS

A CASE OF UTI TRUST OF INDIA

A PROJECT REPORT SUBMITTED
TO
ACHARYA NAGARJUNA UNIVERSITY

In partial fulfillment of the requirement for the award of degree of

“MASTER OF BUSINESS ADMINISTRATION”
Submitted by
S.J.ALEKYA
Regd. No.Y10BU141016

Under the guidance of

Mr. SUMAN.K. BABU
M.B.A
Assistant professor
DEPARTMENT OF MASTER BUSINESS ADMINSTRATION
M.V.R.COLLEGE OF ENGINEERING AND TECHNOLOGY
(Affiliated to ACHARYA NAGARJUNA UNIVERSITY)

Paritala-522510

2009-2011
 DECLARATION

I S.J.ALEKYA hereby declare that this project report “A STUDY ON DIFFERENT INVESTMENT

AVENUES IN MUTUAL FUNDS at UNIT TRUST OF INDIA has been prepared by me during academic year

2009-11 under the guidance of SUMAN.K .BABU M.B.A in partial fulfillment of the requirement for the

DEPARTMENT OF MASTER OF BUSINESS ASMINISTRATION by ACHARYA NAGARJUNA

UNIVERSITY

I also hereby declare that this project is the result of my own sincere efforts and it has been not submitted to any
other university for award of any other degree or diploma

Place (S.J.ALEKYA)

Date: Y10BU141016
 ACKNOWLEDGEMENT

Firstly I express my sincere thanks to Dr. K. V. Samba Siva Rao M.E (BITS PILANI), PhD- (IIT Delhi),
Principal, MVR COLLEGE OF ENGINEERING & TECHNOLOGY, Paritala Permitting me for doing project in
UNIT TRUST OF INDIA (PVT) LTD for two months.

I thank Mr.N.SIVA SURENDRA M.com, MBA, (PhD), head of the department for his motivation & help in
completion of this project.
It was grateful to Project guide Mr.SUMAN.KBABU for encouragement & co-operation for completion of the
project.

I am very much obliged and indebted to Mr. K.VENU, HR Manager of UTI PVT LTD for approval and valuable
suggestions to take up the project.

I thank ful to all the faculty members for helping me for completion of project.
Last but not least I express my sincere thanks to all those who helped me directly or indirectly throughout my
project work.

ALEKYA
 M.V.R COLLEGE OF ENGINEERING & TECHNOLOGY

DEPARTMENT OF MASTER OF BUSINESS ADMINISTRATION

CERTIFICATE

This is to certify that the project Report entitled study on “A STUDY ON DIFFERENT INCESTMENT AVENUES
IN MUTUAL FUNDS at UNIT TRUST OF INDIA is a bonafied work done by S.J.ALEKYA Regd No
Y10BU141016 under my guidance & supervision. The project report is submitted to department of MASTER OF
BUSINESS ADMINISTRATION, M.V.R COLLEGE OF ENGINEERING & TECHNOLOGY in partial
fulfillment of the degree of MASTER OF BUSINESS ADMINISTRATION by ACHARYA NAGARJUNA
UNIVERSITY during 2009-2011.

SUMAN.K. BABU N.SIVA SURENDRA

(PROJECT GUIDE) (HEAD OF THE DEPARTMENT)

CHAPTER-I

 INTRODUCTION
 MUTUAL INDUSTRY IN INDIA:A Profile
 FINANCE

INTRODUCTION:
In the modern money-oriented economy, finance is one of the basic foundations of all kinds of economy
activities; it is the master key which provides access to all sources for being employed in manufacturing and
merchandising activities.

Meaning:

Word Finance comes directly from the Latin word finis. Finance is defined as the issuance of distribution of and
purchase of liability and equity claims issued for the purpose of generating revenue producing assets. These claims are
commonly preferred as financial claims.

Definition:

According to Paul G. HASINGS Finance is the management of the monetary affairs of accompany .IT includes
determining What has to be paid for raising money on the best terns available and devoting available funds to the best
uses.
 According to A.L.KINGSHOTT WHO stated that Finance is the common denominator for a vast range of
corporate Objectives, and the major part of any corporate plan must be expressed in financial.

MUTUAL FUNDS
MEANING:

According to securities and exchange board of India (SEBI) regulations “Mutual Fund means a fund
established in the form of a trust by a sponsor to raise money by the trustee through the sale of units to the public under
one or more schemes for investing of securities in accordance with the regulations. Thus, a mutual fund collects
money from the investors, issues certificate to achieve mutual benefits in term of capital appreciation in such
securities”.
Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in
securities in accordance with objectives as disclosed in offer document. The money that is 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 to 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.

HISTORY OF INDIAN MUTUAL FUND INDUSTRY

Inception:

The concept of mutual funds was introduced in India with the formation of Unit Trust of India in 1963. The first
scheme launched by UTI was the now infamous Unit Scheme 64 in 1964. UTI continued to be the sole mutual fund
until 1987, when some public sector banks and Life Insurance Corporation of India and General Insurance Corporation
of India set up mutual funds. It was only in 1993 that private players were allowed to open shops in the country.
Today, 32 mutual funds collectively manage Rs 6713575.19 Crore under hundreds of schemes.

Definition:

A mutual fund is a trust that pools the savings of a number of investors with common financial goals. The
collected money is invested in various instruments like debentures, shares, etc. The income generated from these
instruments and the capital appreciation is shared by the investors in proportion to the number of units owned by them.
Short history:

The government of India set up Unit Trust of India in 1963 by an act on parliament. UTI functioned under the
regulatory and administrative control of the Reserve Bank of India till 1978. The Industrial Development Bank of
India took over the regulatory and administrative control that year. The first scheme launched by UTI was Unit Scheme

1964 or the infamous Unit 64. The second phase of the mutual fund industry began with the public sector banks
and Life Insurance Corporation of India and General Insurance Corporation of India setting up their own mutual funds
in 1987.

Finally, in 1993 Kothari Pioneer (now merged with Franklin Templeton) became the first private sector mutual
fund to start operations in the country. A host of private sector as well as foreign funds set up shop after that. In 1996,
a comprehensive and revised Mutual Fund regulation was put in place. The industry now functions under SEBI
(Mutual Fund) Regulations, 1996.

The industry faced its toughest challenge when the US 64 fiasco shattered the confidence of investors. One entity
manages the assets of US 64 and some assured return schemes. The other is a regular mutual fund working under the
SEBI regulations.

Thanks to the boom in the stock market, UTI managed to clean up its act and continue to enjoy the confidence of
several investors. The whole industry also came out of the controversy without any major setbacks.
 Conception and performance in India:

The industry has steadily grown over the decade. For example, before the public sector mutual fund’s entry, UTI
was managing around Rs 6,700 Crore on its own. Public sector mutual funds also helped accelerate the growth of
assets under management. UTI and its public sector counterparts were managing around Rs 47,000 Crore when
Kothari Pioneer, the first private sector mutual fund, set up shop in 1993. Before the US 64 fiasco, there were 33
mutual funds with total assets of Rs 1, 21,805 core as on January 2003.

The UTI was way ahead of other mutual funds with Rs 44,541 Crore assets under management. The industry
overall has performed well over the years. Of course, there were a few funds houses, which disappointed investors.
However, overall performance has been good. However, lack of awareness still impedes the growth of the mutual fund
industry. Un like developed countries, most of the household.
CATEGORIES OF MUTUAL FUNDS
 Working of mutual funds

A mutual fund is set up by a sponsor. However, the sponsor cannot run the fund directly. He has to set up two
arms: a trust and Asset Management Company. The trust is expected to assure fair business practice, while the AMC
manages the money. All mutual funds except UTI functions under SEBI (Mutual Fund) regulations 1996.

The mutual fund collects money directly or through brokers from investors. The money is invested in various
instruments depending on the objective of the scheme. The income generated by selling securities or capital
appreciation of these securities is passed on to the investors in proportion to their investment in the scheme.

The investments are divided into units and the value of the units will be reflected in Net Asset Value or NAV of
the unit. NAV is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset
value of the scheme divided by the number of units outstanding on the valuation date.

Mutual fund companies provide daily net asset value of their schemes to their investors. NAV is important, as it
will determine the price at which you buy or redeem the units of a scheme. Depending on the load structure of the
scheme, you have to pay entry or exit load.
 The mutual industry in India started in 1963 with formation of unit Trust of India, at the initiative of the government
of India and reserve bank. The History of mutual funds in India can be broadly in to four distant phases.

• First phase-1964-87:
Unit trust of India was established on 1963 by an act of parliament. It was set up by the reserve bank of India and
functioned under the regulatory and administrative control of the reserve bank of India. In 1978 UTI was de-linked
from the RBI and the Industrial Development Bank of India took over launched by UTI was Unit Scheme 1964. At the
end of 1988 UTI had Rs.6700 cores of assets under Management.

• Second Phase-1987-1993(entry of public Sector Funds):

The year 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 of India (GIC).
SBI Mutual Fund was the first non-UTI Mutual Fund established in June 1987 followed by can Bank mutual fund (Dec
97), Punjab national bank mutual fund(Aug 89), Indian bank mutual fund (Nov 89). Bank of India (Jun 90), Bank of
Baroda Mutual Fund (Oct 92). LIC established its Mutual Fund in June 1989 while GIC had set up its Mutual Fund in
December in 1990.
 • Third Phase-1993-2003(Entry of Private Sector Funds)
With the entry of private sector in 1993, a new era started in the Indian Mutual funds industry, giving the Indian
investors wider choice of mutual fund families. Also, was the year in which funds, except UTI were to be registered
and governed? The erstwhile Kothari pioneer was the first private sector mutual fund registered in july1993.
The number of mutual fund went on increasing, with many foreign mutual funds setting up funds and also the industry
ha witnessed several mergers and acquisition.

Fourth Phase –Since February 2003:

In February 2003, following the repeal of the Unit Trust of India Act 1963 UTI was bifurcated in to two separate
entities. One is the Specified Undertaking of the Unit Trust of India with assets under a management of rs.29835 cores
as at the end of january2003, representing broadly, the assets of US 64 scheme, assured return and certain other
schemes.
The specified Undertaking of Unit Trust of India functioning under an administrator and the rules framed by
Government of India and does not come under the purview of mutual fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and
functions under the Mutual Fund Regulations. With the bifurcation of the erstwhile UTI which had in March 2000
more than Rs. 76,000 Cores of assets under management and with the setting up of a UTI Mutual Fund, conforming to
the SEBI Mutual Fund Regulations, and with recent mergers taking place among different private sector funds, the
mutual fund industry has entered its current phase of consolidation and growth.
 Mutual Funds in India:
Mutual funds can be defined as the money-managing systems that are introduced to professionally invest money
collected from the public. The Asset Management Companies (AMCs) manage different types of mutual fund schemes.
The AMCs are supported by various financial institutions or companies Investment in mutual funds in India means
pooling money in bonds, short-term money market, financial institutions, stocks and securities and dishing out returns
as dividends. In India, Fund Managers manage the mutual funds. They are also referred to as portfolio managers. The
mutual funds in India are regulated by the Securities Exchange Board of India.

Best Mutual Funds in India

Before knowing about the arguably best mutual funds in India, it is important to know the factors that actually
decide their fate in the market.
In order to get an actual ideal of the best performing mutual funds in the market, one need to track its current
Net Asset Value or NAV. NAV stands for the latest market value of the holdings of a fund that brings down the fund's
liabilities, which are generally indicated in terms of per share amount. On a daily basis, most of the funds' NAV is
decided.

This is determined after the trade closes on certain financial exchanges. The net asset value of the mutual funds
is ascertained at the end of the trading day. An increase in NAV signifies rise in the holdings of the shareholder. The
Fund Firm will then do the transaction on the shares along with the sales fees. While open-ended net asset value of the
mutual funds is issued daily, the close-ended NAV of the mutual fund is released on a weekly basis.
You can calculate net asset value of the mutual fund easily. Track latest market value of the net assets of the fund
and then subtract that by the number of outstanding shares.

Top mutual funds in India

Here are some of the top mutual funds in India that are listed below.

 Reliance Mutual Fund

 The DSP ML Tiger Fund
 SBI Magnum Contra Fund
 HDFC Equity Fund
 Prudential ICICI Dynamic Fund
 SBI Mutual Fund
 Elements of mutual funds

A mutual fund is set up by a sponsor. However, the sponsor cannot run the fund directly. He has to set up
two arms: a trust and Asset Management Company. The trust is expected to assure fair business practice, while
the AMC manages the money. All Mutual Funds except UTI functions under SEBI (mutual funds) regulations
1996.

The mutual fund collects money directly or through brokers from investors. The money is invested in various
instruments depending on the objective of the scheme. The income generated by selling securities or capital
appreciation of these securities is passed on to the investors in proportion to their investment in the scheme.

The investments are divided into units and the value of the units will be reflected in Net Asset Value or NAV of
the unit. NAV is the market value of the assets of the scheme minus its liabilities. The per unit NAV is the net asset
value of the scheme divided by the number of units outstanding on the valuation date. Mutual fund companies provide
daily net asset value of their schemes to their investors.

NAV is important, as it will determine the price at which you buy or redeem the units of a scheme. Depending
on the load structure of the scheme.
 PROBLEMS OF MUTUAL FUND IN INDIA:

• Liquidity Crisis:

Mutual funds in India face liquidity problems investors are not able to draw back from some of the schemes,
there is no easy exit route. Bad delivery has caused a lot of problems and liquidity crisis for the mutual funds.

• Lack of Innovation:
Mutual funds in India have not been able to provide innovative schemes in terms of risk, Liquidity and
choice of the investors.

• Inadequate Research:
Most of the mutual funds in India are suffering because of inadequate research facilities. Most of the funds
depend upon external research and have no facilities fort in house research. They should provide more money on the
research and development if they want to be successful in future.
 • Conventional Pattern of Investment:
Mutual funds in India have been following conservative pattern of investment. They have not been able to
diversify the large extent .Which has caused low returns on investments.

• No provision for Performance Guarantee:

Mutual funds in India have so far failed to provide performance guarantee to the investors. In many cases,
there has been erosion of capital.

• Equate Disclosures:
There have not been adequate ad timely disclosures of material information to the investors by the mutual
funds in India.

• .Equate Disclosures:

There have not been adequate ad timely disclosures of material information to the investors by the mutual
funds in India.
 PERFORMANCE OF MUTUAL FUND

The performance of mutual funds in 1995-96 and 1996-97 had not been encouraging investor confidence in
mutual funds, which ideally should be the most preferred investment vehicle for lay investor, had been low. There has
been lukewarm response to their schemes during this period. However, the position improved during 1997-98. The
number of offer documents of mutual funds filed with SEBI increased substantially from 32 into 1996-97 to 60 in
1997-98.

The amount mobilized through various schemes also increased considerably. These improvements were partly in
response to the regulatory changes brought by SEBI following the mutual funds 2000 Report and the notification of
new regulation During April-December, 1999 Mutual Funds raised Rs. 35,915 crore in gross terms as against Rs
16,288 Crore in the corresponding period in 1998.

In n terms, they mobilized Rs 12,194 Crore during same period as against a net out flow of Rs 950 crore during
the whole of 1998-99.out of the total mobilization, the share of unit trust of India was about 28 percent while the share
of the private sector was 66 percent. The balance of 6 percent was mobilized by banks and financial institution-
sponsored funds.

Out of the total mobilization of Rs 22,088 crore by the private sector mutual funds, foreign funds raised the
maximum amount of Rs 9,822 Crore. The monetary and credit policy for 1999-2000 has permitted money market funds
to offer cheque writing facility to unit holders.
RESOURCE MOBILISATION BY MUTUAL FUNDS (RS.CRORE)
ITEM PRIVATESECTOR PUBLICSECTOR UTI TOTAL
GROSS-
INFLOW
1998-99 7,847 1,671 13,791 22,711

1999-00 43,726 3,871 13,698 61,241

2000-01 75,009 5,535 12,413 92,957

APRIL-
DECEMBER
2000-01 47,550 3,110 8,790 59,430

2001-02 92461 7,346 3,858 1,03,666

REDEMPTION
1998-1999 6,394 1,336 15,930 23,660

1999-2000 28,559 4.562 9,150 42,271

2000-2001 65,160 6,580 12,090 83,289

 APRIL-
DECEMBER

2000-2001 39,360 4,970 9,310 53,640

2001-02 78,150 5,471 9,009 92,632

NET INFLOW
1998-1999 1,452 335 -2,737 -949

1999-2000 15,167 -745 4,548 18970

2000-2001 9,849 -1,045 323 9,128

APRIL-
DECEMBER
2000-2001 8,190 -1,530 480 7,050

2001-2002 14,311 1,874 -5,151 11,033

The mutual fund industry registered significant growth in the last two years. The ingestible
resource of mutual fund rose from Rs 68,200 Crore in 1998-1999 to Rs 1,09,114 core in 1999-2000. Gross resource
mobilization by mutual funds during 2001-2002 amounted to Rs 103,666 cores compared with Rs. 59,430 core
during the previous year, 2000-2001. Private sector mutual funds accounted for 89.2 percent of the total resource
mobilization during April-December 2001, compared to 80 percent in the previous year.

Growth of mutual funds in India:

The growth rate of Indian mutual fund industry has been increasing for last few years was approximately0.12% in
the year of 1999 and its noticed 0.25% in 2004 in terms of AUM as percentage of global AUM
some facts for the growth of mutual funds in India

 100% growth in the last 6years

 Number of foreign AMC’ s is in the queue to entry the Indian markets
 Our saving rate is over 23%c
 Number of foreign AMC’ s is the queue to enter the Indian markets.
 Our saving rate is over 23% highest in the world. Only channel zing these savings in mutual funds Sector is
required
 Emphasis on better corporate governance
 Trying to curb the late trading practices.
 Mutual fund can penetrate rural like the Indian insurance industry with simple and limited products/
 SEBI allowing the MF’ s to launch commodity mutual funds
CHAPTER II:-

CONCEPUTUAL BACK GROUND

COMPANY PROFILE
 MUTUAL FUNDS
MEANING:

According to securities and exchange board of India (SEBI) regulations “Mutual Fund means a fund
established in the form of a trust by a sponsor to raise money by the trustee through the sale of units to the
public under one or more schemes for investing of securities in accordance with the regulations. Thus, a
mutual fund collects money from the investors, issues certificate to achieve mutual benefits in term of capital
appreciation in such securities”.

Mutual fund is a mechanism for pooling the resources by issuing units to the investors and
investing funds in securities in accordance with objectives as disclosed in offer document. The money that is
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 to 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.

MUTUAL FUND OPERATION FLOW CHART

 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. A mutual fund is required
to be registered with Securities and Exchange Board of India (SEBI), which regulates securities markets
before it can collect funds from the public.

Mutual funds have a unique structure not shared with other entities such as companies or firms. India
has a legal framework within which mutual funds must be constituted. A MF in India is allowed to issue
open end and close end schemes under common legal structure. Therefore, a Mutual Fund may have several
different schemes (open and close end) at any point of time.

SEBI contemplated four-tier systems for managing the affairs of Mutual Funds ensuring arms length
distance between the sponsor and the fund. The four constituents were the sponsoring company, the fund, the
custodians and the asset management company. They are presented in a diagram.
 DISADVANTAGE OF MUTUAL FUND

 No control over Cost in the Hands of an Investor.

 No tailor-made Portfolios.

 Managing a Portfolio Funds.

 Difficulty in selecting a Suitable Fund Scheme.

ADVANTAGES OF MUTUAL FUNDS

 For investors who have limited resources available in terms of capital and the ability to carry out detailed
research and market monitoring, mutual funds offer the following major advantages:

Portfolio Diversification:
This enables an investor to hold a diversified investment portfolio, even with amount of investment that would
otherwise require big capital

• Professional Management:
A team of professional fund managers them with in-dept research inputs from investment analysts

• Reduction Risk:
As mutual fund invest in large number of companies and are managed professionally, the risk
factor of the investor id reduced. A small investor, on the other hand, may not be in apposition to
minimize such risks.

• Reduced Transaction Cost:

An investor can reap the benefits of the 'Economies of Scale' as funds pay lesser costs on
brokerage, custodian charges etc, because of larger volumes.
 • Convenience and flexibility:
Investors can easily transfer their holdings from one scheme to another; get updated market
information and so on.

• Tax Advantage:
There are certain schemes of mutual funds which provide tax advantage under the income tax Act. Thus, the
tax liability of an investor is also reduced when he invests in here schemes of mutual funds.

• Flexibility:-
Mutual funds provide flexible investment plans to its subscribers such as, regular investment plans, regular with
drawl plans and dividend reinvestment plans, etc.Thus; an investor can invest or withdraw funds according to his own
requirements.

• Low operating costs:-

 Mutual funds have large investible funds at their disposal and thus can avail economies of large scale. This
reduces their operating costs by way of brokerage, fees, commission etc. Thus, a small investor also gets the benefit of
large scale economies and low operating costs.

• Higher returns:
Mutual funds are expected to provide higher returns to the investors as compared to direct investment because of
professional management, economies of scale, reduced risk, etc.

• Liquidity:
A peculiar advantage of a mutual fund is that investment made in its schemes can be converted back in to
cash promptly with out heavy expenditure on brokerage, delays, etc.

Scope of Mutual Funds

It has grown enormously over the years. In the first age of mutual funds, when the investment
management companies started to offer mutual funds, choices were few. Even though people invested their
money in mutual funds as these funds offered them diversified investment option for the first time. By
 investing in these funds they were able to diversify their investment in common stocks, preferred stocks,
bonds and other financial securities. At the same time they also enjoyed the advantage of liquidity. With
Mutual Funds, they got the scope of easy access to their invested funds on requirement.

But, in today’s world, Scope of Mutual Funds has become so wide, that people sometimes take long
time to decide the mutual fund type, they are going to invest in. Several Investment Management Companies
have emerged over the years who offer various types of Mutual Funds, each type carrying unique
characteristics and different beneficial features.

To understand the broad scope of Mutual Funds we need to discuss the main types of Mutual Funds that
are normally offered by the Mutual Companies

Types of Mutual Funds:

These are number of mutual funds to suit the needs and preferences of investors. The choice of the fund is
linked to the demand of the investor. To achieve the differing objectives of the investor, mutual funds adopt different
strategies according offer different schemes of investment. The various mutual funds are classified under five broad
categories.
 A. According to Ownership

B. According to the schemes of Operation

C. According to portfolio

D. According to location

E. Others

A. According to Ownership:
According to ownership Mutual funds in India may be classified as

1. Public sector Mutual funds

2. Private sector Mutual funds

• Public sector Mutual fund:

Unit trust of India has been functioning in the arena of mutual funds business in India since1963-1964.
However, it was only after23years,in 1987that second was establishes in India by the State Bank of India. Although
UTI was functioning successfully, it was found inadequate to meet the requirements of small and medium house hold
sectors. There after a number of public sector Originations like IND Bank-, GIC-MF, MF, CAN Bank-MF, BOI-MF,
PNB-MF LIC-MF, etc.
 • 2. Private Sector Mutual funds:
Seeing the success and growth of mutual funds in the Indian capital market, the Government of Indian allowed
the private sector corporate to join the mutual fund Industry on Febuary14, 1992.Since then, a number of private sector
companies have approached SEBI for permission to set up private mutual funds. SEBI Regulations 1996 provide
guidelines for registration, constitution, management and schemes of mutual funds.

B. According to scheme of operation:

The most important classification of mutual funds is one the basis of the scheme of their operations as all
types of mutual fall under these classifications

• Open-ended schemes/funds

• Close-ended schemes/funds

• Interval schemes/funds

• Open ended fund/Scheme:

 An open-ended fund or scheme is one that is available for subscription and repurchase on a continuous basis.
These schemes do not have fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value
(NAV) related prices, which are declared on a daily basis. The key feature of open-end scheme is liquidity.

• Closed ended Fund Scheme:

A closed ended fund scheme has a stipulated maturity period e .g 5-7 years. The fund is open for subscription
only during for a specific period at the time of launch of the scheme.
Investors can invest in the scheme at the time of the initial public issue and there after they can buy or sell the units of
the scheme on the stock exchanges where the units are exchanged.

• Interval Schemes/Funds:
A as interval scheme is a scheme of mutual fund which is kept open for a specific interval and after that it
operates as close scheme.

C. According to Portfolio:
A scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its
investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes
may be classified mainly as follows.

• Growth Fund
 The aim of growth funds is to provide capital appreciation over the medium to long- term. Such schemes
normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes
provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose
an option depending on their preferences. Growth schemes are good for investors having a long-term outlook seeking
appreciation over a period of time.

• Income/debt oriented Scheme:

The aim of income funds is to provide regular and steady income to investors. Such schemes generally invest in
fixed income securities such as bonds, corporate debentures, Government securities and money market instruments.
Such funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity
markets. However, opportunities of capital appreciation are also limited in such funds.

• Balanced Fund:
The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities
and fixed income securities in the proportion indicated in their offer documents. These are appropriate for investors
looking for moderate growth. They generally invest 40-60% in equity and debt instruments.

• Money Market or Liquid Fund:

These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and
moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates
of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate
much less compared to other funds.

• Gilt Funds:
These funds invest exclusively in government securities. Government securities have no default risk. Naves of
these schemes also fluctuate due to change in interest rates and other economic factors as are the case with income
or debt oriented schemes

• Index Funds:
Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index
(Nifty), etc. These schemes invest in the securities in the same weight age comprising of an index.

 Specialized Funds:

These funds invest in a particular type of securities. The funds may specialize in securities of companies dealing
in a particular product, firms in a particular industry or of certain income producing securities.

Stock/Equity fund:

These funds mainly invest in shares of the companies. The investments may vary from BLUE CHIP companies
to newly establish companies. They under take risk associated with investment in equity shares and growth funds.
D. According to Location:

Mutual fund can also be classified on the basis of location from where they mobilized funds.

• Domestic Funds.

• Off-shore Funds

• Domestic Funds:
These are the funds which mobilize savings people with in country where investments are made. Domestic
funds can further be sub-divided on the basis of scheme of operation or portfolio as discussed in the earlier pages.

• Off-shore Funds:
Off-shore mutual funds are those which rise or mobilize funds in countries other than where investments are to
be made. These funds attract foreign savings for investment in India.

E. Other Types Mutual Funds:

In addition to the above mutual funds, there can be some other types of mutual funds also, such as, “Loan funds” and
‘Non –Loan funds’ based upon the expenses/fees to be charged.
 Various Investment Options in Mutual Funds Offer

To cater to different investment needs, Mutual Funds offer various investment options. Some of the important
investment options include:

Growth option:
Dividend is not paid-out under a Growth Option and the investor realizes only the capital appreciation on the
investment (by an increase in NAV).

Dividend Payout Option:

Dividends are paid-out to investors under the Dividend Payout Option. However, the NAV of the mutual fund
scheme falls to the extent of the dividend payout.

Dividend Re-investment Option:

Here the dividend accrued on mutual funds is automatically re-invested in purchasing additional units in open-
ended funds. In most cases mutual funds offer the investor an option of collecting dividends or re-investing the same.
Retirement Pension Option:

Some schemes are linked with retirement pension. Individuals participate in these options for themselves, and
corporate participate for their employees.

Insurance Option:

Certain Mutual Funds offer schemes that provide insurance cover to investors as an added benefit.

Systematic Investment Plan (SIP):

Here the investor is given the option of preparing a pre-determined number of post-dated cheques in favor of the
fund. The investor is allotted units on a predetermined date specified in the offer document at the applicable NAV.
Systematic Withdrawal Plan (SWP):
As opposed to the Systematic Investment Plan, the Systematic Withdrawal Plan allows the investor the facility
to withdraw a pre-determined amount / units from his fund at a pre-determined interval. The investor's units will be
redeemed at the applicable NAV as on that day.

Constitution of Mutual Funds

A mutual fund is a Special type of investment institution that acts as an investment conduit. It pools the savings;
particularly of the relatively Small investors .and invests them in a well diversified portfolio of sound investment.
 Mutual Funds issue securities to the investors in accordance with the quantum of money invested them. The
profits are shared by the investors in proportion to their investments. A mutual funds is set up in the form of a trust,
which has

 sponsor

 trustee

 Asset Management Company

 Custodian.

The trust has established by a sponsors. who is are like promoter of a company .The trustees of the Mutual funds
hold its property for the benefit of the unit holders .The AMC manages the funds by making investments in various
types of the securities .The custodial holds the securities of various schemes of the fund in its custody. The trustees are
vested with the general power of superintendence and direction over AMC, they monitor the performance and
compliance of the SEBI Regulations by the mutual fund.

Mutual funds have emerged as significant avenue of finance for industry and a notable intermediary in the Indian
capital market.
 Until1987, the UTI was the sole mutual fund /unit trust in the country. Subsidiaries of public sector banks
launched mutual funds subsequently. Later the Life Insurance Corporation of India and the General Insurance
Corporation of India also floated mutual funds.

In the Post-1992period, mutual funds sponsored by other public and private sector financial institutions,
corporate in collaboration with foreign investment and fund managers and foreign institutional investors emerged on
the scene.

At present there are about 38players in the market including the UTI with assets as on April30, 2006 agreeing
Rs257500croes.with the repeal of the UTI Act and the consequent reorganization, the UTI operates like other mutual
funds, with in the frame work of SEBI regulations/guidelines. The present Chapter is devoted to a discussion on mutual
funds.

Regulations and Operations Of mutual funds

SEBI mutual Fund Regulations

 Registration of Mutual funds.

 Constitution and Management of Mutual fund and
Operations of trusts.
 Constitution and Management of Asset management.
 Company and custodian. .
  Investment objectives and valuation polices.
Real Estate mutual Funds.
 General obligations of Mutual Funds /asset Management companies.
 Inspection/audit.
SEBI Mutual Fund Guidelines

 Responsibilities of AMC s and Trustees

 Participation by mutual funds in derivative trading.
 Participation by mutual funds stock lending scheme
 Advertisement by mutual funds
 Valuation of Securities
 Introduction of benchmarks
 Identifying and Provisioning for Naps for Mutual funds

Approval of the Board for appointment of trustee:

o No trustee shall initially or any thereafter be appointed with out prior approval of the Board. Provided
further if any trustee resigns or retries, a new trustee shall be appointed with in a period of three months
with the prior approval of the board
 o The existing trustees of any mutual fund may form a company to act as at trustee with the prior approval
of the Board.

TRUSTEE:

Rights and obligations of the trustee

 The trustee and the assets Management Company shall with the prior approval of the board enter in to an
investment management agreement.
 The investment management agreement shall contain such clauses as are mentioned in the fourth schedule and
such other clauses as are necessary for the purpose of making investments.
 The trustee shall have a right to obtain from the assets management company such information as is considered
necessary by the trustees.
 The trustee shall ensure that an management company has been diligent in empanelling the brokers, in
monitoring securities truncations with broken and avoiding undue concentration of business with any broker.
Asset Management Company and its Obligations:

 The asset management, company shall take reasonable steps and exercise due diligence to endure that the
investment of funds pertaining to any scheme is not contrary to the provisions of the regulation and the trust deed.
 The asset management company shall submit to the trustees quarterly reports of each year on its activities and the
compliance with these regulations.
  The trustees at the request of the asset management company may terminate the assignment of the asset
management company at any time.
 The asset management company shall appoint registrars and share transfer agents who are registered with the
Board.
 In case the asset management company enters into any securities transactions with any f its associates a report to
the effect shall immediately be sent to the trustees.

Custodian:

Appointment of Custodian:

 The mutual funds shall appoint a custodian to carry out he custodial services for the schemes of the fund and sent
intimation of the same the board with in fifteen days of the appointment of the custodian.
 No custodian in which the sponsor or its associates hold custodian or more of the voting rights of the directions
of the custodian represent the interest of the sponsor or its associates shall act as custodian for a mutual funds
constituted by the same or any of its associate or subsidiary company.

Agreement with custodian:

The mutual fund shall enter into a custodian agreement with the custodian, which contain the clauses which are
necessary for the efficient and orderly conduct of the affairs of the custodian:
 Provided that the agreement, the service contract, terms and appointment of the custodian shall be entered into with
prior approval of the trustees.

Company Profile

Introduction:-

Vision:
To be the most Preferred Mutual Fund
Our mission is to make UTI Mutual Fund:

• The most trusted brand, admired by all stakeholders.

• The largest and most efficient money manager with global presence
• The best in class customer service provider
• The most preferred employer.
• The most innovative and best wealth creator.
• A socially responsible organization known for best corporate governance.

Unit Trust of India:-

Was created by the UTI Act passed by the Parliament in 1963.For more than two decades it remained the
sole vehicle for investment in the capital market by the Indian citizens. In mid- 1980s public sector banks were allowed
to open mutual funds. The real vibrancy and competition in the MF industry came with the setting up of the Regulator
SEBI and its laying down the MF Regulations in 1993.UTI maintained its pre-eminent place till 2001, when a massive
decline in the market indices and negative investor sentiments after Ketan Parekh scam created doubts about the
capacity of UTI to meet its obligations to the investors. This was further compounded by two factors; namely, its
flagship and largest scheme US 64 was sold and re-purchased not at intrinsic NAV but at artificial price and its
Assured Return Schemes had promised returns as high as 18% over a period going up to two decades..!!

Fearing a run on the institution and possible impact on the whole market Government came out with a rescue
package and change of management in 2001.Subsequently, the UTI Act was repealed and the institution was bifurcated
into two parts.

UTI Mutual Fund was created as a SEBI registered fund like any other mutual fund. The assets and liabilities of
schemes where Government had to come out with a bail-out package were taken over directly by the Government in a
new entity called Specified Undertaking of UTI, SUUTI. SUUTI holds over 27% stake Axis Bank. In order to distance
Government from running a mutual fund the ownership was transferred to four institutions; namely SBI, LIC, BOB and
PNB, each owning 25%. Certain reforms like improving the salary from PSU levels and effecting a VRS were carried
out UTI lost its market dominance rapidly and by end of 2005,when the new share-holders actually paid the
consideration money to Government its market share had come down to close to 10%!

A new board was constituted and a new management inducted. Systematic study of its problems role and functions was
carried out with the help of a reputed international consultant. Fresh talent was recruited from the private market,
organizational structure was changed to focus on newly emerging investor and distributor groups and massive changes
in investor services and funds management carried out. Once again UTI has emerged as a serious player in the industry.
 Some of the funds have won famous awards, including the Best Infra Fund globally from Lipper. UTI has been
able to benchmark its employee compensation to the best in the market, has introduced Performance Related Payouts
and ESOPs.

The UTI Asset Management Company has its registered office at: UTI Tower, Gn Block, Bandra — Kurla
Complex, Bandra (East), Mumbai- 400 051.It has over 70 schemes in domestic MF space and has the largest investor
base of over 9 million in the whole industry. It is present in over 450 districts of the country and has 100 branches
called UTI Financial Centres or UFCs. About 50% of the total IFAs in the industry work for UTI in distributing its
products! India Posts, PSU Banks and all the large Private and Foreign Banks have started distributing UTI products.

The total average Assets under Management (AUM) for the month of June 2008 was Rs. 530 billion and it
ranked fourth. In terms of equity AUM it ranked second and in terms of Equity and Balanced Schemes AUM put
together it ranked FIRST in the industry. This measure indicates its revenue- earning capacity and its financial strength.

Besides running domestic MF Schemes UTI AMC is also a registered portfolio manager under the SEBI
(Portfolio Managers) Regulations. It runs different portfolios for is HNI and Institutional clients. It is also running a
Sharia Compliant portfolio for its Offshore clients. UTI tied up with Shinsei Bank of Japan to run a large size India-
centric portfolio for Japanese investors.

For its international operations UTI has set up its 100% subsidiary, UTI International Limited, registered in
Guernsey, Channel Islands. It has branches in London, Dubai and Bahrain. It has set up a Joint Venture with Shinsei
Bank in Singapore. The JV has got its license and has started its operations.
 In the area of alternate assets, UTI has a 100% subsidiary called UTI Ventures at Bangalore This company runs
two successful funds with large international investors

Genesis:-

January 14, 2003 is when UTI Mutual Fund started to pave its path following the vision of UTI Asset
Management Co. Ltd. (UTIAMC), which was appointed by UTI Trustee Co, Pvt. Ltd. for managing the schemes of
UTI Mutual Fund and the schemes transferred/migrated from the erstwhile Unit Trust of India.

UTIAMC provides professionally managed back office support for all business services of UTI Mutual Fund in
accordance with the provisions of the Investment Management Agreement, the Trust Deed, the SEBI (Mutual Funds)
Regulations and the objectives of the schemes. State-of-the-art systems and communications are in place to ensure a
seamless flow across the various activities undertaken by UTIMF. Since February 3, 2004, UTIAMC is also a
registered portfolio manager under the SEBI (Portfolio Managers) Regulations, 1993 for undertaking portfolio
management services. UTIAMC also acts as the manager and marketer to offshore funds through its 100 % subsidiary,
UTI International Limited, registered in Guernsey, Channel Islands.

Assets Under Management

UTIAMC presently manages a corpus of over Rs.64,445 Cores* as on 30th June 2010 Mutual Fund has a track
 record of managing a variety of schemes catering to the needs of every class of citizens. It has a nationwide network
consisting 144 UTI Financial Centers (UFCs) and UTI International offices in London, Dubai and Bahrain.

UTIAMC has a well-qualified, professional fund management team, which has been fully empowered to manage
funds with greater efficiency and accountability in the sole interest of the unit holders. The fund managers are ably
supported by a strong in-house securities research department. To ensure investors’ interests, a risk management
department is also in operation.

Reliability:

UTIMF has consistently reset and upgraded transparency standards. All the branches, UFCs and registrar
offices are connected on a robust IT network to ensure cost-effective quick and efficient service. All these have
evolved UTIMF to position as a dynamic, responsive, Restructured, efficient and transparent entity, fully compliant
with SEBI regulations.

. Investment Philosophy:

UTI Mutual Fund’s investment philosophy is to deliver consistent and stable returns in the medium to long term
with a fairly lower volatility of fund returns compared to the broad market. It believes in having a balanced and well-
 diversified portfolio for all the funds and a rigorous in-house research based approach to all its investments. It is
committed to adopt and maintain good fund management practices and a process based investment management.

Registered office:

Shri Janki Ballabh, Chairman,

Former Chairman, SBI Flat No. 605,

Versova VinayakCo-op. Hsg. Soc., HSG Plot No

8, Near Versova Telephone

Exchange, Versova, Andheri (W), Mumbai 400 053

Trustee:
 Shri Janki Ballabh,
Chairman, Former Chairman, SBI
Flat No. 605, Versova Vinayak
Co-op. Hsg. Soc., HSG Plot No.
8, Near Versova Telephone
Exchange, Versova, Andheri (W),
Mumbai 400 053

Dr. P G Apte

Director, Indian Institute of Management

Bangalore, 415, IIMB Campus,

Bannerghatta Road

Bangalore - 560 076

Shri S P Oswal
Chairman & Managing Director
Vardhman Textiles Ltd.
Auro Mirra Bhawan, 2722,

Walkeshwar Road,

Mumbai – 400 006 Shri Ashok K Kini

Flat No. B-202, Mantri Pride
apartment, 1st Cross Mountain
Road, Jayanagar, 1st Block,
Bangalore – 560011

Shri S Rave Senior Partner,

Ravi Rajan & Co.

Chartered Accountants
D-218, Saket,
New Delhi - 110 017
 Prof P. V Ramana
Chairman, I.TM Business School, Kharghar
Bungalow No 12, Gulab View,
Near Chembur,
Mumbai - 400 071

Sponsors:

Three leading public sector banks – Bank of Baroda, Punjab National Bank and State Bank of India and Life
Insurance Corporation of India (LIC), the largest public financial investment institution and life insurer in India are the sponsors
of UTI Mutual Fund.

Bank of Baroda
Bank of Baroda is a commercial bank performing activities in terms of Banking Companies (Acquisition and Transfer
of Undertakings Act 1970) under which the Undertaking of the Bank was taken over by the Central Government. During the
period since inception, it has always maintained its practice of sound value based banking to emerge as one of the premier public
sector Banks of the country today. It has a track record of uninterrupted profits since inception in 1908. The financial strength of
 the Bank and its long tradition of efficient customer service are drawn substantially from the extensive reach of its 2732 strong
branch network (as of 31.03.2007) covering almost every State and Union Territory in the Country. The Bank is also one of the
few Indian Banks with a formidable presence overseas with 40 branches. Thus, the total branch network is 2,772 as at
31.03.2007.

Life Insurance Corporation of India:

Life Insurance Corporation of India (LIC) is amongst the largest insurance companies in the world, with 2048 branches
and having a Fund size of Rs.-5,60,806.33 crore.

National Bank
Punjab National Bank is a commercial bank performing activities in terms of Banking Companies (Acquisition and
Transfer of Undertakings Act 1970) under which the Undertaking of the Bank was taken over by the Central Government. The
main object of the bank under the said Act is as below:- An act to provide for the acquisition and transfer of the undertaking of
certain banking companies, having regard to their size, resources coverage and organization, in order to further to control the
heights of the economy, to meet progressively and serve better, the needs of the development of the economy and to promote the
welfare of the people, in conformity with the policy of the State towards securing the principles laid down in clause (b) and (c) of
Article 39 of the Constitution of India and for matter connected therewith or incidental therein. As on 31.03.2007 Punjab
National Bank has 4539 domestic offices including 421 extension counters, 2 subsidiaries and a deposit size of Rs.1, 39,860.

Bank of India

The State Bank of India is the largest public sector bank in India with 9517 branches in India and 83 offices in
32 countries worldwide. In addition to this, SBI also has 21 subsidiaries.
The sponsors are not responsible nor liable for any loss resulting from the operation of the scheme beyond the
contribution of an amount of Rs.10, 000/- made by them towards setting up of the Mutual Funds.

Board of Directors

Shri U K Sinha
Chairman & Managing Director
UTI AMC Pvt. Ltd
UTI Tower ‘Gn’ Block,
Bandra Kurla Complex,
Bandra (East), Mumbai - 51

Ms. Anita Ramchandran

M/s Cerebrus Consultants Pvt. Ltd.,
405, Kakad Chambers

132 Dr Annie Besant Road, Worli,

Mumbai – 400018

Shri P R Khanna
70, Sunder Nagar
New Delhi – 110 003

Mr James Sellers Riepe

1330 Western Run Road
 Cockeysville,

Marryland 21030 USA

Mr Flemming Madsen
Director, Head of Asia PacificT Rowe Price

Global Investment Services Ltd.

Key People:

 Mr. U.K. Sinha

 Mr. Jaideep Bhattacharya
 Mr. Satish Chandra Dikshit
 Mr. Imtaiyazur Rahman
 Mr. T.N.Radhakrishna
 Mr. Anoop Bhaskar
 Mr.Asish Ranawade
 Mr. Amandeep Singh Chopra
 Mr. S.L.Pandian
 Mr. Manas Lal Mitra
Fund Managers::

Mr. Amandeep Chopra

Mr. Anoop Bhaskar

Mr. Sanjay Ramdas Dongre

Ms. Swati Kulkarni

Mr. Harsha Upadhyaya

Mr. V. Srivatsa

Ms. Shilpita Guha

Mr. Harsha Upadhyaya

 Ms. Shilpita Guha

Mr. Kaushik Basu

Mr. K Mukundan

AWARDS:

 UTI MF wins CNBC TV18-CRISIL Award...

 UTI MF sweeps ICRA mutual fund Award 2009
 UTI MF wins the Best Debt Fund House Award...
 UTI MF wins CNBC TV18-CRISIL Award...
 UTI MF sweeps ICRA mutual fund Award 2009...
 UTI AMC gets 3 International Awards..
 . UTI Mutual Fund sweeps ICRA mutual fund Award 2009
 UTI MF wins the Best Debt Fund House Award
 Golden Peacock Innovative Product/Service Award-2008
 Loyalty Awards - 2009
 Reader’s Digest Trusted Brand 2008
  Lipper Fund Awards09-UTI Mahila Unit-5 yrs
 Lipper Fund Awards - Gulf 2008
 Four ICRA 7 Star Gold Award
 Four ICRA 5 Star Award
 ICRA Mutual Fund Award 2007
 CRISIL-CNBC-TV18-Mutual Fund of the year Award 2007...
 ICRA Mutual Fund Award 2006...

DISTRIBUTORS

Distribution Network:-

UTI MF has a large distribution network comprising of 139 branches / Financial Centers across India, 439
Chief Representatives / Chief Agents and over 28,000 Association of Mutual Funds of India (AMFI) certified agents to
meet varied investment needs of its investors. This distribution channel helps mobilization of funds from across the
country. A dedicated team of marketing professionals at Corporate Office guides educates and motivates this
distribution force towards achieving higher business volumes.

Our distributors:-
 UTI MF has tied up with various banks and institutions to help increase the volume of business. UTI MF has
further expanded its
distribution capabilities by
tying up with Department of
Post.

CHAPTER-III

Research methodology
 CHAPTER -3
RESEARCH METHODOLOGY

 Problem of the study

 Significance of the Study

 Objectives of the Stud

  Methodology of the Study

 Sample Frame

 Scope & Limitations

3.2 OBJECTIVES OF THE STUDY:

Primary Objective:

To study investors’ preference towards various investment avenues.

Secondary Objectives:

 To study the risk appetite of the investors.

 To identify the reasons for investments in Mutual fund.
 To estimate the customer satisfaction with investment in mutual fund.
 To study the choice of investment for tax benefits.
RESEARCH METHODOLOGY
INTRODUCTION
 Research methodology is a way to systematically solve the research problems. It includes the overall research
design, the sampling procedure, data collection method and analysis procedure.

3.1 RESEARCH DESIGN

A research design is the arrangement of condition for collection and analysis of data in a manner which may
result in an economy in procedure. It stands for advance planning for collection of the relevant data and the techniques
to be used in analysis, keeping in view the objectives of the research and availability of time.

Descriptive Research Design

Descriptive research includes survey and fact-finding enquiries of different kinds. The major purpose of this
research is description of state of affairs as it exits at present.

3.2 SAMPLING TECHNIQUES /FRAME

The convenience sampling technique was employed in the selection of the sample.
SAMPLE SIZE
The number of items selected from the population constitutes the sample size. The study covers the customers in
the city of UTI. Total sample size for the study is 100.

3.3 DATA COLLECTION METHOD

While deciding about the method of data collection for the study the researcher should keep in mind the two
sources of data.

Primary data

Secondary data

Primary Data

The primary data are those which are collected afresh and for the first time and thus happen to be original in
character.
 Pre-tested Structured questionnaire has been used for the collection of primary data from the respondents. Please
Refer Appendix – I for the full version of the questionnaire.

Secondary Data
The secondary data has been collected from the company records and various websites.

3.4 STATISTICAL TOOLS

The data are analyzed through statistical method. There are various statistical tools to analysis the data.
Weighted average, Simple percentage analysis are used for analyzing the data collected

SCOPE OF THE STUDY

This study on ‘mutual funds’ was important to UTI consultants, UTI The marketing and sales personnel at UTI
Consultants wanted to know the level of awareness about various investment methods and awareness about ‘Mutual
funds’ in particular. With the opening up of the capital markets in a big way to Foreign Institutional Investors, mutual
funds are becoming an attractive avenue. UTI is a Pearl City with vast potential. UTI experienced lack of detailed
information about the investment behavior of the population in URI. Hence there was a need to conduct this study to
gather information about the investment preferences, with particular reference to mutual funds.

Duration of Study:
The Study was carried out for the period of one and half months from 5Th on June 2010

Limitations:

 The area of study is limited to UTI only; hence the results may not be true for other geographical areas.

 Validity & Reliability of the data obtained depend on the responses from the customer.

 Structured questionnaire is the basis for collecting the data. It may have the disadvantage of not investigating the
reasons for their responses.

 The time at the disposal of the researcher is limited.

 The size of the sample comparing to the population is very less and hence it may not represent the whole
population.
CHAPTER – IV

 DATA PRESENTATION

 ANALYSIS
 Data Presentation& Analysis

GENDER OF THE RESPONDENTS

No. of
S.No. Gender Percentage
Respondent
1. Male 84 84.0
2. Female 16 16.0
Total 100 100.0

gender
100

80

60

40 gende
r
20

0
INTERPERTATION: male female

It is identified from the above table that 84.0% of the respondents are belonging to male category and 16.0% of
the respondents are belonging to female
AGE PROFILE OF THE No. of
S.No. Age Percentage
RESPONDENTS Respondent

1. < 20 years 0 0.0

2. 21 to 30 years 44 44.0

3. 31 to 40 years 35 35.0

4. 41 to 50 years 15 15.0

5. 51 to 60 years 6 6.0

6. > 60 years 0 0.0

Total 100 100.0

INTERPERTATION:

It is identified from the above table that maximum (44.0%) of the respondents belong to 21-30 years of age
group and respondents in the age group 31 to 40 years from another 35% of the sample. It can be inferred that majority
of the investors (nearly 79%) are in the age group of 21 to 40 years.
 MARITAL STATUS OF THE RESPONDENTS

No. of
S.No. Marital status Percentage
Respondent
1. Single 31 31.0
2. Married 69 69.0
Total 100 100.0

80
70
60
50
40 married
30 single
20
10
0
S eries 1
INTERPERTATION:

It is observed from the above table that 31.0% of the investors are unmarried and 69.0% of the respondents are
married.

OCCUPATION OF THE RESPONDENTS

 No. of
S.No. Nature of employment Percentage
Respondent

1. Salaried 48 48.0

2. Business 36 36.0

3. Professional 13 13.0

4. Retired 1 1.0

5. Others 2 2.0

Total 100 100.0

.
INTERPERTATION:

It is noted from the above table that maximum (48.0%) of the investors are salaried people and 36% of the
respondents are business people and 13%of the respondents are professional and 1% of the respondents are others of
the respodents2% are retired

ANNUAL INCOME OF THE RESPONDENTS

 No. of
S.No. Annual Income Percentage
Respondent

1. Rs.50000 - Rs.1 lakh 21 21.0

2. Rs.1 lakh - Rs.2 lakhs 50 50.0

3. Rs.2 lakhs – Rs.3 lakhs 19 19.0

4. Rs.3 lakhs – Rs.4 lakhs 6 6.0

5. Rs.4 lakhs – Rs.5 lakhs 3 3.0

6. >Rs.5 lakhs 1 1.0

Total 100 100.0

60

50

40

30

20

10

0
INTERPERTATION:

It is known from the above table that maximum (50.0%) of the investors are earned Rs. 1 lakh to 2 lakh per
annum another 21% of the respondents had an annual income between Rs.50,000 to Rs.1,00,000 and 19% of the
respondents had annual income between Rs.2,00,000 to Rs.3,00,000.

Thus 90% of all respondents had an annual income Less than Rs.3,00,000. The median income of the group was
Rs.1,50,000.

CHOICE OF INVESTMENTS AVENUES

No. of
S.No. Opinion Percentage
Respondent

1. Fixed deposits 65 65.0

2. Post office Savings 37 37.0

 3. Bonds / debentures 10 10.0

4. Mutual funds 83 83.0

5. Life insurance 70 70.0

6. Shares 58 58.0

7. National savings certificates 4 4.0

av en v es

m u tu va l fu n d

fd
bond

lic
p o s t o ffic e
s a vin g s
INTERPERTATION:

Since the respondents have used more than one Investment Avenue, the total number of responses is more than
100. In terms of popularity of Investment Avenue, the ranking can be inferred from the table above.

Rank Investment Avenue % of total respondents

I Mutual Funds 83%

II Life Insurance 70%

III Fixed Deposits 65%

IV Share Deposits 58%

 THE REASONS FOR INVESTMENT IN MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent

Best returns when compared to

1. 40 48.2
other avenues

2. Professional management 2 2.4

3. Consistency of steady returns 27 32.5

4. Trade off between risks and return 1 1.2

5. Diversification 12 14.5

6. Liquidity 1 1.2

Total 83 100.0
INTERPERTATION:

It is known from the above table that 48.2% of the investors who have invested in mutual fund invested their
money through mutual fund for the reason of best returns when compared to other avenues.

The second most important reason in consistency of steady returns, which was the reason given by 32.5% of the
respondents who had invested in mutual funds.

Combining both, it can be inferred that majority (80.7%) of the people who invest in mutual funds choose this
avenue due to either better returns or steady returns.

PERIOD OF INVESTMENT IN MUTUAL FUNDS

No. of
S.No. Opinion Percentage
Respondent

1. Less than 1 year 7 8.4

2. 1 year-3 years 59 71.1

3. 3-5 years 16 19.3

4. More than 5 years 1 1.2

Total 83 100.0
INTERPETATION:

It is observed from the above table that maximum 71.1% of the investors invested their money through mutual
funds for the period of 1 year- 3 years. Maximum 16% of the investors their money though mutual funds for the period
of more than 5years.

TYPE OF MUTUAL FUNDS

No. of
S.No. Type of Fund Percentage
Respondent

1. Public 14 16.9

2. Private 23 27.7

3. Both 46 55.4

Total 83 100.0
INTERPERTATION:

It is identified from the above table that 55.4% of the investors invest their money through both public and
private mutual funds. Another 27.7% invested only through private mutual funds. Only 16.9% of the investors inverted
only in public mutual funds.

Since the investors have indicated that they are seeking steady or better returns, they appear to feel that private
mutual funds can meet their expectation on returns better.
TYPES OF MUTUAL FUND SCHEMES

No. of
S.No. Type of Schemes Percentage
Respondent

1. Equity 66 79.5

2. Debt 0 0.0

3. Hybrid 17 20.5

4. Gilt fund 0 0.0

Total 83 100.0
INTERPERTATION:

It is known from the above table that most (79.5%) of the investors selected Equity type of schemes and 20.5%
of the investors chose Hybrid schemes.

This result is also in line with the opinion expressed by the investment that they invest in mutual funds for better
or steady returns.

Since equity schemes promise better returns and hybrid schemes promise steady returns, the investors prefer
only these two types of schemes. The responses are consistent with the expectation of the investors.
 PROPORTION OF INCOME INVESTED IN MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent

1. Less than 10% 49 59.0

2. 11-20% 33 39.8

3. 21-30% 1 1.2

4. 31-40% 0 0.0

5. Above 40% 0 0.0

Total 83 100.0
50
45
40
35 OF INCOME IN
30 MUTAL FUNDS
25
20
15
10
5
0
<10% 21-30% ABOVE40%
INTERPERTATION:

It is seen from the above table that maximum (59.0%) of the investors invest less than 10% of their income
through mutual fund. Further 39.8% of the investors invest between 11-20% of their income invest in mutual funds.
Together nearly all investors (99%) investment up to a maximum of 20% of then income in mutual fund.
 RISK PERCEPTION ABOUT MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent

1. High risk 1 1.2

2. Moderate risk 59 71.1

3. Low risk 20 24.1

4. No risk 3 3.6

Total 83 100.0
INTERPERTATION:

It is identified from the above table that most (71.1%) of the investors feel that investment in mutual funds carry
moderate risk. Another 24.1% of the respondents feel that the risk in low.
 Combining the responses in table this reveals that investors in mutual funds are wiling to bear moderate risk in
order to obtain better returns.

LEVEL OF SATISFACTION REGARDING THE RETURNS IN MUTUAL FUND

No. of
S.No. Opinion Percentage
Respondent

1. Highly satisfied 26 31.3

2. Satisfied 49 59.0

3. Neutral 8 9.6

4. Dissatisfied 0 0.0

5. Highly dissatisfied 0 0.0

Total 83 100.0
INERPERTATION:

It is evident from the above table that maximum (59.0%) of the respondents are satisfied regarding the returns in
mutual fund investment, and another 31.3% of the respondents are highly satisfied. Taken together an overwhelming
majority (90.3%) of the investors are satisfied or highly satisfied will the returns they earn through investment in
mutual fund.
 CHANCES OF FUTURE INVESTMENT IN MUTUAL FUNDS

No. of
S.No. Opinion Percentage
Respondent

1. Definitely invest 77 77.0

2. Very Likely 19 19.0

3. Probably invest 4 4.0

4. Definitely will not 0 0.0

Total 100 100.0

INTERPERTATION:

It is seen from the above table that 77.0% of the respondents will definitely invest in mutual fund schemes in the
forthcoming years. Another 19% of the respondents said that they are very likely to invest in mutual funds in the
future. No respondent said that he will definitely not invest in the future.

This response accords well with the response in table 4.1.13 where 90.3% of the respondents indicated that they
are satisfied highly satisfied with the returns they got from their investment in mutual funds. It is natural that such
satisfied customer will invest in mutual funds in the future also.
 DIFFICULTIES IN CHOOSING THE RIGHT INVESTMENT

No. of
S.No. Opinion Percentage
Respondent

1. Too much choices 53 53.0

2. Lack of timely information 36 36.0

3. Lack of unbiased opinion 11 11.0

Total 100 100.0

INTERPERTATION:

It is seen from the above table that 53.0% of the respondents are facing too many choices and 36% feel that there
is lack of timely information. 11% of the respondents feel that the lack of unbiased information is the hurdle in
choosing the right investment.
 MUTUAL FUNDS AS A TOOL FOR SAVING TAX

No. of
S.No. Mutual Fund for Saving Tax Percentage
Respondent

1. Yes 56 56.0

2. No 44 44.0

Total 100 100.0

60

50 mutual fund as a
tool for savind
40 tax

30

20

10

0
yes no
INTERPERTATION:

It is evident from the above table that 56.0% of the respondents preferred mutual funds as a tool for saving ta
 PROPORTION INVESTED IN TAX SAVING SCHEMES

Proportion of Taxable No. of

S.No. Percentage
Income Respondent

1. Less than 10% 38 67.9

2. 11-20% 17 30.4

3. 21-30% 1 1.8

4. 31-40% 0 0.0

5. Above 40% 0 0.0

Total 56 100.0

40
35
30
25
INVEST IN TAX
20
15
10
5
0
<10% 31-40%
INTERPERTATION:

Among 56 respondents who said that they use mutual funds as a tax shield, 68% said that they invest less than
10% of their taxable income in tax saving schemes. Another 30.4% said that they invest between 11 to 20% of their
taxable income in tax saving schemes.
OTHER MODES OF TAX SAVING

No. of
S.No. Other Tax Saving Modes Percentage
Respondent

1. Insurance 24 54.5

2. Housing loans 17 38.6

3. General provident fund 3 6.8

Total 44 100.0
INTERPERTATION:

Among the 44 respondents who did not choose mutual funds for tax saving purposes, Insurance was the primary
investment tool for tax saving purposes. The second most important avenue was housing loans. A mere 7% used
general provident fund for tax saving purposes.

REASONS FOR THE SELECTION OF MUTUAL FUNDS

 Weight age
S.No. Particulars rank
score

1. Past performance 232 II

2. Financial advisors 174 III

3. Fund manager 131 IV

4. NAV appreciation 293 I

INTERPRETATION
 It is identified from the above table that the factor ‘NAV appreciation’ is the most important reason for selection
of mutual funds and it is ranked first by the respondents with score of 293 points. ‘Financial advisors’ with score of
232 and 174 points. The fourth rank goes to the factor ‘fund manager’ with score of 131 points. It is concluded from
the above analysis that maximum of the respondents’ opinion that the factor ‘NAV appreciation’ makes to reason for
selection of invested funds.

The second most important reason for choosing a mutual fund is its past performance. Financial advisors rank as
the third major important factor. The reputation of the fund manager is the least important factor.

It is therefore safe to infer that expectation of future performance (NAV) and record of past performance are the
most important factors in the choice of mutual fund.