TABLE OF CONTENTS

S.NO TOPICS PAGE NO.

1 INTRODUCTION 1-12

LITERATURE REVIEW 13-14

2

OBJECTIVE AND 15-17

3 SCOPE OF STUDY

RESEARCH 18-20
4 METHODOLOGY

DATA ANALYSIS 21-47

5 AND
INTERPRETATION
 FINDINGS AND 48-50
6 CONCLUSION

SUGGESTIONS 51-52
7

BIBLIOGRAPHY 53

QUESTIONNAIRE 54-58
 EXECUTIVE SUMMARY

In few years Mutual Fund has emerged as a tool for ensuring one’s 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. The trick for converting a person with no
knowledge of mutual funds to a new Mutual Fund customer is to understand which of
the potential investors are more likely to buy mutual funds and to use the right arguments
in the sales process that customers will accept as important and relevant to their decision.
This Project gave me a great learning experience and at the same time it gave me enough
scope to implement my analytical ability. The analysis and advice presented in this
Project Report is based on market research on the saving and investment practices of the
investors and preferences of the investors for investment in Mutual Funds. This Report
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 or Which Investment Strategy they
follow (Systematic Investment Plan or One time Plan). This Project as a whole can be
divided into two parts. The first part gives an insight about Mutual Fund and its various
aspects, Objectives of the study, Research Methodology. One can have a brief
knowledge about Mutual Fund and its basics through the Project. The second part of the
Project consists of data , its analysis collected , findings ,suggestions and conclusions.

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 CHAPTER:1

INTRODUCTION

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 INTRODUCTION

Mutualfundisatypeofprofessionally managedcollectiveinvestmentvehiclethatpools money

frommany investorstopurchasesecuritieswhosharesacommonfinancialgoal.The
moneythuscollectedistheninvestedincapitalmarketinstrumentssuchasshares,debentures
&othersecurities.Theincomeearnedthroughtheseinvestmentsandthe capitalappreciation
realizedissharedby itsunitholderinproportiontotheno.ofunitsownedby them.Thus,a
mutualfundisthemostsuitableinvestmentforacommonmanasitoffersanopportunity to invest in
adiversified, professionallymanaged basket ofsecurities atrelativelylowcost.

Mutual funds invest in threebroad classes of financial assets:

 Stocks: Equityrelated instruments.

 Bonds: Debt instrumentsthat haveamaturityofmorethan oneyear.

 Cash:Debtinstrumentsthathaveamaturity oflessthanoneyear.Fore.g.T-bills, Commercial

papersetc.

Depending ontheassets mix MFs schemes areclassified into

threebroadcategories:

a. Equity schemes:

Thisschemeinvesttherebulkofthecorpus85-95percentinequitysharesorequity linked instruments

and thebalancein cash.Following arethe types of equityschemes

 Diversifiedequityschemes:Theseschemesinvestbroadlyintodiversifiedportfolio of
equitystocks.. Typicallysuchschemes have20-50 stocks form wide
 rangeof industries. Fore.g. RelianceVision fund, etc.
 IndexSchemes:Theseschemesinvestitscorpusinabasketofequitystocksthat

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 comprisesagivenstockmarketindexsuchthatS&Pniftyindex,witheachstock being
assignedaweightageequaltowhatithas intheindexasaresultindexscheme appreciates
ordepreciates relativelyto theIndex.
 SectoralSchemes:Asectoralschemeinvestsitscorpusintheequitystocksofa givensectorsucha
power,telecommunication,automobile etc.Fore.g.Reliance Pharma funds
 TaxplanningSchemes:AlsoknownasELSS(EquitylinkedSavingSchemes)are open to
individuals. Subject to such condition &limitation, as prescribed under section80Cof
Income TaxActandsubscriptiontothese schemescanbe deducted
beforecomputingtaxableincome. Fore.g. RelianceTaxsaver (ELSS) fund

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Arbitrage funds: Arbitrage funds invest in the securities or any other financial
instrumentwhich can besimultaneouspurchased and soldatdifferentpricesin
differentpricesanddifferentforms,thisdifferenceinpriceistheprofitthatthe
investorearnsArbitrageexists asaresultofmarketinefficiencies;itprovidesa
mechanismtoensurethatthepricesdonotdeviatesubstantially fromfairvaluefor longperiods of
time.

b. HybridSchemes

 Hybridschemes,alsoreferredtoasbalancedschemes,investsinamixofequityand
debtinstruments,Ahybridschemesmay beequityoriented,debtorientedorvariable Assets
allocation schemes.

 Equity-oriented:Theseschemesmayconsistofequityofapprox.60percentofthe portfolio
&the balancein the debt instruments.
 Debt oriented schemes: The most popular debt oriented schemes in India are Monthly
Incomeplanwhichtypicallyconstitute 85-90percentofthe debtcomponent
typicallybonds.
 Variableassetallocationschemes.Inthisschemetheproportionofequity&debtis
oftenvariedonthebasisofsomeofthe objective criterion.Theallocationtoequity
increaseswhenthe marketfallsanddecreaseswhenthe marketriseswhereinthe allocation
to debt decreases when market falls&increases when market rises.

c. Debt Schemes

Debt schemes invest indebt instruments Vis. Bonds &Cash.

 Giltschemes:Governmentsecuritiesschemesinvestonlyingovernmentbondsi.e.

80-85percentofthecorpuswillbeinvestedinit&remaining incash.Theseschemes
mayhavevaryingmaturityShort-term, mediumterm orlongterm.
 Mixed debt schemes: Mixed debt schemes invest 30-40 per cent of corpus in
governmentbond;40-55per centisinvested incorporate Bonds7the balance is invested in
cash.

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 Floating Rate Debt schemes: Floating rate debt schemes invests in a portfolio
comprising substantially offloatingrate debtbonds,fixedratebondsswappedforthe
floatingrate returns &cash.

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  CashSchemes:Alsoknownasliquidschemes,investsprimarilyinmoneymarket
instrumentslike T-bill,Commercialpaper,certificateofdeposit&depositwitbank.
Theyalsoinvestinshorttermbonds.Theaverageportfoliomaturity ofsuchschemes
lessthan150days.Presently cashschemesaccountsforthelargestshareofthemutual funds
inIndia.

Depending uponthestructure mutual funds aredividedinto threecategories

 OpenEndedschemes:An openended scheme offersunits forsalewithoutspecifying any

durationforredemption.Itremainsopen(always)toacceptmoney frominvestors
andhaveanobligationtoreturnmoney backtotheinvestors.Suchaschemedoesnot
haveanyfixedmaturityandismeanttobecarriedontillitiscloseddownunderany
oftherulesoftheregulations.Thisgivesinvestorstheflexibility toenterorexitfrom
theschemebasedontheirindividualneeds.Someunit-holdersmay exitfromthe
scheme,whollyorpartly,butthisdoesnotaffectthecontinuity oftheschemeandit continues
operations with the remaininginvestors.

 CloseEndedSchemes:Theseareschemeslaunchedbymutualfundhouses,wherein,
onecaninvestonly during thenewfundofferperiod.Oncethisisover,onecannot
invest.Theseschemescanhaveadebtorequity mandate.Also,they haveapre-
specifiedmaturityperiodoralock-in,afterwhichtheschememayeitherbecome open-
endedorwindup itsoperationsandreturntheinvestmenttotheinvestors, calculated in
accordance with the net asset value (NAV) onthe maturity date.
However,thesecondoptionisrarely exercisedforequity close-endedschemes.These
schemesarelistedoneithertheBSEortheNSEaftertheNFOperiodends.The NAV is
generally disclosed on a weekly basis. The fund manager can manage the
investmentbetter because thecorpusfund isavailable fortheentiredurationof the scheme
and heis not required to maintain theliquidityto takecareof redemption.