I.

1 INTRODUCTION ABOUT MUTAL FUNDS:

A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. 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 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.

The flow chart below describes broadly the working of a Mutual Fund:

MUTUAL FUND OPERATION FLOW CHART

1.1 MUTUAL FUND OPERATION FLOW CHART

1
Mutual Fund is a trust that pools the savings of a number of investors who share

a common financial goal. Each scheme of a mutual fund can have different character

and objectives. Mutual funds issue units to the investors, which represent an equitable

right in the assets of the mutual fund. 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 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.

I.2 OBJECTIVES OF THE STUDY :

• To study about the mutual fund and its various types of schemes available in
the mutual funds for the investors.

• To give a brief idea about the benefits available for Mutual Fund investment.

• To study about the perception of the investors about the mutual fund
investment.

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 • To make a more informed investment decision while selecting a specific
scheme to the investors.

I.3 NEED OF THE STUDY:

To study about the mutual fund and different types of mutual fund schemes are

available for the investors and suggest the best one to the investors for the investment

of their funds.

I.4 SCOPE OF THE STUDY:

Mutual funds in promoting economic development can be seen not only in terms of

their participation in the savings market but also in their dominant presence in the

money and capital market. A developed financial market is critical to overall

economic development, and mutual funds play an active role in promoting a healthy

capital market.

I.5 RESEARCH METHODOLIGY:

The study is based on both primary and secondary data and examines the availability
of bank deposits vs. mutual funds. The results are drawn mainly from the secondary
and primary data collected.

Primary data
Primary data has been collected in the form of questionnaire collected from the
companies. Questionnaire consists of both open ended and close-ended questions.
Questions are collected by a personal interview with the respondent. The approach is
a direct and structured one.

Secondary data
Secondary data has been collected from the various sources such as
 Publications of the company
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 Business magazines
 Journals, text books
 Websites
 Annual reports
In order to gain information on current practices and problems, the area chosen for
study are the emerging and competitive companies in and around Hyderabad City.

Sampling design
Stratified random sampling method is used in selection of the sample, where
the whole sample is treated as homogeneous and individual elements are drawn at
random from the whole sample. Companies are randomly selected from any sector
whether it is a small, medium or large companies sample size of the study is 100.

I.6 HYPOTHISIS OF THE STUDY:

H (O): Growth fund is the best scheme in the mutual for the investors.

H (1) : Growth fund may not be the best scheme in the mutual for the investors.

Limitations

1. The study does not give the exact investment profile in a particular company.
2. The study does not give the proportion of investment of the portfolio.
3. The financial data of the company is not completely available.
4. Coverage area was only limited to Hyderabad city

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II.1 INTRODUCATION ABOUT ZEN SECURITIES LTD :

Zen Securities Limited (ZSL) is one of the leading financial services company

-providing Financial and Investment related Services and Products.

The Company commenced as a proprietary concern of M/s K. Ravindra Babu in 1986

was converted to a Limited company in February 1995 as Zen Securities Ltd. Zen has

the distinction of being the First Corporate Member from Hyderabad and also the first

A.P. based broking firm to start trading on the National Stock Exchange (NSE).

ZEN is a registered Member on the Capital Market Segment and Futures & Options

segment of both NSE and BSE.As Zen are growing our operations both in the offline

and online channels, we have various career opportunities at ZEN.Shri Ravindra Babu

Kantheti founded Zen Securities Ltd as a stock broking company and led its evolution

into a highly respectable financial services company known for its ethics and values.

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II.2 Board of Directors:

Managing Director
Mr. Pratap Kantheti

Jt. Managing Director Mr. Satish Kantheti

Director Mr. K. Gandhi

Whole Time Director Mr. Satyanarayana Ch. Ravi (RS)

Executive Director Mr. Sambasiva Rao Patibandla

Director Mr. Narayanan

Director Mr. Ajay Kumar Mikkilineni

Director Mr. D. Madhusudhan

Director Mr. K. Narasimha Rao

Mr. Namashivaya Renukuntla

Director and Head of Compliance

II.2 Board of Directors

II.3 Services Offered by Zen Securities Limited:

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 • Investment advisory services

• Trading in cash market of NSE and BSE

• Trading in Futures and Options on NSE and BSE

• Internet Trading in Stocks, futures and Options both NSE and BSE

• Mutual Funds advisory service

• Depository Services in Both NSDL and CDSL

• Trading in Commodities on MCX and NCDEX

• Portfolio Management Services

• NRI Investor Services

• PAN Application Service

• Mutual Fund KYC Registration Service

• Fixed Income Securities / Fixed Deposits / RBI Bonds / Tax Saving Bonds

Stock Broking :

Zen Securities Limited provides the following equity related trading services to the

investors:

o Capital Market Segment of NSE and BSE

o Futures & Options segment of NSE and BSE

ZEN operates from Hyderabad as it head office and has branches and associates in

Andhra Pradesh, Tamil Nadu, Maharashtra, Karnataka, West Bengal and Orissa. The

Company operates from over 140 locations with over 500 trading terminals
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Internet Trading:

Internet trading is easy, convenient and reliable with ZenTr@de

Advantages of ZenTr@de - Internet Trading Platform

Flexible and advanced trading platform

 Simple, reliable and easy to use

 Futures & Options segment of NSE and BSE

 Integrated payment gateways – facilitates online transfer of funds from your

banks (ICICI /Axis/Corp / Yes bank etc.) for instant limits (on funds

transferred)

 Integrated with Zen DP account – seamless settlement

 Take full control of trading and trade with privacy from any place of your

choice.

Market watch

 Streaming market quotes

 Multiple market watch

 Integrated market watch for viewing NSE / BSE / NSE FAO on one screen

 Access to trade in NSE / BSE and NSE FAO Segments

INTRADAY and DELIVERY differentiation

 Different limits for INTRADAY and DELIVERY

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  Auto square off of all INTRADAY orders 15 minutes before close of trading

 Convert INTRADAY trades to DELIVERY trades on availability of

credit/margin source

Access to statements

 Stock Statements - View Stocks in your DP account and also Zen Benf

account

 Statements – View Cash available in your Zen Broking account

 Mutual Funds – View Transaction/Holding statements with Latest NAV’s

 Networth Statement - Networth statement of assets with Zen,

(Stocks+Cash+Mutual funds)

ZenTr@de is an integrated CTCL and internet trading platform offering the choice to

trade in a branch or in internet or both as per client’s convenience and choice. The

platform offers all the conveniences and advantages mentioned above

Depository

Zen is a depository participant offering flexible, cost effective and transparent

depository services to its clients .Zen is a depository participant with the National

Securities Depository Limited and Central Depository Services (India) Limited for

trading and settlement of dematerialised shares. Zen performs clearing services for all

securities transactions through its accounts. Zen offers depository services to create a

seamless transaction platform – execute trades through Zen Securities and settle these

transactions through the Zen Depository Services.

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Zen Depository Services is a part of our value added services for our clients that

creates multiple interfaces with the client and provides for a solution that takes care of

all your needs

Basic Services Provided by Zen DP

• Account Opening

• Account Transfers - Market and Off-Market

• Dematerialisation

• Re-materialization

• Pledg

Commodities Broking

ZEN Securities provides trading in Commodities through its subsidiary, Zen

Comtrade Pvt. Ltd.

Zen Comtrade Pvt. Ltd. is a member of:

o National Commodities & Derivatives Exchange Limited (NCDEX) and

o Multi Commodities Exchange (MCX

Zen Securities Limited is a premier financial services company with a formidable

presence in the stock market and has earned the trust of its clients for its efficient and

investor friendly services.

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What is Portfolio Management Service (PMS)?

o Portfolio Management Service (PMS) is a customized investment portfolio of

equity, debt, or instruments created to suit the individual investment objectives

of a client.

o A professional fund manager who is well equipped to handle the process

conducts the portfolio's day-to-day management, research, and idea

generation.

Under Is PMS right for me?

Portfolio Management Services may be the right option for individuals who:

o Want to invest their money in equities but do not have the required expertise.

o Are equipped with the required awareness and knowledge to invest in equities

but do not have time to actively manage their portfolio.

Why ZEN PMS?

o In today's markets, equity investment has become a more involved activity and

demands a greater awareness and in depth understanding of the business and

economic variables that affect equity valuations.

o Stocks operate in a wonderful tax environment, with no tax on long-term

capital gains and a minimal 10% tax on short-term capital gains. Also in this

economy, there are no investment avenues other than stocks and real estate to
11
 earn inflation adjusted positive return and stocks offer more liquidity than real

estate. Zen's portfolio managers fully understand these advantages of stocks

and make them work in your favor.

o Zen's portfolio managers are supported by a strong research bureau that is well

equipped to understand the market and deliver superior returns.

o Each portfolio is personalized keeping in mind your investment parameters,

including return expectations, objectives, time horizon, liquidity constraints, a

distinctive tax status, and most importantly, personal risk tolerances.

ZEN's investment philosophy:

We follow a simple yet effective philosophy of wealth creation through a long-term

investment strategy that focuses on quality and undervalued businesses run by people

of competence and integrity. We firmly believe that there will always be opportunities

for wealth creation, irrespective of the Sensex movements. At Zen, we follow an

elaborate procedure of studying each company in detail before we in invest in them.

o We assess the size and durability of the opportunity.

o We focus on the track record of the company, pedigree of the management,

quality of earnings, growth potential and most importantly, sustainability of

earnings/ growth.

o We then shortlist companies applying various quantitative and qualitative

filters.

o We constantly monitor the business and revise the values accordingly.

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 o We follow a disciplined approach to investing.

Zen Securities Limited is a premier financial services company with a formidable

presence in the stock market and has earned the trust of its clients for its efficient and

investor friendly services.

Client Login

Web Based CLIENT LOGIN (Service) facility on our website www.zenmoney.com

In our endeavor to leverage technology to service valuable clients like you, we are

pleased to launch an online facility – CLIENT LOGIN

CLIENT LOGIN facility has the following facilities.

II.4 PRODUCTS & SERVICES OF ZEN SECURITIES LTD

Broking Back Office (Hyper soft)

Cash: Financial Ledger / Scrip Ledger / Holding Statement & many more statements

F&O: Financial Ledger / Scrip Ledger / Holding Statement & many more statements

DP Account: Transaction Statement (NSDL / CDSL Account)

Holding Statement (NSDL / CDSL Account), with Value of Holdings.

Equity:

At Usec trade, you can place online trades for virtually any stock listed on

NSE & BSE. Use trade offers plenty of powerful ways to place stock orders along

with the trading tools and services that help you move quickly and conveniently.

Delivery based Trading: Place delivery based orders for all stocks listed on

NSE&BSE. Intra-day Trading: Execute Margin Orders up to 3 to 4 times your

available funds. The same is available for select group of stocks listed on NSE &

BSE. BTST\ANST: customers should sell shares before they receive the same in their

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demat account. They can avail of this facility 1st and 2nd day after the buy order date.

Derivative

With a Derivative-approved Usec trade account, you can pursue a wide range of

Futures & Options trading strategies with speed and ease. The company delivers the

support, information and structure

Mutual Funds

At Use trade, we offer access to more than 1000 mutual fund schemes from leading
fund families. These funds provide broad diversification and cover a range of
investment objectives, philosophies, asset classes and risk exposures. Trades may be
placed via the Internet, Interactive Voice Response (IVR) phone system.

IPO
IPO or Initial Public Offer presents excellent opportunities for gaining high returns
on your investments in a relatively short period of time. We have made investing in
IPO’s hassle free. All that is required is “Buying POWER” and rest is at the click of a
button. No paperwork no queues. Get information on IPO news, Forthcoming IPO’s
and a lot more on Usectrade.com

Commodities
Metals, energies, grains and livestock — whatever you wish to trade, you'll find it on
our commodity trading system. Plus, you'll get a comprehensive suite of educational,
analytical, and execution tools that makes trading commodities easy.

Bonds
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Fixed income securities can help reduce your risk within an investment portfolio

while providing a steady stream of income over time. Currently you can choose to

invest online in GOI Bonds. If you are looking to diversify your portfolio, possibly

improve your tax efficiency and/or reducing your risk exposure, you may want to

consider making fixed income securities part of your personal investment strategy

CUSTODY MANAGEMENT:

Unique identity is compared to the securities by affixing a bar code. Bar code system

prevents abuse, aids in tracking the securities at any place in the processing cycle,

facilities speeds correlation of scripts with the data in the system and identification of

geniuses of the scripts received in the custody back after registration.

CORPORATE ACTION

Provide services relating to subscriptions to public issues, right issue, collections of

bonus shares, warrants, dividends, interest warrants, principal of redemption etc.. a

separate department keeps track of deceleration of various benefits by the companies

and ensures timely collection therefore.

VALUE ADDED SERVICES

LOAN AGAINST SHARES:

ZEN SECURITIES has tied up with various public, private foreign and

corporate banks to provide loan against share. Beneficiary account holders at ZEN

SECURITIES will have the opportunity to avail the loan facility against pledge of
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Demat shares on the term and condition best suited for them from the banks enlisted

with ZEN SECURITIES.

SELL ‘n’ CASH

This is another value added services which enables ZEN SECURITIE’S

account holder to realize proceeds from the sale of securities on the same day. After

ascertaining the availability of shares, on the beneficiary account and upon receiving

the necessary conformation from the brokers, ZEN SECURITIES would debit his /

her share account and issue a cheque on the same day for the value of share sold after

deducting service charges which enables brokerage.

FUND INVEST

FUND INVEST is a mutual fund advisory service offered by ZEN

SECURITIES With several mutual funds in foray having different schemes it is

difficult to the common investor to decide on one. Customers grievance cell helps the

investor in prudent decision making by providing an in depth information about

various schemes offered by the following mutual funds.

III.1 INTRODUCTION ABOUT MUTAL FUNDS:

A Mutual Fund is a trust that pools the savings of a number of investors who share a

common financial goal. The money thus collected is then invested in capital market

16
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.

The flow chart below describes broadly the working of a Mutual Fund:

MUTUAL FUND OPERATION FLOW CHART

III.1 MUTUAL FUND OPERATION FLOW CHART

Mutual Fund is a trust that pools the savings of a number of investors who share

a common financial goal. Each scheme of a mutual fund can have different character

and objectives. Mutual funds issue units to the investors, which represent an equitable

right in the assets of the mutual fund. The money thus collected is then invested in
17
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

III.1 MUTUAL FUND OPERATION FLOW CHART

III.2 Structure of Mutual Fund: - The SEBI (Mutual Funds) Regulations

1993 defines a Mutual Fund (MF) as a fund established in the form of a sponsor to

18
raise money by the Trustees through the sale of units to the public under one or more

schemes for investing in Securities in accordance with these regulations.

These regulations have been replaced by the SEBI (Mutual Fund) Regulations, 1996.

The structure indicated by the new regulations is indicated as under:

A Mutual Fund comprises 4 separate entities, namely Sponsor, Mutual Fund Trust,

AMC and Custodian. The Sponsor establishes the Mutual Fund and gets it registered

with SEBI. The Mutual Fund needs to be constituted in the form of a Trust and the

instrument of the Trust should be in the form of a deed registered under the provisions

of the Indian Registration Act.

The Sponsor is required to contribute at least 40% of the minimum net worth (Rs.10

Crores) of the Asset Management Company. The Board of Trustee manages the MF

and the Sponsor executes the Trust deeds in favor of the Trustees. It is the job of the

MF Trustee to see that schemes floated and managed by the AMC appointed by the

Trustees are in accordance with the Trust deed and SEBI guidelines.

Organization of a Mutual Fund

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 III.2 Organization of a Mutual Fund

III.3 THE HISTORY OF MUTAL FUNDS

When three Boston Securities executives pooled their money together in 1924 to
create the first mutual fund, they had no idea how popular mutual funds would
become.

The idea of pooling money together for investing purposes started in Europe in the
mid – 1800s. The first pooled fund in the U.S. was created in 1893 for the faculty and
staff of Harvard University. On March 21st, 1924 the first official mutual fund was
born. It was called the Massachusetts Investors Trust.
After one year, the Massachusetts Investors Trust grew from $50000, in assets in
1924 to $392000 in assets (with around 200 shareholders). In contrast, there are over
1000 mutual funds in the U.S today totaling around $7 trillion (with approximately 83
million individual investors) according to the Investment Company Institute

The Stock market crash of 1929 slowed the growth of mutual funds. In response to
the stock market crash, congress passed the Securities Act of 1933 and the Securities
Exchange Act of 1934. These laws require that a fund be registered with the SEC and
provide prospective investors with a prospectus. The SEC (U.S Securities and
Exchange Commission) helped create the Investment Company Act of 1940, which
provides the guidelines that all funds must comply with today.With renewed

20
confidence in the stock market, mutual funds began to blossom. By the end of the
1960s there were around 270 funds with $48billion in assets.

In 1976, John C. Boggle opened the first retail fund called the first Index investment
Trust. It is now called the Vanguard 500 Index fund and in November of 2000 it
became the largest mutual fund ever with $100 billion in assets.
One of the largest contributors of mutual fund growth was Individual Retirement
Account (IRA) provisions made in 1981 allowing individuals (including those already
in corporate pension plans ) to contribute $2000 a year. Mutual funds are now
popular in employer – sponsored defined contribution retirement plans (401K) IRAs
and Roth IRAs.

Mutual funds are very popular today, known for ease-of-use, liquidity, and unique
diversification capabilities.

Mutual Funds in India

Mutual Fund industry started with the setting up of unit Trust of India in 1964. Public
sector banks and financial institutions began to establish Mutual Funds in 1987. The
private sector and foreign institutions were allowed to set up Mutual Funds in 1993.
The Securities and Exchange Board of India (SEBI) regulate this fast growing
industry.

Marketing and Distribution

Mutual Funds are concentrating resources on marketing to attract investors to their

products. Many mutual funds, like LIC Mutual Funds, HDFC Mutual Fund, DSP ML
Mutual Fund, have tied up with banks to sell their products. Others like SBI Mutual
Funds, Prudential ICICI Mutual Fund, and IDBI Principal Mutual Fund have tied up
with post offices to sell their products. Zurich India Mutual Funds has tied up with
21
National Stock Exchange (NSE) to use the NSE network of brokers to buy and sell its
units.

Service standards

Mutual Funds are becoming more innovative in providing value-added services.

AMCs have embraced new technology making it easier for investors to have
information at their fingertips. Besides communication, funds are using the Internet.
Sales and service focus on retail markets are increasing significantly and fund houses
adopting a broad-spectrum broad market approach.

There will be emphasis on ease of operations, single account statement reflecting

customers’ transactions in all mutual funds.

Investment and Financial Services Mutual Fund and Kotak Mahindra Mutual Fund
have introduced cell-based services wherein investors can now access information on
their investments such as latest NAV, unit balances and the last three transaction
details, just by sending an SMS. IL & FSMF have also introduced trigger options.
Triggers allow investors to present their growth targets based on different criteria.
Apart from date and value triggers, it introduced more options such as index trigger,
capital gains trigger, downside trigger, and a switch option for triggers

Clearly the trend has been to provide information using the latest technology. Most of
the Mutual Funds have interactive websites, which not only display their products but
also facilitates online transactions such as switch over facility, account statements,
redemption, and online applications. They also provide other information as tax
calculators, portfolio trackers etc.

Net trading could facilitate easy access, lower intermediation costs and better services
for all. A research agency that specializes in internet technology estimates that over
the next four years Mutual Fund Assets traded on line will grow ten folds from
$128billiion to $1227billion; whereas equity assets traded on line will increase during

22
the period from $1561billion. This will increase the share of mutual funds from 34%
to 40% during the period.
Funds are suffering electronic fund transfer facility, systematic investment and
systematic with drawl facility. The investor can now enjoy benefits like getting
redemption money in 24hours, direct debit and credit facility in case of purchase and
sale. A few mutual funds also other insurance cover on their products. New services
like ATM linked investments and cheque writing is on the anvil. For example Zurich
India MF launched Zuricheques. These are pre-issued repurchases cheques. So,
instead of going through the process of filling up a repurchase form, sending it to the
investor service center and then waiting for the cheque to be delivered to him the
investor can simply bank the Zuricheques with after putting the date on the cheque.
JM MF has recently launched a new customer facility, which will enable investors
carry out transactions over the phone or the Internet. The investor opting for this
facility is issued a PIN, which serves as an authentication of the transaction request.

HDFC MF has already taken the lead by providing Any Time Mutual Fund facility.
This facility offered through its ATMs of HDFC Bank and ICICI Bank will enable
investors access mutual fund products anytime and anywhere. Currently, the
transactions are limited to cash withdrawals against existing investments.
A maximum of Rs.5000 withdrawal is permitted per day, while a minimum of
Rs.20000 worth units should be maintained. Similarly, Birla Sun Life MF hit a novel
idea of gifting certificates of Birla Income Plus.

III.4 Types of Mutual Funds:

23
 Mutual Fund schemes can be classified on the basis of its structure and its
investment objective

III.4 Types of Mutual Funds

By Structure:
24
 Open-ended funds

An Open-end fund is one that is available for subscription all through the year.

These do not have a fixed maturity. Investors can conveniently buy and sell units at

Net Asset Value (NAV) related prices. The key feature of this scheme is liquidity.

You deal directly with the mutual fund for your investments and redemptions.

 Closed-ended funds

A Closed-end fund has a stipulated maturity period which generally (ranging from 3

to 5 years).The fund is open for subscription only during a specified period. Investors

can invest in the scheme at the time of the initial public issue and thereafter they can

buy or sell units of the scheme on the Stock Exchanges, if they are listed. In order to

provide an exit route to the investors, some close-ended funds give an option of

selling back the units to the mutual fund through periodic repurchase at NAV related

prices. SEBI Regulations stipulates that at least one of the two exit routes is provided

to the investor.

 Interval funds

Interval funds combine the features of open-ended and close-ended schemes. They

are open for sale or redemption during pre-determined intervals at NAV related

prices.

III.5 Advantages of mutual fund investments:

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 Professional management: You avail of the services of experienced and skilled

professionals who are backed by a dedicated investment research team, which

analyses the performance and prospects of companies and selects suitable

investments to achieve the objectives or the scheme.

 Diversification: Mutual Funds invest in a number of companies across a broad

cross-section of industries and sectors. This diversification reduces the risk

because seldom do all stocks decline at the same time and in the same proportion.

You achieve this diversification through a Mutual Fund with far less money

than you can do on your own.

 Convenient Administration: Investing in a Mutual Fund reduces paperwork and

helps you avoid many problems such as bad deliveries, delayed payments and

unnecessary follow-up with brokers and companies. Mutual Funds save your time

and make investing easy and convenient.

 Return Potential: Over a medium to long term, Mutual Funds have the potential

to provide a higher return as they invest in a diversified basket of selected

securities.

 Low Costs: Mutual Funds are a relatively less expensive way to invest compared

to directly investing in the capital markets because the benefits of scale in

brokerage, custodial and other fees translate into lower costs for investors.

 Liquidity: In open-ended schemes, you can get your money back promptly at net

asset value related prices from the Mutual Fund itself. With close-ended schemes,

you can sell your units on a stock exchange at the prevailing market price or avail

of the facility of direct repurchase at NAV related prices, which some close-

ended, and interval schemes offer you periodically.

26
 Transparency: You get regular information on the value of your investment in

addition to disclosure on the specific investment made by your scheme, the

proportion invested in each class of assets and the fund manager’s investment

strategy and outlook.

 Flexibility: Through features such as regular investment plans, regular withdrawal

plans and dividend reinvestment plans, you can systematically invest or withdraw

funds according to your needs and convenience.

 Choice of Schemes: Mutual Fund offers a family of schemes to suit your varying

needs over a lifetime.

 Well Regulated: All Mutual Funds are registered with SEBI and they function

within the provision of strict regulations designed to protect the interests of

investors. The operations of Mutual Funds are regularly monitored by SEBI.

III.6 PRODUCTS:

Mutual Funds

 Equity
 Income
 Balanced
 Money Market
 Child Care Plans
 Pension Plans
 ELSS

BondS
27
 Capital Gains
 Tax Saving
 State Government
 PSU
 Life Insurance
 Endowment
 Money back
 Annuity term
 Retirement
 Unit Linked Plans
 Direct Equity
 IPOs,
 Stock Broking
 Depository Services

Shakeouts
Even as mutual funds are poised for exciting times, consolidation is taking place

among the players, in 2004, consolidations and takeovers will be part of the industry

especially in the rather volatile global scenario. As players emerge who have a long-

term commitment to India and provide comfort to investors, the mutual fund industry

will benefit. This happens in any industry and investors would increasingly look to

familiar long-standing and easily recognizable brands. Many foreign players are

departing due to the losses suffered by their principals. Jardine Fleming exited from

its mutual fund business in India. Alliance capital is already up for sale and Zurich

28
India is also planning to quit from India. Dundee Mutual Fund is hutting shop in

India for lack of buyers.

Taxation

The Finance Act 2003 has made dividend income from mutual fund tax-free in the

hands of the investor. These provisions have toned down the attractiveness of mutual

funds.

Other developments

Till now, Investor education has been one of the issues, less cared for, by the industry.

The industry focused upon the amounts and not why a person wanted to invest or

whether a particular product suited him or not. While educating the customer might

not have been on the cards earlier, the things are beginning to change now. Apart

from the initiatives taken by mutual funds, two bodies, AMFI and SEBI, have also

been bringing out regulations, which will be helpful to the investors. For instance,

SEBI has made it mandatory for the distributors and agents of mutual funds to pass

the AMFI certification program. This will and distributors and agents to help the

investors make will-informed decisions. They will be able to advice investors on

proper asset allocation and one can expect negative selling to take a backseat.

Three major efforts taken by AMFI were implementing the certification and

registration program for the distributors, putting into place a proper risk management

system for mutual funds, and the benchmarking of indices. Around 20,000

distributors have taken this course and their upgraded knowledge will definitely

provide a sound platform to investors since distributors play a pivotal role. They will

29
be able to understand the investor’s lifecycle and suggest a suitable fund. The mutual

fund industry is also taking commensurate steps in terms of transparency and

disclosure norms

The road ahead

Mutual funds in India may have come a long way but they come a long way but they

still have miles to go. Mobilizations are expected to pick up pace with more inflows

coming into mutual funds as the industry gears to get a foothold on the retail front.

Already, many mutual funds have started targeting the small towns, which they

believe would form a large part of retail base. Educating the retail investors also holds

the key to building up mobilizations. The mutual fund industry is still in its infancy

stage as compared to the developed markets in us, where the banking industry and the

mutual fund industry rival each other as investment vehicles but in India to reach that

stage will require lot of efforts on the fund houses. Clearly, This is the beginning and

the industry is still evolving. The industry has tremendous growth opportunity given

the savings rate of the masses and its low penetration.

Players in the market

30
  ANZ  JM
Grindlays
 Benchmark  Kotak
Mahindra
 Birla  LIC
 Sun Life
 BOB  PNB
 Can bank  PRINCIPAL
 Cholamand  Prudential
alam ICICI
 Deutsche  Reliance
Capital
 DSP Merrill Lynch  SBI
 Escorts  Standard
Chartered
 First India  SUN F&C
 Franklin Templeton  Sundaram
 GIC  Tata
 HDFC  Taurus
 HSBC  UTI
 IL&FS  Zurich India

31
III.7 Banks Vs Mutual Funds:

India is at the first stage of a revolution that has already peaked in the U.S. he

U.S.boasts of an Asset base that is much higher than its bank deposits. In India,

mutual fund assets are not even 10% of the bank deposits, but this trend is beginning

to change. This is forcing a large number of banks to adopt the concept of narrow

banking wherein the deposits are kept in Gilts and some other assets, which improves

liquidity and reduces risk. The basic fact lies that banks cannot be ignored and they

will not close down completely. Their role as intermediaries cannot be ignored. It is

just that Mutual Funds are going to change the way banks do business in the future.

Banks Mutual Funds

Returns Low Better

Administrative High Low

Risk Low Moderate

Investment options Less More

Network High penetration Low but improving

Liquidity At a cost Better

Quality of assets Not transparent Transparent

Interest calculation Minimum balance Everyday

between 10th & 30th of
every month

Guarantee Maximum Rs. 1 lakh on none

deposits

32
III.8 Investment:

Investment is the sacrifice of certain present value for the uncertain future regard. It

entails arriving at numerous decisions such as type, mix, amount, timing, grade etc.

Of investment and disinvestments. Future, such decision-making has not only to be

continuous but rational too. Broadly speaking, an investment decision is a trade off

between risk return. All investment choices are made at points of time in accordance

with the personal investment ends and in contemplation of an uncertain future. Since

investment environment is fluid, the reliable bases for reasoned expectations become

more and more vague as one conceives of the distant future. Investors in securities

will reappraise and reevaluate their various investment commitments in the light of

new information, changed expectations and ends, from time to time.

There are three basic concepts of investments:

Economic investment – which is an economist’s definition investment.

Investment in a more general or extended sense, which is used by “the man on the

street”

Financial investment – which means an exchange of financial claims – bank

deposits, mutual funds, stocks and bonds (collectively termed securities), real estate

mortgages, etc.

33
Features of investment

In choosing specific investment, investors will need definite ideas regarding features,

which their portfolios should possess. These features should be consistent with the

investors general objectives and, in addition, should afford them the entire incidental

conveniences and advantages, which are possible under the circumstances. The

following are the suggested features as the ingredients from which many successful

investors compound their selection policies.

Stability

An investor must consider stability of monetary income. If monetary income stability

is stressed, capital growth and diversification will be limited.

Capital Appreciation

Capital growth has today become an important principle. Recognizing the connection

between corporation and industry growth and very large capital appreciation,

investors seek growth stocks. It is difficult to make a successful choice.

Tax Benefits

Investment Programme has to be planned with regard to one’s tax status. There are

two problems involved here, one concerned with the amount of income paid by the

investment and another with the burden of income taxes upon that income. Investors

are anxious to have maximum cash returns on their investments, and are prone to take

excessive risks. On the other hand, investors who are not pressed for cash income

often find that income taxes deplete certain types of investment incomes less than

others, thus affecting their choices.

34
Safety of Principal

Safety implies protection against loss under reasonably likely conditions or variations.

It calls for careful review of economic and industry trends before deciding types of

investments.

Liquidity

An investment is a liquid assets if it can be converted into cash without delay at full

market value in any quantity. For an investment to be liquid, it must be either

reversible or marketable.

Inflation Protection

Since an investment nearly always involves the commitments of current funds with

the objective of receiving greater amounts of future funds, the investor should

consider the degree of price level inflation.

Conceal ability

To be safe from social disorders, government confiscation, or unacceptable levels of

taxation, property must be concealable and leave no record of income received from

its use or sale. Gold and precious stones have long been esteemed for these purposes

because they combine high value with small bulk and are readily transferable.

Investment Alternatives

The surplus funds can be deployed in a variety of ways of ways. At one end of the

spectrum is term deposits in a bank, virtually a risk free investment that offers a

relatively modest rate of interest. At the other end of the spectrum is the investment

in equity shares, which can produce highly volatile returns.

35
Term Deposits

Banks accept term deposits for periods ranging from 15 days to 5 years. The interest

rate on term deposits varies currently from 5% to 7% per annum. The interest rate

rises as the period of deposit increases.

Mutual Fund Schemes

A variety of schemes are offered by mutual funds. Based on the investment policy,

the mutual fund schemes can be broadly classified as follows:

Equity schemes: The corpus of an equity scheme is invested substantially (80% -

95%) in equity or equity related INSTRUMENTS. The balance may be in debt

instruments.

Balanced schemes: As the name suggests, invests its corpus across two broad asset

classes, viz., equity and debt in a more or less balanced manner

Debt schemes: A debt scheme invests its corpus primarily in debt instruments. Some

debt schemes may have a small exposure to equities.

For investing short-term surpluses perhaps the most popular schemes are debt

schemes because of their low or nil exposure to equities. Within the category of debt

schemes, money market schemes seem to be more appropriate. The corpus of money

market schemes (also referred to as a liquid scheme) is invested primarily in money

market instruments such as treasury bills, commercial paper, certificates of debt and

call notice money. Money market instruments have negligible interest risk exposure

as well as credit risk exposure. The principal value of a unit in a money market

scheme remains stable, though the periodic income may vary depending on the

36
conditions in the money market.Money market schemes are very convenient for firms

that do not have in house expertise for managing short term surpluses. They offer

safety of principal, near instantaneous liquidity, and a return that is higher than what

short term bank deposits provide.

Ready Forward

commercial bank or some other organization may do a ready forward deal with a

company interested in deploying surplus funds on a short term basis. Under this

arrangement, the bank sells and repurchases the same securities (i.e. the company, in

turn, buys and sells securities) at prices determined before hand. Hence the name

‘ready forward’. Ready forwards are permitted only in certain securities. The

company earns a return in the form of a price difference (between buying and selling

rates) and not in the form of an interest income. From the tax point of view, however,

both the incomes are treated alike. The return on a ready forward deal is closely

linked to money market conditions. Note that the money market tends to be tight

during the busy season as well as at the time of year closing.

37
 Debt Instruments
Type
Central Government Securities
State Government Securities
Government Guaranteed Bonds
PSU Bonds
Corporate Debentures
Money Market Instruments
III.8 Debt Instruments
Typical features
Medium to long term bonds issued by RBI
on behalf of GOI. Coupon payments are
semi annual.
Medium to long term bonds issued by RBI
on behalf of the state government. Coupon
payments are semi annual.
Medium to long term bonds issued by
Government agencies and guaranteed by the
Central or State Government. Coupon
payments are semi annual.
Medium to long term bonds issued by
public sector companies in which the
Central or State Government has an equity
stake of 51% or more
Short to medium term debt issued by private
and public sector companies.
Debt instruments like Treasury Bills (issued
by GOI), Commercial paper (issued by
corporate) and certificates of deposits
(issued by banks and financial institutions)
that have a maturity of less than a year
38
Bonds

A bond or debenture is a debt instrument issued by the Government or a Government

agency or a business enterprise.

Treasury Bills

Treasury bills represent short term obligations of the Government which have

maturities like 91 days, 181 days and 364 days. They do not carry an explicit interest

rate (or coupon rate). They are instead sold at a discount and redeemed discount and

the period of maturity.

Though the yield on treasury bills is somewhat low, they have appeal for the

following reasons:

1. They can be transacted readily as they are issued in bearer form.

2. There is a very active secondary market for treasury bills and the Discount and

Finance House of India is a major market maker

3. Treasury bills are virtually risk free

Certificates of Deposits

A Certificate of Deposit (CD) represents a negotiable receipt of funds deposited in a

bank for a fixed period. It may be in a registered form or a bearer form. The latter is

more popular as it can be transacted more readily in the secondary market. Unlike

treasury bills, CDs carry an explicit rate of interest. The funds deposited earn a fixed

39
rate of interest. On maturity, the holder of the CD gets the principal amount along

with the interest thereon.

CDs are popular form of short-term investment for companies for the following

reason:

1. Banks are normally willing to tailor the denominations and maturities to suit

the needs of the investors.

2. CDs are fairly liquid

3. CDs are generally risk free

4. CDs generally offer a higher rate of interest than treasury than treasury bills or

term deposits.

Commercial Paper

Commercial paper represents short term unsecured promissory notes issued by

firms that are generally considered to be financially strong. Commercial paper

usually has a maturity period of 90 days or 180 days. It is sold at a discount and

redeemed at par. Hence the implicit rate is a function of the size of discount and the

period of maturity. Commercial paper is either directly placed with investors or sold

through dealers. Commercial paper does not presently have a well develop secondary

market in India.

The main attraction of commercial paper is that:

1. It offers an interest rate that is typically higher than that offered by treasury

bills or certificates of Deposit.

However, its disadvantage is that it does not have an active secondary market.

2. Hence, it makes sense for firms that plan to hold till maturity.

40
Inter Corporate Deposits

A deposit made by one company with another, normally for a period of up to six

months is referred to as an inter corporate deposit. Such deposits are usually of three

types:

Call Deposits: A call deposit is with draw able by the lender on giving a day’s notice.

In practice, however, the lender has to wait for at least three days.

Three-month Deposit: more popular in practice, these deposits are taken by

borrowers to tide over a short-term cash inadequacy.

Six-month Deposits: Normally, lending companies do not

extend deposits beyond this time frame. Such deposits are usually made with

first class borrowers.

As inter

corporate deposits represent unsecured borrowings, the lending company must

satisfy itself about the creditworthiness of the borrowing firm. In addition, it

must make sure that it adheres to the following requirements, as stipulated by

section 370 of the Company’s Act: A Company cannot lend more than 10%

of its net worth (equity plus free reserves) to any single company.

The total lending of a company cannot exceed 30% of its net

worth without the prior approval of the central government and a special

resolution permitting such excess lending.

III.8 Mutual Funds And SEBI:

41
For the smooth conduct and regulation of the mutual fund several guidelines have

been issued by the SEBI regarding the investment, disclosure, accountability

distribution of its profits to its members and the investment companies. SEBI

has issued regulation and code of conduct in 1993, which provided a basic

legal framework for the functioning of the mutual fund. The Mutual Fund

regulation act 1996, has provided a sound floating and considerable leeway to

fund management. The elements in corporate in the year 1998, have placed the

investor in a better position with regard to proper asset management and

disclosure.

Disclosure Norms

With the number of mutual fund schemes ever on the increase (in 1997 alone 67 new

scheme of wide varieties were introduced in the market the market) the

investor should be kept well informed about the nature and functioning of the

mutual funds. It should start from the offer document. The offer document

should provide essential information to assist the investors to make informed

and correct decision. According to SEBI regulation, the standard offer

document should give the following details:

Standard and scheme specific risk factors. The latter may be related to investment

objective, investment strategy, asset allocation, and risks from non-

diversification if any, and from investing in close ended schemes.

Due Diligence by the AMC.

42
Fundamental attributes such as type of scheme, investment objective (including the

tentative equity/money market portfolio) and terms of issue (provision such as

listing, repurchase/ redemptions, fee, expenses, guarantee/ safety net). Details

of the offer, such as sale, purchase, minimum corpus and pricing of units in

relation to NAV.

43
Likely initial issue expenses, actual issue expenses for schemes launched during the

last year, expenses borne by AMC and annual recurring expenses (as a

percentage of average weekly net assets).

Identification of AMC and background of fund managers.

Asset allocation pattern (as percentage of the assets) with indicative range of

investments or the maximum investment in a certain asset class.

The policy of diversification or concentration to be persued.

The portfolio turnover policy and the effects of investment techniques on total

portfolio turnover.

The policy with respect to dividends and distribution, including any options for unit

holders.

The policy of the fund regarding inter scheme transfers.

Associate transactions.

The borrowing policy, including the intent and purpose of borrowing and any stock

lending by the fund.

Valuation of assets, accounting policies and NAV.

The manner of determination of redemption and repurchase price of the units.

Tax treatment of investments in mutual funds, investor rights and services and

redressed of investor grievances.

44
 The amendation in 1998 made a significant change in information disclosure
pertaining to litigation/ penalties. SEBI has now mandated the disclosure of
information contained in reports of investigation and inspection conducted by it.
So far , such information

was neither disclosed in the offer document nor in the annual report. Now,
all mutual funds have to disclose in their offer documents the information
pertaining to the following areas:

 All cases of penalties awarded by SEBI or any other regulatory body against

the sponsor of the mutual fund, the trustee company/board of trustees, or any

of the directors or key personnel ( specifically the fund managers) of the AMC

and trustee company. The nature of the penalty must be disclosed.

 Pending material litigation proceedings including pending criminal and

economic cases against any of the afore mentioned parties. The name of the

court or agencies in which the proceedings are pending, the date instituted, the

principal parties thereto, a brief description of the factual basis alleged to

underline the proceedings and relief sought, if any shall be indicated.

 Any deficiency in the systems and operations of the sponsor of the mutual

fund or any company associated with the sponsor in any capacity such as the

AMC or the trustee company. This must pertain to matters that SEBI has

specially directed disclosures. The full portfolio disclosure in the annual

reports is mandatory.

Investments
45
The investments made by the mutual funds decide the return for the investor. In

proper management of investment would land the investor in peril this, SEBI has

tightened its control regarding the investment criteria. They are:

1. Mutual funds cannot deal in option trade, short sale or carry forward transaction in

securities. They can only invest in transferable securities in the money market capital

market capital, any privately placed debenture or debt securities.

2. Mutual funds are required to form trusts and are managed separately by the asset

management companies. The minimum net worth of the asset management company

should be Rs. 5 crore and 40% should be the sponsors contribution.

3. Investments under an individual scheme should not exceed 5% of the corpus of any

company’s share and the investments under all scheme should not exceed 10% of the

funds in shares, debentures or securities of a single company.

4. Mutual funds shall not make investment in any unlisted securities of associate

/group companies of the sponsors.

5. Mutual funds shall not make investment in privately placed securities issued by

associate/ group companies of the sponsors.

6. The aggregate investment of a Mutual fund in the listed and/ or to be listed

securities of group companies of the sponsor shall not exceed 25% of the net assets of

all schemes of the fund.

7. The AMCs would be required to disclose in the offer document maximum

investment proposed to be made by the scheme in the securities of the group

companies of the sponsors and also aggregate investment made by all schemes in the

group companies.

46
8. The AMCs shall have to submit quarterly report to the trustees giving details about

the transactions in the securities of the group companies during the quarter and the

trustees have to make specific comments in their half yearly reports to SEBI on those

investments.

9. The ‘Group for this purpose would have the same meaning as provided in the

Monopolies and Restrictive Trade Practices Act, 1969.

10. An AMC cannot purchase or sell securities for any of the schemes through any

broker beyond 5% pf the aggregate business of the securities in a quarter, unless the

AMC records the justification for exceeding the limit and reports such cases to the

trustees on a quarterly basis.

Accountability

Every mutual fund for each scheme should keep and maintain proper books of

accounts, records and documents to explain its transaction. The records should

disclose at any point of time the financial position of the mutual fund in a true and fair

view of the state of affairs of the fund. The accounts should provide information

regarding the distribution or accumulation of income accruing to the unit holder in a

fair and true manner.

“Short term capital gains” and “long term capital gains” should be segregated in the

accounts. All the expenses should be clearly identified and appropriated to the

individual scheme. The AMC may charge the mutual fund with investment subject to

the following:

47
  One and a quarter of one percent of the weekly average net assets outstanding

in each accounting year for the scheme concerned as net assets do not exceed

Rs.100 crore and one percent of the excess amount over Rs. 100 crore.

 The AMC can charge

a) Initial issue costs of sponsoring the fund and its schemes.

b) Recurring expenses related to marketing and selling expenses including agents

commission, brokerage and transaction costs and registrar services for transfer of

shares sold or redeemed, provided, the initial expenses in respect of any one scheme

shall not exceed 6% of the fund raised under the scheme.

The above-mentioned expenses and fees payable to AMC shall be charged to the

mutual fund.

Dividend

Mutual funds after closing of the annual accounts, distribute by way of

dividend to the holders in accordance with the regulations, an amount not less than

ninety percent of the profits earned during the year by that scheme. This does not

apply to a cumulative investment scheme or a growth oriented scheme where the

nature of the scheme has been made known to the investors at the time of the offer.

Management

The sponsor should have a sound track record, experience in the relevant field of

financial services for a minimum period of five years, professional competence,

financial soundness and general reputation in all his business transaction.

AMC shall be authorized for business by SEBI on the basis of certain. The

memorandum and articles of association of the AMC would have to be approved by

48
SEBI. The trustee board should be constituted with two thirds of independent trustees

to stand for the interest of the investors.

VALUE ADDED SERVICES

LOAN AGAINST SHARES:

ZEN SECURITIES has tied up with various public, private foreign and

corporate banks to provide loan against share. Beneficiary account holders at ZEN

SECURITIES will have the opportunity to avail the loan facility against pledge of

Demat shares on the term and condition best suited for them from the banks enlisted

with ZEN SECURITIES.

SELL ‘n’ CASH

This is another value added services which enables ZEN SECURITIE’S

account holder to realize proceeds from the sale of securities on the same day. After

ascertaining the availability of shares, on the beneficiary account and upon receiving

the necessary conformation from the brokers, ZEN SECURITIES would debit his /

her share account and issue a cheque on the same day for the value of share sold after

deducting service charges which enables brokerage.

FUND INVEST

FUND INVEST is a mutual fund advisory service offered by ZEN

SECURITIES With several mutual funds in foray having different schemes it is

difficult to the common investor to decide on one. Customers grievance cell helps the

49
investor in prudent decision making by providing an in depth information about

various schemes offered by the following mutual funds.

1) Scheme preferences of customers in mutual funds.

Table1:

TYPES OF SCHEMES PERCENTAGE (%)

Open ended 65

Closed ended 33

Interval 2

TYPES OF SCHMES

70

60

50
Open ended
40
Closed ended
30
Interval
20

10
0
1

1. Types of schemes

INTERPRETATION:

From the above table,

• 65% of the sample have selected open ended schemes

50
 • 33% of the sample have selected closed ended schemes

• 2% of the sample have selected interval schemes

2 ) Factors that influence customers while investing in mutual funds.

Table2:

CUSTOMER LOOK FORWARD PERCENTAGE

THE MAJOR FACTORS (%)
Liquidity 22
Reduction of Risk 28
Returns 42
Consistency 8

MAJOR FACTORS (% )

45
40
35
30 Liquidity
25 Reduction of Risk
20 Returns
15 Consistency
10
5
0
1

2. Major factors
INTERPRETATION:

51
 From the above table,

• 22% of the respondents are influenced by liquidity factor to invest in

mutual funds

• 28% of the respondents are influenced by reduction of risk factor to

invest in mutual funds

• 42% of the respondents are influenced by return factor to invest in

mutual funds

• 8% of the respondents are influenced by consistency factor to invest in

mutual funds

3) Expected returns of the customers of their Investment

Table3:

EXPECTED RETURNS PERCENTAGE (%)

UP to 10% 8

10%-15% 19

15%-20% 38

Above 20% 35

52
 EXPECTED RETURNS

40
35
30
UP to 10%
25
10%-15%
20
15%-20%
15
Above 20%
10
5
0
1

3.Expected Returns

INTERPRETATION:

From the above table,

• 8% of the sample expect returns upto 10%

• 19% of the sample expect returns upto 10%-15%

• 38% of the sample expect returns upto 15%-20%

• 35% of the sample expect returns above 20%

4) Reasons for opting open ended schemes by customers.

Table4:

53
REASONS FOR CHOOSING PERCENTAGE
OPEN ENDED (%)
Flexibility 32

Liquidity 68

OPEN ENDED (% )

80
70
60
50
Flexibility
40
Liquidity
30
20
10
0
1

4.Open Ended(%)

INTERPRETATION:

From the above table,

• 68% of the sample have chosen open ended schemes because of

liquidity

• 32% of the sample have chosen open ended schemes because of

flexibility

54
5) Reasons for opting closed ended schemes by customers.

Table5:

REASONS FOR ClOSING OPEN PERCENTAGE (%)

ENDED

High returns 70

Tax benefits 30

COLSED ENDED (% )

80
70
60
50
High returns
40
Tax benefits
30
20
10
0
1

5.Closed Ended(%)

INTERPRETATION:

From the above table,

55
 • 70% of the sample have chosen closed ended schemes because of
liquidity

• 30% of the sample have chosen closed ended schemes because of

flexibility

6) The reasons for investing in Mutual Funds.

Table6:

Reasons for investing Percentage (%)

Brand name 28

Friends reference 19

Agents advice 43

Others 10

INVESTING (%)

50
45
40
35 Brand name
30
Friends reference
25
Agents advice
20
15 Others
10
5
0
1

INTERPRETATION:

• 28% of the samples are investing in mutual funds because of Brand

name.

56
 • 19% of the samples are investing in mutual funds because of Friends
reference.

• 43% of the samples are investing in mutual funds because of Agents

advice.

• 10% of the samples are investing in mutual funds because of others.

7) In which type of schemes you have invested for how many years
Table7:

Year Equity type Debt and money market type

Less then 1 year 9 16

1-2 year 21 5

above 2year 46 3

50
45
40
35
30
Series1
25
Series2
20
15
10
5
0
Less then 1 1-2 year above 2year
year

7. Type of schemes

INTERPRETATION:

• 9% of the sample will invest in equity type schemes for less than a
year.21% of the sample will invest in equity type schemes for 1-2
years

57
 • 46% of the sample will invest in equity type schemes for above 2
years

• 16% of the sample will invest in debt and money market type for less
than a year.

• 5% of the sample will invest in debt and money market type for 1-2
years

• 3% of the sample will invest in debt and money market type for above
2 years

8) This table shows the customer which option was choose at the time of
investing in mutual funds

Table8:

Investing option Percentage (%)

Growth option 66

Dividend option 34

INVESTING OPTION (% )

70

60

50
40 Growth option
30 Dividend option

20

10
0
1

58
8. Investing option(%)

INTERPRETATION:

From the above table,

• 66% of the sample opted growth option while investing in mutual funds

• 34% of the sample opted dividend option while investing in mutual funds

9) Customers have opted SIP or not.

Table9:

Customers options Percentage

Yes 13

No 87

59
 CUSTOMER OPTION (% )

100
90
80
70
60
Yes
50
No
40
30
20
10
0
1

9.Customer option(%)

INTERPRETATION:

From the above table, 13% of the samples have opted for SIP and remaining
87% of the samples have not opted of SIP.

60
10) Customers awareness about the exit load.

Table10:

Customers awareness Percentage

Yes 82

No 18

CUSTOMER AWERNESS

90
80
70
60
50
Series1
40
30
20
10
0
Yes No

10.Customer awareness

INTERPRETATION:

From the above table, 82% of the samples were aware of exit load and the
remaining 18% of the sample were not aware.

11) Customers opinion on rate of returns in Mutual funds.

61
Table11:

Rate of returns Percentage

Excellent 2

Good 63

Moderate 32

Bad 3

RATE OF RETURS (% )

70
60

50
Excellent
40 Good
30 Moderate
Bad
20

10
0
1

11. Rate of returns

INTERPRETATION:

From the above table,

• 2% of the sample rated excellent for the returns in mutual funds.

• 63% of the sample rated good for the returns in mutual funds.

• 32% of the sample rated moderate for the returns in mutual funds.

• 3% of the sample rated bad for the returns in mutual funds.

62
 12) Customers risk taking capability.

Table12:

Risk taking capability Percentage

High risk 11

Moderate risk 69

Low risk 20

RISK TAKING (% )

80
70
60
50 High risk
40 Moderate risk
30 Low risk
20
10
0
1

12.Risk taking(%)

INTERPRETATION:

From the above table,

• 11% of the sample take High risk

• 69% of the sample take moderate risk

• 20% of the sample take low risk

63
13) Customers satisfaction about the service of the Mutual funds

Table 13:

customer opinion Percentage

Yes 91

No 9

CUSTOMER OPINION (% )

100
90
80
70
60
Yes
50
No
40
30
20
10
0
1

13.Customer option(%)

INTERPRETATION:

From the above table, it was observed that 91% of the sample were satisfied with
service of mutual funds and the remaining 9% were not satisfied.

64
V.1 FINDINGS OF THE STUDY:
• Investor education has been one of the issues. During the study

researcher found that many of the customers are not completely aware

of mutual funds and the industry. So people will prefer bank deposits

as the best investment avenue, which will serve their investment needs

and the safer one.

• People who are aware of mutual funds find mutual funds as on of the

good investment option that will give better returns with moderate

risk.

• Most of the investors invest to gain tax benefits & childrens benefits &

they belong to upper income.

• Knowledge about mutual fund & their various schemes is moderate

among investors.

• . Over fifty percent of the investors believe that mutual funds taking a

risk market fluctuate.

• . People who are aware of mutual funds as on of the good investment

option that will give better returns with moderate risk.

Through agents and awareness among customers was less.

• It was observed from the study that, 32% of the sample will invest

small amounts in mutual funds

• 42% of the customers invest in mutual funds mainly for returns.

65
V .2 SUGGESTIONS OF THE STUDY:

• Investor education programmers should be conducted so that the

awareness about the mutual funds and their working ness can be

understood by the investors for proper investing.

• Mutual fund investments are very much suitable to risk averters and

moderate investor.

• Liquid funds of all AMC’s are with low risk so the investment is

helpful to get back our investment in time.

• Mutual funds generally helpful to small investors to invest in different

sectors compared to investing in a single sector industry so small

investors should be aimed and that can be helpful to develop the

mutual fund industry

• The investor who is willing to invest in long-term capital appreciation

the growth funds are the best, most convenient way for building up

assets over the years.

• Arranging free seminars in different organizations can increases the

awareness about eh new mutual funds.

• Arranging stalls in public is a good publicity for the organization.

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CONCLUSIONS OF THE STUDY:

It’s fascinating to contrast the thinking processes of human chess players and

computers. In many positions, a good human player and a good computer will choose

the same movers while doing their analysis from entirely different standpoints.

Creating a portfolio frequently involves a similar clash of different but equally valid

forms of logic. There are several ways to assess risks in different types of investments

and it’s illuminating to understand the differences in the thinking process. Sometimes

they reach the same conclusions, sometimes different.

Equity and debt funds had a dream run in 2009, thanks to the steady fall in interest

rates. Most debt funds yielded returns in excess of 20 %. The performance of income

funds, as a group, was less impressive (down 5%), primarily because of monthly

income plans. Although these schemes are classified as debt funds, they had massive

exposures to equities. The bearish equity market took its toll on their NAVs.

In conclusion, one should not argue that the investor should not ever invest in

individual stocks, but one can say that investing in mutual funds is more advantage

that in others as there exits liquidity, risk is low, small amounts can be invested and

service charges are low compared to others.

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BIBLIOGRAPHY
(A) TEXT BOOKS:

• Donald E. Fisher, Ronald j.jordan, Security Analysis & portfolio management,

1999,6th edition, prentice hall of india.
• Sharp W.F .Alexander J.Bailey, Investments, 1998, 5th edition , prentice hall
of india.
• C.Shapiro, International financial management , 6th edition
(B) WEBSITES:

• http://www.zenmoney.com
• http://www.mutual@zenmony.com
• http://www.valueresearchonline.com
• http://www.mutualfundindia.com
• http://www.nseindia.com

( C )JOURNALS:

Business India, January 2010.

Capital market, January 2010.

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