SOME OF THE PRODUCTS OF HDFC MUTUAL FUND:

HDFC GROWTH FUND
HDFC EQUITY FUND
HDFC BALANCED FUND
HDFC TOP 200 FUND
HDFC INCOME FUND
HDFC CAPITAL BUILDER FUND
HDFC LIQUID FUND
HDFC TAX SAVER FUND
HDFC LONG TERM ADVANTAGE FUND
HDFC PRUDENCE FUND
HDFC CHILDERN GIFT FUND
HDFC HIGH INTEREST FUND
HDFC GLIT FUND
HDFC CASH MANAGEMENT FUND
HDFC SHORT TERM PLAN
HDFC MONTHHLY INCOME PLAN
HDFC INDEX FUND
HDFC CORE AND SETELITE FUND
HDFC FLOATING RATE FUND
HDFC PREMIER MULTI-CAP FUND

Today HDFC mutual funds are one of the most successful mutual funds. Its growth has been very predominant in this sector and there are many funds of great demand and also the returns assured were quiet high when compared to other mutual funds. With efficient management, innovative product range and some tailor made products HDFC has been very well marching forward in this highly competitive sector.

HDFC:

It was incorporated in 1977 as the first specialized housing finance institution in India .HDFC provides assistance to individuals, corporates and developers for the purchase or construction of residential housing. It also provides property related services, traning and consultancy. Housing finance remains the dominant activity.HDFC currently has over 800000 lacks of borrowers, 12, 00,000 depositors, 92,000 shareholders and 50,000 deposit agents.HDFC borrows loans from international agencies like world bank, IFC,CDC.
HDFC has received the highest rating for its bonds and deposits for the ninth year in succession.


STANDARD LIFE INVESTMENTS LIMITED:
It was established in 1825 and has a considerable experience in global financial markets. In 1998, it became a dedicated company of standard life group and is owned 100% by the standard life assurance company. It is one of the worlds major investment company and is responsible for investing money on behalf of five million retail and international clients. Its headquarters are in Edinburgh and it has a global presence with operations in many countries. standard life investments limited manages a diverse portfolio covering all of the major markets world aide, which includes a range products of public and private equities, government and company bonds, property investments and various derivative instruments.

HDFC MUTUAL FUNDS

HDFC ASSET MANAGEMENT COMPANY:
HDFC asset management company was incorporated under companies act, 1956 on December 10, 1999, and was approved to act has as an asset management company for hdfc mutual fund.
In terms of investment management agreement the trustee has been appointed the AMC to mange the mutual fund.
As per the terms of investment management agreement, the AMC will conduct the operations of the mutual fund and manage assets of the schemes launched from time to time.

The present share holding pattern of the AMC is as follows:


PARTICULARS % OF PAID UP CAPITAL
HDFC 50.10

STANDARD LIFE INVESTMENTS LTD 49.90

Zurich insurance company, the sponsor of Zurich India mutual fund, following a review of its overall strategy, had decided to divest its asset management business in India. The AMC had entered into an agreement with Zurich insurance company to acquire the said business, subject to necessary regulatory approvals.

HDFC BANK-A PROFILE

HDFC is India's premier housing finance company and enjoys an impeccable track record in India as well as in international markets. Since its inception in 1977, the Corporation has maintained a consistent and healthy growth in its operations to remain the market leader in mortgages. Its outstanding loan portfolio covers well over a million dwelling units. HDFC has developed significant expertise in retail mortgage loans to different market segments and also has a large corporate client base for its housing related credit facilities. With its experience in the financial markets, a strong market reputation, large shareholder base and unique consumer franchise, HDFC was ideally positioned to promote a bank in the Indian environment.

HDFC BANK-A PROFILE

The authorized capital of HDFC Bank is Rs.450 crore (Rs.4.5 billion). The paid-up capital is
Rs.311.9 crore (Rs.3.1 billion). The HDFC Group holds 22.1% of the bank's equity and about
19.4% of the equity is held by the ADS Depository (in respect of the bank's American Depository
Shares (ADS) Issue). Roughly 31.3% of the equity is held by Foreign Institutional Investors (FIIs)
and the bank has about 190,000 shareholders. The shares are listed on the Stock Exchange, Mumbai
and the National Stock Exchange. The bank's American Depository Shares are listed on the New
York Stock Exchange (NYSE) under the symbol "HDB".


HDFC Bank operates in a highly automated environment in terms of information technology and

communication systems. All the bank's branches have online connectivity, which enables the bank to

offer speedy funds transfer facilities to its customers. Multi-branch access is also provided to retail

customers through the branch network and Automated Teller Machines (ATMs).


In a milestone transaction in the Indian banking industry, Times Bank limited (another new private

sector bank promoted by Bennett, Coleman & Co./Times Group) was merged with HDFC Bank Ltd.,

effective February 26, 2000. As per the scheme of amalgamation approved by the shareholders of

both banks and the Reserve Bank of India, shareholders of Times Bank received 1 share of HDFC

Bank for every 5.75 shares of Times Bank. The acquisition added significant value to HDFC Bank

in terms of increased branch network, expanded geographic reach, enhanced customer base, skilled

manpower and the opportunity to cross-sell and leverage alternative delivery channels

HDFC BANK-A PROFILE

The Housing Development Finance Corporation Limited (HDFC) was amongst the first to

receive an 'in principle' approval from the Reserve Bank of India (RBI) to set up a bank in the

private sector, as part of the RBI's liberalization of the Indian Banking Industry in 1994. The bank

was incorporated in August 1994 in the name of HDFC Bank Limited', with its registered office

in Mumbai, India. HDFC Bank commenced operations as a Scheduled Commercial Bank in January

1995

HDFC Bank's mission is to be a World-Class Indian Bank. The objective is to build sound

customer franchises across distinct businesses so as to be the preferred provider of banking

services for target retail and wholesale customer segments, and to achieve healthy growth in

profitability, consistent with the bank's risk appetite. The bank is committed to maintain the

highest level of ethical standards, professional integrity, corporate governance and regulatory

compliance. HDFC Bank's business philosophy is based on four core values – Operational

Excellence, Customer Focus, Product Leadership and People.

LIMITATIONS OF THE STUDY

(1) Since the branch in Vijaywada doesn’t have separate mutual fund office and the

(2) Office deals with all the mutual funds apart from HDFC mutual funds it was difficult to analyze the movement of particular mutual fund.

(3) Many customers even though they had invested in mutual funds were hesitant to respond to questionnaire due to lack of interest.


(4) Some people though they invested in mutual funds did not possess any knowledge of mutual funds; they were totally dependent on their bank investment advisor or their friends and family people advice.

(5) Since the sample size was 100 it cannot give the exact perception of whole population.

RESEARCH METHODOLOGY ADOPTED:

TYPE OF RESEARCH: The research undertaken for the survey was exploratory research.

DATA COLLECTION:
Primary data was collected using questionnaire and also by interacting with the customer’s who were coming to the bank for investment advice.

POPULATION OF STUDY:
The population of study was HDFC customers.

SAMPLING METHOD:
The sample consists of walk in customers of HDFC bank.
Convenient sampling technique was used for the survey.

SAMPLE SIZE: Sample size taken for the study is 100.

OBJECTIVE OF THE STUDY:

(1) The primary objective of the study is perception of bank’s customers regarding mutual funds. Interacting with customers who came for investment advice, queries and other related matters mostly did the project. It gave an insight of different customer’s views regarding mutual funds and reasons for choosing a particular fund.

(2) To know the other preferred investment options by respondents.

(3) To know the plans preferred in mutual funds by the respondents.

(4) To find the preferred source of gathering information and advice before investing in mutual funds.

KEY INFORMATION MEMORANDUM:

An abridged or shortened version of offer document is key information memorandum (KIM). It is attached along with the application. First time investors should compulsorily go through it before investing.

TAX ASPECTS OF MUTUAL FUNDS:

(1) Mutual funds do not pay tax on the income they earn; they are fully exempt from tax.

(2) An investor who holds units for 12 months or less than that and if on selling them he gains a profit then he gets a short term capital gain. And he will be taxed at a marginal rate of tax.

(3) An investor who holds the units for a period of more than 12 months has to pay long-term capital gain on those units. However long term capital gain can be indexed for inflation.


INDEXATION:

It refers to updating of purchase price based on cost of inflation index published by central board of direct taxes.

Formula: purchase price x (index price in year of sale/index price in the year of purchase)(4) Investors can pay 10% tax on capital gain without indexation or 20% tax on capital gain after indexation inclusive of surcharge which ever is low.

TECHNICAL ASPECTS OF MUTUAL FUNDS:

OFFER DOCUMENT:
An offer document of a mutual fund scheme is a prospectus issued by an Asset Management Company/ sponsor inviting public for subscription in units of the scheme disclosing information which is adequate to enable an investor to make informed investment decision.
This is the most important source of information for the prospective investor. When a new scheme is launched the AMC prepares and issues offer document on behalf of trustees and is responsible for the validity of the contents .The cover page contains details of the scheme and name of the of sponsor and description of schemes& investment objective. Terms of issue, historical statistics, Investor rights and services, open and closing date of the scheme and disclaimer .It gives investors idea about funds past performance. Expenses like load charges, Past 3 year’s condensed financial history of all schemes. Due diligence certificate should be signed by compliance officer before submitting to SEBI. SEBI does not approve or certify contents of offer document. Closed ended funds issue offer document only once.
Standard and Scheme specific risk factors will be mentioned in offer document. Contents of Open-ended mutual fund offer document can be reviewed every 2 years. A copy of that has to be submitted to SEBI.

REGULATORS IN INDIA OF MUTUAL FUNDS:

First and foremost the major regulator of mutual funds in India is SEBI. And funds belonging to any bank like SBI mutual fund or HSBC mutual fund then both SEBI and RBI are the regulators. Ownership of the asset management company is by the bank.
Other regulators:

▪ Ministry of finance.

▪ Company law board

▪ Department of company affairs.

▪ Registrar of companies.

▪ Charity commissioner.

▪ Stock exchanges

▪Trustee’s of mutual funds

▪ Office of public trustee.

LIMITATIONS OF INVESTORS:

(A) Unit holders are part of the trust hence cannot sue the trust, however they can initiate legal proceedings against trustees.

(B) In case assured returns are not achieved sponsor doesn’t have any legal obligation to meet the shortfall unless it has been specifically mentioned in offer document.

(C) Buyer beware concept is true in the case of mutual fund investors also.

RIGHTS AND OBLIGATIONS OF INVESTORS:

As per SEBI Regulations on Mutual Funds, an investor is entitled to
1. Receive Unit certificates or statements of accounts confirming your title within 6 weeks from the date your request for a unit certificate is received by the Mutual Fund.
2. Receive information about the investment policies, investment objectives, financial position and general affairs of the scheme;
3. Receive dividend warrants within 30 days of their declaration and if they don’t receive them within 10 days they can get interest at 15% on redemption amount.
4. The trustees shall be bound to make such disclosures to the unit holders as are essential in order to keep them informed about any information which may have an adverse bearing on their investments.
5. 75% of the unit holders with the prior approval of SEBI can terminate the AMC of the fund.
6. 75% of the unit holders can pass a resolution to wind-up the scheme.
7. An investor can send complaints to SEBI, who will take up the matter with the concerned Mutual Funds and follow up with them till they are resolved.
8. Any change in Fundamental Attributes (like. objective, terms of issue, fees, and expenses) can’t be carried out unless investors are informed in writing and through ads in one nationwide English daily, one regional news paper where head office of mutual fund is situated and unit holders are allowed to exit without any loads.

PEOPLE WHO CAN INVEST IN MUTUAL FUNDS:

(a) Resident Indian individuals

(b) Indian companies, trusts and charitable intuitions

(c) Banks and insurance companies

(d) Provident funds, super annuation and gratuity.

(e) Non resident Indian’s

(f) Overseas corporate bodies and SEBI approved FIIs.

(g) Foreign citizens and entities are not allowed to invest.

DIFFERENT PLANS IN MUTUAL FUNDS:

Growth Plan and Dividend Plan:
A growth plan is a plan under a scheme wherein the returns from investments are reinvested and very few income distributions, if any, are made. The investor thus only realizes capital appreciation on the investment. This plan appeals to investors in the high-income bracket. Under the dividend plan, income is distributed from time to time. This plan is ideal to those investors requiring regular income.

Dividend Reinvestment Plan:
Dividend plans of schemes carry an additional option for reinvestment of income distribution. This is referred to as the dividend reinvestment plan. Under this plan, dividends declared by a fund are reinvested on behalf of the investor, thus increasing the number of units held by the investors.

Automatic Investment Plan:
Under the Automatic Investment Plan (AIP) also called Systematic Investment Plan (SIP), the investor is given the option for investing in a specified frequency of months in a specified scheme of the Mutual Fund for a constant sum of investment. AIP allows the investors to plan their savings through a structured regular monthly savings program

Automatic Withdrawal Plan:
Under the Automatic Withdrawal Plan (AWP) also called Systematic Withdrawal Plan (SWP), a facility is provided to the investor to withdraw a pre-determined amount from his fund at a pre-determined interval.

On the basis of geographic location

Domestic funds:
These funds mobilize the savings of nationals within the country.
Offshore Funds
These funds facilitate cross border fund flow. They invest in securities of foreign companies. They attract foreign capital for investment.


(d) Others:

▪ Commodity funds

▪ Real estate funds

▪ Funds of funds

▪ Bullion funds

On the basis of Flexibility

Open-ended Funds:
These funds do not have a fixed date of redemption. Generally they are open for subscription and redemption throughout the year. Their prices are linked to the daily net asset value (NAV). From the investors' perspective, they are much more liquid than closed-ended funds. Investors are permitted to join or withdraw from the fund after an initial lock-in period.
Close-ended Funds:
These funds are open initially for entry during the Initial Public Offering (IPO) and thereafter closed for entry as well as exit. These funds have a fixed date of redemption. One of the characteristics of the close-ended schemes is that they are generally traded at a discount to NAV; but the discount narrows as maturity nears. These funds are open for subscription only once and can be redeemed only on the fixed date of redemption. The units of these funds are listed (with certain exceptions), are tradable and the subscribers to the fund would be able to exit from the fund at any time through the secondary market.
Interval funds:

These funds combine the features of open–ended and close-ended funds wherein the fund is close-ended for the first couple of years and open-ended thereafter. Some funds allow fresh subscriptions and redemption at fixed times every year (say every six months) in order to reduce the administrative aspects of daily entry or exit, yet providing reasonable liquidity

Types of Funds

Diversified funds:
These funds invest in companies spread across sectors. These funds are generally meant for risk-taking investors who are not bullish about any particular sector.
Sector funds:
These funds invest primarily in equity shares of companies in a particular business sector or industry. These funds are targeted at investors who are extremely bullish about a particular sector.
Index funds:
These funds invest in the same pattern as popular market indices like S&P 500 and BSE Index. The value of the index fund varies in proportion to the benchmark index.
Tax Saving Funds:
These funds offer tax benefits to investors under the Income Tax Act. Opportunities provided under this scheme are in the form of tax rebates U/s 88 as well saving in Capital Gains U/s 54EA and 54EB. They are best suited for investors seeking tax concessions.
Debt / Income Funds:
These Funds invest predominantly in high-rated fixed-income-bearing instruments like bonds, debentures, government securities, commercial paper and other money market instruments. They are best suited for the medium to long-term investors who are averse to risk and seek capital preservation. They provide regular income and safety to the investor.
Liquid Funds / Money Market Funds:
These funds invest in highly liquid money market instruments. The period of investment could be as short as a day. They provide easy liquidity. They have emerged as an alternative for savings and short-term fixed deposit accounts with comparatively higher returns. These funds are ideal for Corporates, institutional investors and business houses who invest their funds for very short periods.
Gilt Funds:
These funds invest in Central and State Government securities. Since they are Government backed bonds they give a secured return and also ensure safety of the principal amount. They are best suited for the medium to long-term investors who are averse to risk.
Balanced Funds:
These funds invest both in equity shares and fixed-income-bearing instruments (debt) in some proportion. They provide a steady return and reduce the volatility of the fund while providing some upside for capital appreciation. They are ideal for medium- to long-term investors willing to take moderate risks.
Hedge Funds:
These funds adopt highly speculative trading strategies. They hedge risks in order to increase the value of the portfolio.

TYPES OF FUNDS

There are different types of mutual funds taking into consideration the preferences and mentality of different investors. Broadly mutual funds are divided into three types,

(1) On the basis of objective
(2) On the basis of flexibility
(3) On the basis of geographical location.


(a) On the basis of Objective

Equity Funds/ Growth Funds
Funds that invest in equity shares are called equity funds. They carry the principal objective of capital appreciation of the investment over the medium to long-term. The returns in such funds are volatile since they are directly linked to the stock markets. They are best suited for investors who are seeking capital appreciation. There are different types of equity funds such as Diversified funds, Sector specific funds and Index based funds.
Types of equity funds:
AGGRESSIVE GROWTH FUNDS: Investment in less researched or speculative/non-blue chip stocks
n GROWTH FUNDS: Investment in stocks with above average growth prospects over 3-5 years.example: Tech Stock
n SPECIALITY FUNDS: Sector, Offshore, Small-cap equity, Option income funds
n DIVERSIFIED EQUITY FUNDS: ELSS. Ex: ETSP
n EQUITY INDEX FUNDS
n VALUE FUNDS: Invest in fundamentally sound companies with low P/E ratio.
n EQUITY INCOME FUND: Invest in sectors where low fluctuation in stock price and high dividend is expected.

TRUSTEE AND AMC:

• AMC fees have a ceiling decided by SEBI
  
• Initial issue expenses not exceeding 6%
  
• Recurring expenses such as trustee fees, audit fees, etc.
  
• When net assets do no exceed Rs.100 crores, asset management fee is maximum 1.25% of average weekly net assets.
  
• When assets exceed Rs.100 crores, an additional asset management fee of maximum 1%of additional net assets.
  
• If the scheme is a no-load scheme, further fee of maximum 1% of average weekly net assets.
  
  CUSTODIAN:
  Custodian is appointed by Board of trustees for safekeeping of the physical securities or participating in any clearing system on behalf of mutual funds in case of DMAT securities. He provides an independent means of control as custodians (usually banks).
  
  TRANSFER AGENTS:
  They are responsible for unit holder record maintenance and servicing, including purchase, transfer and redemptions of units. They take care of change of address loss of Certificates or account statements etc.

TRUSTEE AND AMC:

The sponsor with sebi approval appoints trustee. Trustee is the one who sees that funds are managed according to investor mandate. Trustees have a fiduciary responsibility. Trustees are the one who approve the mutual fund schemes floated by the AMC .They receive fee for their services. They are also responsible to furnish report to SEBI on AMC and regarding the functioning of the fund. At least two thirds of the trustees should be independent. Trustees are required to meet four times a year to look after the working of the AMC.

AMC:
Acts as investment manager of the trust under the board supervision and direction of the trustee. AMC is the fund managerAMC floats the different MF schemes. AMC is responsible to the trustees. AMC should be registered with SEBI.It should have a net worth of ten crore at all the times. An AMC of one fund cannot be the trustee of another fund. An AMC cannot engage except in portfolio advisory and management.

STRUCTURE OF MUTUAL FUNDS IN INDIA

In India the structure of mutual fund is three tiers:

SPONSOR→TRUSTEE→AMC

SPONSOR:
A sponsor is the promoter of the fund. He establishes the trustee and AMC and appoints the boards of both these but with the approval of SEBI. At least 50% of the directors in an AMC should be independent directors of the sponsor. The sponsor should have a 5 year track record in financial service business and should earn profits in 3 years out of those 5 years. At least the sponsor should contribute 40% of the capital in AMC. Asset Management Company shall not deal with any broker/firm associated with sponsor beyond 5% of daily gross business of the mutual fund.

HISTORY OF MUTUAL FUNDS IN INDIA:

In India mutual funds came into existence in the year 1963 with UTI (unit trust of India).it was the only mutual fund at that time which was public held and enjoyed a monopoly power till a long time. It was governed under uti act; 1963.the first mutual product from uti was UTI MASTER SHARE in 1986. Before that the first scheme launched by UTI was US-64 followed by CGGF in 1986.
In the year 1987 banks and other financial institutions were allowed to set up mutual funds. RBI (reserve bank of India) was made the sponsor of mutual funds and as public sector banks came under the purview of RBI they came under the guidelines of RBI. And later on they were both brought under the guidelines SEBI and RBI. STATE BANK OF INDIA (sbi) was the first bank-sponsored mutual fund followed by LIC & CAN BANK.
But till that time UTI was the undisputed leader in the market. And later when the wave of liberalization entered India, in 1993 private sector mutual funds were allowed to come up. The first private sector mutual fund was JV and JM Kothari pioneer was the first private sector mutual fund, in 1996. The coming of private sector mutual funds brought innovative product range, good management techniques, and investor servicing techniques. With more and more mutual funds with wide product range coming up customers became selective. In 1996 mutual funds dividends were made tax free in the hands of investor. In the year 2002 the mutual funds assets were approximately 100,000 crore.

SHUTOUT PERIOD:

After the closure of the Initial Offer Period, on an ongoing basis, the Trustee reserves a right to declare Shut-Out period not exceeding 5 days at the end of each month/quarter/half-year, as the case may be, for the investors opting for payment of dividend under the respective Dividends Plans. The declaration of the Shutout period is envisaged to facilitate the AMC/the Registrar to determine the Units of the unit holders eligible for receipt of dividend under the various Dividend Options. Further, the Shutout period will also help in expeditious processing and dispatch of dividend warrants. During the Shut-Out period investors may make purchases into the Scheme but the Purchase Price for subscription of units will be calculated using the NAV as at the end of the first Business Day in the following month/quarter/half-year as the case may be, depending on the Dividend Plan chosen by the investor. Therefore, if investments are made during the Shut –Out period, Units to the credit of the Unit holder’s account will be created only on the first Business Day of the following month/ quarter/half year, as the case may be, depending on the dividend plan chosen by the investor. The Shut-Out period applies to new investors in the Scheme as well as to Unit holders making additional purchases of Units into an existing folio. The Trustee reserves the right to change the Shut-Out period and prescribe new Shut- Out period, from time to time.

REDEMPTION PRICE:

When we sell units of an open-end scheme then we receive redemption price. If an exit load is levied then redemption price will be less than the nav and vice-versa.

SALE/PURCHACE PRICE:
Sale price is the price paid for purchasing the unit of a fund. Again the sale price depends on the load levied on that fund i.e. the entry load. If an entry load is put than sale price would be more than the NAV if there is no entry load levied than sale price would be equal to NAV.
REPURCHASE PRICE:
Repurchase price is the price at which a close-ended scheme repurchases its units. Repurchase can either be at NAV or can have an exit load.

SWITCH:
Some mutual funds give an option to the investor to change his scheme within the fund, in other words it allows shifting from one scheme to another and for this the fund levies a switching fee.
Switching allows the Investor to alter the allocation of their investment among the schemes in order to meet their changed investment needs, risk profiles or changing circumstances during their lifetime.

LOCK –IN-PERIOD:
It is period with in which the fund cannot be permitted to be redeemed. Mostly for open-ended schemes and tax saving schemes there is a lock in period.

Various terminologies involved in mutual funds:

Net asset value (Nav):
Net asset value is funds value which is usually expressed in share value. Mostly in many countries NAV is declared after when trading ends.
Net Asset Value of the fund is the cumulative market value of the assets of the fund net of its liabilities. NAV per unit is simply the net value of assets divided by the number of units outstanding. Buying and selling into funds is done on the basis of NAV-related prices.

NAV is calculated as follows:
NAV= Market value of the fund’s investments+Receivables+Accrued Income– Liabilities-Accrued Expenses
_______________________________________________________________________
Number of Outstanding units
The NAV of a scheme has to be declared at least once a week. However many Mutual Fund declare NAV for their schemes on a daily basis. As per SEBI Regulations, the NAV of a scheme shall be calculated and published at least in two daily newspapers at intervals not exceeding one week. However, NAV of a close-ended scheme targeted to a specific segment or any monthly income scheme (which is not mandatory required to be listed on a stock exchange) may be published at monthly or quarterly intervals.

Load:
This is the amount paid to the broker when shares are purchased. They are paid as percentage of the amount invested. There are two types of loads (1) entry load (2) exit load.
A load is normally collected to cover up the front-end costs and also processing costs. Some funds do not charge this load and are called ‘no load fund’. At present most of the companies are charging load at 2-2.25%.

Reasons for growth of mutual funds:

Today there are various ways and also options to invest in, ranging from recurring deposits to postal saving schemes. But investment in mutual funds has grown quiet massively and still growing. The reasons for such growth in mutual funds can be attributed to the fact that investment in them can be done with ease.
Today time is a big constraint for people, a few people have the time to follow shares and understand the volatilities involved in share market. It is rightly said that stock market is gamble. So people today want someone to look after there investments and suggest them regarding there investments. In this situation mutual funds come to their rescue.

Firstly a professional and qualified fund manager manages mutual funds. Though investors have the capacity and capability to Asses and understand a financial instrument but still an analytical and wise decision making capacity of a fund manager is very beneficial.
And also the investors are saved from the task of keeping track of there investments, not only this since mutual funds allow to invest in diversified stocks it reduces the risk burden. Many companies today have schemes like balanced equity funds which help them to reduce the risk pattern for example tata balanced mutual fund, hdfc balance fund etc.And one of the major advantage of mutual funds is that an investor can invest with small amounts whenever he has corpus funds with him and also they can be redeemed easily as and when the investor wants if he is investing in open ended funds.

Theoretical Background Of The Study

What is a mutual fund?
A Mutual fund is a form of collective investment that pools money from many investors and invests the collected funds in stocks, bonds, short-term money market instruments and other securities.

A Mutual Fund is a body corporate that pools the savings of a number of investors and invests the same in a variety of different financial instruments, or securities. The income earned through these investments and the capital appreciation realized by the scheme is shared by its unit holders in proportion to the number of units owned by them. Mutual funds can thus be considered as financial intermediaries in the investment business that collect funds from the public and invest on behalf of the investors. The losses and gains accrue to the investors only. The Investment objectives outlined by a Mutual Fund in its prospectus are binding on the Mutual Fund scheme. The investment objectives specify the class of securities a Mutual Fund can invest in. Mutual Funds invest in various asset classes like equity, bonds, debentures, commercial paper and government securities.

Asset Management Company:
An Asset Management Company (AMC) is a highly regulated organization that pools money from investors and invests the same in a portfolio. They charge a small management fee, which is normally 1.5 per cent of the total funds managed.

Introduction

Mutual funds came in to being in the year 1963 under public sector. UTI was the first company to start the mutual funds and its first scheme was us-64.it was enjoyed a monopoly status in the arena and was an undisputable leader. In India mutual funds came into existence. It was governed under UTI act; 1963.the first mutual product from UTI was UTI MASTER SHARE in 1986. Before that the first scheme launched by UTI was US-64 followed by CGGF in 1986.

In the year 1987 banks and other financial institutions were allowed to set up mutual funds.RBI (reserve bank of India) was made the sponsor of mutual funds and as public sector banks came under the purview of RBI they came under the guidelines of RBI. And later on they were both brought under the guidelines SEBI and RBI. STATE BANK OF INDIA (SBI) was the first bank-sponsored mutual fund followed by LIC & CAN BANK.
But till that time UTI was the undisputed leader in the market. And later when the wave of liberalization entered India, in 1993 private sector mutual funds were allowed to come up. The first private sector mutual fund was JV and jm kothari pioneer was the first private sector mutual fund, in 1996. The coming of private sector mutual funds brought innovative product range, good management techniques, and investor servicing techniques. With more and more mutual funds with wide product range coming up customers became selective. In 1996 mutual funds dividends were made tax free in the hands of investor. In the year 2002 the mutual funds assets were approximately 100,000 crore.

EXECUTIVE SUMMARY

Mutual funds pool money from different investors and invest in different investment sources like stocks, shares, bonds etc. A professional fund manager manages these and returns are paid in form of dividends. Some schemes assured fixed returns that are less in risk and some offer dividends based on the market fluctuations and prices. Mutual funds have to be subscribed in units and the purchase or sale is dependent on NAV (Net Asset Value), taking into consideration the exit and entry load factors into account.
This project undertaken deals with customer perception with regard to mutual funds that is the schemes they prefer, the plans they are opting, the reasons behind such selections and also this project dealt with different investment options, which people prefer along with and apart from mutual funds. Like postal saving schemes, recurring deposits, bonds, and shares. The findings from this project is that most of the people are hesitant in going for new age investments like mutual funds and prefer to avert risks by investing in less riskier investment options like recurring deposits and so. Also people going for investment in mutual funds are not going for high-risk portfolios and schemes but want to go for medium risk elements. And another finding is that most of the workingwomen does not prefer this type of investments.