INTRODUCTION

The Monetary System of a country greatly affects its Economy. Mutual funds are the institutions which provide savings avenues to the investors moreover play a crucial role in the economy by mobilizing their savings and investing them in Capital Markets, thus establishing a link between the savings and Capital markets. Generally investors have two choices- they can invest directly in individual securities through their De-Mat account or they can invest it indirectly through a Financial intermediary. A financial intermediary gathers savings from consumers and invests these in a portfolio of financial assets. A Mutual Fund is a trust that pools savings of investors who share a common financial goal. The money collected is then invested in Capital Market instruments such as Shares, Debentures and other Securities. The income earned from these investments and Capital appreciations realized are shared by its unit holders in the proportion to the number of units owned by them. Thus, a Mutual Fund is the most suitable investment for common man as it offers an opportunity to invest in a well Diversified Professionally Managed Basket of securities and that also at a relative low cost. HOW MUTUAL FUNDS EARN MONEY: A mutual fund is a means of investing that enables individuals to share the risks of investing with other investors. All contributors to the fund experience an equal share of gains and losses for each dollar invested. A mutual fund owns the securities of several corporations. A mutual fund pools money from hundreds and thousands of investors to construct a portfolio of stocks, bonds, real estate, or other securities, according to the kind of investments the mutual fund trades. Investors purchase shares in the mutual fund as if it was an individual security. Fund managers hired by the mutual fund company are paid to invest the money that the investors have placed in the fund. Heeding the adage "Don't put all your eggs in one basket" the holders of mutual fund shares are able to gain the advantage of diversification which might be beyond their financial means individually.1 HISTORY OF MUTUAL FUNDS:
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http://www.mutualfundsresource.com/mutualfunds

The history of mutual funds is definitely not exclusive and unique to America and it was not started in this country either. In 1822 in the Netherlands, the first mutual fund was created and then it was followed later by Scotland in the 1880's when the second fund came into being. In 1889, the New York Stock Trust was the first mutual fund in America, followed later in the 1920's when one started in Boston. Most of the mutual funds that came after that time actually were started in Boston, including Fidelity, the Putnam Fund, and the State Street Fund. In 1924, the Massachusetts Investors Trust (which is now called the MFS) was founded and by the end of a full year, the company had $392,000 in assets and 200 shareholders who invested their money. The market for mutual funds grew tremendously by the end of that year and there was a combined value of $10 million put into this new kind of investment. With the crash of the stock market in 1929, mutual funds ceased to be as popular, but as one of the benefits of this disaster in United States history, investors were given certain guarantees by the government. After the crash, there was much stronger legislation and liability so that investors could once again feel safe to invest their money. Acts and laws were passed after 1929 that gave investors complete disclosure about the mutual funds, the managers, and the safety of the securities and with that, people became more confident and the mutual fund market began to grow again. Proof of the renewed confidence is that there were $48 billion in assets and 270 different mutual funds at the end of the 1960's. It was during the 1960's that there was a tremendous growth because people were investing in much riskier funds, which obviously earned the most money when they were successful. There were over 100 funds that were placing their money into technology stocks and other risky ventures but investors were satisfied because they were making money. At the end of this short era, though, in around 1969, people began to get dissatisfied because their money wasn't doing so well anymore and people were afraid that they'd never get their money back. The market was suffering tremendously with unemployment, sky-high inflation rates, and investors took their money out of the mutual funds. Then, in the 1970's, a new type of mutual fund emerged that was called a 'no load' fund. This type of mutual fund had no sales commission and the money that investors earned went straight to them, and not to salespeople or managers. Since the year 1940, there has not been one case of a mutual fund becoming bankrupt, and although people may be intimidated by the large amount of mutual funds available from which to choose, investors should be aware that they can be a very safe and lucrative place to put their money. Each fund has it benefits and detriments but choosing wisely and making an informed decision can have yield great profits in the years to

come.2 HISTORY OF MUTUAL FUNDS IN INDIA: The Evolution The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. The history of mutual fund industry in India can be better understood divided into following phases: Phase 1. Establishment and Growth of Unit Trust of India - 1964-87 Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was transferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US-64), which attracted the largest number of investors in any single investment scheme over the years. UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Master share (Indias first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores. Phase II. Entry of Public Sector Funds - 1987-1993 The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Mutual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share.
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http://www.imutualfundsinvest.com/history-of-mutual-funds

Assets Amount 1992-93 Mobilised Under Managemen t UTI Public Sector Total 11,057 1,964 13,021 38,247 8,757 47,004

Mobilisation as % of gross Domestic Savings 5.2% 0.9% 6.1%

Phase III. Emergence of Private Sector Funds - 1993-96 The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutual fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes. Phase IV. Growth and SEBI Regulation - 1996-2004 The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilisation of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds. Investors' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. Various Investor Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an objective to educate investors and make them informed about the mutual fund industry. In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutual fund players on the same level. UTI was re-organised into two parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund. Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past

schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilisation of funds from investors and assets under management which is supported by the following data: GROSS FUND MOBILISATION (RS. CRORES) PUBLIC FROM TO UTI SECTO R 3101-April-98 March99 3101-April-99 March00 3101-April-00 March01 3101-April-01 March02 01-April-02 31-Jan03 3101-Feb.-03 March03 3101-April-03 March04 3101-April-04 March05 1,03,246 7,36,416 8,39,662 68,558 5,21,632 5,90,190 * 7,259* 58,435 65,694 5,505 22,923 2,20,551 2,48,979 4,643 13,613 1,46,267 1,64,523 11,67 9 PRIVAT E SECTOR TOTAL

1,732

7,966

21,377

13,53 6

4,039

42,173

59,748

12,41 3

6,192

74,352

92,957

3101-April-05 March06 1,83,446 9,14,712 10,98,158

ASSETS UNDER MANAGEMENT (RS. CRORES) AS ON 31-March-99 UTI 53,320 PUBLIC SECTOR 8,292 PRIVATE SECTOR 6,860 TOTA L 68,472

Phase V. Growth and Consolidation - 2004 Onwards The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutual fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.3

http://www.appuonline.com/mf/knowledge/industry.html

MEANING OF MUTUAL FUNDS: A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. The mutual fund will have a fund manager that trades the pooled money on a regular basis.4 A fund manager, who using his investment management skills and necessary research works ensures much better return than what an investor can manage on his own. The capital appreciation and other incomes earned from these investments are passed on to the investors (also known as unit holders) in proportion of the number of units they own.
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When an investor subscribes for the units of a mutual fund, he becomes part owner of the assets of the fund in the same proportion as his contribution amount put up with the corpus (the total amount of the fund). Mutual Fund investor is also known as a mutual fund shareholder or a unit holder. Any change in the value of the investments made into capital market instruments (such as shares, debentures etc) is reflected in the Net Asset Value (NAV) of the scheme. NAV is defined as the market value of the Mutual Fund scheme's assets net of its liabilities. NAV of a scheme is calculated by dividing the market value of scheme's assets by the total number of units issued to the investors. For example: A. If the market value of the assets of a fund is Rs. 100,000 B. The total number of units issued to the investors is equal to 10,000. C. Then the NAV of this scheme = (A)/(B), i.e. 100,000/10,000 or 10.00 D. Now if an investor 'X' owns 5 units of this scheme E. Then his total contribution to the fund is Rs. 50 (i.e. Number of units held multiplied by the NAV of the scheme)

DEFINITIONS OF MUTUAL FUNDS: SEBI (Mutual Funds) Regulation 1993, defines Mutual Funds as, a fund established in the form of a Trust by a sponsor to raise money by Trustees through the sale of units to the public under one or more schemes for investing in securities in accordance with these regulations. As per The Mutual Fund Factbook published by the Investment Company institute of the U.S A Mutual Fund is a financial service Organization that receives money from shareholders, invests it, earns return on it, attempts to make it grow and agrees the shareholders cash on demand for the current value of his investment (Mutual Fund Factbook 1940).

IMPORTANT CHARACTERISTICS OF MUTUAL FUNDS:1.It belongs to the investors 2.It is managed by investment professionals 3.It is invested in a portfolio of marketable investments 4.The investors share in fund is denominated by units 5.The investment portfolio is created according to the stated investment objective

TYPES OF MUTUAL FUNDS

Mutual fund schemes may be classified on the basis of its structure and its investment objective.

BY STRUCTURE:
Open ended funds- An open-ended Mutual fund is one that is available for

subscription and repurchase on a continuous basis. These Funds do not have a fixed maturity period. Investors can conveniently buy and sell units at Net Asset Value (NAV) related prices which are declared on a daily basis. The key feature of open-end schemes is liquidity
Close ended fund- A close-ended Mutual fund has a stipulated maturity period e.g. 5-

7 years. The fund is open for subscription only during a specified period at the time of launch of the scheme. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where the units 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 stipulate that at least one of the two exit routes is provided to the investor i.e. either repurchase facility or through listing on stock exchanges. These mutual funds schemes disclose NAV generally on weekly basis.

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.

2. BY INVESTMENT OBJECTIVE: A scheme can also be classified as growth fund, income fund, or balanced fund considering its investment objective. Such schemes may be open-ended or close-ended schemes as described earlier. Such schemes may be classified mainly as follows:

Growth funds- The aim of growth funds is to provide capital appreciation over the medium

to long- term. Such schemes normally invest a major part of their corpus in equities. Such funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Growth schemes are good for investors having a long-term outlook seeking appreciation over a period of time.

Income funds- Income funds are named appropriately: their purpose is to provide current income on a steady basis. When referring to mutual funds, the terms "fixed-income," "bond," and "income" are synonymous. These terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady cash flow to investors. As such, the audience for these funds consists of conservative investors and retirees. Bond funds are likely to pay higher returns than certificates of deposit and money market investments, but bond funds aren't without risk. Because there are many different types of bonds, bond funds can vary dramatically depending on where they invest. For example, a fund specializing in high-yield junk bonds is much more risky than a fund that invests in government securities. Furthermore, nearly all bond funds are subject to interest rate risk, which means that if rates go up the value of the fund goes down

Balance funds- The objective of these funds is to provide a balanced mixture of safety, income and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income. The weighting might also be restricted to a specified maximum or minimum for each asset class. A similar type of fund is known as an asset allocation fund. Objectives are similar to those of a balanced fund, but these kinds of funds typically do not have to hold a specified percentage of any asset class. The portfolio manager is therefore given freedom to switch the ratio of asset classes as the economy moves through the business cycle

Money market funds- These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest exclusively in safer short-term instruments such as treasury bills, certificates of deposit, commercial paper and inter-bank call money, government securities, etc. Returns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. Gilt Fund- These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to change in interest rates and other economic factors as is the case with income or debt oriented schemes Load Funds- A Load Fund is one that charges a commission for entry or exit. That is, each time you buy or sell units in the fund, a commission will be payable. Typically entry and exit loads range from 1% to 2%. It could be worth paying the load, if the fund has a good performance history. No-Load Funds- A No-Load Fund is one that does not charge a commission for entry or exit. That is, no commission is payable on purchase or sale of units in the fund. The advantage of a no load fund is that the entire corpus is put to work. OTHER SCHEMES: Tax Saving Schemes- These schemes offer tax rebates to the investors under specific provisions of the Indian Income Tax laws as the Government offers tax incentives for investment in specified avenues. Investments made in Equity Linked Savings Schemes (ELSS) and Pension Schemes are allowed as deduction u/s 88 of the Income Tax Act, 1961. The Act also provides opportunities to investors to save capital gains u/s 54EA and 54EB by investing in Mutual Funds. 4.SPECIALSCHEMES. Industry Specific Schemes- Industry Specific Schemes invest only in the industries specified in the offer document. The investment of these funds is limited to specific industries like InfoTech, FMCG and Pharmaceuticals etc.

Index schemes- Index Funds replicate the portfolio of a particular index such as the BSE Sensitive index, S&P NSE 50 index (Nifty), etc These schemes invest in the securities in the same weightage comprising of an index. NAVs of such schemes would rise or fall in accordance with the rise or fall in the index, though not exactly by the same percentage due to some factors known as "tracking error" in technical terms. Necessary disclosures in this regard are made in the offer document of the mutual fund scheme. There are also exchange traded index funds launched by the mutual funds which are traded on the stock exchanges. Sectoral Schemes- Sectoral Funds are those, which invest exclusively in a specified industry or a group of industries or various segments such as 'A' Group shares or initial public offerings.5

ADVANTAGES OF MUTUAL FUNDS: Since their creation, mutual funds have been a popular investment vehicle for investors. It is because their simplicity along with other attributes provides great benefit to investors with limited knowledge, time, or money. Diversification One rule of investing that both large and small investors should follow is asset diversification. Diversification involves the mixing of investments within a portfolio and is used to manage risk. For example, by choosing to buy stocks in the retail sector and offsetting them with stocks in the industrial sector, one can reduce the impact of the performance of any one security on the entire portfolio. To achieve a truly diversified portfolio, one may have to buy stocks with different capitalizations from different industries and bonds with varying maturities from different issuers. For the individual investor, this can be quite costly. By purchasing mutual funds, an individual is provided with the immediate benefit of instant diversification and asset allocation without the large amounts of cash needed to create individual portfolios. One caveat, however, is that simply purchasing one mutual fund might not give you adequate diversification - check to see if the fund is sector or industry specific.

www.sharemarketbasics.com/Mutual-Funds/Mutual-Fund-Types.htm

For example, investing in an oil and energy mutual fund might spread your money over fifty companies, but if energy prices fall, your portfolio will likely suffer. Economies of Scale The easiest way to understand economies of scale is by thinking about volume discounts; in many stores the more of one product you buy, the cheaper that product becomes. For example, when you buy a dozen donuts, the price per donut is usually cheaper than buying a single one. This occurs also in the purchase and sale of securities. If you buy only one security at a time, the transaction fees will be relatively large Mutual funds are able to take advantage of their buying and selling size and thereby reduce transaction costs for investors. When you buy a mutual fund, you are able to diversify without the numerous commission charges. Imagine if you had to buy the 10-20 stocks needed for diversification. The commission charges alone would eat up a good chunk of your savings. Add to this the fact that you would have to pay more transaction fees every time you wanted to modify your portfolio - as you can see the costs begin to add up. With mutual funds, you can make transactions on a much larger scale for less money. Divisibility Many investors don't have the exact sums of money to buy round lots of securities. One to two hundred dollars is usually not enough to buy a round lot of a stock, especially after deducting commissions. Investors can purchase mutual funds in smaller denominations, ranging from $100 to $1,000 minimums. Smaller denominations of mutual funds provide mutual fund investors the ability to make periodic investments through monthly purchase plans while taking advantage of dollar-cost averaging. So, rather than having to wait until you have enough money to buy higher-cost investments, you can get in right away with mutual funds. Liquidity Another advantage of mutual funds is the ability to get in and out with relative ease. In general, you are able to sell your mutual funds in a short period of time without there being much difference between the sale price and the most current market value. However, it is important to watch out for any fees associated with selling, including back-end load fees. Also, unlike stocks and exchange-traded funds (ETFs), which trade any time during market This provides an additional advantage liquidity.

hours, mutual funds mutual funds transact only once per day after the fund's net asset value (NAV )is calculated. Professional Management When you buy a mutual fund, you are also choosing a professional money manager. This manager will use the money that you invest to buy and sell stocks that he or she has carefully researched. Therefore, rather than having to thoroughly research every investment before you decide to buy or sell, you have a mutualfund's money manager to handle it for you.

Tax benefit Investment in mutual funds also enjoys several tax advantages. Dividends from Mutual Funds are tax-free in the hands of the investor (This however depends upon changes in Finance Act). Also Capital Gain accrued from Mutual Fund investment for a period of over one year is treated as long term capital appreciation and is tax free. Less Risk Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities. Choice of schemes Mutual funds provide investors with various schemes with different investment objectives. Investors have the option of investing in a scheme having a correlation between its investment objectives and their own financial goals. These schemes further have different plans/options Transparency Funds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator. Safety

Funds provide investors with updated information pertaining to the markets and the schemes. All material facts are disclosed to investors as required by the regulator.6

DISADVANTAGES OF MUTUAL FUNDS: Like many investments, mutual funds offer advantages and disadvantages, which are important for one to consider and understand before investment. Here are some of the drawbacks of mutual funds: Fluctuating Returns Mutual funds are like many other investments without a guaranteed return: there is always the possibility that the value of your mutual fund will depreciate. Unlike fixed-income products, such as bonds and Treasury bills, mutual funds experience price fluctuations along with the stocks that make up the fund. When deciding on a particular fund to buy, you need to research the risks involved - just because a professional manager is looking after the fund, that doesn't mean the performance will be stellar. Another important thing to know is that mutual funds are not guaranteed by the government, so in the case of dissolution, you won't get anything back. This is especially important for investors in money market funds. Diversification Although diversification is one of the keys to successful investing, many mutual fund investors tend to over diversify. The idea of diversification is to reduce the risks associated with holding a single security; over diversification (also known as diworsification) occurs when investors acquire many funds that are highly related and, as a result, don't get the risk reducing
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benefits

of

diversification.

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At the other extreme, just because you own mutual funds doesn't mean you are automatically diversified. For example, a fund that invests only in a particular industry or region is still relatively Cash, Cash and More CashAs you know already, mutual funds pool money from thousands of investors, so everyday investors are putting money into the fund as well as withdrawing investments. To maintain liquidity and the capacity to accommodate withdrawals, funds typically have to keep a large portion of their portfolios as cash. Having ample cash is great for liquidity, but money sitting around as cash is not working for you and thus is not very advantageous. Costs Mutual funds provide investors with professional management, but it comes at a cost. Funds will typically have a range of different fees that reduce the overall payout. In mutual funds, the fees are classified into two categories: shareholder fees and annual operating fees. The shareholder fees, in the forms of loads and redemption fees, are paid directly by shareholders purchasing or selling the funds. The annual fund operating fees are charged as an annual percentage - usually ranging from 1-3%. These fees are assessed to mutual fund investors regardless of the performance of the fund. As you can imagine, in years when the fund doesn't make money, these fees only magnify losses. Misleading AdvertisementsThe misleading advertisements of different funds can guide investors down the wrong path. Some funds may be incorrectly labelled as growth funds, while others are classified as small cap or income funds. The Securities and Exchange Commission (SEC) requires that funds have at least 80% of assets in the particular type of investment implied in their names. How the remaining assets are invested is up to the fund manager. However, the different categories that qualify for the required 80% of the assets may be vague and wide-ranging. A fund can therefore manipulate prospective investors by using names that are attractive and misleading. Instead of labelling itself a small cap, a fund may be sold as a "growth fund". Or, the "Congo High-Tech Fund" could be sold with the title "International High-Tech Fund". risky.

Evaluating FundsAnother disadvantage of mutual funds is the difficulty they pose for investors interested in researching and evaluating the different funds. Unlike stocks, mutual funds do not offer investors the opportunity to compare the P/E ratio, sales growth, earnings per share, etc. A mutual fund's net asset value gives investors the total value of the fund's portfolio less liabilities, but how do you know if one fund is better than another? Furthermore, advertisements, rankings and ratings issued by fund companies only describe past performance. Always note that mutual fund descriptions/advertisements always include the tagline "past results are not indicative of future returns". Be sure not to pick funds only because they have performed well in the past - yesterday's big winners may be today's big losers.7

REVEIW OF LITERATURE:
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Pollara Inc (2006). largest Canadian public opinion and marketing research firm, conducted the study on Canadian investors perception about mutual funds and mutual fund industry and the major findings was that of the five investment vehicles tested (mutual funds, GICs, bonds, stocks, and real estate), mutual funds rank second only to real estate in terms of investors confidence in their ability to meet their financial goals. Even with the currently strong real estate market, investors confidence in mutual funds is not far behind real estate. In total, 88% of investors are at least somewhat confident in real estate, compared to 85% who are similarly confident in mutual funds. Mutual fund investors show less confidence in term deposits (71%), bonds (63%) and stocks (54%). While more than half of investors are confident in each type of investment, only 3% to 19% of investors report feeling confident this reflects a cautious optimism among investors in general about all of the products tested.8 Rajeswari. T.R and Ramamoorthy (2001), conducted An Empirical Study on Factors Influencing the Mutual Fund/Scheme Selection by Retail Investors and find that at the retail level, investors are unique and are a highly heterogeneous group. Hence, their fund/scheme selection also widely differs. Investors demand inter-temporal wealth shifting as he or she progresses through the life cycle. This necessitates the Asset Management Companies (AMCs) to understand the fund/scheme selection/switching behaviour of the investors to design suitable products to meet the changing financial needs of the investors. With this background a survey was conducted among 350 Mutual Fund Investors in 10 Urban and Semi Urban centres to study the factors influencing the fund/scheme selection behaviour of Retail Investors.9 Jambodekar (1996) conducted a study to assess the awareness of MFs among investors, to identify the information sources influencing the buying decision and the factors influencing the choice of a particular fund. The study reveals among other things that Income Schemes and Open Ended Schemes are more preferred than Growth Schemes and Close Ended Schemes during the then prevalent market conditions. Investors look for safety of Principal, Liquidity and Capital appreciation in the order of importance; Newspapers and Magazines are the first source of information through which investors get to know about MFs/Schemes and
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www.anbid.com.br/.../Fundos/Congressos%20IIFA%20de%20fundos/.../Canadian %20Investors%20perceptions%20of%20mutual%20...
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investor service is a major differentiating factor in the selection of Mutual Fund Schemes. Sikidar and Amrit (1996) carried out a survey with an objective to understand the behavioural aspects of the investors of the North Eastern region towards equity and mutual funds investment portfolio. The survey revealed that the salaried and self employed formed the major investors in mutual fund primarily due to tax concessions. UTI and SBI schemes were popular in that part of the country then and other funds had not proved to be a big hit during the time when survey was done.

DR GURSHARAN SINGH KAINTH after doing study on Mutual Fund Industry in India: Investor's Perception came to know that 70%of the investors has invested both in mutual funds as well as stock market directly. It implies that investors have retained safe positions by investing directly in stock market too. The confidence level of the investors in the stock market and mutual funds is almost the same. Nearly 66% of the investors demonstrated moderate confidence level in the stock market investment. On the other hand, nearly 70% of the investors demonstrated moderate confidence level in mutual funds. Nearly 20% of the investors demonstrated high level of the confidence in opting both the stock market as well as mutual funds. It implies that investors are ready to invest their money which promise high returns. Further 60 per cent of the investors invested 20 to 40 per cent of their total investment in mutual funds. Nearly 10% of the investors invested more than 50 per cent as well as less than 10 per cent of the total investment in mutual funds. Different investors have different reasons as per their judgment and assessment.10 Sharad Panwar and Dr. R. Madhumathi did a study on CHARACTERISTICS AND PERFORMANCE EVALUATION OF SELECTED MUTUAL FUNDS IN INDIA. In their study they used sample of public-sector sponsored & private-sector sponsored mutual funds of varied net assets to investigate the differences in characteristics of assets held, portfolio diversification, and Variable effects of diversification on investment performance for the period May, 2002 to May,2005. The study found that public-sector sponsored funds do not differ significantly from private-sector sponsored funds in terms of mean returns.

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However, there is a significant difference between public-sector sponsored mutual funds and private-sector sponsored mutual funds in terms of average standard deviation, average variance and average coefficient of variation(COV).The study also found that there is a statistical difference between sponsorship classes in terms of e-SDAR(excess standard deviation adjusted returns)as a performance measure. When residual variance (RV) is used as the measure of mutual fund portfolio diversification characteristic, there is a statistical difference between public-sector sponsored mutual funds and private-sector sponsored mutual funds for the study period. The model built on testing the impact of diversification on fund performance and found a statistical difference among sponsorship classes when residual variance is used as a measure of portfolio diversification and excess standard deviation adjusted returns as a performance measure. RV, however, has a direct impact on Sharpe fund performance measure.11 Kamlesh Khosla in How Good Are Mutual Funds concluded that: Research indicates that the Indian mutual fund industry has changed from massive to an extremely competitive structure, where many players are involved. Despite the entry of threedozen new mutual fund organisations, the UTI has been named the best. Nearly 80 per cent of the UTI respondents regarded the scheme as reasonably safe. However, in future, whether it will continue to be so, is not certain. Joint venture mutual funds currently account for bulk of industry's net mobilisation of funds, while diversification of investment among several mutual funds has become a norm. Income schemes account for approximately one-half of the assets, while the place of equity schemes in mutual fund industries is low at present. The growth of mutual funds and net mobilisation of savings rose steeply in the early nineties but soon the industry started facing a slowdown. The prolonged market depression since 1995 meant losses for investors in mutual fund equity schemes so the interest of investors waned. The author points out that instead of relying on tax concessions and incentives, which the government gave to the mutual fund industry, value for investors should be created through services.12 Bala Ramasamy, Matthew C.H. Yeung in their study on Evaluating mutual funds in an emerging market: factors that matter to financial advisors. Concluded that:

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http://unpan1.un.org/intradoc/groups/public/documents/APCITY/UNPAN025795.pdf www.tribuneindia.com/2002/20020901/spectrum/book4

Growth, both in terms of size and choice, in the mutual fund industry among emerging markets has been impressive. However, mutual fund research in emerging markets hardly exists.In particular, the research surveys the relative importance of factors considered important in the selection of mutual funds by financial advisors in emerging markets. Their study focuses on Malaysia where the mutual industry started in the 1950s but only gained importance in the 1980s with the establishment of a government initiated programme. The results of their survey point to three important factors which dominate the choice of mutual funds. These are consistent past performance, size of funds and costs of transaction. Factors which relate to fund managers and investment style are not considered to be relatively important. With the impending liberalization of the financial markets in the developing world, their findings would assist those international funds that are considering expanding their operations into these emerging markets.13

OBJECTIVES OF THE STUDY:

1. To know the savings objectives of investors. 2. To identify the preferred savings avenues among individual investors. 3. To assess Mutual fund conceptual awareness among present investors. 4. To assess the funds or scheme preference of the different investors. 5. To know the fund qualities that would affect the selection of Mutual funds. 6. To understand that which fund sponsor qualities influencing the selection of MFs/Schemes. 7. To identify the information sources influencing the scheme selection decision of investors. 8. To identify the most popular Mutual Funds among individual investors.

13

www.emeraldinsight.com

RESEARCH METHODOLOGY OF THE STUDY: The study chiefly done to know the perception of different investors towards Mutual funds. The area of the survey was Amritsar and Chandigarh city. The data required was collected with the help of a questionnaire administered on a combination of simple random and judgement sample of 100 educated individual investors. Judgement sample selection is due to the time and financial constraints. Respondents were screened and judgement was purely on the basis of their knowledge about Financial Markets, especially in Mutual Funds. This was necessary, because the questionnaire presumed awareness of some basic terminology about Mutual Funds. The survey was conducted during March-April 2009, Among 100 educated persons of city of Chandigarh and Amritsar. 23 Respondents were from the Amritsar city and 77 Respondents were from the city of Chandigarh. Sample of the questionnaire is given in Annexure.

Limitations of the Study:

1. Sample size was limited to 100 respondents in the city of Chandigarh and Amritsar. The sample size may not adequately represent the national market. 2. Simple Random and judgement sampling techniques are used because of limited time period. 3. This study has not been conducted over a longer period of time having both ups and downs of stock market conditions which could lead to significant influence on investor s buying pattern and preferences.

FINDINGS OF THE STUDY:

The survey conducted during March-April2009, in Chandigarh and Amritsar, to know the perceptions of investors towards mutual funds and results were following: 1. Annual income of different Respondents:

The above graph represents that among the respondents major share was of the people with annual income from Rs 1,00,000-Rs 3,00,000 group followed by Rs 3,00,000-Rs 5,00,000 and so on. 2. Saving Capacity of individual Investors: In the study it was also tried to know that how much investors save their income and the results were:

The graph showed that 69% of the respondents save from Rs50,000 to Rs 1,00,000 annually 15% save less than Rs50,000 and 16% save more than Rs1,00,000 in a year.

3. Savings Objective of Individual Investors: It was tried to find out in the study that what the main motive of different investors is, For what reason they wanted to save their money rather than spending it. The different options given to the Respondents were To provide for Retirement For Tax Reduction To meet Contingencies For Childrens Education For purchase of Assets

The results were as follows:

Savings Objective favoured by majority of Investors was to provide for Retirement i.e by 57% followed by Tax reduction , For purchase of Assets, To meet Contingencies and by 6% For Childrens Education thus throwing light on the nature of risk averse investors. AMC can attract a pool of investors by designing products for Risk-Averse investors. 4. Savings Instrument Preference among Individual Investors: Savings Instrument Preference among Individual Investors provides an insight into the investment attitude of investors, which

will influence the policy formation for garnering the individual savings. The study reveals that Mutual Funds are the most popular savings instrument among individual investors followed by Real estate, Pension and Provident Fund, Bank deposits, Shares, Life insurance, Gold and Currency. Total 8 choices were given to the respondents and the Mutual funds was selected by most of the respondents. 5. Current Attitude of Individual Investors towards the Following Financial Instruments, In the Indian Capital Market: Every asset class has different characteristics. Stocks have the potential to provide high total returns with proportionate level of risk. The attitude of every individual investor may be influenced by their investment goals, risk tolerance, time horizon, personal circumstances or performance aspect of the asset class. The Financial instruments i.e. Shares, Debentures and Mutual Funds were rated on a 5-point scale. Shares were rated as Favourable Debentures were rated in the Somewhat Favourable category. Whereas Mutual Funds were rated as Highly Favourable instrument. The MF industry has evolved in many aspects i.e. product innovation, distribution reach, investor education or leveraging technology for enhancing service standards. As Mutual Fund is an ideal vehicle for both Debt and Equity products i.e why it is elected by most of the respondents. 6. Mutual Fund Scheme Preference among Individual Investor Investors have surplus options ranging from Growth schemes to Fixed Income schemes. Now-a-days investors are not offered just plain vanilla schemes but an assorted basket to tune with their risk appetite. MF scheme preference for majority of investors is Growth Scheme . The preference for growth or any other scheme is also influenced by stock market conditions prevailing at the time of investment decision. The prevailing market conditions have prompted investors to look for growth schemes followed by income schemes, Tax saving schemes, balanced schemes, Index schemes and Money market schemes. This further indicates the growing alertness of investors.

7. Scheme Preference by Operation among Individual Investors:

Analysis of scheme preference by nature of operation reveals the popularity of OpenEnded scheme. In India majority of schemes are Open- Ended as investors can buy or sell units at NAV related prices. The preference to Open- Ended scheme has also given due importance to Liquidity . On the other hand,32% of the respondents have opted for close ended schemes and only 23% of the respondents have voted for Interval Schemes which shows lack of awareness with regard to these features. 8. Preferential Feature in Mutual Funds among Individual Investors The study also shows the investors choose Mutual Funds because of tax benefits as opted by 43% of the respondents followed by diversification benefit(21%), Professional Management(15%),liquidity(9%),safety(7%)and capital appreciation by only 5%.

9. Mutual Fund Investment Preference in Future:

The study shows that, there is a fair opportunity for the Mutual Fund investments in future as 42% of the respondents have voted towards Yes . However, 38% have voted No and 20% as Not Sure as their preference infuture MF investment. However, the No and Not Sure category should be matter of concern to the AMCs. There must be ample reasons for 58% (38 + 20; No and Not Sure category) of the investors to have posed a negative approach towards MFs. Firstly, AMCs should take steps and see that funds are not virtually at the mercy of institutional investors. MFs should not indulge in unethical practices and launch schemes that benefit institutional investors at the cost of retail investors. Also, the AMCs should try and tap the NRI market, as they can diversify from Bank Deposits to MFs. The main task at hand for the AMCs is to tackle investor sentiments with greater transparency and credibility in the functioning. 10.Various variables that effect selection of mutual funds: Respondents were asked to rate different variables on a 5-point scale which could affect their fund selection and the results were: a) Fund Performance record- The respondent rated this variable as Highly important variable. b) Fund reputation or brand name- the respondents rated this variable as just important. c) Entry/Exit load- The respondents rated this as highly important variable
d) Area/portfolio of investment- Respondents rated this variable also as highly important

variable.

e) Reputation of the fund manager/Scheme- Respondents rated this variable as not very important variable. f) Withdrawal facilities-Respondents rated this variable as just important variable. g) Favourable Rating by Rating agencies- The respondent considered this variable as not very important variable. h) Innovativeness of the Schemes- The respondents rated it as just important variable i) Products with Tax Benefits- In the view of respondents this variable seems to be of much importance i.e why they have rated it as Highly important variable.
j) Condition of Minimum initial investment- The respondents also Feel this variable of

very high importance to them. Few investor related services that could also affect the selection of Mutual Funds: a) Disclosure of investment objective in the Advertisement- This variable is just important for the Respondents. b) Disclosure of NAV on every Trading Day- It is considered highly important factor by the Respondents. c) Disclosure of the method and the periodicity of the schemes sales and repurchases in the offer Document-This is also considered as Highly Important variable by the respondents. d) Disclosure of deviation of investments from the original pattern- this variable is Highly important for the respondents. e) Mutual Funds investors Grievance redressal Machinery: In the view point of the respondents this variable is of Somewhat Importance. 11. Source of information regarding Mutual Fund Investments among Individual Investors: Investors may use some sources to gain awareness regarding investing in Mutual Funds. The sources in the study are confined to Reference groups, Newspapers General & Business, Financial Magazines, Television, Brokers/ Agents, E-Mail etc. Findings of the study reveal that investors attach high priority to information provided through Television. 48% of the respondents feel that they get information through Television followed by Reference groups 20%, Financial Magazines 13%, Brokers/Agents by 10% and from Newspapers General & Business by 9%. None of the other sources were mentioned by any of the respondents.

12. Top-of-Mind-Recall of Mutual Funds/Schemes among Individual Investors: Top-Of-Mind Recall throws light on the strength of brand identity, awareness, acceptability and preference of Mutual Funds in India. This calls for a high degree of brand equity and loyalty, which is the direct result of the promotion strategy of the AMCs and a good performance over a period of time. Mutual Funds are no more just financial instruments, rather a product or a service, which should be tailor-made to attract and retain investors. AMCs should realize that it is not just the USPs (Unique Selling Propositions) that count, but the ESPs (Extra Sensory Perceptions), which will help to track, gauge and deliver satisfaction to the targeted investor groups. Top-Of-Mind Recall test of Mutual Funds was administered in the questionnaire, which was distributed to 100 respondents during the study. This study yielded superlative results where 16 registered Mutual Funds (not schemes) were recalled by the investors, UTI being most promptly remembered among the investors. It is mystifying to know that out of 37 registered Mutual Funds, 16 Mutual Funds were recalled, in a few moments of time spent by the investor in filling up the questionnaire.

SUMMARY,SUGGESTIONS AND CONCLUSION.

The study was done to know investors perceptions towards mutual funds with special reference to the city of Chandigarh and Amritsar with 100 respondents. For this study Review of some studies was done which are as follows: Pollara Inc (2006). conducted the study on Canadian investors perception about mutual funds and mutual fund industry

Rajeswari. T.R and Ramamoorthy (2001), conducted An Empirical Study on Factors Influencing the Mutual Fund/Scheme Selection by Retail Investors Jambodekar (1996) conducted a study to assess the awareness of MFs among investors, Sikidar and Amrit (1996) the behavioural aspects of the investors of the North Eastern region towards equity and mutual funds investment portfolio DR GURSHARAN SINGH KAINTH after doing study on Mutual Fund Industry in India: Investor's Perception Sharad Panwar and Dr. R. Madhumathi did a study on CHARACTERISTICS AND PERFORMANCE EVALUATION OF SELECTED MUTUAL FUNDS IN INDIA. Kamlesh Khosla in How Good Are Mutual Funds Bala Ramasamy, Matthew C.H. Yeung in their study on Evaluating mutual funds in an emerging market: factors that matter to financial advisors. The respondents of these surveys considered investment mutual funds favourable especially in case of emerging markets. The major investors in the mutual funds are salaried people and self employed people because of tax benefits and due to some other reasons like using the professional judgment of the fund manager, which diversifies the risk takes advantage of volume buying, expertise and so on. These studies also revealed that Income Schemes and Open Ended Schemes are more preferred than Growth Schemes and Close Ended Schemes. On the basis of these studies certain objectives were ascertained which are as follows: 9. To know the savings objectives of investors. 10.To identify the preferred savings avenues among individual investors. 11.To assess Mutual fund conceptual awareness among present investors. 12.To assess the funds or scheme preference of the different investors. 13.To know the fund qualities that would affect the selection of Mutual funds. 14.To understand that which fund sponsor qualities influencing the selection of MFs/Schemes. 15.To identify the information sources influencing the scheme selection decision of investors. 16.To identify the most popular Mutual Funds among individual investors.

On the basis of these objectives a research methodology was formed to undertake the study which is as follows: The study chiefly done to know the perception of different investors towards Mutual funds. The area of the survey was Amritsar and Chandigarh city. The data required was collected with the help of a questionnaire administered on a combination of simple random and judgement sample of 100 educated individual investors. Judgement sample selection is due to the time and financial constraints. Respondents were screened and judgement was purely on the basis of their knowledge about Financial Markets, especially in Mutual Funds. This was necessary, because the questionnaire presumed awareness of some basic terminology about Mutual Funds. The survey was conducted during March-April 2009, Among 100 educated persons of city of Chandigarh and Amritsar. 23 Respondents were from the Amritsar city and 77 Respondents were from the city of Chandigarh. On the basis of the survey various suggestions are drawn: 1. As the major investments come from the savings which is found to be low in case of investors in India so AMCs must not Charge high Entry/Exit charges as it will reduce their investment and could lead to investment in other avenues as they consider Entry/Exit charges to be low. 2. More of the new schemes opening for subscription must be Open-ended because the investors need for liquidity is found to be high. 3. AMCs should continuously design suitable schemes to meet the multiple needs of tax benefits, Diversification, liquidity, safety and adequate returns in a balanced proportion to fulfil the needs of the investors. They should also simplify the operational environment. AMCs should open more investor service branches or arrange with other banks to provide over-the-counter redemption facility across the country through their banking network. 4. Mutual fund companies should segment their target customers and position their various products based on the target segment they propose to address. The target segment can be broadly divided into institutional segment and individual investor segment. The institutional segment consisted of treasury departments of Corporate, Trusts etc and suitable products such as Institutional Income schemes and Money Market schemes can be targeted at them. The individual investor can be in turn divided into various segments such as Young Families with small or no children,

Middle-aged People saving for retirement and Retired People looking for steady income. Suitable products such as Growth and Balanced schemes for young families and Income schemes with sure and steady returns for retired people can be marketed. By proper segmentation and by targeting the right product to the right customer, Mutual Fund companies can hope to win the confidence of their customers and 'own' them for a lifetime. 5. The mutual fund industry in India is constrained by law from offering full-fledged pension plans on the lines of the 401 K plans, a popular Mutual Fund product available in the United States. Funds like UTI and Kothari Pioneer are some of the mutual funds offering full-fledged Pension Plans with benefit under Section 88. While UTI offers Retirement Benefit Plan, Kothari Pioneer Mutual Fund offers KP Pension Plan. Retirement schemes similar to 401K plan will attract a large number of small investors who seek regular income after retirement. 6. The projected average life span of an Indian after retirement (i.e, after 60) is expected to go up from 15 years to 20 years. And the number of others (those over 60) is expected to increase significantly from 6.8 per cent of the population in 1991 to 8.9 per cent in 2016 and further to 13.3 per cent by 2026. One of the key recommendations of the expert committee of Project OASIS (Old Age Social and Income Security) constituted by the government on pension reforms in 1999 is the creation of a privately managed, individual choice based, voluntary Pension system. Pension funds are likely to be a big driver for the MF industry. So AMCs must launch more schemes for Voluntary Pension system. 7. AMC/AMFI/SPONSORS should effectively convey the message that among the multitude of investment options available, MFs are better geared to offer the balanced mix of return, safety and liquidity to the investors. Negative perceptions about MFs require to be tackled through appropriate investor education measures. AMC/AMFI/SPONSORS should develop investor education literature specially tailored to suit the regional needs to increase the awareness level of the investors. 8. E-commerce is gradually showing signs of gaining acceptance and electronic trading of financial products is especially gaining volumes. Therefore AMCs should establish friendlier and easily accessible Automated Response Systems . These systems should not only effectively convey information on products and services but also efficiently redress investor grievances.

9. Funds should also induce technology that reduces the turnaround time for services like investments, redemptions and transfers and bring them on par with banks in turnaround time.

SUGGESTIONS FOR FURTHER RESEARCH: Continuous developments in technology influence the behaviour of investors towards different investment areas. Hence, the impact of technology on financial behaviour is another potential area for close study. The Mutual Funds operational environment is becoming more competitive. Hence, the impact of emerging competition on investors behavioural changes needs to be studied further. Further research can be done to identify whether Mutual Fund investors chase past returns or employ a current performance momentum to invest their funds. CONCLUSION OF THE STUDY: THE emergence of a range of savings and investment options and the impressive increase in the secondary market for financial assets in the recent years in India has opened up an entirely new area of value creation and management. An investor is a starter when it comes to financial markets, the causes may be many: the lack of opportunity, lack of conceptual understanding and the influence of a fixed-income orientation in the Indian culture. Salaried person's savings are mostly invested in mutual funds; the theory behind this is that by pooling together a huge aggregation of individual savings and investing them, using the professional judgment of the fund manager, one spreads risk, takes advantage of volume buying ,expertise and so on. Therefore it is seen as the ideal option for an individual who does not have the time, knowledge or experience to make a succession of judgments involving his hard-earned savings. Mutual Funds industry in India has a large untouched market in urban areas besides the unexposed markets in semi-urban and rural areas. This market prospects can be exploited by judging investor behaviour to identify their expectations and clear investor's own situation and risk preference and then apply to an investment strategy that combines the usual four: cash and equivalents, Government-backed bonds, debt, and equity. Presently, more and more funds are entering the industry and their survival depends on strategic marketing choices of

mutual fund companies, to survive and thrive in this highly promising industry, in the face of such aggressive competition. In addition, the availability of more savings instruments with varied risk-return combination would make the investors more alert and choosy. Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investor. Under such a situation, the present exploratory study is an attempt to understand the financial behaviour of Mutual Fund investors in connection with scheme preference and selection. Studies if conducted on a large scale at regular intervals by organizations like AMFI/SEBI, will help capture the changing perceptions and responses of these groups, and thus provide early warning signals to enable implementation of timely corrective measures.

BIBLIOGRAPHY
Http://www.mutualfundsresource.com/mutualfunds http://www.imutualfundsinvest.com/history-of-mutual-funds http://www.appuonline.com/mf/knowledge/industry.html

 www.sgprivatebanking.com www.sharemarketbasics.com/mutual-funds/mutual-fund-types.html www.indiastudychannel.com www.anbid.com.br/.../fundos/congressos%20iifa%20de%20fundos/.../canadian

%20investors%20perceptions%20of%20mutual
www.utiicm.com/cmc/pdfs/2001/rajeswari.pdf www.amazines.com http://unpan1.un.org/intradoc/groups/public/documents/apcity/unpan025795.pdf www.tribuneindia.com/2002/20020901/spectrum/book4 www.emeraldinsight.com www.mutualfundsindia.com www.amfiindia.com www.finance.indiamart.com/markets/mutual_funds

ANNEXURE

Respondents Information (100 Respondents): Sex: Male:-76 Female:-24

Age: Below 25yrs :- 7 respondents 26-40yrs :- 57

41-60 yrs:- 36 Qualification: Graduates:-22 Post-Graduate:-71 Professional Degree:-7 Marital StatusMarried:-95 Unmarried:-5 OccupationProfession :- 7 Business:- 26 Salaried:- 67

QUESTIONNAIRE

Dear Sir / Madam, I am currently engaged in a study on Investors perception towards Mutual Funds. In this connection I request You to read the following items carefully and answer them. The answers your give will be held confidential and used purely for academic purpose only. Please put a tick mark in the box corresponding your choice. I thank you for your time.

Annual Income in Rs: Below Rs 1,00,000 Rs 3, 00,0005, 00,000 Above Rs 5, 00,000 How much do you save annually in Rs: Less than Rs 50,000 Above Rs 1,00,000 Rs 50,001 to Rs 1,00,000 Rs1, 00,000 3, 00,000

Objective of your savings: To provide for Retirement For tax reduction To meet contingencies For purchase of assets For children s education

What is your current preference of savings avenue? (Rank from 1 first preference to 8 last preference) Currency Life Insurance Shares Real Estate Pension & Provident Fund Bank Deposit

Units of UTI & Mutual funds Gold

What is your current attitude towards the following Financial Instruments, in the Indian Capital Market? Highly Favourable a) Shares Favourable Some what favourable Not very favourable Not at all favourable

b) Debentures c) Mutual Funds

Generally you prefer (Please Rank from 1 first preference to 6 last preference) Growth schemes Balanced Schemes Tax saving Schemes Income Schemes Index Schemes Money Market Schemes

Generally You prefer (please tick in the box): Open ended Schemes Interval Schemes Close Ended Schemes

You prefer investment in Mutual funds due to: Safety Tax Benefit Diversification Benefit Professional Management Liquidity Capital appreciation

Do you prefer investment in Mutual funds to other savings avenue in future? Yes No Not sure

Of the various variables given below that could affect your selection of Mutual funds and its Specific Schemes. Please indicate importance of the following in your decision: Fund Related Qualities a) Funds past performance record Highly Important Important Some what Important Not very Important Not at all Important

b) Funds reputation or brand name c) Entry/ Exit load

d) Area/ Portfolio of investment e) Reputation of the Fund Manager/Scheme f) Withdrawal facilities g) Favourable rating by a rating agencies h) Innovativeness of the scheme i) Products with tax benefits j) Condition of Minimum initial investment

Investor related Services a)Disclosure of investment objective in the advertisement b) Disclosure of NAV on every trading day c) Disclosure of the method and the periodicity of the schemes sales and repurchases in the offer documents d) Disclosure of deviation of investment from the original pattern e)MFs Investors Grievance redressal machinery

Highly Important

Important

Somewhat Important

Not very Important

Not at all Important

How did you come to know about Mutual fund investment schemes? Reference groups Financial Magazines Brokers / Agents Newspapers Television Mail

Other_________________________________________________________

Please recall a few Mutual funds existing in the Indian Capital Market at present: 1)_________________________________________________________________________ _ 2)_________________________________________________________________________ _ 3)_________________________________________________________________________ _ 4)_________________________________________________________________________ _ Personal Data: Name :_______________________________________________________________ Sex : Male Age : Below 25 26 40 41 60 Above 60 Academic Qualification: School Graduate Post Graduate Professional Degree Female

Marital Status: Married Unmarried

Occupation: Professional Business Salaried Retired

General Information About Birla Sun Life Mutual Fund

Birla Sun Life Mutual Fund Asset Management Company Birla Sun Life Mutual Fund was setup on December 24, 1994. The sponsors of Birla Mutual Fund are Birla Global Finance Limited and Sun Life (India) AMC Investments Inc. Sun Life Financial Group of Companies is a financial services organization headquartered in Toronto, Canada. The AMC of Birla Sun Life Mutual Fund is Birla Sun Life Asset Management Company Limited which was incorporated on September 5, 1994. Recently Birla Mutual Fund crossed AUM of Rs. 10,000 crores. Since its inception in 1994, Birla Sun Life Mutual fund has emerged as one of India's leading mutual funds managing assets of a large investor base. The fund offers a range of investment options, which include diversified and sector specific equity schemes, fund of fund schemes, hybrid and monthly income funds, a wide range of debt and treasury products and offshore funds. BSLAMC follows a long-term, fundamental research based approach to investment. The approach is to identify companies, which have excellent growth prospects and strong fundamentals. The fundamentals include the quality of the companys management, sustainability of its business model and its competitive position, amongst other factors. Birla Sun Life Asset Management Company has one of the largest team of research analysts in the industry, dedicated to tracking down the best companies to invest in. BSLAMC strives to provide transparent, ethical and research-based investments and wealth management services. About Sun Life Financial Inc . Sun Life Financial Inc. is a leading international financial services organizationproviding a diverse range of wealth accumulation and protection products andservices to individuals and corporate customers. Tracing its roots back to 1865,Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Hong-Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of 31December 2004, the Sun Life Financial group of companies had total assetsunder management of USD 299 billion. Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol "SLF". On the other side it is Birla group of companies which is known for its diversified business and Indias largest business group. Birla Sun Life Mutual fund is joint venture of Birla & Sun Life Financial Inc.