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INTRODUCTION India is one of the few countries in the world, which has the

credit of maintaining in study growth in domestic savings during 1970s, and 80s. One significant aspect of India saving structure is increasing share of household sector in domestic savings. It is interesting to know the structural changes in savings sector are not matched by new financial instruments and institutions to canalize the savings for more productive purposes and better returns to the investors. Traditional savings media like bank deposits, insurance, provident fund and pension fund remained dominant. Investment in the capital market is also significantly low 1% of the population in India puts its savings in the capital market as against 10% in Industrialized Countries. Therefore there was a need for new instruments to mobilize the growing savings with higher returns. The Mutual funds in India is response to the demand and a tip towards financial innovation and integration. The Indian economy in the recent times has passed through revolutionary changes. The impact of economic reforms in the form of Liberalization, Privatization and Globalization (LPG) has significantly influenced the growth of Indian financial system, and led to the rapid growth of economic in the 21st century. It has also significantly influenced the growth of capital markets; as well create a demand for newer capital market instruments and financial services. Expansion and diversification of capital markets has also generated

Complexities in capital markets operations which very often cannot be understood by small investors. Mutual funds are a response to this problem. Though Mutual funds took the world capital market by storm in 1980s their entry dates back to 1924, when the first Mutual fund was established in USA. At present the US Mutual fund industry is managing assets worth over $7 trillion (Rs 308 lac crores) and with more than 8,000 odd schemes by the end of 2000. It is to say that all most every second household owns some of them. That is how US Mutual fund industry has become the most powerful force in the US investment landscape. Contrary through this the Indian Mutual fund industry is at a relatively slow pace. On June 30, 2004, Indian Mutual funds commanded assets of Rs. 121778 crores 8% of the retail deposits of scheduled commercial banks. In the US, mutual funds over took bank deposits some years ago. MUTUAL FUND CONCEPT: A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme. These could range from shares to debentures to money market instruments. The income earned through these investments and the capital

appreciations realized by the scheme are shared by its unit holders in

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proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. The small savings of all the investors are put together to increase the buying power and hire a professional manager to invest and monitor the money. Anybody with an ingestible surplus of as little as a few thousand rupees can invest in Mutual Funds. Each Mutual Fund scheme has a defined investment objective and strategy.

MANAGEMENT OF MUTUAL FUNDS: In Western Countries like U.K., U.S.A. Mutual Funds are operated by financial institutions, investment corporations and brokerage houses, though banks are not legally allowed to operate Mutual Funds themselves, they offer the opportunities to their customers to invest through affiliated with mutual fund companies. In India the largest mutual fund company, UTI was set up under public sector and nationalized commercial banks also were allowed to set up Mutual Funds as separate trusts. Apart from this other financial institutions like LIC, GIC, ICICI, and HDFC have also put up mutual funds. From 1993 Government has permitted private sector Mutual funds as a part of financial sector reforms. Mutual funds are managed by professional managers of high quality and expertise, who can devise the tailor, made scheme to suit the needs of the cross section of investors. In order to minimize the risk of investment and to earn higher rates of investment. MF investment is diversified in several
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instruments after careful market research by the professionals. Managers of the mutual funds keep a constant watch on various vital aspects of economy particularly in the areas of Industry, Trade, and Capital Market etc. Mutual Funds are thus able to provide their investors safety, liquidity and yield through diversification, professional management and special financial services. Mutual funds may offer one or more funds (schemes) depending upon the objectives. Mutual funds sell shares/units usually of a specified denomination called face value say Rs. 10/- or Rs. 100/-. Mutual funds specify the minimum amount to be invested and units offered to the investors directly or through agent brokers or identified agencies.

SIGNIFICANCE AND IMPORTANCE OF MFs: The advantages of MFs can be listed as under:
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Diversification: MFs invest in a number of companies. This diversification reduces the risk because all stocks decline at the same time and in the same proportion. This diversification through a MF with far less money than he can do on his own. Return Potential: MFs have the potential to provide a higher return as they invest in a diversified basket of selected securities over a medium to long-term. The service of experienced and skilled professionals are backed by a dedicated investment research team which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives of the scheme.

Convenient administration:

MFs save time and make investing in a MF reduces paper work and solves many problems such as bad deliveries delayed payments and unnecessary follow up with brokers and companies. Low Costs: Investing directly into the capital market involves huge amounts, when compared to MF as the brokerage, custodial and other fees translate into lower costs for investors. Liquid: In open ended schemes, one can get his money back at NAV related prices from the MF, close-ended schemes; one can sell his units in a stock exchange at the prevailing market price. Choice of Schemes: To suit the investors with different needs over a lifetime MFs offer a variety of schemes to suit the investors. Transparency: The investor gets regular information on the value of investment in addition to disclosures on the specific investments made by the scheme.

Flexibility:

The investor can invest or withdraw funds according to his needs and convenience with systematic investment plans withdrawal plans and dividends reinvestment plans. Well Regulated: MFs are registered with SEBI and function within the provisions of strict regulations designed to protect the interests of investors. operations of MFs are regularly monitored by SEBI. The

Need and Importance of study:

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In the recent past years due to heavy population growth and high income of the people, they are very much interested to invest their money. in investment industry which is for investments. a vital role. The liberalization policy adopted by the government lead to tremendous growth The investor decision regarding to the investment would be crucial. In that time the company play

Objectives of the Study: This study is undertaken to analyze the alternatives for small investors used for their decision making with respect to the Mahindra Finance, Warangal.

To know the investor interest to invest in Mahindra Finance company. To identify the factors influencing in investment of the investors. To know the investor alternatives regarding investment. To know the investor satisfaction regarding the investment. To study the company-investors alternatives with respect to the offers of the Mahindra finance company. Investor satisfaction about the with respect to the Brand name, service, clarity etc.

Methodology:
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Research design: For the purpose of the study, both primary and secondary data has been collected following the observational method and survey research method collects the primary data. While taking personal interviews of the investor the observational method was used. The survey research method is used to gain insight knowledge about the opinions of the investors towards the Mahindra Finance. The main research instrument used for collecting the required data is a well structured questionnaire. An investor towards the Mahindra Finance and administered to the same. Sample Design: For ascertaining the investor alternatives towards the Mahindra Finance 100 investors have been randomly selected from various parts the Andhra Districts. The technique of sampling adopted in this is convenient random sampling. The researcher has taken necessary steps to avoid any bias while collecting the data. Limitations: The study covers the Hyderabad district only and due to the limited sample size, the facts revealed in the study may not generalize. The analysis based on what investors option at the time of the survey. The study may not produce the same findings if done at a later stage of time. While filling the questionnaire investors could not provide 100% accurate information because of their personal limitations. The study tries to know the investors alternatives but it was not possible to focus on all the issues.

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INDUSTRY PROFILE
A MF is a trust that pools the thirty savings of varied investors who share a common financial goal. The funds thus collected are invested by the fund manger in different types of financial instruments like shares, securities, bonds etc. available in capital market depending upon the objectives of the scheme. 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 on prorate basis. Thus A MF is the most suitable investment for the common man as it offers an opportunity to invest in a diversified and professionally managed portfolio at a relevant low cost. Any individual with an investable surplus of as little as few thousand rupees can invest in MFs. Each MF scheme has a defined investment objective and strategy. A MF is the ideal investment vehicle for todays complex word. Markets for equity shares, bonds and other fixed income instruments, real estates, derivatives and other assets have become matured and information drive price changes in these assets are driven by global events occurring in far away places. A typical individual is unlikely to have the knowledge, skills, and inclination and acts speedily. It is difficult to keep trace of ownership of assets investments, brokerage dues and bank transitions etc. A MF is the answer for all the situations. It appoints professionally qualified and experienced staff that manages each of these functions on a full time basis. The present day fund mangers are thoroughly professionally, highly market oriented and quiet aggressive in strategy formulations. The large pool of money collected by the funds allows it to hire such personnel at a very low cost to each investor. In other words MF vehicle exploits economy of scale in all three areas of Research, Investments and Transaction processing.
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COMPANY PROFILE
We at Mahindra Finance are all-encompassing of clients needs. So while we believe in making assets easily available, we also believe in catering to those who want to create wealth from these assets. Our Investment Advisory Services act as an avenue to help create and multiply wealth. Mutual Fund Distribution Recently we have received the necessary permission from Reserve Bank of India (RBI) to start the distribution of Mutual Fund products through our network. Hitherto we were only participating in the liability requirements of our customers but with a mutual fund distribution business, we can also participate in their asset allocation. When it comes to investing, everyone has unique needs based on their own objectives and risk profile. While many investment avenues such as fixed deposits, bonds etc. exist, it is usually seen that equities typically outperform these investments, over a longer period of time. Hence we are of the opinion that, systematic investment in equity allows one to create substantial wealth. However, investing in equity is not as simple as investing in bonds or bank deposits, because only proper allocation of portfolio gives maximum returns with moderate risk, and this requires expertise and time. Our Investment Advisory Services help you invest your money in equity through different Mutual Fund Schemes. We ensure the best for our clients by identifying products best suited to individual needs.

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What we offer
Personalized Service We believe in providing personalized service and individual attention to each client to ensure that we understand their investment goals and help them achieve it. Professional Advice

We offer expert advice on equity and debt portfolios with an objective to provide consistent long-term return while taking calculated market risks. Our approach helps our clients build a proper mix of products, and not concentrate on just one individual product. Hence, serving their long-term objectives in the best way. Long-term Relationship

We believe that long-term vision is the only means to steady wealth creation. However to achieve this one also needs to take advantage of shortterm market opportunities while not loosing sight of long-term objectives. Hence we partner all our clients in realising their long-term vision. Access to Research Reports

We provide our clients with access to the expert opinion of economists and Personalised Service We believe in providing personalised service and individual attention to each client to ensure that we understand their investment goals and help them achieve it.

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Professional Advice We offer expert advice on equity and debt portfolios with an objective to provide consistent long-term return while taking calculated market risks. Our approach helps our clients build a proper mix of products, and not concentrate on just one individual product. Hence, serving their long-term objectives in the best way. Long-term Relationship

We believe that long-term vision is the only means to steady wealth creation. However to achieve this one also needs to take advantage of shortterm market opportunities while not loosing sight of long-term objectives. Hence we partner all our clients in realising their long-term vision. Access to Research Reports

We provide our clients with access to the expert opinion of economists and analysts from CRISIL, one of the leading financial research and rating companies of India. This is because; we believe that unbiased research is the key to providing sound advice in making informed investment decisions. TransparencyandConfidentiality Our clients receive regular portfolio statements from us via email. They can also view the detailed performance of their investment portfolio on the web, the access to which is restricted to the client only. Moreover, our monitoring system enables us to detect any unauthorized access to the portfolio.

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Flexibility To facilitate smooth dealing and consistent attention, all our clients are serviced by their individual Relationship Executives. Relationship Executives provide you with completely hassle-free, customised services taking care of all the administrative aspects of your investments. This includes submission of application forms to fund houses and a monthly report on the overall performance of your investment portfolio. Hassle-free investment

We want to ensure that the process of investing remains hassle-free. We also want to offer complete customised service to our clients. It is for these reasons that our Relationship Executives take care of all the administrative aspects of investments like helping them to submit the application forms to fund houses and other such formalities like monthly reports on the overall state of investments of the clients and performance of portfolios. Our clients also enjoy: At Mahindra Finance, we pride ourselves on having pioneered rural finance in India. We have grown with each passing year, met targets, exceeded expectations and in the process created wealth for our shareholders. Here we have a dedicated section of up-to-date information, from our financials to our events and presentationseasy access to information, at the click of a button. Much like most of our quick and simple processes at Mahindra Finance.

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At Mahindra Finance we have a wide range of products and services, with something to suit everyones needs. Right from finance for two wheelers, tractors, farm equipment, cars and utility vehicles to commercial vehicles and construction equipment, we also have a group of experts providing investment advice, surveying available market products and choosing the most suitable to our customers needs. Vision: Our vision is to be the leading rural finance company and continue to retain the leadership position for mahindra products.

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Management Images MR. ANAND G. MAHINDRA Chairman of Mahindra Finance, Mr. Anand G. Mahindra graduated from Harvard College, Cambridge, Massachusetts, Magna cum Laude (High Honours). In 1981 he secured an MBA degree from the Harvard Business School, Boston, Massachusetts. He returned to India that year and joined Mahindra Ugine Steel Company Ltd (MUSCO), the countrys foremost producer of specialty steels, as Executive Assistant to the Finance Director. In 1989 he was appointed President and Deputy Managing Director of the company. MR. BHARAT N. DOSHI Vice Chairman, Bharat Doshi joined the Company in 1973 as an Executive. He is a fellow member of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India and has a Master's Degree in Law from the University of Bombay. He has participated in the Program for Management Development (PMD) at Harvard Business School. He was also a Fellow of the Salzburg Seminar on 'Asian Economies: Regional and Global Relationships' held in December2000. MR. UDAY PHADKE Director, Mr. Uday Phadke joined the Company in 1973. He is a member of the Institute of Chartered Accountants of India and the Institute of Company Secretaries of India and has a Bachelors degree in Commerce and Law. He has attended the General Management Course for Senior Executives conducted by the Administrative Staff of College of India (ASCI) and a course for Senior Executives organized by the International Institute for Management Development (IMD)
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in

Lausanne,

Switzerland.

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MR. RAMESH IYER Mr. Ramesh Iyer is the Managing Director of Mahindra & Mahindra Financial Services Limited (MMFSL), which is in the business of financial services for the last 15 years. Mr. Iyer has been associated with MMFSL fromitsinception. MR. V. RAVI V Ravi is the Chief Financial Officer of Mahindra & Mahindra Financial Services Limited (MMFSL), the Company which is in the business of financial services for the last 15 years. Mr. Ravi has been associated with MMFSL from its inception.

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WHY MUTUAL FUNDS? MFs can survive and thrive if they can live up to the hopes and trust of their individual members. MFs come to the rescue of those people who do not excel at stock market due to certain mistakes; they commit which can be minimized with MFs. Such mistakes can be viz, lack of sound investment strategies, unreasonable expectations of making money, untimely decisions of investing or Disinvesting, acting on the advise given by others, putting all their eggs in one basket, that is failure to diversify. Mutual funds are characterized by many advantages that they share with other forms of investments and what they posses uniquely for themselves. The primary objectives of an investment proposal would fit into one or combination of the two broad categories, i.e., income and capital gains. How mutual fund is expected to be over and above an individual in achieving these two said objectives is what attracts investors to opt for mutual funds. Mutual fund route offer several important benefits. Some of these are. BENEFITS OF MUTUAL FUNDS: Professional Management: Making investments is not a full time assignment of investors. So they can hardly have a professional attitude toward their investment. When investor buys mutual fund scheme, an essential benefit one acquires is expert management of the money he puts in the fund. High Value Diversification: A sound investment policy is based on the principle of diversification which is ideal of not putting all the eggs in one basket. By investing in
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many companies the mutual funds can protect themselves from unexpected drop in value of some shares. The small investor cannot achieve wide diversification on his own because of many reasons, mainly funds at his disposal. Mutual funds on the other hand, pool funds of lakhs of investors and thus can participate in a large basket of shares of many different companies. Easy Liquidity: A distinct advantage of a mutual fund over other investments is that there is always a market for its units/shares. Moreover, Securities and Exchange Boards of India (SEBI) require that mutual funds in India have to ensure liquidity. Mutual fund units can be sold in the share market as SEBI has made it obligatory for close-ended schemes to list themselves on stock exchanges. For open-ended schemes, investor can always approach the fund for repurchase at Net Asset Value (NAV) of the scheme. Reduced Risks: Risk in investment is as to recovery of the principal amount and return of it. Mutual fund investments on both fronts provide a comfortable situation for investors. The expert supervision, diversification and liquidity of units ensured in mutual funds minimize the risk. Investment Protection: Besides depending on the expert supervision of fund managers, regulatory body like SEBI in India and Securities Exchange Commission (SEC) in U.S.A. also provide for the safety for their regulation. These agencies act as watchdogs and attempt wholeheartedly to safeguard investor interests.
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Switching: Mutual Funds provide investors flexible investment opportunities. Mutual funds family allows investors to switch over from one fund to another e.g. investors can switch from income scheme to growth scheme or vice-versa or say from close ended scheme to open ended schemes as the investors opt. Tax Benefit: Many schemes of mutual funds provide tax shelter. Like in India for equity-linked schemes of mutual funds, under section 88, tax rebate up to twenty per cent of investment (up to Rs. 10,000) is available. Under Section80L income form mutual funds dividends along with other specified incomes; up to Rs. 10,000 is exempted from tax. Such provisions vary from country to country. Low Operating Costs: Mutual Funds having large investable funds at their disposal avail economies of scale. The brokerage fee or trading commission may be reduced substantially. The reduced operating costs obviously increases the income available for investors. Investing in securities through mutual funds has many advantages over organizing a personnel portfolio. Other advantages include the option to reinvest dividends, strong possibility of capital appreciation, regular returns, etc. Mutual funds are also relevant in national interest. The test of their economic efficiency as financial intermediary lies in the extent to which they are able to mobilize additional savings and channel sing to more productive sectors of the economy.
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PRODUCTS OF MUTUTAL FUNDS: Products of mutual funds refer to the schemes they offer to investors. Investors are to choose as per their objectives of earnings. Mutual funds adopt different strategies to achieve these objectives and accordingly offer different schemes of investments. Schemes can be grouped into following classifications. I. Operational Classification: a) Open Ended Schemes: Such schemes accept funds from investors by offering its units on a continuing basis. Such fund even stands ready to buy its securities at any time. It implies that the capitalization of the fund is constantly changing as investors sell or buy their shares or units (shares in U.S.A, units in India). Further, these shares or units are normally not traded on the stock exchange. Open-ended schemes have comparatively better liquidity despite the fact that these are not listed. The reason is that investor can any time approach Mutual fund for sale of such units. No intermediaries are required. Moreover, the realizable amount is certain since repurchase is at a price based on declared net asset value. No minute-to-minute fluctuations in rates haunt the investors. In such funds, option to reinvest its divided is also available.

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b) Close Ended Schemes: Such schemes have a definite period after which their units are redeemed. Unlink open-ended funds, these funds have fixed capitalization, i.e. their corpus normally does not change throughout its tenure. While open-ended funds are repurchased or sold directly by mutual funds on the basis of NAV, the close ended fund units trade among the investors in the secondary market since they are to be quoted on stock exchanges. Their price is determined on the basis of demand and supply in the market. Their price is free to deviate from the NAV, i.e. there is every possibility that market price may be above or below its NAV. From management point of view, managing close-ended scheme is comparatively easy since fund managers can evolve and adopt long term investment strategies depending on the life of the scheme. Need for liquidity arises after comparatively longer period, i.e. normally at the time of redemption. c) Interval Scheme: It is basically a close ended scheme with a peculiar feature that every year for a specific period (interval) it is made open. Prior to and after such specific interval the scheme operates as close ended. During the said period mutual fund is ready to buy or sell the units directly from or to the investors. In India as per SEBI (MF) regulations every mutual fund is free to launch any or both types of schemes including interval scheme. In the USA, UK and Canada close-ended funds are popular as investment companies/ trust whereas open-ended funds are known as mutual funds. Such distraction is not made in Indian context. In those countries mutual funds are more popular than investment companies. Till 1994 mid, in India also close ended funds have been popular but later on investors preference for open-ended funds forced mutual funds to change their market product.
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II. Return-Based Classification: To meet the diversified needs of investors, the mutual fund schemes are designed accordingly. Basically, all investments are made to earn good returns. Returns expected are in the form of regular dividends or capital appreciation ore combination of these two. In the light of this fact, mutual fund schemes can also be classified on the basis of returns. a) Income Funds: For investors who are more curious for regular returns, Income funds are floated. Their object is to maximize current income. Such funds distribute periodically the income earned by them. These funds can further be spitted up into two categories: those that target constant income at relatively low risk and those; that attempt to achieve the maximum income possible, even with the use of leverage. Obviously the higher the expected return, the higher the potential risk to the investment. b) Growth Funds: Such funds aim at appreciation in the value of the underlying investments through capital appreciation. Such funds invest in growth oriented securities which can appreciate in long run. Growth funds are also known as Nest eggs or long haul investments. An investor who selects such fund should be able to assume a higher than normal degree of risk.

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c) Conservative Fund: The funds with a philosophy of all things to an issue offer document announcing objectives as: (1) to provide a reasonable rate of return, (2) to protect the value of investment and, (3) to achieve capital appreciation consistent with the fulfillment of the first two objectives. Such funds which offer a blend of all these features are known as conservative fund. These are also known as middle of the road funds. Such funds divide their portfolio in common stocks and bonds in a way to achieve the desired objectives. Such funds have been most popular and appeal to the investors who want both growth and income. Be splitted up into two categories: those that target constant income at relatively low risk and those; that attempt to achieve the maximum income possible, even with the use of leverage. Obviously the higher the expected return, the higher the potential risk to the investment. III. Balanced Fund: The funds which have in their portfolio a reasonable mix of equity and bonds are known as balanced funds. Such funds will put more emphasis on equity share investments when the outlook is bright and will tend to switch to debentures when the future is expected to be poor for shares, majority of funds fall in this category, of course, their mix proportion varies. IV. Sector-based Classification: There are number of funds that direct investing in a specified sector of an economy. While such funds do have the disadvantage of low diversification by putting all their eggs in one basket, the policy of specializing has the advantage of developing in the fund managers an intensive knowledge of the specific sector in which they are investing. The specialized sectors can be (i) gold and silver, (ii) real estate, (iii) specific
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industry say oil and gas companies, (iv) off-shore investments, etc. There can also be funds of funds i.e. mutual funds investing in units of other mutual funds only. CONSTITUTION OF MUTUAL FUNDS: In the USA and UK, mutual funds and the unit trusts are governed by the Investment Act of 1940 in USA and by the Prevention of Frauds Act at U.K. There are normally three agencies to manage the show of mutual funds: first the Investment Adviser, second the agency collecting savings from prospective investors for a commission; and the third is a trustee which is either banking or insurance company. The investment adviser is accountable to the treeless for its operations and ultimately to the Securities Exchange Commission (SEC) in USA or to the Securities Investment Board (SIB) in UK. In India SEBI, in its regulations contemplated a four-tier system for managing the affairs of mutual funds ensuring arms length distance between the sponsor and the fund. The four constituents were the sponsoring company, the fund, the custodians and the Assets Management company. i) Sponsor: It refers to any corporate body which initiates the launching of a mutual fund. It is this agency which on its own or in collaboration with other body corporate comply the formalities of establishing a mutual fund. The sponsor should have a sound track record and experience in the relevant filed of financial services for a minimum period of 5 years. SEBI ensures that sponsors should have professional competence, financial soundness and general reputation of fairness and integrity in business transactions. Sponsor it to contribute at least 40 per cent of the net worth of the Asst Management
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Company. It is the prerogative of the sponsor to appoint trustees, Assets Management Company and custodians as per the regulations. Sponsor is normally not responsible for any loss or shortfall resulting from the operations of any scheme of the fund beyond its initial contribution towards the constitution of trust fund. ii) Trustees: A mutual fund is to be constituted as Trust under Indian Trust Act and trustees are to look after the trust. A trustee is a person who holds the property of the mutual fund in trust for the benefit of the unit holders. A company is appointed as a trustee to manage the mutual fund with prior approval of SEBI. To ensure fair dealings, atleast 75 percent of the trustees are to be independent of the sponsors. Trustees take into their custody, or under their control all the property of the schemes of mutual fund. It is the duty of the trustees to provide information to unit holders as well as to SEBI about the mutual fund schemes. The trustees are to appoint Asset Management Company (AMC) to float the schemes. The trustees are to evolve Investment Management Agreement to be entered into with AMC. It is trustees duty to observe and ensure that AMC is managing schemes in accordance with the trust deed collection of any income due to be paid to the scheme. Trustees for their services are paid trusteeship fee which is to be specified in the trust deed. Trustees are to present annual report to the investors. iii) Custodians: In a mutual fund depending on its size there is substantial work involved for managing the scripts bought from and sold in the market. Their safe custody and ready availability is to be ensured. SEBI requires that each
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mutual fund shall have a custodian who is not in any way associated with the Asset Management Company. Such custodian cannot act as sponsor or trustee of any mutual fund. Further, custodian is not permitted to act as a custodian of more than one mutual fund without the prior approval of SEBI. A custodian main assignment is safe keeping of the securities or participation in any clearing system on behalf of the client to effect deliveries of the securities. The custodian, depending on terms of agreement, also collects income/dividends on the securities. Some of other associated assignments of custodians are: Ensuring delivery of scripts only receipt of payment and payment only upon receipt of scripts Regular reconciliation of assets to accounting records. Timely resolution on discrepancies and failures. Securities are properly registered or recorded. Depending on the volume there can be co-custodian(s) for a mutual fund. These custodians are entitled to receive custodianship fee, based on the average weekly value of net assets or sale and purchase of securities along with per certificate custody charges. iv) Assets Management Company (Investment Manager): The sponsor or the trustees appoint an AMC to manage the affairs of the mutual fund. It is the AMC which operates all the schemes of the fund. Any AMC cannot act as a trustee of any other mutual fund. AMC can act as an AMC of only one mutual fund. AMC is not permitted to undertake any business activity except activities in the nature of management and advisory services to off shore funds, pension funds, provident funds, venture capital funds, management of insurance funds, financial consultancy and exchange of research on commercial basis, if these activates are not in conflict with
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the activities of the mutual fund. It can also operate as an underwriter provided it gets registered under SEBI (Merchant Bankers) Regulations. To ensure efficient management, SEBI desires that existing AMC should have a sound track record (good net worth, dividend paying capacity and profitability, etc.) general reputation and fairness in transaction. The directors of AMC should be expert in relevant fields like portfolio management, investment analysis and financial administration because any AMC is basically involved in these three activities. An AMC is expected o operate independently. SEBI regulations require that atleast fifty percent of the directors should be those who do not have any association with sponsor or trustees. Its Chairman should be an independent person. To ensure stake of sponsors in the AMC, it is required that atleast 40 percent of its net worth is contributed by the former AMC, itself should be financially sound, should have a net worth of atleast Rs. 10 crores. Functions of AMC: It is not required that AMC performs all its functions on its own. It can hire service of outside agencies as per its requirements or perform all functions on its own. Some of such agencies are: 1. Registrars and Transfer Agents may be assigned the job of receiving and processing the application forms of investors, issuing unit certificates, sending refund orders, according all transfers of units and maintaining all such records, repurchasing the units, redemption of units, issuing dividend or income warrants. For such services they are entitled to a fee which is in proportion to the number of unit-holders and number of approach

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potential investors through meetings, exhibitions, contacts advertising, publicity, and sales promotion. 2. Investment Advisory may be appointed by AMC if it can not cope up with its workload. Investment advisors analyze the market and securities and advise the AMC to design its investment strategies on a continuous basis. For their professional advice on funds investment, they are entitled to receive compensation normally based on the average weekly value of the funds net assets. Majority of Indian Mutual Funds have their own market analyses who design their investment strategies. 3. Legal Advisors are also sometimes appointed to get legal guidance about planning and execution of different schemes. A group of advocates and solicitors may be appointed as level advisors. decided. Their fee is no way associated with net assets of the fund but actual fee is paid to them as Assets Management Company is also required to have an auditor, who is not an auditor of the mutual fund, to undertake independent inspection and verification of its accounting activities. REGULATORIES ON MUTUAL FUNDS The following authorities regulate Indian Mutual Fund industry, SEBI RBI Ministry of Finance Company Act Stock Exchange

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Regulations of SEBI The primary authority for regulating Mutual Funds in India is SEBI. It requires all Mutual Funds to be registered with it. It outlined the broad framework of authorization process and selection criteria. SEBI regulations clearly states that all funds and schemes operational under them would be bound by their regulations. It has taken the following steps for the regulation of Mutual Funds, Formation Registration Documentation Code of Advertisements Assurance on returns Minimum corpus Institutionalization Investment of funds mobilized Investment in Money Markets Valuation of Assets Inspection Regulations of RBI Some of the commercial banks in public sector have set up Mutual Funds and a few are in the process of setting them up. On an examination of the operations of the Mutual Funds already functioning, it was considered necessary to issue guideline as certain important aspects as indicated
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below. It helps to orderly functioning and in the interest of ensuring investors confidence. They are,

Constitution & Management Investment objectives and policies Prudential exposure ceiling limits Pricing policy Income distribution Statement of Accounts & Disclosure Regulations of Ministry of Finance The finance ministry is the supervisor of both the SEBI and the MF is also the appellate authority under SEBI regulations. Aggrieved parties can make appeals to the MoF on the SEBI rulings relating to Mutual Funds. Regulations of Stock Exchanges If a Mutual Fund has listed its schemes on Stock Exchanges, such listings are subjected to the listing regulations of Stock Exchanges. Mutual funds have to sign the listing agreement and abide by its provisions, which primarily deal with periodic notifications and disclosure of information that may impact the trading of listed units. Regulations of Companies Act 1956 The AMC and the Trustee Company may be structured as limited companies, which come under the regulations of the Company Law Board (CLB). The provisions of the Companies Act, 1956, are applicable
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to the company form of organizations. The CLB is the apex regulatory authority for companies. CLB is also the appellate authority for all issues relating to the Companies Act. Any grievance against the AMC or the Trustee Company can be addressed to the CLB for redressal. The Registrar of Companies (ROC) oversees the compliance by the AMC and trustee Company. Periodic reports and annual accounts have to be filed by these companies with the ROC. The Department of Company Affairs (DCA) is responsible for the formulation and modification of laws relating to companies, including the Indian Companies Act. The DCA also has the powers to prosecute directors for non-compliance with provisions of the Act. Testing & Certification AMFI (Association of Mutual Funds India) in association with NSE (National Stock Exchange) has developed a self-study and testing program for Mutual Fund employees and distributors to foster professional standards in their services. This helps the Mutual Fund industry to employ trained and certified professionals in the interest of investors. Mutual Funds can adopt certification of agents and distributors on voluntary basis.

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GROWTH OF MUTUAL FUND INUSTRY IN INDIA The MF Industry in India originated in 1963 by way of establishment of Unit Trust of India (UTI) with the initiative of the Government of India and Reserve Bank of India. This has led to emergence of MFs as the most preferred investment vehicle. The Indian MF Industry has been growing but is still not big enough to make its presence felt.1 divided into four distinct phases. PHASE 1 (1964-87)- ESTABLISHMENT OF UTI: Unit Trust of India (UTI) started its operations in 1963, with the enactment of UTI Act, in the Parliament. The then finance minister Mr. T.T. krishnamacharya who piloted the bill made it clear that UTI would provide an opportunity for the middle and lower income groups to acquire without much difficulty, property in the form of share . This institution is intended to cater mainly to the needs of Individual Investors, whose means are small UTI started its operations with the premier scheme, an open ended one, Unit Scheme 1964, popularly referred as US-64 on July 1st 1964. In the very first year itself it could garner Rs. 24.67 crores. This scheme is an example of Load Fund Scheme along with CANCIGO and CANGILT. UTI came forward with a number of schemes in the first phase itself, A thorough understanding of the growth process of MF Industry in India can be broadly

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Due to the immense popularity of its US-64, UTI launched a reinvestment plan (automatic reinvestment of dividends to US-64 unit holders) in 1966-67 and in 1971. One more popular scheme, Unit Linked Insurance plan (ULIP) was launched in 1971 which provided insurance benefits besides growth of investment. PHASE II (1987-93)-ENTRY OF PUBLIC SECTOR FUNDS: The monopoly of UTI came to an end in 1987, when the Government of India amended Banking Regulation Act to enable public sector banks to start subsidiaries to do MF business. Hence 1987 marked the entry of non UTI. The declining profitability forced commercial banks, particularly public sector banks, to for new avenues of income. As such they started opening of separate departments or setting up subsidiaries to do a variety of business. One of the such new avenues of income is MF. Public sector banks started set ting up of public sector MFs. The first public sector MF is SBI mutual fund. This was launched by the Sate Bank of India capital market Ltd. In November 1987, followed by Can Bank MF in December 1987, Punjab National Bank Mutual fund in November 1989, Bank of India in June 1990, India Bank Mutual Fund in November 1989, bank of India in June 1990, and Bank of Baroda MF in October 1992. It was for the first time an insurance company i.e. LIC entered into the field of MFs followed by GIC. The LIC MF was launched in June 1989 as a trust by LIC, while GIC had sets up its MF in December 1990. General insurance Corporation of India (GIC) is the second investment institution to mobilize the savings of the country.

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During the II phase 9 MF Cos were set up by the public sector banks and 2 by the Investment Institutions i.e. LIC & GIC. The orderly growth of MF Industry to a greater extent was affected by the irregularities in securities and banking transactions popularly known as securities SCAM was unearthed in April 1992. Third Phase 1993-2003 (Entry of Private Sector Funds) : The MF Industry has seen a major growth in the last decade. The amendment of Banking Regulation act during 1987 permitting the public sector banks and financial institutions to set up MFs has bought in significant changes. The government has subsequently allowed the private sector companies to enter in to the industry. This has led to a new era in Indian MF Industry with the entry of private sector funds in 1993. It has given a wider choice to Indian investors to choose different fund families. It was also important to make note that 1993 was the year in which the first MF regulations came into being, under which MFs expect UTI, were to be registered and governed. The entry of primitive sector MFs injected certain character, changes and competitions to the MF industry. The first reason being that most of the private sector MFs had tie ups with foreign investment which facilities better research and investment analysis. The other reason being new & healthy trend created by private sector MFs providing information of NAV (Net Asset Value) more frequently for the benefit of the investor. It also led to improved discloser of necessary information to the investor for a less risky and more profitable investment decision.

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PHASE IV (SINCE FEB 2003) BIFURCATION OF UTI: In February 2003, following the repel of the Unit Trust of India act 1963, UTI was bifurcated into two separate entities. One is the specified undertaking of the UTI with assets under management (AUM) of Rs 29,835 crores as at the end of January 2003, representing broadly, the assets of Us 64 schemes, assured return on the certain other schemes. The specified undertaking of UTI, functioning under an administrator and under the rules framed by government of India does not come under the purview of the MF regulations. The second is the UTI MF, Ltd., sponsored by SBI, PNB, BOB and LIC. It is registered with SEBI and functions under the MF regulations with the bifurcation of the erstwhile UTI which had in march 2000, more than Rs 76,000 crores of assets under management and with the setting up of a UTI MF, conforming to the SEBI MF regulations and with recent mergers taking place among different private sector funds, the MF industry has entered current phase of consolidation and growth. As at the end of October 31, 2003, there were 31 funds, which manage assets of Rs.126726 crores under 386 schemes. GROWTH IN ASSETS UNDER MANAGEMENT

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ANALYSIS
Data analysis of the survey:
The study to find awareness levels of Mahindra Finance mutual fund. Hence a survey was conducted by the researcher to understand the opinion, take suggestions and to get enough feed back in the city of Warangal. The survey was conducted among 100 consumers residing in and around Warangal who belong to different segments and having different educational and occupational background. The data was collected through structure questionnaire. The following pages depict the information collected from the survey and is presented in an easy-to-understand tabular and graphs after a thorough analysis and study using statistical techniques. Each of the tables carries necessary explanation for understanding the use of the study and for gathering conclusions for the same.

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Table 1 1. MARITAL STATUS No. of Respondents 85 15 100

Status Married Unmarried Total

% 85% 15%

100 80 60 40 20 0 Married Un married

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From the above table it can be observed that 85% of the respondent married status of the Mahindra Finance Mutual Fund while 15% nos. of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.

Table 2 2. FAMILY SIZE Size 3 4 5 above Total No. of Respondents 35 47 18 100 % 35% 47% 18%

S iz e 50 40 30 20 10 0 3 4 5 a b o ve
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S iz e

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From the above table it can be observed that 47% of the respondent family size of the Mahindra Finance Mutual Fund while 35% and 18% nos. of Mahindra Finance mutual fund have implemented good promotional strategies. Remaining does not have idea about mutual funds. Table 3 3. ANNUAL INCOME OF RESPONDENTS No. of Income Respondents < 60,000 60,000 1,00,000 1,00,000 1,50,000 1,50,000 2,50,000 2,50,000 3,00,000 above Total
Incom e 40 30 20 10 0
<60,000 60,000- 100,000-150,000-250,000100,000 150,000 250,000 300,000 abov e

% 27% 30% 31% 9% 3%

27 30 31 9 3 100

Incom e

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From the above table it can be observed that the high income groups are aware of mutual fund. Because they make investments and they can bear the risk the lower income groups cannot afford to make investment and take risk. Table 4 4. SAVINGS AND INVESTMENT Savings Bank Deposits Mutual Funds Postal Deposits Life Insurance Shares Total
S aving s 70 60 50 40 30 20 10 0 B ank M utual F und s P o stal Life Insurance S hares D ep o sits D ep o sits S aving s

No. of Respondents 15 16 4 62 3 100

% 15% 16% 4% 62% 3%

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From the above table it can be observed that 62% of the respondent savings of the Mahindra Finance Mutual Fund while 16% nos. saving of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds. Table 5 5. PERCENTAGES OF SAVINGS (OR) INVESTMENT No. of Percentage % Respondents 1 10% 11 20% 21 - above Total 69 22 9 100 69% 22% 19%

Perc e nta g e 80 70 60 50 40 30 20 10 0 1 - 10 % 11 - 20% 21 - a b ov e

Pe rc e n tage

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From the above table it can be observed that 69% of the respondent percentage of the Mahindra Finance Mutual Fund while 22% and 9% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.

Table 6 6. THE INVESTMENT HORIZON No. of Horizon Respondents 1 year 1-3 years 3 years above Total 30 30 40 100

% 30% 30% 40%

Horiz on 50 40 30 20 10 0 1 y ear 1 - 3 y ears 3 y ears abov e Horiz on

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From the above table it can be observed that 40% of the respondent horizon of the Mahindra Finance Mutual Fund while 30% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.

Table 7 7. EXPECTED RETURNS Returns 1 10% 11 20% 21 - above Total

Retu rn s 60 50 40 30 20 10 0 1 -10 % 11 - 2 0 % 20 % abov e Return s

No. of Respondents 32 48 20 100

% 32% 48% 20%

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From the above table it can be observed that 48% of the respondent returns of the Mahindra Finance Mutual Fund while 32% and 20% no.s aware of Mahindra Finance mutual fund have implemented good promotional strategies. Remaining does not have idea about mutual funds.

Table 8 8. DID YOU INVEST ANY MUTUAL FUN PRODUCT

Any Invest YES NO Total No. of Respondents 25 75 100 % 25% 75%

Any Invest 80 60 40 20 0 YES NO Any Invest

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From the above table it can be observed that 75% of the respondent any mutual fund of the Mahindra Finance Mutual Fund while 25% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.

Table 9 9. IF YES WHAT THE PRODUCT

Product ICICI HDFC SBI Other (Plz Specify) Total

No.of Respondents 26 46 18 10 100

% 26% 46% 18% 10%

P ro duct 50 45 40 35 30 25 20 1 5 1 0 5 0 IC IC I HDF C SB I Other (P lz Specify)

P ro duct

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From the above table it can be observed that 46% of the respondent product of the Mahindra Finance Mutual Fund while 10% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.

Table 10 10. INVESTMENT ALLOCATION

Allocation 70% equity debt 50% equity debt 30% equity debt Total
60 50 40 30 20 10 0 A lloc ation

No.of Respondents 30% 50% 70% 53 37 10 100

% 53% 37% 10%

A lloc ation

70% equity 30% 50% equity 50% 30% equity 70% debt debt debt

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From the above table it can be observed that 53% of the respondent allocation of the Mahindra Finance Mutual Fund while 10% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.
Table 11 11. HOW WOULD YOU PREFER TO INVEST

Prefer One time to Investment Systematic Investment plan Total

Pr e f e r 100 80 60 40 20 0

No.of Respondents 19 81 100

% 19% 81%

Pr e f e r

O n e tim e to In v e s tm e n tte m a tic In v e s tm e n t Sys p la n

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From the above table it can be observed that 81% of the respondent prefers to invest of the Mahindra Finance Mutual Fund while 19% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.
Table 12 12. TIC THE REASONS FOR TAKING THE MUTUAL FUND

Reasons Tax planning Earnings Savings Other (Plz Specify) Total

No.of Respondents 8 25 63 4 100

% 8% 25% 63% 4%

Re as on s 70 60 50 40 30 20 10 0 Tax Plan ning Earn in gs Sav in gs Othe r (Plz Spe c if y )

Re as on s

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From the above table it can be observed that 63% of the respondent reasons of the Mahindra Finance Mutual Fund while 4% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.

Table 13 13. DO YOU HAVE AWARENESS MAHINDRA FINANCE (Sin smart)

Awareness Yes No Total

No. of Respondents 16 84 100

% 16% 84%

Aw are nes s 100 80 60 40 20 0 YE S NO

Aw aren es s

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From the above table it can be observed that 84% of the respondent awareness of the Mahindra Finance Mutual Fund while 16% no.s aware of Mahindra Finance mutual fund has implemented good promotional strategies. Remaining does not have idea about mutual funds.

SUMMARY

The awareness about mutual funds is their, but a common man is unable to invest because of affordability. If the approach is changed, we can see better performance in the mutual fund sector in the present and future as well. More plans that suits middle and lower class people should be introduced. Study proves that recurring deposits investors who belong to the lower income group are major migrating into systematic investment plans. Mode on investment option in mutual funds recording significant growth in the mutual funds market. From the survey it can be noticed that many of the customers are aware of mutual funds as it became a good investment option and yielding good returns. Every AMC has opportunity to capture the market by improving its promotional strategies and make customers aware of their company. Many of the customers satisfied with the returns yielded through mutual funds. There has been major shift in investment from fixed deposits to mutual funds because of its liquidity and high yielding.
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Suggestions
1. Mahindra Finance should take care to inform in detail about their products to all segments, so that it can increase its market share and thus can become a leader. 2. Along with creating awareness the company should also carry out good promotional activities like advertisements and direct interactions. 3. The company should develop and maintain a very good relationship with the customers as the competition is increasing.

4. The company should take steps to measure the effectiveness of the promotional activities and its effect on the brand image.

5. There are several other individual who are willing to invest but

waiting for the creative persuasive efforts of the agents, who are
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known as potential investors, the company should motivate the agents who are creative enough to make them customers. 6. Creating awareness about the benefits of the available products.

QUESTIONNAIRE Name Age : Phone number: Address : ( B. Unmarried ( B. 4 C. 5above ( ) ) ) :

Designation :

1. Marital Status A. Married 2. Family Size A. 3

3. Annual incomes of respondents < 60,000 60,000 1,00,000 1,00,000 -1,50,000 1,50,000 -2,50,000 2,50,000 -3,00,000above 4. Savings and Investment
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Bank deposits Mutual funds Postal deposits Life insurance Shares 5. Percentage of Savings or Investment 1-10% B.11-20% ( ) C.21above

6. The Investment horizon A. 1year 7. Expected returns A. 1-10% A. Yes A. ICICI C. SBI 10. Investment allocation 70%equity-30%debit 50%equity-50%debit 30%equity-70%debit 11. How would you prefer to invest One time to investment Systematic investment plan 12. Tick the reasons for taking the mutual fund A. Tax planning C. Savings B. Earnings D.Others (plz specify) B.11-20% B. No C.20%above 8. Did you invest in any mutual fund product 9. If yes what is the product B.HDFC D.Others (plz specify) B.1-3 years C. 3years above

( ( ( (

) ) ) )

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13. Do you have awareness Mahindra Finance (Fin smart) A. Yes B. No

14. If yes in which mutual fund you have invested Through Mahindra Finance Please Specify______________________________

BIBLIOGRAPHY
TEXT BOOKS Philip Kotler (2002), Marketing Management Prentice Hall of India, New Delhi, Eleventh Edition. C.R.Kothari (2003), Research Methodology Wishwa Prakashan , Mumbai.

WEBSITES
www.Mahindra finance .com

www.mutualfund.com www.amfiiindia.com

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