The document reviews literature on mutual funds and research methodology. It summarizes views from various sources on the concept and growth of mutual funds in India. It discusses how mutual funds pool investor funds and provide investment opportunities to small investors. It also reviews different types of mutual fund schemes and benchmarks used to evaluate fund performance.

1. REVIEW OF LITERATURE AND
RESEARCH METHODOLOGY
A. REVIEW OF LITERATURE
Review of literature helps the researcher to understand the concept
of the topic. It also provides the guideline to carry on research work in the
right direction. This is the reason why the researcher made an attempt to
review the available literature on the subject in the following manner:
According to Mr. Lalit K. Bansal1
, “A Mutual Fund is better
understood by the functions it performs and role it plays. It is a non-
depository financial intermediary. Mutual Funds are mobilizer of saving,
particularly from the small and household sector, for investments in stock
and money market. Basically, these institutions are professional fund
managers, managing funds of individuals and institutions that may not
have such high degree of expertise or may not have time sufficient to cope
up with complexities of different investment avenues, legal provisions
associated therewith and vagaries and vicissitudes of capital markets.
Mutual Funds, thus, provide an alternative to the investors who instead of
making direct investments in share of bonds through public issues or
through secondary market, subscribe to the corpus of mutual funds.
Investor can reap all the benefits of good investing through mutual funds
like enjoying growth in scrip in which he could not have otherwise
invested, holding a balanced and well-diversified portfolio, better return
1
Bansal, Lalit K.; Mutual Funds Management and Working –; Deep and Deep publications; New
Delhi; 1996; pp.24 & 26.

2. 39
due to specialized and professional management of funds etc. Mutual
funds mobilize funds by selling their own shares also known as units.
Thus, Mutual funds are investment intermediaries which pool
investors’ funds to acquire individual investments and pass on the returns
thereof to fund investors. Besides investment business, mutual funds may
also undertake, if permitted, underwriting and other merchant banking
activities.”
Speaking about the growth of Mutual Funds industry,
Mr. Amitabh Gupta2
, put his views in the words, “At present the
industry has four types of players viz.; (a) UTI, (b) Public Sector Banks,
(c) Financial institutions, and (d) the Private Sector. Of the total 36
players, 11 are in the public sector including the UTI, while the remaining
25 are in the private sector. The total assets under management of the
industry stood at Rs. 91,811 crore (as on September 30, 2001) out of
which, UTI alone accounts for Rs. 49,213 crore (53.60 per cent), while
the share of public sector funds is Rs. 7,564 crore (8.23 per cent). The
remaining resources of Rs. 35,034 crore (38.15 per cent) are with the
private sector funds. As on 30th
September 2001, the total number of
schemes offered by all the mutual funds stood at 411, of which 283 are
open-ended while the remaining 128 are closed-ended. It is estimated that
1.5 crore or nearly 9 per cent of all Indian households have invested in
units of mutual funds and there are likely to be 2.3 crore unit holders in
mutual funds.”
2
Amitabh Gupta Quoted by Bansal, Lalit K.; Mutual Funds – Management and Working; Deep and
Deep Publications; New Delhi; 1996; pp.24 & 26.

3. 40
Mr. Akhilesh Gururani3
expressed his views in the words,
“Benchmarks are independent portfolios that are not managed by any fund
manager, but are representative of the behaviour of returns from the
markets. The movement of these indices represents the movement in
prices, and therefore returns, of large, actively traded stocks in the equity
market. If an investor has invested in an index fund, the return from the
index a will have to compare with the risk and return of the equity index,
which the fund manager replicating. If the fund manager is managing an
equity portfolio, he invests only in equity, but is not an index fund;
investors may want to know how his performance compares with an
independent portfolio like the Nifty or the Sensex. These independent
portfolios, used to understand fund manager performance, are called
benchmarks.”
A. P. Kurian4
expressed his views saying about the growth of
Mutual Funds, “Worldwide, Mutual Fund or Unit Trust as it is referred to
in some parts of the world, has a long and successful history. The
popularity of Mutual Funds has increased manifold in developed financial
markets, like the United States. As at the end of March 2008, in the US
alone there were 8,064 mutual funds with total assets of about US
$ 11.734 trillion (Rs. 470 lack crores).
In India, the mutual fund industry started with the setting up of the
erstwhile Unit Trust of India in 1963. Public sector banks and financial
institutions were allowed to establish mutual funds in 1987. Since 1993,
private sector and foreign institutions were permitted to set up mutual
funds. In February 2003, following the repeal of the Unit Trust of India
3
Gururani, Akhilesh; Mutual Funds by Akhilesh; HABSG Consulting; Mumbai; 2007; p.89.
4
Kurian, A.P.; Making Mutual Funds Work for You; Association of Mutual Funds in India;
Mumbai; 2008; p.2.

4. 41
Act, 1963 the erstwhile UTI was bifurcated into two separate entities viz
the specified undertaking of the Unit Trust of India, representing broadly,
the assets of US 64 scheme, schemes with assured return and certain other
schemes and UTI Mutual Fund conforming to SEBI Mutual fund
Regulations.”
A. P. Kurian5
expressed his views saying about the role of
intermediaries in the Indian Mutual Funds industry, “From the beginning,
UTI and other mutual funds have relied extensively on intermediaries to
market their schemes to investors. It would be accurate to say that without
intermediaries, the mutual funds industry would not have achieved the
depth and breadth of coverage amongst investors that it enjoys today.
Intermediaries have played a pivotal and valuable role in popularizing the
concept of mutual funds across India. They make the forms available to
clients, explain the schemes and provide administrative and paperwork
support to investors, making it easy and convenient for the clients to
invest.
Intermediation itself has undergone a change over the past few
decades. While individual agents provided the foundation for growth in
the early years, institutional agents, distribution companies and national
brokers soon started to play an active role in promoting mutual funds.
Recently, banks, finance companies, secondary market brokers and even
post offices have also begun to market mutual funds to their existing and
potential client bases.”
5
Kurian, A.P.; AMFI Guidelines and Norms for Intermediaries; Association of Mutual Funds in
India; Mumbai; 2002; p.2.

5. 42
According to Investors India6
, “Top fund houses like SBI Mutual
Fund, Birla Sun Life, Reliance Mutual, HDFC Mutual, Sundaram BNP
Paribas Mutual and Kotak Mutual have become active in the primary
market over the past one year, according merchant bankers. Equity
offerings of companies like Mahindra Holidays, India bulls Power, Adani
Power, Vascon Engineers, ARSS Infrastructure and United Bank of India
have mutual funds holding over 3% of the issue size. Through a small
number when compared to total issue size, mutual funds form a
constituents of the Qualified Institutional Buyer (QIB) segment.
According to SEBI IPO allocation rules, 5% of the QIB segment is
reserved for mutual funds.
The average assets under management (AUM) for the mutual funds
industry as a whole rose by 51 per cent to Rs. 745,422 crore at the end of
March, 2010, from Rs. 493,634 crore in March 2009. Month-on-month,
however, the AUM showed a decline of Rs. 37, 466 crore, on account of
withdrawals by banks and corporate ahead of their financial year closing
in March 2010. In the last 12 months, the top fund houses in terms of
assets under management were the biggest gainers in the rise. While the
industry AUM grew Rs. 251,787 crore in the period, it was UTI Mutual
Fund that grew the maximum, followed by HDFC Mutual Fund, ICICI
Prudential and Reliance Mutual Fund respectively.”
On the level of performance of the fund managers and the
competition among them, Can bank Mutual Fund Chief G.A. Shenai7
says, “Fund managers believe in the competitive sharing of information.
6
Investors India – India’s leading magazine for wealth – creation; A Bajaj Capital publication;
New Delhi; 2010; p.9.
7
Shenai, G.A. Quoted by Bansal, Lalit K.; Mutual Funds – Management and Working; Deep and
Deep Publications; New Delhi; 1996; pp.90 & 91.

6. 43
This means the fund manager who identifies particularly good investment
opportunity, invests first on behalf of his fund and then shares the
information with other fund managers. The fund managers are given a
target to out perform the index, in the case of index securities, and to
show a return of 20 per cent to 25 per cent in non-index securities.”
“The Can bank Mutual Fund was a seller-when the market at its
highest- with the result that schemes which were due for redemption in
January 1995 were able to maintain their net asset values (NAVs) despite
the huge fall in market capitalization over the past six months.”
According to Amitabh Gupta8
, “There are two popular measures
of risk that can be used in performance evaluation: (a) total risk and (b)
systematic or non-diversifiable risk. The former can be measured by
standard deviation of the returns distribution while the latter can be
measured by beta. The choice of the risk measure depends on the fact
whether the evaluation is to be done from the perspective of the investor
or the portfolio manager. Note that the total risk of a portfolio can be
diversified at two stages: First at the hands of the portfolio manager and
second at the hands of the investor. Thus, the choice of a risk measure
would depend on whether the risk of the managed portfolio is diversified
at the portfolio managers’ level or at the investors’ level. In case the
portfolio is neither diversified at the hands of the fund manager nor at the
hands of the investor, the appropriate risk measure would be standard
deviation. However, in all other situations, beta would be considered to be
and appropriate measure of risk. In general, empirical studies on
8
Gupta, Amitabh; Mutual Funds in India – A Study of Investment Management; Anmol
Publications Pvt. Ltd.; New Delhi; 2002; p.21.

7. 44
performance evaluation have largely utilized both these measures of risk
i.e. standard deviation and beta.”
Nalini Prava Tripathy9
expressed her views saying about the
schemes of Mutual Fund, “Within a short span of four to five years
mutual fund operation has become an integral part of the Indian financial
scene and is poised for rapid growth in the near future. Today, there are
eight mutual funds operating various schemes tailored to meet the
diversified needs of savers. UTI has been able to register phenomenal
growth in the mid eighties. Now there are 121 mutual funds are launched
in India including UTI’s scheme attracting over Rs. 45,000 crore from
more than 3 crore investor’s accounts. Out of this closed-end schemes are
offered by mutual fund of India to issue shares for a limited period which
are traded like any other security as the period and target amounts are
definite under such schemes. Besides open-ended schemes are launched
by mutual fund under which unlimited shares are issued by investors but
these shares are not traded by any stock exchange. However, liquidity is
provided by this scheme to the investors. In addition to this offshore
mutual funds have been launched by foreign banks, some Indian banks
like SBI, Canara Bank etc, and UTI to facilitate movement of capital from
cash-rich countries to potentially high growth economics. Mutual Funds
established by leading public sector banks since 1987- SBIMF, Can bank,
Ind Bank, PNB MF and BOI MF, emerged since 1987- SBIMF, as major
players by offering bond like products with assurance of higher yields.
The latest schemes of BOI mutual fund goes to the extent of allowing
each individual investor to choose the date for receiving the income.
9
Tripathy, Nalini Prava; Mutual Funds in India: A Financial Service in Capital Market; Finance
India; 1996; pp.87 & 88.

8. 45
Besides, the bank mutual funds have also floated a few open-ended
schemes, pure growth schemes and tax saving schemes. The LIC, GIC
mutual funds offer insurance linked product providing various types of
life and general insurance benefits to the investors. Also the income
growth oriented schemes are operated by mutual fund to cater to an
investor needs for regular incomes and hence, it distributes dividend at
intervals.”
According to www.investing-in-mutual-funds.com / mutual fund
returns10
, “Calculating returns on funds with front-end loads only
involves the first year’s returns. As the load is deducted from the amount
you pay at the time you make investment in a load mutual fund, you will
have to adjust the initial NAV to reflect the load, assuming you want to do
all of your calculations with NAV rather than total amounts. This is
simply a matter of dividing the total amount you paid by the number of
shares initially purchased. This treats the load like part of your initial
investment, although the load was not actually invested.
Back-end loads are trickier, as they are paid at the time you sell
your shares and you probably don’t know exactly when you’ll sell your
shares. So the best thing to do is take a conservative approach and deduct
the back-end load from the NAV at the end of the most recent period for
which you are calculating your return. Now, don’t get carried away and
take it out and leave it out each year. If you deducted it when you
calculated your return last year, this year you need to recalculate last
year’s return without deducting the load and deduct the load from this
year’s NAV.
10
www.investing-in-mutual-funds.com / mutual fund returns.

9. 46
Funds with contingent deferred sales loads (CDSLs) are a bit easier,
as the load goes away after a fixed number of years. If you plan on
holding these funds long enough for the load to disappear, then you can
calculate your return the same way you would if they were no load funds.
If you know you’re going to sell before the fixed period ends or you’re
not sure and you want to be conservative, you should calculate your
returns using the same method used for back-end load funds. If the load
decreases each year, which is likely with a CDSL, you’ll have to
remember to adjust you calculations accordingly.
Whether you’re evaluating load or no load mutual funds, mutual
fund returns should be one of your first considerations but never your sole
consideration. Mutual fund return should always be compared on a
relative basis, preferably on a risk-adjusted basis.”
According to www.banknetindia.com11
, “The domestic mutual
funds industry (DMFI) which grew at a healthy pace of 18-19% in the last
eight years against its worldwide growth rate of 13% is all set to beat past
time records and now poised for achieving 22-23% rate of growth by end
of current fiscal.
According to a Study on ‘Indian Mutual Funds Industry’
undertaken by The Associated Chambers of Commerce and Industry of
India (ASSOCHAM), it is highlighted that IMFI which owned assets
worth around Rs. 5 lack crores until about September 2007, may end up
notching assets size of about Rs. 6 lack crores by March 2008, as it has
started expanding its penetration at smaller towns with vigorous speed.
According to the Study, Asset under Management (AUM) as
percentage of GDP in India is 4.12% as against Australia 88.22%,
11
www.banknetindia.com / banking.

10. 47
Germany 10.54%, Japan 7.57%, UK 18.81%, USA 61.27%, Canada
34.33%, France 59.63%, Hong Kong 101.085 and Brazil 19.95%.
It was observed that IMFI is in fast growth phase; competition is
becoming fierce with mergers and takeovers and building of brand
exercise through focused advertising, better customer service, newer
distribution channels, consistent return and newer products offerings. The
mutual funds industry which witnessed downfall in 1991 when it’s
declined to Rs. 4100 crore achieved significant growth in 1998 and the
total industry became worth Rs. 72,000 crores and ever since this has kept
increasing, revealing its efficient growth. In fact, the months of February
and March considered toughest due to large-scale redemptions to meet tax
liabilities also were active.
In March 2006, mutual funds were net buyers worth Rs. 4,041.88
crore, gross purchases being Rs. 14889.15 crore and gross sales Rs.
10847.27 crore making March the most active month for the mutual funds
industry in India. May of year 2005 was considered the most active month
when mutual funds were net buyers of worth Rs. 3,334.99 crore.”
According to Workbook for NISM – Series – V – A12
, “The
institutional channels have had their limitations in reaching out deep into
the hinterland of the country. A disproportionate share of mutual fund
collections has tended to come from corporate and institutional investors,
rather than retail individuals for whose benefit the mutual funds industry
exists.
Stock exchanges, on the other hand, have managed to ride on the
equity cult in the country and the power of communication networks to
12
Workbook for NISM – Series – V – A: Mutual Fund Distributors Certification Examination;
National Institute of Securities Markets; Mumbai; 2010; pp.141 & 142.

11. 48
establish a cost-effective all-India network of brokers and trading
terminals. This has been a successful initiative in the high-volume low-
margin model of doing business, which is more appropriate and beneficial
for the country.
Over the last few months, SEBI has facilitated buying and selling
of mutual fund units through the stock exchanges. Both NSE and BSE
have developed mutual funds transaction engines for the purpose. The
underlying premise is that the low cost and deeper reach of the stock
exchange network can increase the role of retail investors in mutual funds,
and take the mutual funds industry into its next wave of growth.”
According to www.PersonalFN.com13
, “The year 2010 would
continue to bring in reforms in the mutual funds industry, making every
initiative pro-investor. Also, many new players are likely to enter the
mutual funds space, thus leading to an increase in the product offering to
mutual funds investors. The potential for growth will come from inherent
strengths and sustained interest by foreign and domestic funds as well as
the common investor. However, the challenges will come from
maintaining the interest of all the participants in the market. Increasing
Assets under Management (AUM) will also be a major challenge, since
there is no incentive for the distributor to promote mutual funds. Also
after April 1, 2011, when the Direct Tax Code (DTC), come into effect,
mutual fund companies and investors would be very watchful on the tax
implication of various mutual funds.”
According to Indian Institute of Banking & Finance14
, “Mutual
funds offer a wide variety of services to the unit holders. Redemption of
13
www.PersonalFN.com / How to Select Winning Mutual Funds.
14
Mutual Funds Products and Services; Indian Institute of Banking & Finance; Mumbai; 2007; p.61.

12. 49
units within 24-48 hours, toll-free telephone numbers, cheque-writing
facilities against the mutual funds account, switching between accounts /
plans / options are some of the services. Mutual funds also provide a wide
range of services on net. There are funds, which have extended the facility
of buying / switching / redeeming units on-line. In case of on-line
transactions investors need not worry about filling up application forms,
drawing cheques / making demand drafts, depositing warrants as all the
financial transactions are completely automatic at the click of the mouse
by the investors. Mutual funds units can also be held in demat form.
Extensive investor’s education, performance communications, financial
planning details are also given on website.”
Mr. Sundar Sankaran15
expressed his views in the words, “The
offer document is a key document that provides essential information
about the scheme to help investors make informed decisions about
whether to purchase the units being offered. Minimum disclosure
requirements are set out in SEBI’s standard offer document (form-NS).
Besides, SEBI has also laid down certain “Standard Observations” that
need to be incorporated in the offer document. The standard offer
document prescribes the “nature of the disclosures” but not the “layout or
the language”, except that items I (cover page), II (definitions) and III
(risk factors) must appear in the same numerical order in the offer
document. Here again, the mutual fund may include Item III as a part of
Item I. A mutual fund is free to add any other disclosure provided such
information is not presented in an “incomplete, inaccurate or misleading
15
Sankaran, Sundar; Indian Mutual Funds Handbook; Vision Books Pvt. Ltd.; New Delhi; 2010;
p.175.

13. 50
manner.” In the case of closed-end schemes, the offer document is issued
only once when launched.
Since open-end schemes sell units on an ongoing basis, mutual
funds have to revise and update the offer document of such schemes
regularly. A revised offer document needs to be printed at least once in
two years. Any change before the revised offer document is printed can be
incorporated through an addendum giving details of the change and
attached to the offer document. The addendum also needs to be sent to all
unit-holders, as also distributors / brokers so that it can be attached to the
existing offer documents.”
According to Workbook for NISM – Series – V – A16
,
“Dematerialization is a process whereby an investor’s holding of
Investments in physical form (paper), is converted into a digital record.
Benefit of holding investments in demat form is that investors’ purchase
and sale of investments get automatically added or subtracted from their
investment demat account, without having to execute cumbersome
paperwork. Settlement of most transactions in the stock exchange needs to
be compulsorily done in demat form.
The benefits of demat facility for mutual fund investors has
increased, with National Stock Exchange (NSE) and Bombay Stock
Exchange (BSE) making available screen-based platforms for purchase
and sale of mutual fund schemes.
The demat facility is typically initiated by the mutual funds, which
would tie up with a Depository like National Securities Depository Ltd.
(NSDL) or Central Depository Securities Ltd (CSDL). On the basis of this
16
Workbook for NISM – Series – V – A: Mutual Fund Distributors Certification Examination;
National Institute of Securities Markets; Mumbai; 2010; p.200.

14. 51
tie up, investors can go to a Depository Participant (which is generally a
bank or a broking house) and demat their investment holding i.e. convert
their physical units into demat units. In order to avail of this facility, the
Depository Participant (DP) will insist on the investor opening a demat
account. Usual KYC documentation will be required.
On dematerialization, the investor’s unit-holding will be added to
his / her demat account. As and when the investor sells the unit holding,
the relevant number of units will be reduced from the investor’s demat
account.”
According to SBI Funds Management17
, “A Systematic
Investment Plan (SIP) lets you invest in small amounts in mutual funds on
a regular basis. It gives you a lot of flexibility and is a very convenient
way of building a large corpus over a period time. In mutual fund
terminology, SIP allows the investors to invest a fixed amount every
month or quarter for purchasing additional units of the scheme at NAV
based prices. Also, your investments benefit from rupee-cost averaging.
Let us explain it. If you invest an equal amount of month every month in a
mutual fund, you are engaging in rupee-cost averaging. Share prices
change from day to day, so the set amount of money you invest buys
different amounts of shares every time. When prices are high, NAV is
high- so you get less. And when prices are low, NAV is low- so you get
more. In the end, if you were to buy all units at once you risk getting less
for your money. If you are lucky enough, you would get more. But for
that you would need to be an expert. So, in the interest of an average
17
Benefiting from Mutual Funds: A Simple and Easy to Understand Guide; SBI Funds
Management; Mumbai.

15. 52
investor, a SIP ensures that the chances of losing out on an investment are
spread out and thus minimized.”
According to www.appuonline.com18
, “Mutual fund is a trust that
pools money from a group of investors (sharing common financial goals)
and invest the money thus collected into asset classes that match the stated
investment objectives of the scheme. Since the stated investment objective
of a mutual fund scheme generally forms the basis for an investor's
decision to contribute money to the pool, a mutual fund can not deviate
from its stated objectives at any point of time.
Every Mutual Fund is managed by a fund manager, who is 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.
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.”
18
www.appuonline.com / understanding mutual funds.

16. 53
According to Nalini Prava Tripathy19
, “Mutual funds go back to
the times of the Egyptians and Phoenicians when they sold shares in
caravans and vessels to spread the risk of these ventures. The foreign and
colonial government Trust of London of 1868 is considered to be the fore-
runner of the modern concept of mutual funds. The USA is, however,
considered to be the Mecca of modern mutual funds. By the early - 1930s
quite a large number of close - ended mutual funds were in operation in
the U.S.A. Much latter in 1954, the committee on finance for the private
sector recommended mobilization of savings of the middle class investors
through unit trusts. Finally in July 1964, the concept took root in India
when Unit Trust of India was set up with the twin objective of mobilizing
household savings and investing the funds in the capital market for
industrial growth. Household sector accounted for about 80 percent of
nation’s savings and only about one third of such savings was available to
the corporate sector; it was felt that UTI could be an effective vehicle for
channelising progressively larger shares of household savings to
productive investments in the corporate sector. The process of economic
liberalization in the eighties not only brought in dramatic changes in the
environment for Indian industries, corporate sector and the capital market
but also led to the emergence of demand for newer financial services such
as issue management, corporate counseling, capital restructuring and loan
syndication. After two decades of UTI monopoly, recently some other
public sector organizations like LIC (1989), GIC (1991 ), SBI (1987), Can
Bank (1987), Indian Bank (1990), Bank of India (1990), Punjab National
Bank (1990) have been permitted to set up mutual funds. Mr. M.R. Mayya
19
Tripathy, Nalini Prava; Mutual Funds in India: Financial Service in Capital Market; Finance
India; 1996; p.86.

17. 54
the Executive Director of Bombay Stock Exchange opined recently that
the decade of nineties will belong to mutual funds because the ordinary
investor does not have the time, experience and patience to take
independent investment decisions on his own.”
According to www.sebi.gov.in20
, “During 1995-96, SEBI had
prepared and widely circulated a paper titled "Mutual Funds 2000" which
identified ways to improve the working and regulation of the mutual
funds industry, so that mutual funds could provide a better performance
and service to all categories of investors and offer a range of innovative
products in a competitive manner to match investor needs and preferences
across various investor segments. Based on the comments received on the
recommendations made in the paper by market participants and investors
and on discussions held with the Association of Mutual Funds of India
(AMFI), the SEBI (Mutual Funds) Regulations, 1993 were revised and
the new regulations notified in December 1996.
The impact of the new regulations was immediately felt. Asset
management companies framed several schemes which made use of the
freedom provided to them by the new regulations. Not only the number of
schemes filed with SEBI increased significantly in a short period of time,
but also there was greater variety in the investment products offered.
There was also a significant improvement in disclosures in the offer
documents. The new regulations have brought into greater focus the
responsibilities of trustees of mutual funds who are uniquely positioned to
promote the interests of the unit holders and to ensure that mutual funds
are managed responsibly and ethically. The trustees act independently to
20
www.sebi.gov.in / Mutual Funds 2000.

18. 55
uphold the public trust. In this process, trustees act as the first level
regulators and are critical in helping to ensure the profitability and
progress of the mutual funds. To assist trustees in their new role, and to
set out the manner in which they could best perform this role, SEBI
appointed a committee under the chairmanship of Shri. P.K. Kaul, former
Cabinet Secretary and Ambassador to the United States.
SEBI is using its interface with AMFI to assess the impact of the
new regulations on the working of mutual funds and to examine further
ways of improving the performance of mutual funds so as to restore
investor confidence in them. SEBI also continued working with AMFI so
that it becomes a more effective body representing the mutual funds
industry and embarks on a campaign to sharpen the industry's focus on the
consumer.”
On going through the literature available on the proposed research
topic, it was observed that Mutual Funds Market is passing through
revolutionary stage and has bright future prospects. Undoubtedly the
above review proved helpful in deciding the line of action for conducting
the present research study.

19. 56
B. RESEARCH METHODOLOGY
Research methodology is a base of a research work. It provides a
line of action to the researcher on the basis of which he/she carries on
his/her research study on a particular topic.
The following research methodology was adopted for the proposed
research work:
 SELECTION OF AREA
As the present study is based on the entire Mutual Funds market in
District Meerut, so the personal survey work of mutual funds companies
and investors was done in this district only.
 PERIOD OF STUDY
The proposed research study has been conducted at both macro and
micro levels. For macro level study the research period remained from
2001 to 2009-10 while the year 2010-11 was taken for the purpose of
personal survey.
 DATA SOURCE
The data sources for the present research work were the Different
Government reports in respect of financial sector of India, Records and
Data published by AMFI, Annual reports of leading Mutual Funds
companies of District Meerut, Survey results of leading Mutual Funds
companies of District Meerut, and Survey results of investors of Mutual
Funds of District Meerut.

20. 57
 DATA COLLECTION PROCEDURE
The present study is based on both primary and secondary data. A
thorough search of the published records and reports of Government as
well as organizations associated with finance sector of India was made to
collect the information regarding the growth of Mutual Funds industry in
last 10 years. To analyse the problems of Mutual Funds industry of
District Meerut, personal survey of different Mutual Funds companies and
investors of Mutual Funds was conducted.
Two detailed questionnaires were framed and pre-tested to collect
the necessary information from the officials of Mutual Funds companies
and investors of District Meerut. Open-ended questions as well as
multiple coding of the answers were done for better communication with
the interviewee. In the questionnaires necessary adjustments were made in
the light of experience, thus gained during pilot-survey.
 DATA ENTRY
Data and information collected from different sources were
tabulated chapter wise so as to make the study systematic and scientific.
The tabulated data were illustrated diagrammatically and graphically to
concentrate each and every aspect of the study.
After tabulation of data and information, an analysis of each table
was made using appropriate statistical tools so that relevancy of data
collected may be traced out with the present study and the reliable
conclusion may be drawn.

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 CONCLUSION AND SUGGESTIONS
In the end findings of the research study was given with appropriate
suggestions so as to make the functioning of Mutual Funds industry of
India more systematic and scientific.
HYPOTHESIS OF THE RESEARCH STUDY
The proposed research study is based on the following
presumptions:
 The Mutual Funds industry of India plays a vital role in the
industrial growth as well as economy of the country.
 The Mutual Funds market in District Meerut is in its growing
stage and carries the bright prospects in coming future.
 The general Indian investors are not properly educated in respect
of concept of Mutual Funds; hence they hesitate to associate
themselves with the Mutual Funds industry in District Meerut.
 The sincere and honest efforts of Government of India, to
regulate the Mutual Funds market of the country, may prove
helpful in increasing the faith of Indian investors in Mutual
Funds.
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