1

CHITKARA BUSINESS SCHOOL

DEPARTMENT OF MANAGEMENT

Performance of mutual fun ! an "t! A#arene!! amon$ t%e &atron! "n t%e &re!ent Mar'et

Su(m"tte to C%"t'ara (u!"ne!! Sc%ool In partial fulfillment of the requirements for the award of degree of

MASTER OF BUSINESS ADMINISTRATION

DEPARTMENT OF MANAGEMENT CHITKARA BUSINESS SCHOOL )ANSALA

(2010-10)

DECLARATION
1

I, Amanpreet singh, M.B.A. (2ND semester) the student of

hit!ara Institute of

"ngineering #$e%hnolog&, 'a(pura here)& de%lare that the final pro(e%t report entitled *PERFORMANCE OF MUTUAL FUNDS IN THE PRESENT MARKET+ is an original wor!, %arried out under the super*ision of Mr Gaura, !%arma-!trate$"c (u!"ne!! un"t %ea .of mone/matter at up to the )est of m& !nowledge, the resear%h pro(e%t has not found the )asis for the award of an& other degree. and the same has not )een su)mitted to an& other institute for the award of an& other degree.

SIGNATURE OF CANDIDATE

0000000000000000000000000000000000000000000

ACKNO1LEDGEMENT

To provide a practical perspective to the knowledge that students undergo during their MBA, Chitkara Institute of Engineering &Technology person can never do work of this nature alone. I owe my sincere thanks to Mr. aura! "har#a (strategic unit hea$) for allowing me has included 45 days of summer training in its curriculum that helps to look at corporate world thoroughly. Any

to work as a trainee in Money Matter I%C. This was an experience that how a person need to relate the classroom with the practical application and working in the organi ation.
I e+press m& deep than!s to Mr2 B%arat S%arma -Branc% Mana$er.2 I shall remain inde)ted to him for his a)le and mature guidan%e and whole hearted %ooperation. I also than!s to M!2 Rac%na S%arma -HAD E3ecut",e. for help me in the %ompletion of pro(e%t report.

T&'(E )* C)%TE%T"
Contents !ertificate Acknowledgement Ta$le of content &xecutive summary +age no. " # 4%5 '

Introduction to the (ro)ect Introduction of mutual fund Advantages and disadvantages Types of mutual fund schemes +e$i registered mutual funds (ointers to measure mutual fund performance Tax rules for mutual fund investors ,istory of mutual funds (rocedure of registered mutual funds &valuating portfolio performance Investors financial planning and its results - investment tips to improve your returns ,ow to reduce risk while investing

Introduction to the company +napshot of Moneymatter inc. Introduction of company

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.$)ectives of the study and research methodology /ata (resentation% Analysis and Interpretation !omparison of 4 ma)or mutual funds !onclusion 2 +uggestions

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Annexure 3uestionnaire 4lossary

*4

Bi$liography

151

E,EC-TI.E "-MM&/0

6ole of financial system is to enthusiast economic development. As investors are getting more educated% aware and prudent they look for innovative investment instruments so that they are a$le to reduce investment risk% minimi e transaction costs% and maximi e returns along with certain level of convenience as a result there has $een as advent of numerous innovative financial instrument such as $onds% company deposits% insurance% and mutual finds. All of which could $e matched with individual7s investment needs. Mutual funds score over all other investment options in terms of safety% li8uidity% returns% and are as transparent% convenient as it can get. 4oal of a mutual fund is to provide an efficient way to make money .In India there are #' mutual funds with different Investment strategies and goals to choose from .different mutual funds have different risks% which differ $ecause of fund7s goals% funds manager% and investment styles. A mutual fund is an investment company that collects money from many people and invests it in a variety of securities .the company then manages the money on an ongoing $asis for individuals and $usinesses. Mutual funds are an efficient way to invest in stocks% $onds% and other securities for three reasons9

a: The securities purchased are managed $y professional managers. $: 6isk is spread out or diversified% $ecause you have a collection of different stocks and $onds. c: !osts usually are lower than what you would pay on your own% since the funds $uy in large 8uantities.

)'1ECTI.E" )* T2E "T-30

1. ". #. 4. 5. '. -. 0. *.

The o$)ective of the research is to study and analy e the awareness level of investors of mutual funds. To measure the satisfaction level of investors regarding mutual funds. An attempt has $een made to measure various varia$le7s playing in the minds of investors in terms of safety% li8uidity% service% returns% and tax saving. To get insight knowledge a$out mutual funds ;nderstanding the different ratios 2 portfolios so as to tell the distri$utors a$out these terms% $y this% managing the relationship with the distri$utors To know the mutual funds performance levels in the present market To analy e the comparative study $etween other leading mutual funds in the present market. To know the awareness of mutual funds among different groups of investors. <inding out ways and means to improve on the services $y M)%ETM&TTE/ I%C.

/EC)MME%3&TI)%" &%3 "-

E"TI)%"4

!ustomer education of the salaried class individuals is far $elow standard. Thus Asset Management !ompany7s need to create awareness so that the salaried class people $ecome the prospective customer of the future. &arly and mid earners $ring most of the $usiness for the Asset Management !ompany7s. Asset Management !ompany7s thus needed to educate and develop

schemes for the person7s who are at the late the market share.

earning or retirement stage to gain

6eturn7s record must $e focused $y the sales executives while explaining the schemes to the customer. (ointing out the $rand name of the company repeatedly may not too fruitful. The target market of salaried class individual has a lot of scope to gain $usiness% as they are more fascinated to Mutual <unds than the self employed. +chemes with high e8uity level need to $e targeted towards self employed and professionals as they re8uire high returns and are ready to $ear risk. +alary class individuals are risk averse and thus they must $e assured of the advantage of =risk > diversification? in Mutual <unds. There should $e given more time 2 concentration on the Tier@# distri$utors. The resolution of the 8ueries should $e fast enough to satisfy the distri$utors Time to time presentationAtraining classes a$out the products should $e there. There should $e more num$er of 6elationship Managers in different 6egions $ecause one 6M can handle a maximum of 1"5 distri$utors efficiently and also to cover untapped market. 6egular activities like canopy should $e done so as to get more interaction with the distri$utors. 6egular session should $e organi ed on the handling of the india infoline software so as to resolve the account statement pro$lem. All the persons who have cleared the AM<I exam should $e empanelled with Mutual <und so as to $e largest distri$utor $ase.

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I%T/)3-CTI)%
5hat is a Mutual fun$6 Mutual fund is an investment company that pools money from shareholders and invests in a variety of securities% such as stocks% $onds and money market instruments. Most open@end Mutual funds stand ready to $uy $ack Bredeem: its shares at their current net asset value% which depends on the total market value of the fundCs investment portfolio at the time of redemption. Most open@end Mutual funds continuously offer new shares to investors. Also known as an open@end investment company% to differentiate it from a closed@end investment company. Mutual funds invest pooled cash of many investors to meet the fundCs stated investment o$)ective. Mutual funds stand ready to sell and redeem their shares at any time at the fundCs current net asset value9 total fund assets divided $y shares outstanding.

In +imple Dords% Mutual fund is a mechanism for pooling the resources $y issuing units to the investors and investing funds in securities in accordance with o$)ectives as disclosed in offer document. Investments in securities are spread across a wide cross@ section of industries and sectors and thus the risk is reduced. /iversification reduces the risk $ecause all stocks may not move in the same direction in the same proportion at the same time. Mutual fund issues units to the investors in accordance with 8uantum of money invested $y them. Investors of Mutual funds are known as unit holders. The profits or losses are shared $y the investors in proportion to their investments. The
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Mutual funds normally come out with a num$er of schemes with different investment o$)ectives which are launched from time to time. In India% A Mutual fund is re8uired to $e registered with +ecurities and &xchange Board of India B+&BI: which regulates securities markets $efore it can collect funds from the pu$lic. In +hort% a Mutual fund is a common pool of money in to which investors with common investment o$)ective place their contri$utions that are to $e invested in accordance with the stated investment o$)ective of the scheme. The investment manager would invest the money collected from the investor in to assets that are definedA permitted $y the stated o$)ective of the scheme. <or example% an e8uity fund would invest e8uity and e8uity related instruments and a de$t fund would invest in $onds% de$entures% gilts etc. Mutual fund is a suita$le investment for the common man as it offers an opportunity to invest in a diversified% professionally managed $asket of securities at a relatively low cost.

&3.&%T& E" )* M-T-&( *-%3"

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7rofessional Manage#ent. The ma)or advantage of investing in a mutual fund is that you get a professional money manager to manage your investments for a small fee. Eou can leave the investment decisions to him and only have to monitor the performance of the fund at regular intervals.

3i!ersification. !onsidered the essential tool in risk management% mutual funds make it possi$le for even small investors to diversify their portfolio. A mutual fund can effectively diversify its portfolio $ecause of the large corpus. ,owever% a small investor cannot have a well@diversified portfolio $ecause it calls for large investment. <or example% a modest portfolio of 15 $luechip stocks calls for a few a few thousands.

Con!enient &$#inistration. Mutual funds offer tailor@made solutions like systematic investment plans and systematic withdrawal plans to investors% which is very convenient to investors. Investors also do not have to worry a$out investment decisions% they do not have to deal with $rokerage or depository% etc. for $uying or selling of securities. Mutual funds also offer speciali ed schemes like retirement plans% children7s plans% industry specific schemes% etc. to suit personal preference of investors. These schemes also help small investors with asset allocation of their corpus. It also saves a lot of paper work.

Costs Effecti!eness A small investor will find that the mutual fund route is a cost@effective method Bthe AM! fee is normally ".5F: and it also saves a lot of transaction cost as mutual funds get concession from $rokerages. Also% the investor gets the service of a financial professional for a very small fee. If he were to seek a financial advisorCs help directly% he will end up paying significantly more for investment
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advice. Also% he will need to have a si ea$le corpus to offer for investment management to $e eligi$le for an investment adviser7s services(i8ui$ity. Eou can li8uidate your investments within # to 5 working days Bmutual funds dispatch redemption che8ues speedily and also offer direct credit facility into your $ank account i.e. &lectronic !learing +ervices:. Trans+arency. Mutual funds offer daily GAHs of schemes% which help you to monitor your investments on a regular $asis. They also send 8uarterly newsletters% which give details of the portfolio% performance of schemes against various $enchmarks% etc. They are also well regulated and +e$i monitors their actions closely. Ta9 :enefits. Eou do not have to pay any taxes on dividends issued $y mutual funds. Eou also have the advantage of capital gains taxation. Tax@saving schemes and pension schemes give you the added advantage of $enefits under section 00.

&ffor$a:ility

Mutual funds allow you to invest small sums. <or instance% if you want to $uy a portfolio of $lue chips of modest si e% you should at least have a few lakhs of rupees. A mutual fund gives you the same portfolio for meager investment of 6s.1%555@5%555. A mutual fund can do that $ecause it collects money from many people and it has a large corpus

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3I"&3.&%T& E" )* M-T-&( *-%3"4

7rofessional Manage#ent@ /id you notice how we 8ualified the advantage of professional management with the word ItheoreticallyIJ Many investors de$ate over whether or not the so@called professionals are any $etter than you or I at picking stocks. Management is $y no means infalli$le% and% even if the fund loses money% the manager still takes hisAher cut. DeCll talk a$out this in detail in a later section. Costs @ Mutual funds donCt exist solely to make your life easier@@all funds are in it for a profit. The Mutual fund industry is masterful at $urying costs under layers of )argon. These costs are so complicated that in this tutorial we have devoted an entire section to the su$)ect. 3ilution @ ItCs possi$le to have too much diversification Bthis is explained in our article entitled IAre Eou .ver@/iversifiedJI:. Because funds have small holdings in so many different companies% high returns from a few investments often donCt make much difference on the overall return. /ilution is also the result of a successful fund getting too $ig. Dhen money pours into funds that have had strong success% the manager often has trou$le finding a good investment for all the new money. Ta9es @ Dhen making decisions a$out your money% fund managers donCt consider your personal tax situation. <or example% when a fund manager sells a security% a capital@gain tax is triggered% which affects how profita$le the individual is from the sale. It might have $een more advantageous for the individual to defer the capital gains lia$ility.

&8uity funds% if selected in the right manner and in the right proportion% have the a$ility to play an important role in achieving most long@term o$)ectives of investors in different segments. Dhile the selection process $ecomes much easier if you get advice from professionals% it is e8ually important to know certain aspects of e8uity investing yourself to do )ustice to your hard earned money.

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T07E" )* M-T-&( *-%3 "C2EME"

1. '0 "T/-CT-/E .pen > &nded +chemes. !lose > &nded +chemes. Interval +chemes.

2. '0 I%.E"TME%T )'1ECTI.E 4rowth +chemes. Income +chemes. Balanced +chemes.

;. )T2E/ "C2EME" Tax +aving +chemes. +pecial +chemes. Index +chemes. +ector +pecific +chemes.

1.

)7E% < E%3E3 "C2EME"

The units offered $y these schemes are availa$le for sale and repurchase on any $usiness day at GAH $ased prices. ,ence% the unit capital of the schemes keeps changing each day. +uch schemes thus offer very high li8uidity to investors and are $ecoming increasingly popular in India. (lease note that an open@ended fund is G.T o$liged to keep sellingAissuing new units at all times% and may stop issuing further su$scription to new investors. .n the other hand% an open@ended fund rarely denies to its investor the facility to redeem existing units.

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2.

C()"E3 < E%3E3 "C2EME"

The unit capital of a close@ended product is fixed as it makes a one@time sale of fixed num$er of units. These schemes are launched with an initial pu$lic offer BI(.: with a stated maturity period after which the units are fully redeemed at GAH linked prices. In the interim% investors can $uy or sell units on the stock exchanges where they are listed. ;nlike open@ended schemes% the unit capital in closed@ended schemes usually remains unchanged. After an initial closed period% the scheme may offer direct repurchase facility to the investors. !losed@ended schemes are usually more illi8uid as compared to open@ ended schemes and hence trade at a discount to the GAH. This discount tends towards the GAH closer to the maturity date of the scheme.

;.

I%TE/.&( "C2EME"

These schemes com$ine the features of open@ended and closed@ended schemes. They may $e traded on the stock exchange or may $e open for sale or redemption during pre@ determined intervals at GAH $ased prices. =. /)5T2 "C2EME"

These schemes% also commonly called &8uity +chemes% seek to invest a ma)ority of their funds in e8uities and a small portion in money market instruments. +uch schemes have the potential to deliver superior returns over the long term. ,owever% $ecause they invest in e8uities% these schemes are exposed to fluctuations in value especially in the short term. >. I%C)ME "C2EME"

These schemes% also commonly called /e$t +chemes% invest in de$t securities such as corporate $onds% de$entures and government securities. The prices of these schemes tend to $e more sta$le compared with e8uity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation. These schemes are ideal
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for conservative investors or those not in a position to take higher e8uity risks% such as retired individuals. ,owever% as compared to the money market schemes they do have a higher price fluctuation risk and compared to a 4ilt fund they have a higher credit risk. ?. '&(&%CE3 "C2EME"

These schemes are commonly known as ,y$rid schemes. These schemes invest in $oth e8uities as well as de$t. By investing in a mix of this nature% $alanced schemes seek to attain the o$)ective of income and moderate capital appreciation and are ideal for investors with a conservative% long@term orientation.

@. T&, "&.I%

"C2EME"

Investors are $eing encouraged to invest in e8uity markets through &8uity Kinked +avings +cheme B=&K++?: $y offering them a tax re$ate. ;nits purchased cannot $e assigned A transferredA pledged A redeemed A switched > out until completion of # years from the date of allotment of the respective ;nits. The +cheme is su$)ect to +ecurities 2 &xchange Board of India BMutual <unds: 6egulations% 1**' and the notifications issued $y the Ministry of <inance B/epartment of &conomic Affairs:% 4overnment of India regarding &K++. +u$)ect to such conditions and limitations% as prescri$ed under +ection 00 of the Income@ tax Act% 1*'1.

A.

I%3E, "C2EME"

The primary purpose of an Index is to serve as a measure of the performance of the market as a whole% or a specific sector of the market. An Index also serves as a relevant $enchmark to evaluate the performance of mutual funds. +ome investors are interested in investing in the market in general rather than investing in any specific fund. +uch investors are happy to receive the returns posted $y the markets. As it is not practical to

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invest in each and every stock in the market in proportion to its si e% these investors are comforta$le investing in a fund that they $elieve is a good representative of the entire market. Index <unds are launched and managed for such investors.

B.

"ECT)/ "7ECI*IC "C2EME".

+ector +pecific +chemes generally invests money in some specified sectors for example9 =6eal &state? +peciali ed real estate funds would invest in real estates directly% or may fund real estate developers or lend to them directly or $uy shares of housing finance companies or may even $uy their securiti ed assets.

+&BI 6&4I+T&6&/ M;T;AK <;G/+

1. <.6TI+ Mutual fund ". Alliance !apital Mutual fund% #. AI4 4lo$al Investment 4roup Mutual fund 4. Benchmark Mutual fund% 5. Baroda (ioneer Mutual fund ' Birla Mutual fund -. Bharti ALA Mutual fund 0. !anara 6o$eco Mutual fund *. !6B Mutual fund B+uspended:
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15. /B+ !hola Mutual fund% 11. /eutsche Mutual fund 1". /+( Blackrock Mutual fund% 1# &delweiss Mutual fund 14. &scorts Mutual fund% 15. <ranklin Templeton Mutual fund 1'. <idelity Mutual fund 1-. 4oldman +achs Mutual fund 10. ,/<! Mutual fund% 1*. ,+B! Mutual fund% "5. I!I!I +ecurities <und% "1. IK 2 <+ Mutual fund% "". IG4 Mutual fund% "#. I!I!I (rudential Mutual fund "4. I/<! Mutual fund% "5. MM <inancial Mutual fund "'. M( Morgan Mutual fund "-. Notak Mahindra Mutual fund% "*. KI! Mutual fund #1. Morgan +tanley Mutual fund #". Mirae Asset Mutual fund

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##. (rincipal Mutual fund #4. 3uantum Mutual fund% #5. 6eliance Mutual fund #'. 6eligare A&4.G Mutual fund #-. +ahara Mutual fund% #0. +BI Mutual fund #*. +hriram Mutual fund 45. +undaram BG( (ari$as Mutual fund% 41. Taurus Mutual fund 4". Tata Mutual fund% 4#. ;TI Mutual fund

If the complaints remain unresolved% the investors may approach +&BI for facilitating redressal of their complaints. .n receipt of complaints% +&BI takes up the matter with the concerned Mutual fund and follows up with it regularly. Investors may send their complaints to9

"EC-/ITIE" &%3 E,C2&% E ')&/3 )* I%3I& ("E'I) )**ICE )* I%.E"T)/ &""I"T&%CE &%3 E3-C&TI)% ()I&E) E,C2&% E 7(&C&, D E '()CF, =T2 *())/, '&%3/&-F-/(& C)M7(E,, '&%3/& (E), M-M'&I < =00 0>1.

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. 7ointers to Measure Mutual *un$ 7erfor#ance

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ME&"-/E" "T&%3&/3 3E.I&TI)%

3E"C/I7TI)%

I3E&( /&% E

"tan$ar$ 3e!iation alloHs to e!aluate the !olatility "houl$ :e near to itIs #ean of the fun$. The stan$ar$ $e!iation of a fun$ return. #easures this risk :y #easuring the $egree to Hhich the fun$ fluctuates in relation to its #ean return.

'ET&

'eta is a fairly co##only use$ #easure of risk. It Hith the fun$ as co#+are$ to the :ench#ark.

'eta J 1 K high risky

:asically in$icates the le!el of !olatility associate$ 'eta K 1 K &!g 'eta L1 K (oH /isky !alues range

/-"M-&/E

/- s8uare #easures the correlation of a fun$Is /-s8uare$

#o!e#ent to that of an in$e9. /-s8uare$ $escri:es :etHeen 0 an$ 1, Hhere 0 the le!el of association :etHeen the fun$Ns !olatility re+resents no correlation an$ an$ #arket risk. &(72& &l+ha is the $ifference :etHeen the returns one 1 re+resents full correlation. &l+ha is +ositi!e K returns of

Houl$ e9+ect fro# a fun$, gi!en its :eta, an$ the stock are :etter then #arket return it actually +ro$uces. It also #easures the returns. unsyste#atic risk . &l+ha is negati!e K returns of stock are Horst then #arket. &l+ha is Oero K returns are sa#e as #arket. "2&/7E /&TI) "har+e /atioK *un$ return in e9cess of risk free The higher the "har+e ratio, returnP "tan$ar$ $e!iation of *un$. "har+e ratios the :etter a fun$s returns are i$eal for co#+aring fun$s that ha!e a #i9e$ relati!e to the a#ount of risk asset classes. taken.

Ta9 /ules *or Mutual *un$ In!estorsG

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2I"T)/0 )* M-T-&( *-%3

The mutual fund industry in India started in 1*'# with the formation of ;nit Trust of India% at the initiative of the 4overnment of India and 6eserve Bank. The history of mutual funds in India can $e $roadly divided into four distinct phases9 @

*irst 7hase < 1B?=-A@ An Act of (arliament esta$lished ;nit Trust of India B;TI: on 1*'#. It was set up $y the 6eserve Bank of India and functioned under the 6egulatory and administrative control of the 6eserve Bank of India. In 1*-0 ;TI was de@linked from the 6BI and the Industrial /evelopment Bank of India BI/BI: took over the regulatory and administrative control in place of 6BI. The first scheme launched $y ;TI was ;nit +cheme 1*'4. At the end of 1*00 ;TI had 6s.'%-55 crores of assets under management.

"econ$ 7hase < 1BA@-1BB; (Entry of 7u:lic "ector *un$s) 1*0- marked the entry of non@ ;TI% pu$lic sector mutual funds set up $y pu$lic sector $anks and Kife Insurance !orporation of India BKI!: and 4eneral Insurance !orporation of India B4I!:. +BI Mutual <und was the first non@ ;TI Mutual <und esta$lished in Mune 1*0- followed $y !an $ank Mutual <und B/ec 0-:% (un)a$ Gational Bank Mutual <und BAug 0*:% Indian Bank Mutual <und BGov 0*:% Bank of India BMun *5:% Bank of Baroda Mutual <und B.ct *":. KI! esta$lished its mutual fund in Mune 1*0* while 4I! had set up its mutual fund in /ecem$er 1**5.

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At the end of 1**#% the mutual fund industry had assets under management of 6s.4-%554 crores .

Thir$ 7hase < 1BB;-200; (Entry of 7ri!ate "ector *un$s) Dith the entry of private sector funds in 1**#% a new era started in the Indian mutual fund industry% giving the Indian investors a wider choice of fund families. Also% 1**# was the year in which the first Mutual <und 6egulations came into $eing% under which all mutual funds% except ;TI were to $e registered and governed. The erstwhile Nothari (ioneer Bnow merged with <ranklin Templeton: was the first private sector mutual fund registered in Muly 1**#. The 1**# +&BI BMutual <und: 6egulations were su$stituted $y a more comprehensive and revised Mutual <und 6egulations in 1**'. The industry now functions under the +&BI BMutual <und: 6egulations 1**'. The num$er of mutual fund houses went on increasing% with many foreign mutual funds setting up funds in India and also the industry has witnessed several mergers and ac8uisitions. As at the end of Manuary "55#% there were ## mutual funds with total assets of 6s. 1%"1%055 crores. The ;nit Trust of India with 6s.44%541 crores of assets under management was way ahead of other mutual funds. *ourth 7hase < since *e:ruary 200;

In <e$ruary "55#% following the repeal of the ;nit Trust of India Act 1*'# ;TI was $ifurcated into two separate entities. .ne is the +pecified ;ndertaking of the ;nit Trust of India with assets under management of 6s."*%0#5 crores as at the end of Manuary "55#% representing $roadly% the assets of ;+ '4 scheme% assured return and certain other schemes. The +pecified ;ndertaking of ;nit Trust of India% functioning under an administrator and under the rules framed $y 4overnment of India and does not come under the purview of the Mutual <und 6egulations. The second is the ;TI Mutual <und Ktd% sponsored $y +BI% (GB% B.B and KI!. It is registered with +&BI and functions under the Mutual <und 6egulations. Dith the $ifurcation of the erstwhile ;TI which had in March "555 more than 6s.-'%555 crores of assets under management and with the setting up of a ;TI Mutual <und% conforming to the +&BI Mutual <und 6egulations% and with recent mergers taking place among different private sector funds% the mutual fund industry has entered its current phase of consolidation and growth. As at the end of +eptem$er% "554% there were "* funds% which manage assets of 6s.15#150 crores under 4"1 schemes.
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52&T I" T2E 7/)CE3-/E *)/ /E I"TE/I% "E'I6

& M-T-&( *-%3 5IT2

An applicant proposing to sponsor a Mutual fund in India must su$mit an application in <orm A along with a fee of 6s."5% 555. The application is examined and once the sponsor satisfies certain conditions such as $eing in the financial services $usiness and possessing positive net worth for the last five years% having net profit in three out of the last five years and possessing the general reputation of fairness and integrity in all $usiness transactions% it is re8uired to complete the remaining formalities for setting up a Mutual fund. These include inter alia% executing the trust deed and investment management agreement% setting up a trustee companyA$oard of trustees comprising two@ thirds independent trustees% incorporating the asset management companyBAM!:% contri$uting to at least 45F of the net worth of the AM! and appointing a custodian. ;pon satisfying these conditions% the registration certificate is issued su$)ect to the payment of registration fees of 6s."5.55 lacs for detailsO see the +&BI BMutual funds: 6egulations% 1**'. E.&(-&TI% 7)/T*)(I) 7E/*)/M&%CE

It is important to evaluate the performance of the portfolio on an ongoing $asis. The following factors are important in this process9 !onsider long@term track record rather than short@term performance. It is important $ecause long@term track record moderates the effects which unusually good or $ad short@term performance can have on a fundCs track record. Besides% longer@term track record compensates for the effects of a fund managerCs particular investment style. &valuate the track record against similar funds. +uccess in managing a small or in a fund focusing on a particular segment of the market cannot $e relied upon as an evidence of anticipated performance in managing a large or a $road $ased fund. /iscipline in investment approach is an important factor as the

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pressure to perform can make a fund manager suscepti$le to have an urge to change tracks in terms of stock selection as well as investment strategy. The o$)ective should $e to differentiate investment skill of the fund manager from luck and to identify those funds with the greatest potential of future success.

I%.E"T)/N" *I%&%CI&( 7(&%%I%

7lanning for long ter# o:Qecti!es

&%3 IT" /E"-(T".

Many people get overwhelmed $y the thought of retirement and they think how they will ever save the huge money that is re8uired to lead a peaceful and happy retired life. ,owever% the fact is that if we save and invest regularly over a period of time% even a small sum of money can $e ade8uate. It is a proven fact that the real power of compounding comes with time. Al$ert &instein called compounding Ithe eighth wonder of the worldI $ecause of its ama ing a$ilities. &ssentially% compounding is the idea that one can make money on the money one has already earned. ThatCs why% the earlier one starts saving% the more time money gets to grow. Through Mutual funds% one can set up an investment programme to $uild capital for retirement years. Besides% it is an ideal vehicle to practice asset allocation and re$alancing there$y maintaining the right level of risk at all times. It is important to know that determination and maintaining the right level of risk tolerance can go a long way in ensuring the success of an investment plan. Besides% it helps in customi ing fund category allocations and suita$le fund selections. There are certain $road guidelines to determine the risk tolerance. These are9 Be realistic with regard to volatility. .ne needs to seriously consider the effect of potential downside loss as well as potential upside gain. /etermine a Icomfort levelI i.e.

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If one is not confident with a particular level of risk tolerance% and then select a different level. 6egardless of the level of risk tolerance% one should adhere to the principles of effective diversification i.e. The allocation of investment assets among different fund categories to achieve a variety of distinct riskAreward o$)ectives and a reduction in overall portfolio risk. It helps to reassess risk tolerance every year. The risk tolerance may change due to either ma)or ad)ustment in return o$)ectives or to a reali ation that an existing risk tolerance is inappropriate for oneCs current situation. Market cap of a company signifies its market value% which is e8ual to the total num$er of shares outstanding multiplied $y the current stock price. The market cap has a role to play in the kind of returns the stock might deliver and the risk or volatility that one may have to encounter while achieving those returns.<or example% large companies are usually more sta$le during the tur$ulent periods and the mid cap and small cap companies are more vulnera$le. As regards the allocation to each segment% there cannot $e a standard com$ination applica$le to all kinds of investors. &ach one of us has different risk profile% time hori on and investment o$)ectives. Besides% while deciding on the allocation% one has to keep in mind the fact whether the allocation is $eing done for an existing investor or for a new investor. Dhile for an existing investor% the allocation that already exists has to $e considered% for a new investor the right way to $egin is $y considering funds that invest predominantly in large cap stocks. The exposure to mid and small caps can $e enhanced over a period of time. It is always advisa$le to take help of professionals to decide the allocation as well as select the appropriate funds. ,owever% investors themselves have an important role to play in this process.

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&ll aHar$-Hinning fun$s #ay not :e suita:le for e!eryone Many investors feel that a simple way to invest in Mutual funds is to )ust keep investing in award winning funds. <irst of all% it is important to understand that more than the awardsO it is the methodology to choose winners that is more relevant. A rating firm generally ela$orates on the criteria for deciding the winner7s i.e. consistent performance% risk ad)usted returns% total returns and protection of capital. &ach of these factors is very important and has its significance for different categories of funds. Besides% each of these factors has varying degree of significance for different kinds of investors. <or example% consistent return really focuses on risk. If someone is afraid of negative returns% consistency will $e a more important measure than total return i.e. 4rowth in GAH as well as dividend received. A fund can have very impressive total returns overtime% $ut can $e very volatile and tough for a risk adverse investor. Therefore% all the award winning funds in different categories may not $e suita$le for everyone. Typically% when one has to select funds% the first step should $e to consider personal goals and o$)ectives. Investors need to decide which element they value the most and then prioriti e the other criteria. .nce one knows what one is looking for% one should go a$out selecting the funds according to the asset allocation. Most investors need )ust a few funds% carefully picked% watched and managed over period of time. @ I%.E"TME%T TI7" T) IM7/).E 0)-/ /ET-/%" 1. FnoH your risk +rofile Before you take a decision to invest in e8uity funds% it is important to assess your risk tolerance. 6isk tolerance depends on certain factors like emotional temperament% attitude and investment experience. 6emem$er% Hwhile ascertaining the risk tolerance% it is crucial to consider oneCs desire to assume risk as the capacity to assume the risk. It helps to understand different categories of overall risk tolerance% i.e. !onservative% moderate or aggressive. Dhile a conservative investor will accept lower returns to minimise price volatility% a moderate investor would $e all right with greater price volatility than conservative risk tolerances to pursue higher returns. An aggressive investor wouldnCt mind large swings in the GAH7s to seek the highest returns. Though identifying the desire for risk is a tough )o$% it can $e made easy $y defining oneCs comfort one.
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2. 3onNt ha!e too #any sche#es in your +ortfolio Dhile it is true that diversification helps in earning $etter returns with a lower level of fluctuations% it $ecomes counterproductive when one has too many funds in the portfolio. <or example% if you have 15 funds in your portfolio% it does not necessarily mean that your portfolio is ade8uately diversified. To determine the right level of diversification% one has to consider factors like si e of the portfolio% type of funds and allocation to different asset classes. Therefore% it is possi$le that a portfolio having 5 schemes may $e ade8uately diversified whereas another one with 15 schemes may have very little diversification. 6emem$er% to have a well@$alanced e8uity portfolio% it is important to have the right level of exposure to different segments of the e8uity market like large cap% mid@cap and small cap. In addition% for a decent portfolio si e% it is all right to have some exposure in the sector and specialty funds. ;. (onger ti#e horiOon +ro!i$es +rotection fro# !olatility As an e8uity fund investor% you need to understand that volatility is an integral part of the stock market. ,owever% if you remain focused on the long@term o$)ectives and follow a disciplined approach to investing% you can not only handle volatility properly $ut also turn it to your advantage. =. -n$erstan$ an$ analyOe N oo$ 7erfor#anceN C4ood performanceC is a su$)ective thing. Ideally% to analy e performance% one should consider returns as well as the risk taken to achieve those returns. Besides% consistency in terms of performance as well as portfolio selection is another factor that should play an important part while analy ing the performance. Therefore% if an investment in a Mutual fund scheme takes you past your risk tolerance while providing you decent returnsO it cannot always $e termed as good performance. In fact% at times to ensure that your investment remains within the parameters defined in the investment plan% you may to $e forced to exit from that scheme. In other words% you need to assess as to how much risk did the fund manger su$)ect you to% and did he give you an ade8uate reward for taking that risk. Besides% you also need to consider whether own risk profile allows you to accept the revised level of risk >. "ell your fun$, if you nee$ to There is no standard formula to determine the right time to sell an investment in Mutual fund or for that matter any investment. ,owever% you can definitely $enefit $y following certain guidelines while deciding to sell an investment in a Mutual fund scheme. ,ere are some of them9 Eou may consider selling a fund when your investment plan calls for a sale rather than doing so for emotional reasons. Eou need to hold a fund long enough to evaluate its performance over

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a complete market cycle% i.e. around three years or so. Many of us make the mistake of either holding on to funds for too long or exit in a hurry. It is important to do a thorough analysis $efore taking a decision to sell. In other words% if you take a wrong decision% there is always a risk of missing out on good rallies in the market or getting out too early thus missing out on potential gains. Eou should consider coming out of a fund if its performance has consistently lagged its peers for a period of one year or so. It doesnCt make sense to hold a fund when it no longer meets your needs. If you have made a proper selection% you would generally $e re8uired to make changes only if the fund changes its o$)ective or investment style% or if your needs change. ?. 3i!ersifie$ !s. Concentrate$ 7ortfolio The choice $etween funds that have a diversified and a concentrated portfolio largely depends upon your risk profile. As discussed earlier% a well @ diversified portfolio helps in spreading the investments across different sectors and segments of the market. The idea is that if one or more stocks do $adly% the portfolio wonCt $e affected as much. At the same time% if one stock does very well% the portfolio wonCt reap all the $enefits. A diversified fund% therefore% is an ideal choice for someone who is looking for steady returns over the longer term. A concentrated portfolio works exactly in the opposite manner. Dhile a fund with a concentrated portfolio has a $etter chance of providing higher returns% it also increases your chances of underperforming or losing a large portion of your portfolio in a market downturn. Thus% a concentrated portfolio is ideally suited for those investors who have the capacity to shoulder higher risk in order to improve the chances of getting $etter returns. @. /e!ieH your +ortfolio +erio$ically It is always a good idea to review your portfolio periodically. <or example% you may $egin reviewing your portfolio on a half@yearly $asis. Besides% you may $e re8uired to review your portfolio in greater detail when your investments goals or financial circumstances change.

2)5 T) /E3-CE /I"F 52I(E I%.E"TI% 4

Any kind of investment we make is su$)ect to risk. In fact we get return on our investment purely and solely $ecause at the very $eginning we take the risk of parting with our funds% for getting higher value $ack at a later date. (artition itself is a risk. Dell known economist and Go$el (ri e recipient Dilliam +harpe tried to segregate the total risk faced in any kind of investment into two parts @ systematic B+ystemic: risk and unsystematic B;nsystemic: risk.
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+ystematic risk is that risk which exists in the system. +ome of the $iggest examples of systematic risk are inflation% recession% war% political situation etc. Inflation erodes returns generated from all investments e.g. If return from fixed deposit is 0 per cent and if inflation is ' per cent then real rate of return from fixed deposit is reduced $y ' per cent. +imilarly if returns generated from e8uity market is 10 per cent and inflation is still ' per cent then e8uity returns will $e lesser $y the rate of inflation. +ince inflation exists in the system there is no way one can stay away from the risk of inflation. &conomic cycles% war and political situations have effects on all forms of investments. Also these exist in the system and there is no way to stay away from them. It is like learning to walk. Anyone who wants to learn to walk has to first fallO you cannot learn to walk without falling. +imilarly anyone who wants to invest has to first face systematic riskO there can never make any kind of investment without systematic risk. Another form of risk is unsystematic risk. This risk does not exist in the system and hence is not applica$le to all forms of investment. ;nsystematic risk is associated with particular form of investment. +uppose we invest in stock market and the market falls% then only our investment in e8uity gets affected .6 if we have placed a fixed deposit in particular $ank and $ank goes $ankrupt% than we only lose money placed in that $ank. Dhile there is no way to keep away from risk% we can always reduce the impact of risk. /iversification helps in reducing the impact of unsystematic risk. If our investment is distri$uted across various asset classes the impact of unsystematic risk is reduced. If we have placed fixed deposit in several $anks% then even if one of the $anks goes $ankrupt our entire fixed deposit investment is not lost. +imilarly if our e8uity investment is in Tata Motors% ,KK% Infosys% adverse news a$out Infosys will only impact investment in Infosys% all other stocks will not have any impact. To reduce the impact of systematic risk% we should invest regularly. By investing regularly we average out the impact of risk. Mutual fund% as an investment vehicle gives us $enefit of $oth diversification and averaging.

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(ortfolio of mutual funds consists of multiple securities and hence adverse news a$out single security will have nominal impact on overall portfolio. By systematically investing in mutual fund we get $enefit of rupee cost averaging. Mutual fund as an investment vehicle helps reduce% $oth% systematic as well as unsystematic risk.

926 Intro uct"on to Cor&orate

MONEA MATTER Inc2

P P P

A ompan& whi%h )elie*es in Cu!tomer Del"$%t2 A ompan& that offers a Com&lete Ba!'et of F"nanc"al Solut"on!2 A ompan& with a )elief of hanging the 4inan%e Industr& in India

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Mone& Matter In%. Is a mar!eting and distri)ution %ompan& for *arious finan%ial produ%ts. $he ma(or a%ti*ities and offerings of the %ompan& are "quit& )ro!ing, 5ortfolio Management 6er*i%es, "quit& Anal&sis # 'esear%h, Distri)ution of 4inan%ial 5rodu%ts, et%. $he& are ha*ing a 5rudential, :D4 orporate $ie78ps with 22 leading %ompanies 9i!e I I I et% for life

6tandard 9ife, ;ota! 9ife Insuran%e, A*i*a, $ata Aig, 9I

insuran%e )usiness< Ba(a( Allian=, >riental, 8nited, I44 > $o!&o, et% for ?eneral Insuran%e, and almost with all the 9eading AM @s in India for mutual funds.

$he& are opening our )ran%hes in 5un(a) and 'a(asthan in the first phase and are planning to open 23 )ran%hes a%ross 5un(a) and 'a(asthan within a &ear.

H"!tor"cal Bac'$roun of t%e $rou&B0

Mone& Matter In%. was started )& Mr. 5rem 5al 6harma in 2332 in 'a(asthan. In 'a(asthan the& wor! under the name of Mone& Matter Aealth Ad*isor& 5*t 9td. It has its head offi%e in Delhi. It has si+ )ran%hes in 'a(asthan. In 5un(a), Mone& Matter In%. ,.

,/ 6tarted their ser*i%es on 6eptem)er ., 2331. 'ight now the& ha*e four )ran%hes in 5un(a). 4or 5un(a) 'egion the& ha*e their head offi%e in Mohali.

Ke/ Calue D"fferent"at"on

1. ?reat 9eadership 7 5assionate, Balan%ed, Dis%iplined.

2.

ustomer 7 entri% Business Models7'elationship *Bs 5rodu%t 5ositioning.

,. Aant to )e a 9eader in
emplo&ed segments.

ommer%ial B 6M", Mass

onsumer # Mass 6elf7

-. "na)ling management model and %ulture

.. "mpowerment within defined )oundaries

/. "m)ed the right *alues # )eha*ior a%ross the organi=ation

Focu! on Cu!tomerD not &ro uct 2 2 2

1. Define %ustomer profile and su)7segments.

2. 8nderstand finan%ial needs and !e& e+pe%tations

,/

,0 ,. "*aluating the %ustomer as a whole, not (ust for a produ%t.

-. 5rodu%t features are designed for the spe%ifi% segment.

.. 6egment strateg& for sales, operations, and %olle%tions.

/. 4inan%ials and segment profita)ilit&.

M"!!"on E C"!"on

,0

"na)ling 6u%%ess, "nri%hing 9i*es, 6pread 6miles

,1

C"!"on
Enabling Success, Enriching Lives, Spread Smiles

M"!!"on

$o %reate superior long7term shareholder *alue in finan%ial se%tors a%ross "merging Mar!ets

>rgani% ?rowth A%quire and $ransform Impro*e 5rodu%ti*it& 'is!7'eward Balan%e >ptimi=e apital

P"llar!
Right People Organizational Alignment Processes Execution Discipline

Calue!

Caring ; Honesty ; Passion to Excel ; Team Work ; Disciplined Professionalism

Unique Business value model Proposition model path ment Financial Critical KPI EmpowerPeople

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929 Mone/ Matter Inc2 to "t! cu!tomer!

In its am)ition to emerge as a %omplete finan%ial ad*isor, Mone& Matter In%. :as re%entl& entered into personal finan%ial planning se%tor .It proposes to %ater all ad*i%e to its %ustomer pertaining to personal finan%e. Aith India emerging as a strong mar!et, the in*estments a*enues ha*e also in%reased, to ad*i%e our %ustomers the right a*enue a%%ording to their suita)ilit&. >ur *ision is C$o %ater to the unique needs and requirements of the mass affluent )& pro*iding %omplete finan%ial solutions and there)& ena)ling them to transform their dreams into realit&.C Ser,"ce! Mone& Matter In%. %reates a plethora of opportunities for the %ustomer )& opening up in*estment *istas )a%!ed )& resear%h7)ased ad*isor& ser*i%es. :ere, growth !nows no limits and su%%ess re%ogni=es no )oundaries. :elping the %ustomer %reate wa*es in his portfolio and empowering the in*estor %ompletel& is the ultimate goal. Stoc' Bro'"n$ Ser,"ce!

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It is an undisputed fa%t that the sto%! mar!et is unpredi%ta)le and &et en(o&s a high su%%ess rate as a wealth management and wealth a%%umulation option. $he differen%e )etween unpredi%ta)ilit& and a safet& an%hor in the mar!et is pro*ided )& in7depth !nowledge of mar!et fun%tioning and %hanging trends, planning with foresight and %hoosing one of the options with %are. $his is what we pro*ide in our 6to%! Bro!ing ser*i%es. Ae offer ser*i%es that are )e&ond (ust a medium for )u&ing and selling sto%!s and shares. Instead we pro*ide ser*i%es whi%h are multi dimensional and multi7fo%used in their s%ope. $here are se*eral ad*antages in utili=ing our 6to%! Bro!ing ser*i%es, whi%h are the reasons wh& it is one of the )est in the %ountr&. Ae ma!e trading safe to the ma+imum possi)le e+tent, )& a%%ounting for se*eral ris! fa%tors and planning a%%ordingl&. Ae are assisted in this tas! )& our in7depth resear%h, %onstant feed)a%! and sound ad*isor& fa%ilities. >ur highl& s!illed resear%h team, %omprising of te%hni%al anal&sts as well as fundamental spe%ialists, se%ure result7 oriented information on mar!et trends, mar!et anal&sis and mar!et predi%tions. $his %ru%ial information is gi*en as a %onstant feed)a%! to our %ustomers, through dail& reports Besides this, we also offer spe%ial portfolio anal&sis pa%!ages that pro*ide dail& te%hni%al ad*i%e on s%rips for su%%essful portfolio management and pro*ide %ustomi=ed ad*isor& ser*i%es to help &ou ma!e the right finan%ial mo*es that are spe%ifi%all& suited to &our portfolio. $o empower the in*estor further we ha*e made serious efforts to ensure that our resear%h %alls are disseminated s&stemati%all& to all our sto%! )ro!ing %lients through *arious deli*er& %hannels li!e email, %hat, 6M6, phone %alls et%. D"!tr"(ut"on of F"nanc"al Pro uct!

$he paradigm shift from pure selling to !nowledge )ased selling dri*es the )usiness toda&. Aith our wide portfolio offerings, we o%%up& all segments in the retail finan%ial ser*i%es industr&.

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-1 A team of highl& qualified and dedi%ated professionals drawn from the )est of a%ademi% and professional )a%!grounds are %ommitted to maintaining high le*els of %lient ser*i%e deli*er&. $o further tap the immense growth potential in the %apital mar!ets we enhan%ed the s%ope of our retail )rand, there)& pro*iding planning and ad*isor& ser*i%es to the mass affluent. :ere we understand the %ustomer needs and lifest&le in the %onte+t of present earnings and pro*ide adequate ad*isor& ser*i%es that will ne%essaril& help in %reating wealth. Dudi%ious planning that is %ustomi=ed to meet the future needs of the %ustomer deli*er a ser*i%e that is e+emplar&. $he mar!et7sa**& and the ignorant in*estors, )oth find this ser*i%e *er& satisfa%tor&. $he edge that we ha*e o*er %ompetition is our portfolio of offerings and our professional e+pertise. $he in*estment planning for ea%h %ustomer is done with an un)iased attitude so that the ser*i%e is trul& %ustomi=ed

. A ,"!or/ Ser,"ce!

Ae deli*er ad*isor& ser*i%es to a %ross7se%tion of %ustomers. $he ser*i%e is )a%!ed )& a team of dedi%ated and e+pert professionals with *aried e+perien%e and )a%!ground in handling in*estment portfolios. $he& are %ontinuall& engaged in designing the right in*estment portfolio for ea%h %ustomer a%%ording to indi*idual needs and )udget %onsiderations with a %omprehensi*e support s&stem that fo%uses on trading %ustomersE portfolios and pro*iding *alua)le inputs, monitoring and managing the portfolio through *aried te%hnologi%al initiati*es. $his is made possi)le )& the e+pertise we ha*e gained in the )usiness o*er the &ears. In!urance Bro'"n$

At Mone& Matter In%. Ae pro*ide )oth life and non7life insuran%e produ%ts to retail indi*iduals, high net7worth %lients and %orporates. Aith the opening up of the insuran%e se%tor and with a large num)er of pri*ate pla&ers in the )usiness, we are in a position to pro*ide tailor made poli%ies for different segments of %ustomers. In our (ourne& to -1

-2 emerge as a personal finan%e ad*isor, we will )e )etter positioned to le*erage our relationships with the produ%t pro*iders and pla%e the requirements of our %ustomers appropriatel& with the produ%t pro*iders. Aith Indian mar!ets seeing a sea %hange, )oth in terms of in*estment pattern and attitude of in*estors, insuran%e is no more seen as onl& a ta+ sa*ing produ%t )ut also as an in*estment produ%t. B& setting up a separate entit&, we would )e positioned to pro*ide the )est of the produ%ts a*aila)le in this )usiness to our %ustomers. 4urther, personali=ed ser*i%e is pro*ided here )& a dedi%ated team %ommitted in gi*ing hassle7free ser*i%e to the %lients. Pr",ate Cl"ent Grou&

$his spe%iali=ed di*ision was set up to %ater to the high net worth indi*iduals and institutional %lients !eeping in mind that the& require a different !ind of finan%ial planning and management that will augment not (ust e+isting finan%es )ut their life7st&le as well. :ere we follow a hard7nosed )usiness approa%h with the soft tou%h of dedi%ated %ustomer %are and personali=ed attention. 4or this purpose we offer a %omprehensi*e and personali=ed ser*i%e that en%ompasses planning and prote%tion of finan%es, planning of )usiness needs and retirement needs and a host of other ser*i%es, all pro*ided on a one7to7one )asis. 1%/ Mone/ MatterF >ur ser*i%es are designed !eeping the requirements of in*estors in mind. Aith us &ou will find unmat%hed features to ma!e &our e+perien%e %ompleteF

Galue 5ri%ing

'ather than )ased on the si=e of &our a%%ount and *olume of trading, we offer transparent, fair pri%ing so that e*er&one en(o&s same )enefits.

-2

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'esear%h

Ae help &ou ma!e informed in*estment de%isions with powerful mar!et resear%h, ad*an%ed s%reening and %harting tools, and tra%! progress effi%ientl&. >ur In*estment 6pe%ialists are a*aila)le to help &ou understand and de%ipher Cfundamental # te%hni%alC details offered through our partners.

5lanning towards ?oals Be%ause different people need different finan%ial planning, we partner &ou e+%lusi*el&F right from assessing &our e+perien%e and ris!, mapping &our long term # short term requirements, to asset allo%ation # portfolio anal&sis.

6upport A 'elationship Manager to ser*i%e all &our requirements pro*ides &ou %ustomi=ed and timel& support in%luding alerting &ou in ad*an%e of opportunities from &our wish list or when &ou ma& ha*e to sell

2.; 'asic In!est#ent 7rinci+les of the Money Matter Inc.

&sta$lishing realistic financial goals is an essential first step towards successful investing. ;nderstanding investments that are $est suited to help achieve your goals is e8ually important. Investment principles guide you in your investment choices. <ollowing these time@tested investment principles ena$le you to $uild a strong foundation of financial security. To+ 7rinci+les4

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/u+ee-Cost &!eraging A systematic approach to long@term investing is called rupee@cost averaging. This refers to the practice of investing the same amount of money in the same investment vehicle at regular intervals% regardless of market conditions. If the investor takes the rupee@cost averaging approach% the amount invested is always the same. Thus% the investor automatically $uys more shares when the price is low and fewer when the price is high. The investorCs natural instinct might $e to stop investing if the price starts to drop $ut history suggests that the $est time to invest may $e when you are getting good value. 6upee@cost averaging can $e an effective strategy with funds or stocks that can have sharp ups and downs% $ecause it gives more opportunities to purchase shares less expensively. The $enefit of this approach is that% over time% you may reduce the risk of having shares with the highest cost price. Instead% as the example $elow demonstrates% the average cost of your shares will $e lower. ,owever% rupee@cost averaging does not assure a profit and it does not protect against investment losses in declining markets. Co#+oun$ing !ompounding is the a$ility of an asset to generate earnings% which are then reinvested in order to generate their own earnings. In other words% compounding refers to generating earnings from previous earnings. Through compounding% a small amount of money over time can grow into a su$stantial sum. Investments can increase in value over time @ and the longer the time frame% the greater the value. This is achieved through returns that are earned% $ut not spent. Dhen the return is reinvested% investor earns a return on the return and a return on that return and so on. Therefore it is important to start saving early in order to $enefit from the power of compounding returns.

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3i!ersification /iversification is a strategy that can $e neatly summed up $y the timeless adage I/onCt put all your eggs in one $asket.I In other words% your funds are spread over a variety of investment instruments. It is a risk@management techni8ue that mixes a wide variety of investments within a portfolio. The rationale $ehind this techni8ue contends that a portfolio of different kinds of investments will% on average% yield higher returns and pose a lower risk than any individual investment found within the portfolio. <or example% diversification could mean that you own several stocks% $ut they all come from various types of industries or different parts of the world. By having a variety of different stocks% your funds are more protected. If a certain company is $adly hit% you will have other stocks that may $e a$le to Itake up the slack.I &sset &llocation Asset allocation involves dividing an investment portfolio among different asset categories% such as stocks% $onds% and cash. These asset categories have different risk@ return characteristics% so if you have them in your portfolio% their different patterns of $ehavior offset each other. <or instance% while one asset category increases in value% another may $e decreasing or not increasing as much. Asset allocation aims to $alance risk and reward $y apportioning a portfolioCs assets according to your investment o$)ectives% your risk tolerance and your investment hori on. Asset allocation is generally the most important factor in determining the return on your investments. In fact% according to many researches and studies% asset allocation determines approximately *5F of the return. The remaining 15F of the return is determined $y which particular investments Bstock% $ond% mutual fund% etc.: Eou select and when you decide to $uy them. /e:alancing 6e$alancing your mutual fund portfolio on a regular $asis maintains the desired asset allocation in your investment strategy. Basically% re$alancing is $ringing portfolio $ack to original asset allocation mix. This is necessary $ecause over time some of the investments may $ecome out of alignment with the investment goals% as investments
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donCt all move the same way at the same time. +ome will grow faster than others. By re$alancing your portfolio% you will ensure that you stick to original plans and have the kind of discipline that leads to long@term success. <or example% letCs say it is determined that stock investments should represent '5F of portfolio. But after a recent stock market increase% stock investments represent 05F of portfolio. Eou will need to either sell some of stock investments or purchase investments from an under@weighted asset category in order to reesta$lish original asset allocation mix. 6e$alancing can $e $ased either on the calendar or on the investments. Many financial experts recommend that investors re$alance their portfolios on a regular time interval% such as every six or twelve months. The advantage of this method is that the calendar is a reminder of when investor should consider re$alancing. .thers recommend re$alancing only when the relative weight of an asset class increases or decreases more than a certain percentage that investor has identified in advance. The advantage of this method is that investments will tell you when to re$alance.

92? Name! an Locat"on of Grou& Com&an"e!

Mone/ Matter Inc2 9o%ationsF > > > > > > Mohali (:ead >ffi%e , 5un(a)) 6ri ?anganagar ('a(asthan) Anupgarh ('a(asthan) 6uratgarh ('a(asthan) 'amsinghpur ('a(asthan) 9udhiana (5un(a))

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-0 8p%oming Bran%hesF > > > > Dalandhar (5un(a)) Nawanshahar (5un(a)) Amritsar (5un(a)) ;hanna (5un(a))

Pro uct!5Ser,"ce!

Pro uct!

P P P P P P P

Insuran%e Mutual 4unds 6hares orporate 4D@s 5ortfolio Management 6er*i%es ?old Bonds

T%e Com&an"e! Mone/ Matter Deal! In In L"fe In!urance $A$A AI? ;>$A; 9I4" IN68'AN " AGIGA 9I4" IN68'AN "

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-1 I I I 5'8D"N$IA9 9I BADAD A99IANH BI'9A 68N 9I4" :D4 6BI '"9IAN " 9I4" 6$A' :"A9$: I I I 9>MBA'D 6$ANDA'D 9I4"

In General In!urance $A$A AI? ?"N"'A9 IN68'AN " '"9IAN " ?"N"'A9 IN68'AN " BADAD A99IANH ?"N"'A9 IN68'AN " '>IA9 68ND'AM 8NI$"D NA$I>NA9 >'I"N$A9 N"A INDIA I44 > $>;I>

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92= Our Mana$ement Team

Prof"le of Mana$ement Team

Name

Designation

"+perien%e

Industrial "+perienan%e

Mr.

5rem

5al

hief >ffi%er

>perating 2- &rs

/unlop India Ktd

6harma

Indag 6u$$er Ktd.

4ates India Birla Tyres

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Ktd.

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Mr. ?aura* 6harma 6trategi% 8nit :ead /.. &rs

I!I!I (rudential Notak Kife Insurance% AHIHA Kife

Ms. 6hallu :ead Administration # 4inan%e7 6trategi% 8nit 0 &rs

I!I!I (rudential 6eliance

Mr. 6antosh ;umar Du)e& :ead 6ales7 6trategi% 8nit 1&rs

+BI KI<& ,/<! +td I!I!I (rudential

Ot%er Rele,ant Informat"on B 0

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.2 In "a 0 A 'e/ mar'et for Mone/ Matter Inc2

1) 5ro*ides MMI with a%%ess to one of the most rapidl& growing e%onomies.

2) 9arge under and un7ser*ed segments.

,) 6trong ma%ro7e%onomi% fundamentals.

-) Ban!ing intermediation is still at low le*els pro*ides signifi%ant opportunit& for a new entrant.

.)

A*aila)ilit& of talent, state7of7art lower %ost te%hnolog&, and steadil& impro*ing

infrastru%ture.

/) "mergen%e of 'is! infrastru%ture li!e %redit Bureaus help to esta)lish prudent pra%ti%es.

0) 4oreign Dire%t In*estment inflows e+pe%ted to dou)le to J11Bln.

1) In%reasing le*els of foreign trade .

2) ?rowing glo)al integration.

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., Ne3t F",e Aear Goal

1. A%hie*e mar!et share of .K (top own7)ran%h pla&ers) within target segment.

2 . 6er*e a satisfied %ustomer )ase of L2 million %ustomers.

, . Be the )est emplo&er in finan%ial ser*i%es industr& in India, attra%ting di*erse talent due to its unique )usiness model and wide produ%t range

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Pro uct! an Ser,"ce! #"t% Bran !B0

$his is )asi%all& a Aealth Management 8nit dealing in almost all in*estment options present in the mar!et. $he& gi*e their ser*i%es inF

Insuran%e Demat A%%ount Mutual 4unds Bonds 6hare De)enture orporate 4D@s ?old

Com&an"e! a!!oc"ate #"t% t%e Branc%

P P P P P P P P P P

$A$A AI? ;>$A; 9I4" IN68'AN " AGIGA 9I4" IN68'AN " I I I 5'8D"N$IA9 9I BADAD A99IANH BI'9A 68N 9I4" :D4 6BI '"9IAN " 9I4" 6$ANDA'D 9I4"

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.. P P P P P P P P P P P 6$A' :"A9$: I I I 9om)ard $A$A AI? ?"N"'A9 IN68'AN " '"9IAN " ?"N"'A9 IN68'AN " BADAD A99IANH ?"N"'A9 IN68'AN " '>IA9 68ND'AM 8NI$"D NA$I>NA9 >'I"N$A9 N"A INDIA I44 > $>;I

O(Gect",e! of Sale! De&artment

To improve sales strategies. To make the people aware a$out the new products. To give the $est possi$le services.

O(Gect",e! of HR De&artment $o pro*ide )est wor!ing en*ironment. $o handle the grie*an%es of the emplo&ees. $o retain the emplo&ees.

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2.A "5)T &%&(0"I"

"5)T analysis is a strategic planning method used to evaluate the "trengths% 5eaknesses% )pportunities% and Threats involved in a pro)ect or in a $usiness venture. It involves specifying the o$)ective of the $usiness venture or pro)ect and identifying the internal and external factors that are favora$le and unfavora$le to achieve that o$)ective. The techni8ue is credited to Al$ert ,umphrey% who led a convention at +tanford ;niversity in the 1*'5s and 1*-5s using data from <ortune 555 companies. A +D.T analysis must first start with defining a desired end state or o$)ective. A +D.T analysis may $e incorporated into the strategic planning model. +trategic (lanning% has $een the su$)ect of much research.

StrengthsF attri)utes of the person or o)(e%ti*e(s).

o. $hat are helpful to a%hie*ing the o.that are harmful to a%hie*ing

1ea!nessesF attri)utes of the person or the o)(e%ti*e(s).

OpportunitiesF e+ternal %onditions that are helpful to a%hie*ing the o)(e%ti*e(s).

ThreatsF e+ternal %onditions whi%h %ould do damage to the o)(e%ti*e(s).

Identification of +D.Ts are essential $ecause su$se8uent steps in the process of planning for achievement of the selected o$)ective may $e derived from the +D.Ts. <irst% the decision makers have to determine whether the o$)ective is attaina$le% given the +D.Ts. If the o$)ective is G.T attaina$le a different o$)ective must $e selected and the process repeated. The +D.T analysis is often used in academia to highlight and identify strengths% weaknesses% opportunities and threats. It is particularly helpful in identifying areas for development .

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S1OT Anal/!"! of Mone/ Matter Inc2 Stren$t%! Asso%iation with 22 %ompanies. 5rodu%t 'ange "+perien%e and Iouth staff >pportunit& for In*estment

1ea'ne!!e! Infrastru%ture Inadequate 5romotion 6trategies. 9ow retention 'ate.

)++ortunities
?rowing %ompan& ?rowing Awareness 8ntapped mar!et

Threats
:igh ompetition

hanging Norms of I'DA 9a%! of Interest of 5eople Insuran%e.

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92H O,er,"e# of t%e &ro uct! an matter "nc2

t%e"r

eta"l! u!e

(/ mone/

Mutual fun$s
Mutual 4unds Definition refers to the meaning of Mutual 4und, whi%h is a fund, managed )& an in*estment %ompan& with the finan%ial o)(e%ti*e of generating high 'ate of 'eturns. $hese asset management or in*estment management %ompanies %olle%ts mone& from the in*estors and in*ests those mone& in different 6to%!s, Bonds and other finan%ial se%urities in a di*ersified manner. Before in*esting the& %arr& out thorough resear%h and detailed anal&sis on the mar!et %onditions and mar!et trends of sto%! and )ond pri%es. $hese things help the fund mangers to spe%ulate properl& in the right dire%tion. $he in*estors who in*est their mone& in the Mutual fund of an& in*estment Management ompan&, re%ei*e an "quit& 5osition in that parti%ular mutual fund. Ahen after %ertain period of time, whether long term or short term, the in*estors sell the 6hares of the Mutual 4und, the& re%ei*e the return a%%ording to the mar!et %onditions. $he in*estment %ompanies re%ei*e profit )& allo%ating peopleEs mone& in different sto%!s and )onds a%%ording to their 6pe%ulation a)out the Mar!et $rend. >ther than some spe%ifi% mutual funds whi%h %arr& %ertain Maturit& $erm, In*estors %an generall& sell the shares of their mutual funds at an& time the& want. But, the return will *ar& a%%ording to mar!et *alue of the sto%!s and )onds in whi%h that parti%ular mutual fund made in*estment. But, generall& the share holders of mutual fund sell their share when the pri%es are up and apital ?ain is sure to happen.

A mutual fund is nothing more than a %olle%tion of sto%!s andBor )onds. Iou %an thin! of a mutual fund as a %ompan& that )rings together a group of people and in*ests their mone& in sto%!s, )onds, and other se%urities. "a%h in*estor owns shares, whi%h represent a portion of the holdings of the fund.

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.2 Iou %an ma'e mone/ from a mutual fun in three wa&sF 1) In%ome is earned from di*idends on sto%!s and interest on )onds. A fund pa&s out nearl& all of the in%ome it re%ei*es o*er the &ear to fund owners in the form of a distri)ution. 2) If the fund sells se%urities that ha*e in%reased in pri%e, the fund has a %apital gain. Most funds also pass on these gains to in*estors in a distri)ution. ,) If fund holdings in%rease in pri%e )ut are not sold )& the fund manager, the fundEs shares in%rease in pri%e. Iou %an then sell &our mutual fund shares for a profit.

"hares
A !%are is a unit of a%%ount for *arious finan%ial instruments in%luding sto%!s, mutual funds, limited partnerships, and '"I$Es. In British "nglish, the usage of the word share alone to refer solel& to sto%!s is so %ommon that it almost repla%es the word sto%! itself. In simple Aords, a share or sto%! is a do%ument issued )& a %ompan&, whi%h entitles its holder to )e one of the owners of the %ompan&. A share is issued )& a %ompan& or %an )e pur%hased from the sto%! mar!et. B& owning a share &ou %an earn a portion and selling shares &ou get %apital gain. 6o, &our return is the di*idend plus the %apital gain. :owe*er, &ou also run a ris! of ma!ing a %apital loss if &ou ha*e sold the !%are at a pri%e )elow &our )u&ing pri%e. Iu"c' Fact! on S%are!

>wning a sto%! or a share means &ou are a partial owner of the %ompan&, and &ou get *oting rights in %ertain %ompan& issues >*er the long run, sto%!s ha*e histori%all& a*eraged a)out 13K annual returns :owe*er, sto%!s offer no guarantee of an& returns and %an lose *alue, e*en in the long run

In*estments in sto%!s %an generate returns through di*idends, e*en if the pri%e

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/3 5art of the ownership of a %ompan&. A person who )u&s a portion of a %ompan&Es%apital )e%omes a shareholder in that %ompan&Es assets and as su%h re%ei*es a share of the %ompan&Es profits in the form of an annual di*idend. 9u%!& or astute in*estorsma& also reap a %apital gain as the mar!et *alue of the shares in%reases. 6hares %ome in different formsF Or "nar/ !%are! No spe%ial rights (e+%ept *oting rights) are atta%hed to these, and the )ul! of a %ompan&Es %apital is issued this wa&. Preference !%are! $hese ha*e priorit& o*er ordinar& shares in entitlements to di*idend pa&ments and in %laims to the assets of a %ompan& if it is wound up. Cumulat",e &reference! !%are! $he holder of these shares is entitled to a fi+ed annual di*idend, and if this is not produ%ed one &ear, the amount due is %arried forward and paid the following &ear. $his entitlement ran!s ahead of ordinar& shareholdersE di*idends. (6ometimes these are redeema)le, in whi%h %ase the& are similar to loan se%urities.) Part"c"&at"n$ &reference !%are! $he holder re%ei*es a stated di*idend ea%h &ear and is entitled to share in an& profits remaining after ordinar& shareholders ha*e had their )ite.

Cor+orate fi9e$ $e+ositsPloans

<ixed deposit B</: is an investment option that allows you to invest a sum of money for a fixed time period and at a fixed rate of interest. /uring the course of the </% even if the prevailing interest rates go up or down% you will $e entitled to the rate of interest that was committed to you.!orporate fdsAloans are offered $y companies that are looking to raise money from the open market. !orporate fds typically pay a higher rate of interest% $ut also carry a relatively higher risk than $ank fds.
1%at are Cor&orate F"3e De&o!"t! orporate fi+ed deposits are normal fi+ed deposits offered )& ompanies. $he interest rates offered are generall& higher than Ban! interest rates and %an )e in range from 2K71/K . :igher the interest rates offered higher are the ris!s in*ol*ed. Ah& do /3

/1 %ompanies ha*e these depositsM Ahen %ompanies ha*e %ash %run%h and require mone&, the& %an offer deposits at attra%ti*e rate of interest to %ommon pu)li%, one of the reasons for this %an )e that the& do not want to raise the additional %apital )& issuing shares. orporate Deposits are go*erned as per 6e%tion .1A of ompanies A%t, howe*er these are Nunse%uredO loans (we will tal! a)out it) . R"!'! #"t% Com&an/ F"3e De&o!"t! $here are two main ris!s asso%iated with ompan& Deposits , the& are F

A. Default R"!' B $hese ompan& deposits %arr& a ris! %alled Default 'is!, whi%h means, at maturit& the& might not )e a)le to return &our maturit& amount and default in the pa&ment. It %an happen that %ompan& is out of %ash at that time or does not ha*e suffi%ient mone& in their hand to pa& )a%! , this %an happen for man& reasons li!e their )usiness might not )e going good that time or )e%ause of re%ession . B. Un!ecure De&o!"t! F Ban! Deposits are se%ured )& 'BI up to 1 la%s rupees per )ran%h, whi%h means that if )an! does not return &ou the mone& or goes )an!rupt, 'BI will pa& &ou up to 1 la%s of deposits. $here is no su%h Insuran%e on ompan& Deposits, hen%e the& are totall& unse%ured . 9in! Caut"on Po"nt! 5remature "+it from ompan& 4D@s are not that simple li!e Ban! 4D@s. Iou might ha*e

to run from one pla%e to another and send loads of letters and some times e*en gi*e reasons for 5remature Aithdrawals . S%oul /ou "n,e!t "n Cor&orate F"3e De&o!"t!5loan! $here is nothing good or )ad , some %ompanies whi%h offer 4i+ed Deposits are *er& esta)lished and are highl& reputed, howe*er &ou %an@t ta!e it at fa%e *alue and ignore the ris!sin*ol*ed. If &ou want to par! mone& for short7term and are %omforta)le with the ris!s whi%h %ome with %orporate fi+ed deposits, these orporate fi+ed deposits %an )e a good produ%ts for &ou. $he point here is awareness. It@s not re%ommended that &ou put a )ig sum in same %ompan&. If &ou want to in*est 2 la%s in %ompan& fi+ed deposits, then )etter in*est 1 la%s in 2 different %ompan&, that would di*ersif& &our ris! to some e+tent. Also if &ou are in*esting for some *er& important goal, then )etter settle with Ban! 4i+ed Deposits and not orporate deposits, it@s )etter to settle with 27

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/2 ,K less returns then ta!e unne%%essar& ris! . :ere are some words of %aution while %hoosing ompan& deposits .

1%"c% Com&an/ F"3e De&o!"t! /ou !%oul a,o"

ompanies whi%h offer interest higher than 1.K. ompanies whi%h are not pa&ing regular di*idends to the shareholder ompanies whose Balan%e 6heet shows losses ompanies whi%h are )elow in*estment grade (A or under) rating. 5*t limited ompanies and 5artnership firms as its *er& diffi%ult to (udge their performan%e

&$!antages R f$s offer a safe return4 fds are usually secure and are very low@risk investments. Bank fds are guaranteed up to 6s1 lakh $y the /eposit Insurance and !redit 4uarantee !orporation. R 0ou can raise a loan against your *34 Eou can $orrow up to 05F of your deposit amount Bin some cases% only after a few months of your </7s existence:. This is valid only for $ank fds. R (oH #aintenance4 ;nlike other investments such as stocks% mutual funds or even real estate% you don7t need to monitor your fds on a daily or monthly $asis% or undertake any kind of maintenance work. R Choice of ti#e +erio$4 Eou can make a deposit for any period of time% from 15 days to 15 years. 3isa$!antages R /elati!ely loH returns4 Because fds are very low@risk instruments% they offer low returns compared with alternative investment options such as stocks and mutual funds.

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R (ock-u+s4 Eour money will $e locked up in an </ for the duration of the deposit. As a result% unlike a savings $ank deposit% you will lose the flexi$ility of accessing your funds whenever needed. Eou can $reak your </ if needed% $ut you would have to pay a penalty% which could include $oth a reduced interest rate as well as charges that are typically around 1Fof the investment amount. R -nfa!oura:le ta9 treat#ent4 ;nlike other investment options% interest income earned from fds will $e added to your income and taxed. Ta9es an$ f$s R Ta9-sa!ing in!est#ents4 ;nder section 05!% you can get a tax deduction of up to 6s1 lakh a year if you invest in a five@year </. R f$s an$ ta9 $e$uction at source (T3")4 If the aggregate interest income that you are likely to earn from all your $ank fds held in a single $ranch is at least 6s15%555 in a financial year B6s5%555 in the case of corporate fds: then T/+ will $e deducted at 15F. R If you do not fall in a taxa$le sla$% then furnish <orm 154 or 15, to your $ank to prevent T/+ on the interest income that is paid to you. @ things to Hatch out for 1. Always appoint a nominee on your </ for 8uick withdrawals% and to avoid hassles if you are not around. 2. <ds from companies might pay more $ut come at a much higher risk than $ank fds. These fds are not deposit@guaranteed. ;. In times of rising inflation% avoid fds $ecause your money will lose its purchasing power. =. Dhen making a deposit% check the penalty clause for early withdrawal.

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>. If you need to withdraw funds for an emergency% instead of $reaking the </% you might want to consider taking an overdraft of up to 05F on your </ rather than pay the withdrawal penalty. ?. Eou might want to split your investment and make multiple deposits in small si es and spread them across different maturities as opposed to making a single large deposit. This way% even if you do have to make a premature withdrawal% you will not pay a penalty on the entire amount $ut )ust on the limited amount you withdraw. @. <or fds longer than a year% if your interest is paid at maturity% the taxes on interest income from your fds are due on interest earned% even if the interest hasn7t $een received $y you

Demat account!
The term 3e#at% in India% refers to a dematerialised account. <or individual Indian citi ens to trade in listed stocks or de$entures. The +ecurities &xchange Board of India B+&BI: re8uires the investor to maintain a /emat account. In a demat account shares and securities are held in electronic form instead of taking actual possession of certificates. A /emat Account is opened $y the investor while registering with an investment $roker Bor su$ $roker:. The /emat account num$er which is 8uoted for all transactions to ena$le electronic settlements of trades to take place. Access to the demat account re8uires an internet password and a transaction password as well as initiating and confirming transfers or purchases of securities. (urchases and sales of securities on the /emat account are automatically made once transactions are executed and completed.

&$!antages of 3e#at
The demat account reduces $rokerage charges% makes pledgingAhypothecation of shares easier% ena$les 8uick ownership of securities on settlement resulting in increased li8uidity% avoids confusion in the ownership title of securities% and provides easy receipt of pu$lic issue allotments.

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It also helps you avoid $ad deliveries caused $y signature mismatch% postal delays and loss of certificates in transit. <urther% it eliminates risks associated with forgery% counterfeiting and loss due to fire% theft or mutilation. /emat account holders can also avoid stamp duty Bas against 5.5 per cent paya$le on physical shares:% avoid filling up of transfer deeds% and o$tain 8uick receipt of such $enefits as stock splits and $onuses.

Object Of Demat System

India has adopted this system in which $ook entry is done electronically. It is the system where no paper is involved. (hysical form is extinguished and shares or securities are held in electronic mode. Before the introduction of the depository system $y the /epository Act% 1**'% the process of sale% purchase and transfer of shares was a huge pro$lem and the safety perspective was ero.

Demat Benefits
The $enefits are enumerated as follows9 . Its a safe and convenient way to hold securities . Immediate transfer of securities is there . There is no stamp duty on transfer of securities . &limination of risks associated with physical certificates such as $ad delivery% fake securities% delays% thefts etc . There is a ma)or reduction in paperwork involved in transfer of securities%reduction in transaction cost etc . Go odd lot pro$lem% even one share can $e sold thus there is an advantage . !hange in address recorded with /( gets registered with all companies in which investor holds securities electronically eliminating the need to correspond with each of them separatelyO P Transmission of securities is done $y /( eliminating correspondence with companiesO P Automatic credit into demat account of shares% arising out of $onusAsplitAconsolidationAmerger etc.

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P ,olding investments in e8uity and de$t instruments in a single account.

'enefit to the Co#+any The depository system helps in reducing the cost of new issues due to less printing and distri$ution cost. It increases the efficiency of the registrars and transfer agents and the +ecretarial /epartment of the company. It provides $etter facilities for communication and timely services with shareholders% investor etc. Benefit to the Investor The depository system reduces risks involved in holding physical certificated% e.g.% loss% theft% mutilation% forgery% etc.It ensures transfer settlements and reduces delay in registration of shares. It ensures faster communication to investors. It helps avoid $ad delivery pro$lem due to signature differences% etc.It ensures faster payment on sale of shares. Go stamp duty is paid on transfer of shares. It provides more accepta$ility and li8uidity of securities. Benefit to Brokers The depository system reduces risk of delayed settlement. It ensures greater profit due to increase in volume of trading. It eliminates chances of forgery > $ad delivery. It increases overall of trading and profita$ility.It increases confidence in investors. !ontains Demat conversion !onverting physical holding into electronic holding Bdematerialising securities: In order to dematerialise physical securities one has to fill in a /6< B/emat 6e8uest <orm: which is availa$le with the /( and su$mit the same along with physical certificates one wishes to dematerialise. +eparate /6< has to $e filled for each I+IG Gum$er. The complete process of dematerialisation is outlined $elow9 P+urrender certificates for dematerialisation to your depository participant. P/epository participant intimates /epository of the re8uest through the system. P/epository participant su$mits the certificates to the registrar of the Issuer !ompany. P6egistrar confirms the dematerialisation re8uest from depository. PAfter dematerialising the certificates% 6egistrar updates accounts and informs depository of the completion of

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dematerialisation. P/epository updates its accounts and informs the depository participant. P/epository participant updates the demat account of the investor. Demat Options Banks score over others Around "55 =depository participants? Bdps: offer the demat account facility. A comparison of the fees charged $y different dps is detailed $elow. But there are three distinct advantages of having a demat account with a $ank Q 8uick processing% accessi$ility and online transaction. 4enerally% $anks credit your demat account with shares in case of purchase% or credit your savings accounts with the proceeds of a sale on the third day. Banks are also advantageous $ecause of the num$er of $ranches they have. +ome $anks give the option of opening a demat account in any $ranch% while others restrict themselves to a select set of $ranches. +ome private $anks also provide online access to the demat account. +o% you can check on your holdings% transactions and status of re8uests through the net $anking facility. A $roker who acts as a /( may not $e a$le to provide these services. Fees Involved There are four ma)or charges usually levied on a demat account9 Account opening fee% annual maintenance fee% custodian fee and transaction fee. All the charges vary from /( to /(. &ccount-o+ening fee /epending on the /(% there may or may not $e an opening account fee. (rivate $anks% such as ,/<! Bank and ;TI Bank% do not have one. ,owever% players such as I!I!I Bank% 4lo$e !apital% Narvy !onsultants and the +tate Bank of India to do so. But most players levy this when you re@open a demat account% though the +tock ,olding !orporation offers a lifetime account opening fee% which allows you to hold on to your demat account over a long period. This fee is refunda$le. &nnual #aintenance fee This is also known as folio maintenance charges% and is generally levied in advance.

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Custo$ian fee This fee is charged monthly and depends on the num$er of securities Binternational securities identification num$ers Q I+IG: held in the account. It generally ranges $etween 6s 5.5 to 6s 1 per I+IG per month. /ps will not charge custody fee for I+IG on which the companies have paid one@time custody charges to the depository. Transaction fee The transaction fee is charged for creditingAde$iting securities to and from the account on a monthly $asis. Dhile some dps% such as +BI% charge a flat fee per transaction% ,/<! Bank and I!I!I Bank peg the fee to the transaction value% su$)ect to a minimum amount. The fee also differs $ased on the kind of transaction B$uying or selling:. +ome dps charge only for de$iting the securities while others charge for $oth. The dps also charge if your instruction to $uyAsell fails or is re)ected. In addition% service tax is also charged $y the dps. In addition to the other fees% the /( also charges a fee for converting the shares from the physical to the electronic form or vice@versa. This fee varies for $oth demat and remat re8uests. <or demat% some dps charge a flat fee per re8uest in addition to the varia$le fee per certificate% while others charge only the varia$le fee. Opening an account +teps involved in opening a demat account <irst an investor has to approach a /( and fill up an account opening form. The account opening form must $e supported $y copies of any one of the approved documents to serve as proof of identity B(.I: and proof of address B(.A: as specified $y +&BI. Besides% production of (AG card in original at the time of opening of account has $een made mandatory effective from April 1% "55'. All applicants should carry original documents for verification $y an authori ed official of the depository participant% under his signature. <urther% the investor has to sign an agreement with /( in a depository prescri$ed standard format% which details rights and duties of investor and /(. /( should provide the investor with a copy of the agreement and schedule of charges for their future reference. The /( will open the account in the system and give an account num$er% which is also called B. I/ BBeneficiary .wner

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Identification num$er:. The /( may revise the charges $y giving #5 days notice in advance. +&BI has rationalised the cost structure for dematerialisation $y removing account opening charges% transaction charges for credit of securities% and custody charges vide circular dated Manuary "0% "555. <urther% +&BI has vide circular dated Govem$er *% "555 advised that with effect from Manuary *% "55'% no charges shall $e levied $y a depository on /( and conse8uently% $y a /( on a Beneficiary .wner BB.: when a B. transfers all the securities lying in his account to another $ranch of the same /( or to another /( of the same depository or another depository% provided the B. AccountAs at transferee /( and at transferor /( are one and the same% i.e. Identical in all respects. In case the B. Account at transferor /( is a )oint account% the B. Account at transferee /( should also $e a )oint account in the same se8uence of ownership.

Disadvantages of Demat
The disadvantages of demateriali ation of securities can $e summarised as follows9 Trading in securities may $ecome uncontrolled in case of demateriali ed securities. It is incum$ent upon the capital market regulator to keep a close watch on the trading in demateriali ed securities and see to it that trading does not act as a detriment to investors. The role of key market players in case of demateriali ed securities% such as stock@$rokers% needs to $e supervised as they have the capa$ility of manipulating the market. Multiple regulatory frameworks have to $e confirmed to% including the /epositories Act% 6egulations and the various By@Kaws of various depositories. Additionally% agreements are entered at various levels in the process of demateriali ation. These may cause anxiety to the investor desirous of simplicity in terms of transactions in demateriali ed securities. ,owever% the advantages of demateriali ation outweigh its disadvantages and the changes ushered in $y +&BI and the !entral 4overnment in terms of compulsory demateriali ation of securities is important for developing the securities market to a degree of advancement. <reely traded securities are an essential component of such an

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advanced market and demateriali ation addresses such issues and is a step towards the advancement of the market.

Bon !

1%at I! a Bon F In essen%e, a )ond is nothing more than an I>8. $he organi=ation that offers the I>8 (the )ond) is !nown as the Nissuer,O while the pur%haser is the Nin*estor.O Be%ause no)od& would loan his or her hard7earned mone& to an un!nown part& for nothing, the )ond issuer is required

$o pa& the in*estor interest pa&ments, whi%h are made at a predetermined rate and s%hedule. Bonds are !nown as fi+ed7in%ome se%urities )e%ause the& pro*ide a fi+ed amount of mone& if &ou hold on to them until maturit&. Bon ! ,!2 Stoc'! $he important distin%tion )etween sto%!s and )onds is that )onds are de)t and sto%!s are equit&. Ahen &ou pur%hase sto%! &ou@re in effe%t pur%hasing partial ownership of a %orporation, whi%h gi*es &ou %ertain rights su%h as *oting in shareholder meetings and sharing in %orporate profits. But when &ou pur%hase )onds &ou )e%ome a %reditor to the %orporation or go*ernment, whi%h gi*es &ou a higher %laim on assets than shareholders ha*e. $his means that should the organi=ation go )an!rupt, as a )ondholder &ou would get paid )efore a shareholder. $he downside is that )ondholders are onl& entitled to the prin%ipal plus interest and, as mentioned, don@t share in %ompan& profits. In sum, )onds %ome with less ris! )ut also a lower return rate. 1%/ Bot%er #"t% Bon !F Bonds tend to )e the more logi%al option whene*er &ou %an@t afford the short7term *olatilit& of the sto%! mar!et. $here are two s%enarios when this is parti%ularl& trueF

03

01 retirement and shorter7term return on in*estment needs. 'etirees, who )& definition li*e on fi+ed in%omes, %an@t afford to lose their prin%ipal )e%ause the& need it to pa& their monthl& )ills. $herefore )onds are the safe, logi%al %hoi%e. 4or shorter7term '>I needs, let@s imagine a &oung professional who is planning to return to graduate s%hool in a few &ears@ time. Ahile the sto%! mar!et pro*ides the opportunit& for higher growth, the &oung professional %an@t afford the ris! of losing the mone& for his or her edu%ation. $herefore a fi+ed7in%ome se%urit& su%h as )onds is the wise %hoi%e. $o minimi=e ris!, most personal finan%ial ad*isors ad*o%ate di*ersif&ing &our portfolio and %hanging its distri)ution of asset %lasses as &ou pro%eed through life. 4or e+ample, in &our 23s and ,3s when &our fo%us is on )uilding wealth, a ma(orit& of &our assets should )e in equities. In &our -3s and .3s as &ou )egin to fo%us more on retirement, the per%entages shift out of sto%!s into )onds. In &our /3s and )e&ond the ma(orit& of &our in*estments should )e in the form of fi+ed in%ome. It is also worth mentioning that while )onds are generall& safe )ets, the& aren@t ris! free. ItEs alwa&s possi)le for the )orrower to default on the de)t pa&ments. ?o*ernment )onds are the safest )onds, followed )& muni%ipal )onds, and then %orporate )onds.

Bon Ba!"c!B C%aracter"!t"c!

Bonds ha*e a num)er of %hara%teristi%s of whi%h &ou need to )e aware. All of these fa%tors pla& a role in determining the *alue of a )ond and the e+tent to whi%h it fits in &our portfolio.

Face Calue5Par Calue $he fa%e *alue (also !nown as the par *alue or prin%ipal) is the amount of mone& a holder will get )a%! on%e a )ond matures. A newl& issued )ond usuall& sells at the par *alue. orporate )onds normall& ha*e a par *alue of J1,333, )ut this amount %an )e mu%h greater for go*ernment )onds. Ahat %onfuses man& people is that the par *alue is not the pri%e of the )ond. A )ondEs pri%e flu%tuates throughout its life in response to a num)er of *aria)les (more on this later). Ahen a )ond trades at a pri%e a)o*e the fa%e *alue, it is said to )e selling at a premium. Ahen a )ond sells )elow fa%e *alue, it is said to )e selling at a dis%ount. 01

02

Cou&on -T%e Intere!t Rate. $he %oupon is the amount the )ondholder will re%ei*e as interest pa&ments. ItEs %alled a C%ouponC )e%ause sometimes there are ph&si%al %oupons on the )ond that &ou tear off and redeem for interest. :owe*er, this was more %ommon in the past. Nowada&s, re%ords are more li!el& to )e !ept ele%troni%all&. As pre*iousl& mentioned, most )onds pa& interest e*er& si+ months, )ut itEs possi)le for them to pa& monthl&, quarterl& or annuall&. $he %oupon is e+pressed as a per%entage of the par *alue. If a )ond pa&s a %oupon of 13K and its par *alue is J1,333, then itEll pa& J133 of interest a &ear. A rate that sta&s as a fi+ed per%entage of the par *alue li!e this is a fi+ed7rate )ond. Another possi)ilit& is an ad(usta)le interest pa&ment, !nown as a floating7rate )ond. In this %ase the interest rate is tied to mar!et rates through an inde+, su%h as the rate on $reasur& )ills. Iou might thin! in*estors will pa& more for a high %oupon than for a low %oupon. All things )eing equal, a lower %oupon means that the pri%e of the )ond will flu%tuate more. Matur"t/ $he maturit& date is the date in the future on whi%h the in*estorEs prin%ipal will )e repaid. Maturities %an range from as little as one da& to as long as ,3 &ears (though terms of 133 &ears ha*e )een issued). A )ond that matures in one &ear is mu%h more predi%ta)le and thus less ris!& than a )ond that matures in 23 &ears. $herefore, in general, the longer the time to maturit&, the higher the interest rate. Also, all things )eing equal, a longer term )ond will flu%tuate more than a shorter term )ond. I!!uer $he issuer of a )ond is a %ru%ial fa%tor to %onsider, as the issuerEs sta)ilit& is &our main assuran%e of getting paid )a%!. 4or e+ample, the 8.6. go*ernment is far more se%ure than an& %orporation. Its default ris! (the %han%e of the de)t not )eing paid )a%!) is e+tremel& small 7 so small that 8.6. go*ernment se%urities are !nown as ris!7free assets. $he reason )ehind this is that a go*ernment will alwa&s )e a)le to )ring in future

02

0, re*enue through ta+ation. A %ompan&, on the other hand, must %ontinue to ma!e profits, whi%h is far from guaranteed. $his added ris! means %orporate )onds must offer a higher &ield in order to enti%e in*estors 7 this is the ris!Breturn tradeoff in a%tion. $he )ond rating s&stem helps in*estors determine a %ompan&Es %redit ris!. $hin! of a )ond rating as the report %ard for a %ompan&Es %redit rating. Blue7%hip firms, whi%h are safer in*estments, ha*e a high rating, while ris!& %ompanies ha*e a low rating. $he %hart )elow illustrates the different )ond rating s%ales from the ma(or rating agen%ies in theu.6.F Mood&Es, 6tandard and 5oorEs and 4it%h 'atings.

De(enture!
Meaning of 3e:entures9@ 3e:enture is a (atin Hor$ Hhich #eans Sto oHe $e:tI. In the Hor$s of Thomas &velyn% =a de$enture is a document under company7s seal% which provides for the payment of a principal sums and interest there on at regular intervals% which is usually secured $y a fixed or floating charge on the company7s property or undertaking and which acknowledges a loan to the company.? It includes stock% $onds and any other company7s securities. It may or may not constitute charge on the assets. A document given $y the company which descri$es the de$t and is a proof of de$t is known as /e$enture. It secures the repayment of loan $y creating charge on the assets. It may or may not $e under seal. Characteristics valid de$enture. is without It an a is of a type of of seal is a 3e:entures4certificate. inde$tedness. valid.

1. A de$enture is always in written form. An oral promise to pay $ack the de$t is not a 2. /e$enture directors de$enture. >. A company can also issue irredeema$le de$entures without any undertaking to repay. acknowledgment company

;. It is not necessary that de$enture must $e under seal. A de$enture signed $y two =. /e$entures are issued in series. But there is no restriction on issue of a single

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?. <ixed rate of interest is paid on de$entures at regular intervals of time. @. /e$entures are secured $y either fixed or floating charge on assets of the company. A. /e$enture holders have no right to vote in any meeting of the company.

Fin$s of 3e:entures4- <ollowing are different kinds of de$entures9@

1. /egistere$ 3e:entures4- The de$entures which are registered in the registers of the company in the name of de$enture holder are known as 6egistered /e$entures. These de$entures are fully transfera$le. But it does not mean that they are negotia$le instruments. Interest on these de$entures is paid only to the registered holder. But interest may also $e paid through $earer coupons. 2. 'earer 3e:entures4- Bearer /e$entures are those de$entures which work as negotia$le instruments. These de$entures are fully transfera$le and payment is made only to the $earer of the de$enture. Go register of these de$entures is maintained $y the company. !oupons are attached with these de$entures for the payment of interest. The powers of the transferee of $earer de$entures are same as the original de$enture holder. ;. "ecure$ 3e:entures4- The secured de$entures are those de$entures which are secured either $y fixed or floating charge or $oth on any of the assets or property of the company. =. -nsecure$ or %ake$ 3e:entures4- These de$entures are )ust the opposite of the secured de$entures. ;nsecured or naked de$entures carry no fixed or floating charge on the assets of the company. ;nsecured de$enture holders are ordinary creditors of the company. It is not compulsory to register the name of unsecured de$enture holders as they do not carry any charge. >. /e$ee#a:le 3e:entures4- 6edeema$le de$entures are those which are redeemed or paid off after the termination of fixed term. The amount paid off includes the principal amount and the current year7s interest. The company always has the option of either to redeem a specific num$er of de$entures each year or redeem all the de$entures at specified date. 6e@issue of redeemed de$entures can $e made either $y re@issuing the same de$entures or $y replacing them with other de$entures. ?. Irre$ee#a:le or 7er+etual 3e:entures4- Irredeema$le de$entures are those de$entures which do not have any fixed date of redemption. They are redeemed either in

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the event of winding up or at a very remote period of time% say 155 years. Irredeema$le or perpetual de$enture holders can never force the company to redeem their de$entures. @. Con!erti:le 3e:entures4- !onverti$le /e$entures are those de$entures which have the option of their conversion into the e8uity or preference shares and such conversion has $een approved $y passing special resolution.
;2 Non0Con,ert"(le De(enture!B0 Non7 on*erti)le De)entures are totall& opposite to the %on*erti)le de)entures. Non7%on*erti)le de)entures are those de)entures whi%h do not ha*e the option of their %on*ersion into the equit& or preferen%e shares.

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)'1ECTI.E" )* T2E "T-30

The o$)ective of the research is to study and analy e the awareness level of investors of mutual funds. To measure the satisfaction level of investors regarding mutual funds. An attempt has $een made to measure various varia$le7s playing in the minds of investors in terms of safety% li8uidity% service% returns% and tax saving. To get insight knowledge a$out mutual funds ;nderstanding the different ratios 2 portfolios so as to tell the distri$utors a$out these terms% $y this% managing the relationship with the distri$utors To know the mutual funds performance levels in the present market To analy e the comparative study $etween other leading mutual funds in the present market. To know the awareness of mutual funds among different groups of investors.

/E"E&/C2 MET2)3)() 0

M& resear%h pro(e%t has a spe%ified framewor! for %olle%ting the data in an effe%ti*e manner. 6u%h framewor! is %alled N'"6"A' : D"6I?NO. $he resear%h pro%ess whi%h was followed )& me %onsisted following steps. &. 7/)'(EM4 The pro$lem at hand was to study and measure the awareness level of people regarding mutual funds in the city.

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B2 DECELOPING THE RESEARCH PLAN B T%e e,elo&ment of Re!earc% Plan %a! t%e follo#"n$ Ste&!B 1. DA$A 6>8' "6F $wo t&pes of data were ta!en into %onsideration i.e. 6e%ondar& data # primar& data. M& ma(or emphasis was on gathering the primar& data. $he se%ondar& data has )een used to ma!e things more %lear. -". (ii) Pr"mar/ DataF Dire%t %olle%tion of data from the sour%e of information, te%hnolog& in%luding personal inter*iewing, sur*e& et%. Secon ar/ DataF Indire%t %olle%tion of data from sour%es %ontaining past or re%ent past information li!e Ban!@s Bro%hures, Annual pu)li%ations, Boo!s, 4a%t sheets of mutual funds, Newspaper # Maga=ines et% . 2. '"6"A' : IN6$'8M"N$ A %lose friend questionnaire was %onstru%ted for m& sur*e&. Puestionnaire %onsisting of a set of questions made to )e filled )& *arious respondents.

,. 6AM59IN? 59AN $he sampling plan %alls for three de%isions. a) Sam&l"n$ Un"t: I ha*e %ompleted m& sur*e& in $erritor&. b) Sam&le S"JeF $he sample %onsisted of .3 respondents. $he sample was drawn from wal! in %ustomers of India Info line 9td. $he sele%tion of the respondents was done on the )asis of simple random sampling. c. Contact Met%o ! I ha*e %onta%ted the respondents through personal inter*iews. C2 >99" $IN? $:" IN4>'MA$I>N After this, I ha*e %olle%ted the information from the respondents with the help of questionnaire D. ANA9IH" $:" IN4>'MA$I>N $he ne+t step is to e+tra%t the pertinent findings from the %olle%ted data. I ha*e ta)ulated the %olle%ted data # de*eloped frequen%& distri)utions. $hus handigarh, 8nion

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the whole data was grouped aspe%t wise and was presented in ta)ular form. $hus, frequen%ies # per%entages were prepared to render impa%t of the stud&. ". 5'"6"N$A$I>N6 >4 4INDIN?6 $his was the last step of the sur*e&.

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3&T& 7/E""E%T&TI)%, &%&(0"I" &%3 I%TE/7/ET&TI) %

In,e!tment nee !F

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From t%e a(o,e $ra&% "t "! clear t%at t%ere are man/ &eo&le #%o %a,e &art"c"&ate "n t%e !ur,e/ an "ntere!te t%e maGor &ort"on of t%e !ur,e/ "n "cate! t%at t%e &eo&le are "n "n,e!t"n$ "n mutual fun ! for t%e !a'e o t%e"r fam"l/ f"nanc"al

!ecur"t/2 From t%e a(o,e $ra&% "t al!o re,eal! t%at t%e m"nor &ort"on of t%e $ra&% t%at "! to (u"l a cor&u! for ret"rement oe! not &la/ a maGor role "n t%e "n,e!tment ec"!"on!2

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T%e!e are t%e f"n "n$! from t%e !ur,e/ #%"c% "nclu e t%e num(er of &art"c"&ant! an t%e t/&e of t%e &art"c"&ant!2 T%"! !ur,e/ "nclu e! all t/&e! of &art"c"&ant! #%"c% ma/ $",e e3act re!ult! for t%e e,aluat"on

1%"c% of t%e follo#"n$ o /ou t%"n' a! a ta3 !a,"n$ !c%emeF

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T%e Gra&% "! (a!e ,ar"ou! !c%eme!2

on t%e "ncome of t%e con!umer an

t%e"r "n,e!tment "n

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Income Vs Investment Scheme

100% 80% 60% 40% 20% 0% Below 2 2 lac to 4 lac to 6 lac to Above 8 Lac 4 lac 6 lac 8 lac lac Tax Saving Money market Balance rowt! "ncome

Interpretation I. 9ower in%ome group of )elow 2 la!h are more attra%ted towards the in%ome and mone& mar!et 6%hemes as the& %annot afford to ta!e too mu%h of ris!. II. Balan%ed s%heme is more popular with the in%ome group of 2 la!h to / la!h . $his group is e*en in%lined towards growth 6%hemes to %ertain e+tent . III. 5ersons with a salar& of / la!h and a)o*e are fas%inated )& ta+ sa*ing and mone& mar!et s%hemes.

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T%e Gra&% "! !%o#"n$ t%e "nfluent"al factor amon$ t%e con!umer2

Influential Factor
$# $0 2# 20 1# 10 # 0 +ew' ,a,er(Maga-ine %rien&'(%amily Banner' "nternet T)*

No.of People

Serie'1

Interpretation I. Ma(or %hun! are fas%inated )& the NewspapersB Maga=ine. II. 6e%ond )est instrument to fas%inate the %ustomer is the internet. Be%ause internet pro*ide the eas& and qui%!est wa& to get the information.

1%"c% factor "nfluence /ou mo!t to "n,e!t t%rou$% mone/ matter "ncF

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1. 4A $>'6 Ban! 6er*i%es 6afet& Aord >f Mouth Ad*ertisement 5ast "+perien%e 23K -2K 1-K /K 11K 5"' "N$A?"

INTERPRETATION Ahen as!ed that what fa%tor affe%t most while in*esting in Mutual 4unds through mone& matter in% than wide preferen%e is gi*en to safet&. -2K in*estors %hoose safet&.23K )an! ser*i%es, 11K past e+perien%e, 1-K word of mouth and /K ad*ertisement.

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To %o# muc% e3tent are /ou !at"!f"e #"t% t%e !er,"ce! offere (/ mone/ matter "ncF

&xtremely +atisfied
6atisfied $o 9esser "+tent Dissatisfied $o 9esser "+tent "+tremel& Dissatisfied

13K 13K .K .K

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INTERPRETATION

>ut of the respondents 13K are e+tremel& satisfied with the ser*i%es offered )& mone& matter in% 13K are satisfied to lesser e+tent, .Kare e+tremel& dissatisfied.

>ut of the following whi%h option would &ou preferM

>pen7ended lose7ended

,3 23

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I%TE/7/ET&TI)%
As <II7s have entered Indian markets +ensex have crossed 15555 mark and investors have earned a lot in last financial year. Indians are $ecoming aware of various investment options. (eople have started taking risk as they want to $ook profits. Investors prefer more e8uity schemes than de$t schemes% around '5F of the investors invest in e8uity schemes and $alanced schemes. Investors want to take risk as they want to yield $etter returns. Investors want high returns% li8uidity% safety and tax $enefit. Among all investors gives want to have safety for their money. Around *1F of the investors prefer open
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ended schemes rather than close ended schemes as there is flexi$ility in open ended schemes. Investors prefer $oth systematic investment plan and lump sum. It depends upon the availa$ility of funds that the investor wants to invest in +I( or as lump sum. +ome of the investors invest in $oth ways i.e. through +I( as well as lump sum. Basically it depends upon the availa$ility of fund. Dhen 8uestions were asked a$out the performance of mutual funds in future 55F of investors said strong future% #5F of the investors said very strong future and 15F of the investors said moderate future.

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/EC)MME%3&TI)%" &%3 "-

E"TI)%"4

!ustomer education of the salaried class individuals is far $elow standard. Thus Asset Management !ompany7s need to create awareness so that the salaried class people $ecome the prospective customer of the future. &arly and mid earners $ring most of the $usiness for the Asset Management !ompany7s. Asset Management !ompany7s thus needed to educate and develop schemes for the person7s who are at the late earning or retirement stage to gain the market share. 6eturn7s record must $e focused $y the sales executives while explaining the schemes to the customer. (ointing out the $rand name of the company repeatedly may not too fruitful. The target market of salaried class individual has a lot of scope to gain $usiness% as they are more fascinated to Mutual <unds than the self employed. +chemes with high e8uity level need to $e targeted towards self employed and professionals as they re8uire high returns and are ready to $ear risk. +alary class individuals are risk averse and thus they must $e assured of the advantage of =risk > diversification? in Mutual <unds. There should $e given more time 2 concentration on the Tier@# distri$utors. The resolution of the 8ueries should $e fast enough to satisfy the distri$utors. Time to time presentationAtraining classes a$out the products should $e there. There should $e more num$er of 6elationship Managers in different 6egions $ecause one 6M can handle a maximum of 1"5 distri$utors efficiently and also to cover untapped market. 6egular activities like canopy should $e done so as to get more interaction with the distri$utors.
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6egular session should $e organi ed on the handling of the india infoline software so as to resolve the account statement pro$lem. All the persons who have cleared the AM<I exam should $e empanelled with Mutual <und so as to $e largest distri$utor $ase. +hould have to provide more advertisements% canopies in the shopping mall% main markets $ecause no. of people visiting these places are mostly of service classes and they have to save tax% hence there is more opportunity of getting more no. of applications.

C)%C(-"I)%
These were my o$)ectives of my pro)ect To get an insight knowledge a$out mutual funds ;nderstanding the different ratios 2 portfolios so as to tell the distri$utors a$out these terms% $y this% managing the relationship with the distri$utors To know the mutual funds performance levels in the present market To analy e the comparative study $etween other leading mutual funds in the present market. To know the awareness of mutual funds among different groups of investors. To evaluate consumer feed$ack on mutual funds <inding out ways and means to improve on the services $y india infoline ltd. I satisfied my o$)ectives of the pro)ect in the following manner 1. !omplete insight knowledge a$out the mutual funds were mentioned in the pro)ect ". /ifferent ratios with complete graphical representation were explained in the pro)ect #. To know the performance levels of the pro)ect I have done the comparative analysis of the pro)ect using the four ma)or leading mutual fund companies using different parameters.

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4. To know the consumer awareness I have done the survey using different customers so as to analy e the views a$out the mutual funds and perception of the customer in the present scenario. 5. To evaluate the ways and means to improve Money Matters Inc ltd. I have mentioned various suggestions that are listed a$ove

&77E%3I,

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M-E"TI)%%&I/E
7E/")%&( 3ET&I("4
Name: Mobile Number: Address:____________________________________________________ ___ ___________________________________________________________ __ ___________________________________________________________ __ ___________________________________________________________ __ _______________________________ Occupation: _____________________ Age: ____________________________

1. )f the folloHing Hhat at +resent are your in!est#ent nee$s6 a. To $uild a corpus for retirement $. To save for children educationA marriage c. To provide for medical emergencies d. To provide for family financial security e. To create wealth f. All of the a$ove

2,

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2. 5hich of the folloHing you think as in!est#ent for ta9- sa!ing6

a. Mutual funds $. <ixed deposit c. Insurance d. (pf e. All of the a$ove

;. 2a!e you e!er :een in!este$ in #utual fun$s6 a. Ees $. Go

=. If you ha$ /s 1000P- Hhere you +refer to in!est a. Mutual fund $. <ixed deposit c. /irect e8uity d. Kife insurance e. (ostal office deposit

5. )ut of the folloHing in Hhich Mutual *un$ you ha!e in!este$6

a: )) Tata Mutual <und . %) <ranklin Templeton . d) 6eliance . e) I!I!I (rudential . f) +BI . g: .ther If any %(lease +pecify

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'. To hoH #uch e9tent are you satisfie$ Hith the ser!ices offere$ :y in$ia infoline lt$ regar$ing #utual fun$s6 a: &xteremly satisfied. $: +atisfied to the lesser extent d: /issatisfied to lesser extent e: &xtremely dissatisfied.

@. )ut of the folloHing Hhich o+tion Houl$ you +refer 6 a: !lose ended . $: .pen ended . A. 3o you +refer "I7 ("yste#atic In!est#ent 7lan) or in!esting lu#+ su#6 a: $: +I( Kump sum

c: /epends upon the financial condition

2.

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()""&/0 )* ")ME C)%CE7T"

&MC The AM! is the corporate entity% which markets and manager and manages a mutual fund scheme and in return receives a management fee from the fund corpus. +&BI specifies that an AM! must $e separate entity the trust that manages it. %&. It is the value of unit of a Mutual <und scheme and represents its true worth. GAH is arrived at $y dividing total value of all investment made under the scheme $y num$er of units of the scheme. GAH is critical yardstick of the funds performance. -%IT" ;nits in a mutual fund scheme are similar to shares of a )oint company. These are always in denominations of 6s. 15 each the sum total of all the units constitutes corpus of mutual fund. "7)%")/" +ponsor of a mutual fund are those who esta$lish the mutual fund trust and the AM! they constitute the shareholders of the AM! and receive dividends on profits made $y the AM!. +&BI rules stipulate that mutual fund trust as well as the AM! must maintain an arms length relationship with the sponsors to avoid any conflict to interests% which may affect the unit holders. I%C)ME *-%3 These <unds invest largely in fixed income securities like $onds and de$entures. +uch funds earn returns more regularly than a growth fund $ut level of returns over longer periods normally lag $ehind those offered $y growth funds while returns in such funds may $e regular% their scale may fluctuate depending upon the prevalent interest rates and credit 8uality of the de$t securities.
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/)5T2 *-%3" 4rowth funds predominantly invest in stock market securities and carry risks larger than income funds. +ince stock markets travel through a natural cycle of $oom and $ursts one should normally stay invested ine8uity funds for a longer times to earn higher returns. &8uity funds may earn higher $ut they also carry larger risks. <or risk taking investor e8uity are $est suited. '&(&%CE3 *-%3" A $alanced fund is the mixture of income fund and growth fund invested partly in e8uity to achieve a trade@of $etween risk and return. C()"E E%3E3 In a close@ended fund an investor is allowed to su$scri$e only during the period of the initial offer. !lose@ended funds mature after a specified period. )7E% E%3E3 *-%3" Those funds in which investor can invest 2 withdraw whenever they wish% after the close of initial offer. Dithdrawals are allowed at GAH minus a $ack end load. ()CF I% 7E/I)3 Time period during which investor can neither redeem nor they transfer their holdings to others. Kock in period is imposed to allow fund manager to deploy money for an ade8uate period of time to earn a reasona$le return premature withdrawals may desta$ili e the fund 2 are not $eneficial to the interests of investors. M&%& EME%T *EE" An AM! that mangers 2 markets a mutual fund scheme is entitled to a management feeR 1F to "5F of the total funds managed% it could $e charged to the scheme irrespective of the performance of the scheme. /E3EM7TI)% /is$ursement of unit capital on the maturity of that particular scheme to all its existing unit holders.

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M&/FET 7/ICE The price at which units of mutual funds are 8uoted in stock exchange where they are listed. /E I"T/&/ .rgani ation appointed $y an AM! to the schemes it is registered% monitored% and regulated $y +&BI% it provides re8uired services like system capa$ilities $ack up% accepts and processes investors applications in informs AM! a$out amounts receivedAdis$ursed for su$scriptionA purchaseA redemption it also handles communications with investors% perform data entry services and dispatches account statements. C-"T)3&I% Banking organi ation that keeps in safe custody all the securities 2 other instruments $elonging to the fund to insure smooth inflow 2 outflow of securities. It is also approved regulated and registered with +&BI. E,IT ()&3 Halue of deduction from GAH on the date when one choose to withdraw from a fund% load is imposed $ecause withdrawals carry transaction cost to AM! it can not $e more than 'F of GAH of corpus as prescri$ed $y +&BI many schemes offer redemption facility without exit load. E%T/0 ()&3 !harge paid $y unit holder when he invests an amount in the scheme. Mutual funds incur many expenses during an issue% which are charged to the scheme. +uch load is called entry load. (IM-I3IT0 A$ility of investors to change its unit into cash within minimum time as and when he needs money. T/&%"7&/E%C0 Basic feature of mutual funds is transparency% their functioning is very efficient% well monitored 2 transparent working of AM! is regulated $y +&BI it is audited weekly% it

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has to work under strict guidelines issued $y +&BI% and its GAH is calculated and pu$lished daily so that there is no chance of any default in the working of Mutual <unds.

'I'(I) /&720 Books

/avid <% +wensen. "555. ;nconventional +uccess. A fundamental Approach to (ersonal Investment <ree (ress 41' /.!. An)aria. /haivat An)aria. "551 AM<I7s Mutual <und Testing (rogramme.

De$sites DDD.4..4K&.!.M DDD.EA,...!.M DDD.DINI(&/IA.!.M DDD.IG/IAIG<.KIG&.!.M DDD.AM<IIG/IA.!.M DDD.M.G&E!.GT6.K.!.M

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DDD.5(AI+A.!.M DDD.+,A6&MA6N&TBA+I!+.!.M DDD.+,A6&MA6N&T.!.M

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