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LOVELY PROFESSIONAL UNIVERSITY

DEPARTMENT OF MANAGEMENT

Performance of mutual funds and ts A!areness amon" t#e $atrons n t#e $resent Mar%et

Su&m tted to Lo'el( Profess onal Un 'ers t( In partial fulfillment of the requirements for the award of degree of

MASTER OF )USINESS ADMINISTRATION

Submitted by:

Supervisor:

Dinit Mahendru

Mrs. Deepika Dhall

Reg. No.* 10807727

Le t. of lo!el" professional uni!ersit"

DEPARTMENT OF MANAGEMENT LOVELY PROFESSIONAL UNIVERSITY P+AG,ARA

(2008-10)

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ACKNOWLEDGMENT

It is difficult to acknowledge precious a debt as that of learning as it is the only debt that is difficult to repay except through gratitude. First and foremost I wish to express my profound gratitude to the almighty, the merciful & compassionate with those grace & blessings. I have been able to complete this work. I con'e( m( #eart full t#an%s to t#e Relat ons# $ mana"er Mr-V %as .umar and t#e staff mem&ers of INDIA INFOLINE LTD/ ! t# t#e r #el$ and cor$orat onIt is my profound privilege to express my sincere thanks to Dr. Sanjay Modi, Dir !"or L#M $%a&'ara, for giving me an opportunity to work on the pro ect and giving me full support in completing this pro ect. I am very thankful to my guide Mr(. D )i*a D%a++ (L !",r r in L#M, $%a&'ara) and -y !oordina"or M(. S,*%'ind r *a,r for his full support in completing this pro ect work. !ast but not least, I would like to thank my parents & my friends for their full cooperation & continuous support during the course of this assignment.

TA.LE O/ CONTENTS

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Con" n"( "ertificate $cknowledgement &able of content )xecutive summary

)a& no. # % ',( *

Introduction to the +ro ect Introduction of mutual fund $dvantages and disadvantages &ypes of mutual fund schemes -ebi registered mutual funds +ointers to measure mutual fund performance &ax 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 India info line ltd. Introduction of company 0ni1ue approaches +illars of the organi2ation Milestone keys .istory of India info line ltd

%(

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3b ectives of the study and research methodology Data +resentation, $nalysis and Interpretation "omparison of ' ma or mutual funds "onclusion & -uggestions

'( ',

/4

$nnexure 5uestionnaire Financial statements 6alance sheet +rofit and loss a7c

/%

8lossary

6ibliography

9#

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E0EC1T#2E S1MMA34

:ole of financial system is to enthusiast economic development. $s investors are getting more educated, aware and prudent they look for innovative investment instruments so that they are able to reduce investment risk, minimi2e transaction costs, and maximi2e returns along with certain level of convenience as a result there has been as advent of numerous innovative financial instrument such as bonds, company deposits, insurance, and mutual finds. $ll of which could be matched with individual;s investment needs. Mutual funds score over all other investment options in terms of safety, li1uidity, returns, and are as transparent, convenient as it can get. 8oal 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 because of fund;s goals, funds manager, and investment styles. $ 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 basis for individuals and businesses. Mutual funds are an efficient way to invest in stocks, bonds, and other securities for three reasons<

a= &he securities purchased are managed by professional managers. b= :isk is spread out or diversified, because you have a collection of different stocks and bonds. c= "osts usually are lower than what you would pay on your own, since the funds buy in large 1uantities.

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O.5ECT#2ES O/ T6E ST1D4

4. #. %. '. (. *. /. 9. ,.

&he ob ective of the research is to study and analy2e the awareness level of investors of mutual funds. &o measure the satisfaction level of investors regarding mutual funds. $n attempt has been made to measure various variable;s playing in the minds of investors in terms of safety, li1uidity, service, returns, and tax saving. &o get insight knowledge about mutual funds 0nderstanding the different ratios & portfolios so as to tell the distributors about these terms, by this, managing the relationship with the distributors &o know the mutual funds performance levels in the present market &o analy2e the comparative study between other leading mutual funds in the present market. &o know the awareness of mutual funds among different groups of investors. Finding out ways and means to improve on the services by #ND#A #N/OL#NE LTD

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3ECOMMENDAT#ONS AND S1GGEST#ONS7

"ustomer education of the salaried class individuals is far below standard. &hus $sset Management "ompany;s need to create awareness so that the salaried class people become the prospective customer of the future. )arly and mid earners bring most of the business for the $sset Management "ompany;s. $sset Management "ompany;s thus needed to educate and develop schemes for the person;s who are at the late earning or retirement stage to gain the market share. :eturn;s record must be focused by the sales executives while explaining the schemes to the customer. +ointing out the brand name of the company repeatedly may not too fruitful. &he target market of salaried class individual has a lot of scope to gain business, as they are more fascinated to Mutual Funds than the self employed. -chemes with high e1uity level need to be targeted towards self employed and professionals as they re1uire high returns and are ready to bear risk. -alary class individuals are risk averse and thus they must be assured of the advantage of >risk ? diversification@ in Mutual Funds. &here should be given more time & concentration on the &ierA% distributors. &he resolution of the 1ueries should be fast enough to satisfy the distributors &ime to time presentation7training classes about the products should be there. &here should be more number of :elationship Managers in different :egions because one :M can handle a maximum of 4#( distributors efficiently and also to cover untapped market. :egular activities like canopy should be done so as to get more interaction with the distributors. :egular session should be organi2ed on the handling of the india infoline software so as to resolve the account statement problem. $ll the persons who have cleared the $MFI exam should be empanelled with Mutual Fund so as to be largest distributor base.

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#NT3OD1CT#ON
W%a" i( a M,",a+ 8,nd9 Mutual fund is an investment company that pools money from shareholders and invests in a variety of securities, such as stocks, bonds and money market instruments. Most openAend Mutual funds stand ready to buy back 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 openAend Mutual funds continuously offer new shares to investors. $lso known as an openAend investment company, to differentiate it from a closedAend investment company. Mutual funds invest pooled cash of many investors to meet the fundCs stated investment ob ective. Mutual funds stand ready to sell and redeem their shares at any time at the fundCs current net asset value< total fund assets divided by shares outstanding.

In -imple Dords, Mutual fund is a mechanism for pooling the resources by issuing units to the investors and investing funds in securities in accordance with ob ectives as disclosed in offer document. Investments in securities are spread across a wide crossAsection of industries and sectors and thus the risk is reduced. Diversification reduces the risk because 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 1uantum of money invested by them. Investors of Mutual funds are known as unit holders. &he profits or losses are shared by the investors in proportion to their investments. &he Mutual funds normally come out with a number of schemes with different investment ob ectives which are launched from time to time. In India, $ Mutual fund is re1uired to be registered with

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-ecurities and )xchange 6oard of India B-)6I= which regulates securities markets before it can collect funds from the public. In -hort, a Mutual fund is a common pool of money in to which investors with common investment ob ective place their contributions that are to be invested in accordance with the stated investment ob ective of the scheme. &he investment manager would invest the money collected from the investor in to assets that are defined7 permitted by the stated ob ective of the scheme. For example, an e1uity fund would invest e1uity and e1uity related instruments and a debt fund would invest in bonds, debentures, gilts etc. Mutual fund is a suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

AD2ANTAGES O/ M1T1AL /1NDS

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$ro8 ((iona+ Mana& - n". &he 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.

Di: r(i8i!a"ion. "onsidered the essential tool in risk management, mutual funds make it possible for even small investors to diversify their portfolio. $ mutual fund can effectively diversify its portfolio because of the large corpus. .owever, a small investor cannot have a wellA diversified portfolio because it calls for large investment. For example, a modest portfolio of 4F bluechip stocks calls for a few a few thousands.

Con: ni n" Ad-ini("ra"ion. Mutual funds offer tailorAmade solutions like systematic investment plans and systematic withdrawal plans to investors, which is very convenient to investors. Investors also do not have to worry about investment decisions, they do not have to deal with brokerage or depository, etc. for buying or selling of securities. Mutual funds also offer speciali2ed schemes like retirement plans, children;s plans, industry specific schemes, etc. to suit personal preference of investors. &hese schemes also help small investors with asset allocation of their corpus. It also saves a lot of paper work.

Co("( E88 !"i: n (( $ small investor will find that the mutual fund route is a costAeffective method Bthe $M" fee is normally #.(G= and it also saves a lot of transaction cost as mutual funds get concession from brokerages. $lso, 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 advice. $lso, he will need to have a si2eable corpus to offer for investment management to be eligible for an investment adviser;s services.

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Li;,idi"y. Eou can li1uidate your investments within % to ( working days Bmutual funds dispatch redemption che1ues speedily and also offer direct credit facility into your bank account i.e. )lectronic "learing -ervices=.

Tran()ar n!y. Mutual funds offer daily H$Is of schemes, which help you to monitor your investments on a regular basis. &hey also send 1uarterly newsletters, which give details of the portfolio, performance of schemes against various benchmarks, etc. &hey are also well regulated and -ebi monitors their actions closely.

Ta< = n 8i"(. Eou do not have to pay any taxes on dividends issued by mutual funds. Eou also have the advantage of capital gains taxation. &axAsaving schemes and pension schemes give you the added advantage of benefits under section 99.

A88orda=i+i"y Mutual funds allow you to invest small sums. For instance, if you want to buy a portfolio of blue chips of modest si2e, you should at least have a few lakhs of rupees. $ mutual fund gives you the same portfolio for meager investment of :s.4,FFFA(,FFF. $ mutual fund can do that because it collects money from many people and it has a large corpus.

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D#SAD2ANTAGES O/ M1T1AL /1NDS7

$ro8 ((iona+ Mana& - n"A Did you notice how we 1ualified the advantage of professional management with the word JtheoreticallyJK Many investors debate over whether or not the soAcalled professionals are any better than you or I at picking stocks. Management is by no means infallible, and, even if the fund loses money, the manager still takes his7her cut. DeCll talk about this in detail in a later section. Co("( A Mutual funds donCt exist solely to make your life easierAAall funds are in it for a profit. &he Mutual fund industry is masterful at burying costs under layers of argon. &hese costs are so complicated that in this tutorial we have devoted an entire section to the sub ect. Di+,"ion A ItCs possible to have too much diversification Bthis is explained in our article entitled J$re Eou 3verADiversifiedKJ=. 6ecause funds have small holdings in so many different companies, high returns from a few investments often donCt make much difference on the overall return. Dilution is also the result of a successful fund getting too big. Dhen money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new money. Ta< ( A Dhen making decisions about your money, fund managers donCt consider your personal tax situation. For example, when a fund manager sells a security, a capitalAgain tax is triggered, which affects how profitable the individual is from the sale. It might have been more advantageous for the individual to defer the capital gains liability.

)1uity funds, if selected in the right manner and in the right proportion, have the ability to play an important role in achieving most longAterm ob ectives of investors in different segments. Dhile the selection process becomes much easier if you get advice from professionals, it is e1ually important to know certain aspects of e1uity investing yourself to do ustice to your hard earned money.

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T4$ES O/ M1T1AL /1ND SC6EMES

1. .4 ST31CT13E 3pen ? )nded -chemes. "lose ? )nded -chemes. Interval -chemes.

2. .4 #N2ESTMENT O.5ECT#2E 8rowth -chemes. Income -chemes. 6alanced -chemes.

>. OT6E3 SC6EMES &ax -aving -chemes. -pecial -chemes. Index -chemes. -ector -pecific -chemes.

1.

O$EN ? ENDED SC6EMES

&he units offered by these schemes are available for sale and repurchase on any business day at H$I based prices. .ence, the unit capital of the schemes keeps changing each day. -uch schemes thus offer very high li1uidity to investors and are becoming increasingly popular in India. +lease note that an openAended fund is H3& obliged to keep selling7issuing new units at all times, and may stop issuing further subscription to new investors. 3n the other hand, an openAended fund rarely denies to its investor the facility to redeem existing units.

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2.

CLOSED ? ENDED SC6EMES

&he unit capital of a closeAended product is fixed as it makes a oneAtime sale of fixed number of units. &hese schemes are launched with an initial public offer BI+3= with a stated maturity period after which the units are fully redeemed at H$I linked prices. In the interim, investors can buy or sell units on the stock exchanges where they are listed. 0nlike openAended schemes, the unit capital in closedAended schemes usually remains unchanged. $fter an initial closed period, the scheme may offer direct repurchase facility to the investors. "losedAended schemes are usually more illi1uid as compared to openAended schemes and hence trade at a discount to the H$I. &his discount tends towards the H$I closer to the maturity date of the scheme.

>.

#NTE32AL SC6EMES

&hese schemes combine the features of openAended and closedAended schemes. &hey may be traded on the stock exchange or may be open for sale or redemption during preAdetermined intervals at H$I based prices. @. G3OWT6 SC6EMES

&hese schemes, also commonly called )1uity -chemes, seek to invest a ma ority of their funds in e1uities and a small portion in money market instruments. -uch schemes have the potential to deliver superior returns over the long term. .owever, because they invest in e1uities, these schemes are exposed to fluctuations in value especially in the short term. A. #NCOME SC6EMES

&hese schemes, also commonly called Debt -chemes, invest in debt securities such as corporate bonds, debentures and government securities. &he prices of these schemes tend to be more stable compared with e1uity schemes and most of the returns to the investors are generated through dividends or steady capital appreciation. &hese schemes are ideal for conservative investors or those not in a position to take higher e1uity 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 8ilt fund they have a higher credit risk.

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B.

.ALANCED SC6EMES

&hese schemes are commonly known as .ybrid schemes. &hese schemes invest in both e1uities as well as debt. 6y investing in a mix of this nature, balanced schemes seek to attain the ob ective of income and moderate capital appreciation and are ideal for investors with a conservative, longAterm orientation.

C. TA0 SA2#NG SC6EMES Investors are being encouraged to invest in e1uity markets through )1uity !inked -avings -cheme B>)!--@= by offering them a tax rebate. 0nits purchased cannot be assigned 7 transferred7 pledged 7 redeemed 7 switched ? out until completion of % years from the date of allotment of the respective 0nits. &he -cheme is sub ect to -ecurities & )xchange 6oard of India BMutual Funds= :egulations, 4,,* and the notifications issued by the Ministry of Finance BDepartment of )conomic $ffairs=, 8overnment of India regarding )!--. -ub ect to such conditions and limitations, as prescribed under -ection 99 of the IncomeAtax $ct, 4,*4.

8.

#NDE0 SC6EMES

&he 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. $n Index also serves as a relevant benchmark 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 by the markets. $s it is not practical to invest in each and every stock in the market in proportion to its si2e, these investors are comfortable investing in a fund that they believe is a good representative of the entire market. Index Funds are launched and managed for such investors.

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D.

SECTO3 S$EC#/#C SC6EMES.

-ector -pecific -chemes generally invests money in some specified sectors for example< >:eal )state@ -peciali2ed real estate funds would invest in real estates directly, or may fund real estate developers or lend to them directly or buy shares of housing finance companies or may even buy their securiti2ed assets.

SE.# 3EG#STE3ED M1T1AL /1NDS

4. F3:&I- Mutual fund #. $lliance "apital Mutual fund, %. $I8 8lobal Investment 8roup Mutual fund '. 6enchmark Mutual fund, (. 6aroda +ioneer Mutual fund *. 6irla Mutual fund /. 6harti $L$ Mutual fund 9. "anara :obeco Mutual fund ,. ":6 Mutual fund B-uspended= 4F. D6- "hola Mutual fund, 44. Deutsche Mutual fund 4#. D-+ 6lackrock Mutual fund, 4%. )delweiss Mutual fund 4'. )scorts Mutual fund,

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4(. Franklin &empleton Mutual fund 4*. Fidelity Mutual fund 4/. 8oldman -achs Mutual fund 49. .DF" Mutual fund, 4,. .-6" Mutual fund, #F. I"I"I -ecurities Fund, #4. I! & F- Mutual fund, ##. IH8 Mutual fund, #%. I"I"I +rudential Mutual fund #'. IDF" Mutual fund, #(. MM Financial Mutual fund #*. M+ Morgan Mutual fund #/. Notak Mahindra Mutual fund, #,. !I" Mutual fund %4. Morgan -tanley Mutual fund %#. Mirae $sset Mutual fund %%. +rincipal Mutual fund %'. 5uantum Mutual fund, %(. :eliance Mutual fund %*. :eligare $)83H Mutual fund %/. -ahara Mutual fund,

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%9. -6I Mutual fund %,. -hriram Mutual fund 'F. -undaram 6H+ +aribas Mutual fund, '4. &aurus Mutual fund '#. &ata Mutual fund, '%. 0&I Mutual fund

If the complaints remain unresolved, the investors may approach -)6I for facilitating redressal of their complaints. 3n receipt of complaints, -)6I takes up the matter with the concerned Mutual fund and follows up with it regularly. Investors may send their complaints to<

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6#STO34 O/ M1T1AL /1ND

&he mutual fund industry in India started in 4,*% with the formation of 0nit &rust of India, at the initiative of the 8overnment of India and :eserve 6ank. &he history of mutual funds in India can be broadly divided into four distinct phases< A

/ir(" $%a( ? 1DB@-8C $n $ct of +arliament established 0nit &rust of India B0&I= on 4,*%. It was set up by the :eserve 6ank of India and functioned under the :egulatory and administrative control of the :eserve 6ank of India. In 4,/9 0&I was deAlinked from the :6I and the Industrial Development 6ank of India BID6I= took over the regulatory and administrative control in place of :6I. &he first scheme launched by 0&I was 0nit -cheme 4,*'. $t the end of 4,99 0&I had :s.*,/FF crores of assets under management.

S !ond $%a( ? 1D8C-1DD> (En"ry o8 $,=+i! S !"or /,nd() 4,9/ marked the entry of nonA 0&I, public sector mutual funds set up by public sector banks and !ife Insurance "orporation of India B!I"= and 8eneral Insurance "orporation of India B8I"=. -6I Mutual Fund was the first nonA 0&I Mutual Fund established in Mune 4,9/ followed by "an bank Mutual Fund BDec 9/=, +un ab Hational 6ank Mutual Fund B$ug 9,=, Indian 6ank Mutual

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Fund BHov 9,=, 6ank of India BMun ,F=, 6ank of 6aroda Mutual Fund B3ct ,#=. !I" established its mutual fund in Mune 4,9, while 8I" had set up its mutual fund in December 4,,F. $t the end of 4,,%, the mutual fund industry had assets under management of :s.'/,FF' crores. T%ird $%a( ? 1DD>-200> (En"ry o8 $ri:a" S !"or /,nd() Dith the entry of private sector funds in 4,,%, a new era started in the Indian mutual fund industry, giving the Indian investors a wider choice of fund families. $lso, 4,,% was the year in which the first Mutual Fund :egulations came into being, under which all mutual funds, except 0&I were to be registered and governed. &he erstwhile Nothari +ioneer Bnow merged with Franklin &empleton= was the first private sector mutual fund registered in Muly 4,,%. &he 4,,% -)6I BMutual Fund= :egulations were substituted by a more comprehensive and revised Mutual Fund :egulations in 4,,*. &he industry now functions under the -)6I BMutual Fund= :egulations 4,,*. &he number 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 ac1uisitions. $s at the end of Manuary #FF%, there were %% mutual funds with total assets of :s. 4,#4,9F( crores. &he 0nit &rust of India with :s.'',('4 crores of assets under management was way ahead of other mutual funds. /o,r"% $%a( ? (in! / =r,ary 200>

In February #FF%, following the repeal of the 0nit &rust of India $ct 4,*% 0&I was bifurcated into two separate entities. 3ne is the -pecified 0ndertaking of the 0nit &rust of India with assets under management of :s.#,,9%( crores as at the end of Manuary #FF%, representing broadly, the assets of 0- *' scheme, assured return and certain other schemes. &he -pecified 0ndertaking of 0nit &rust of India, functioning under an administrator and under the rules framed by 8overnment of India and does not come under the purview of the Mutual Fund :egulations. &he second is the 0&I Mutual Fund !td, sponsored by -6I, +H6, 636 and !I". It is registered with -)6I and functions under the Mutual Fund :egulations. Dith the bifurcation of the erstwhile 0&I which had in March #FFF more than :s./*,FFF crores of assets under management and with the setting up of a 0&I Mutual Fund, conforming to the -)6I Mutual Fund :egulations, and with recent mergers taking place among different private sector funds, the mutual fund industry has entered its current phase of consolidation and growth. $s at the end of -eptember, #FF', there were #, funds, which manage assets of :s.4(%4F9 crores under '#4 schemes.

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W6AT #S T6E $3OCED13E /O3 3EG#STE3#NG A M1T1AL /1ND W#T6 SE.#9 $n applicant proposing to sponsor a Mutual fund in India must submit an application in Form $ along with a fee of :s.#(, FFF. &he application is examined and once the sponsor satisfies certain conditions such as being in the financial services business 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

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reputation of fairness and integrity in all business transactions, it is re1uired to complete the remaining formalities for setting up a Mutual fund. &hese include inter alia, executing the trust deed and investment management agreement, setting up a trustee company7board of trustees comprising twoA thirds independent trustees, incorporating the asset management company B$M"=, contributing to at least 'FG of the net worth of the $M" and appointing a custodian. 0pon satisfying these conditions, the registration certificate is issued sub ect to the payment of registration fees of :s.#(.FF lacs for detailsO see the -)6I BMutual funds= :egulations, 4,,*. E2AL1AT#NG $O3T/OL#O $E3/O3MANCE It is important to evaluate the performance of the portfolio on an ongoing basis. &he following factors are important in this process< "onsider longAterm track record rather than shortAterm performance. It is important because longAterm track record moderates the effects which unusually good or bad shortAterm performance can have on a fundCs track record. 6esides, longerAterm 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 be relied upon as an evidence of anticipated performance in managing a large or a broad based fund. Discipline in investment approach is an important factor as the pressure to perform can make a fund manager susceptible to have an urge to change tracks in terms of stock selection as well as investment strategy. &he ob ective should be to differentiate investment skill of the fund manager from luck and to identify those funds with the greatest potential of future success.

#N2ESTO3NS /#NANC#AL $LANN#NG AND #TS 3ES1LTS.

$+annin& 8or +on& " r- o=j !"i: ( Many people get overwhelmed by the thought of retirement and they think how they will ever save the huge money that is re1uired 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 be ade1uate.

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It is a proven fact that the real power of compounding comes with time. $lbert )instein called compounding Jthe eighth wonder of the worldJ because of its ama2ing abilities. )ssentially, compounding is the idea that one can make money on the money one has already earned. &hatCs why, the earlier one starts saving, the more time money gets to grow. &hrough Mutual funds, one can set up an investment programme to build capital for retirement years. 6esides, it is an ideal vehicle to practice asset allocation and rebalancing thereby 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. 6esides, it helps in customi2ing fund category allocations and suitable fund selections. &here are certain broad guidelines to determine the risk tolerance. &hese are< 6e realistic with regard to volatility. 3ne needs to seriously consider the effect of potential downside loss as well as potential upside gain. Determine a Jcomfort levelJ i.e. If one is not confident with a particular level of risk tolerance, and then select a different level. :egardless of the level of risk tolerance, one should adhere to the principles of effective diversification i.e. &he allocation of investment assets among different fund categories to achieve a variety of distinct risk7reward ob ectives and a reduction in overall portfolio risk. It helps to reassess risk tolerance every year. &he risk tolerance may change due to either ma or ad ustment in return ob ectives or to a reali2ation that an existing risk tolerance is inappropriate for oneCs current situation. Market cap of a company signifies its market value, which is e1ual to the total number of shares outstanding multiplied by the current stock price. &he 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.For example, large companies are usually more stable during the turbulent periods and the mid cap and small cap companies are more vulnerable.

P a g e | #0

$s regards the allocation to each segment, there cannot be a standard combination applicable to all kinds of investors. )ach one of us has different risk profile, time hori2on and investment ob ectives. 6esides, while deciding on the allocation, one has to keep in mind the fact whether the allocation is being done for an existing investor or for a new investor. Dhile for an existing investor, the allocation that already exists has to be considered, for a new investor the right way to begin is by considering funds that invest predominantly in large cap stocks. &he exposure to mid and small caps can be enhanced over a period of time. It is always advisable 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.

A++ a'ard-'innin& 8,nd( -ay no" = (,i"a=+ 8or : ryon Many investors feel that a simple way to invest in Mutual funds is to ust keep investing in award winning funds. First of all, it is important to understand that more than the awardsO it is the methodology to choose winners that is more relevant. $ rating firm generally elaborates on the criteria for deciding the winner;s 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. 6esides, each of these factors has varying degree of significance for different kinds of investors. For example, consistent return really focuses on risk. If someone is afraid of negative returns, consistency will be a more important measure than total return i.e. 8rowth in H$I as well as dividend received. $ fund can have very impressive total returns overtime, but can be very volatile and tough for a risk adverse investor. &herefore, all the award winning funds in different categories may not be suitable for everyone. &ypically, when one has to select funds, the first step should be to consider personal goals and ob ectives. Investors need to decide which element they value the most and then prioriti2e the other criteria.

P a g e | #1

3nce one knows what one is looking for, one should go about selecting the funds according to the asset allocation. Most investors need ust a few funds, carefully picked, watched and managed over period of time.

C #N2ESTMENT T#$S TO #M$3O2E 4O13 3ET13NS 1. Kno' yo,r ri(* )ro8i+ 6efore you take a decision to invest in e1uity funds, it is important to assess your risk tolerance. :isk tolerance depends on certain factors like emotional temperament, attitude and investment experience. :emember, Iwhile 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 be all right with greater price volatility than conservative risk tolerances to pursue higher returns. $n aggressive investor wouldnCt mind large swings in the H$I;s to seek the highest returns. &hough identifying the desire for risk is a tough ob, it can be made easy by defining oneCs comfort 2one. 2. DonN" %a: "oo -any (!% - ( in yo,r )or"8o+io Dhile it is true that diversification helps in earning better returns with a lower level of fluctuations, it becomes counterproductive when one has too many funds in the portfolio. For example, if you have 4( funds in your portfolio, it does not necessarily mean that your portfolio is ade1uately diversified. &o determine the right level of diversification, one has to consider factors like si2e of the portfolio, type of funds and allocation to different asset classes. &herefore, it is possible that a portfolio having ( schemes may be ade1uately diversified whereas another one with 4F schemes may have very little diversification. :emember, to have a wellAbalanced e1uity portfolio, it is important to have the right level of exposure to different segments of the e1uity market like large cap, midAcap and small cap. In addition, for a decent portfolio si2e, it is all right to have some exposure in the sector and specialty funds. >. Lon& r "i- %oriOon )ro:id ( )ro" !"ion 8ro- :o+a"i+i"y $s an e1uity fund investor, you need to understand that volatility is an integral part of the stock market. .owever, if you remain focused on the longAterm ob ectives and follow a disciplined approach to investing, you can not only handle volatility properly but also turn it to your advantage. @. 1nd r("and and ana+yO NGood $ r8or-an! N

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C8ood performanceC is a sub ective thing. Ideally, to analy2e performance, one should consider returns as well as the risk taken to achieve those returns. 6esides, consistency in terms of performance as well as portfolio selection is another factor that should play an important part while analy2ing the performance. &herefore, if an investment in a Mutual fund scheme takes you past your risk tolerance while providing you decent returnsO it cannot always be 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 be forced to exit from that scheme. In other words, you need to assess as to how much risk did the fund manger sub ect you to, and did he give you an ade1uate reward for taking that risk. 6esides, you also need to consider whether own risk profile allows you to accept the revised level of risk A. S ++ yo,r 8,nd, i8 yo, n d "o &here 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 benefit by following certain guidelines while deciding to sell an investment in a Mutual fund scheme. .ere are some of them< 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 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 before 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 be re1uired to make changes only if the fund changes its ob ective or investment style, or if your needs change. B. Di: r(i8i d :(. Con! n"ra" d $or"8o+io &he choice between funds that have a diversified and a concentrated portfolio largely depends upon your risk profile. $s discussed earlier, a well A diversified portfolio helps in spreading the investments across different sectors and segments of the market. &he idea is that if one or more stocks do badly, the portfolio wonCt be affected as much. $t the same time, if one stock does very well, the portfolio wonCt reap all the benefits. $ diversified fund, therefore, is an ideal choice for someone who is looking for steady returns over the longer term. $ concentrated portfolio works exactly in the opposite manner. Dhile a fund with a concentrated portfolio has a better chance of providing higher returns, it also increases your chances of underperforming or losing a large portion of your portfolio in a market downturn. &hus, 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 better returns. C. 3 :i ' yo,r )or"8o+io ) riodi!a++y

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It is always a good idea to review your portfolio periodically. For example, you may begin reviewing your portfolio on a halfAyearly basis. 6esides, you may be re1uired to review your portfolio in greater detail when your investments goals or financial circumstances change.

6OW TO 3ED1CE 3#SK W6#LE #N2EST#NG7

$ny kind of investment we make is sub ect to risk. In fact we get return on our investment purely and solely because at the very beginning we take the risk of parting with our funds, for getting higher value back at a later date. +artition itself is a risk. Dell known economist and Hobel +ri2e recipient Dilliam -harpe tried to segregate the total risk faced in any kind of investment into two parts A systematic B-ystemic= risk and unsystematic B0nsystemic= risk. -ystematic risk is that risk which exists in the system. -ome of the biggest 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 9 per cent and if inflation is * per cent then real rate of return from fixed deposit is reduced by * per cent. -imilarly if returns generated from e1uity market is 49 per cent and inflation is still * per cent then e1uity returns will be lesser by 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. $lso these exist in the system and there is no way to stay away from them. It is like learning to walk. $nyone 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. $nother form of risk is unsystematic risk. &his risk does not exist in the system and hence is not applicable to all forms of investment. 0nsystematic risk is associated with particular form of investment.

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-uppose we invest in stock market and the market falls, then only our investment in e1uity gets affected 3: if we have placed a fixed deposit in particular bank and bank goes bankrupt, than we only lose money placed in that bank. Dhile there is no way to keep away from risk, we can always reduce the impact of risk. Diversification helps in reducing the impact of unsystematic risk. If our investment is distributed across various asset classes the impact of unsystematic risk is reduced. If we have placed fixed deposit in several banks, then even if one of the banks goes bankrupt our entire fixed deposit investment is not lost. -imilarly if our e1uity investment is in &ata Motors, .!!, Infosys, adverse news about Infosys will only impact investment in Infosys, all other stocks will not have any impact. &o reduce the impact of systematic risk, we should invest regularly. 6y investing regularly we average out the impact of risk. Mutual fund, as an investment vehicle gives us benefit of both diversification and averaging. +ortfolio of mutual funds consists of multiple securities and hence adverse news about single security will have nominal impact on overall portfolio. 6y systematically investing in mutual fund we get benefit of rupee cost averaging. Mutual fund as an investment vehicle helps reduce, both, systematic as well as unsystematic risk.

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SNA$S6OT O/ #ND#A #N/OL#NE LTD.

Da" o8 E("a=+i(%- n" 3 : n, Mar* " Ca) Cor)ora" Addr (( .ran!% ( Mana& - n" T a3ctober 4,,( :s. ',#(/.# million Byear ended March, #FF/= :s. (44F./4 B$pril #4 #FF9= 9', Hariman 6havan, Hariman +oint, Mumbai A 'FFF#4, Maharashtra, India India Hirmal Main A Founder : Ienkataraman A "oApromoter and )xecutive Director -at +al Nhattar A Hon )xecutive Director Hilesh Iikamsey A Independent Director Nranti -inha A Independent Director India Infoline !imited provides the entire gamut of financial services entailing e1uity research, e1uities and derivatives trading, commodities trading, portfolio management services, mutual funds, life insurance, fixed deposits, 8oI bonds and investment banking. It is proficient in e1uities broking, wealth advisory services and portfolio management services. &he company is a member of 6-) and H-). It is a depository member of Hational -ecurities Depository !imited and "entral Depository -ecurities !td. &he parent company India Infoline 8roup also contains India Infoline Media and

O: r:i '

P a g e | #7

:esearch -ervices !imited, India Infoline "ommodities !imited, India Infoline Marketing & -ervices, India Infoline Investment -ervices !imited and IIF! B$sia= +rivate !imited

#NT3OD1CT#ON.

India Infoline originally incorporated on 3ctober 49, 4,,( as +:36I&E :)-)$:". $HD -):II")- +I& !&D. at Mumbai under the "ompanies $ct, 4,(* with :egistration Ho. 44,%/,/.and became a public limited company on $pril #9, #FFF. &he name of the "ompany was changed to India Infoline.com !imited on May #%, #FFF and later to India Infoline !imited on March #%, #FF4. It is the first "ompany in India to foray into the online distribution of Mutual Funds It is a oneAstop financial services shop, most respected for 1uality of its advice, personali2ed service and cuttingAedge technology. &he Ho.4"orporate agent for I"I"I +rudential !ife Insurance "ompany. :esearch acknowledged by Forbes as >Must :ead for investor in -outh $sia@ !isted on 6ombay and Hational -tock )xchange with a net worth of IH: #FF crore and a market cap of over IH: 4,/F crore. &he company has a network of ,/* business locations Bbranches and subAbrokers= spread across %*( cities and towns. It has more than 9FF,FFF customers. It is registered with H-D! as well as "D-! as a depository participant. +roviding a oneAstep solution for clients trading in the e1uities market.

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O13 1N#M1E A$$3OAC6ES7

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$#LLA3S O/ T6E O3GAN#EAT#ON

P 0nlike others, India Infoline has the concept of an Investment &eam. P &he brains behind all the investment strategies and decisions regarding Dealth Management -ervices are<

P a g e | $0

Mr. Nir-a+ 5ain C%air-an Q Mana&in& Dir !"or #ndia #n8o+in L"d. Hirmal Main, M6$ BIIM, $hmedabad= and a "hartered and "ost $ccountant, founded India;s leading financial services company India Infoline !td. in 4,,(, providing globally acclaimed financial services in e1uities and commodities broking, life insurance and mutual funds distribution, among others. Mr. Main began his career in 4,9, with .industan !ever;s commodity export business, contributing tremendously to its growth. .e was also associated with In1uireA Indian )1uity :esearch, which he coAfounded in 4,,' to set new standards in e1uity research in India. Mr. 3 2 n*a"ara-an E< !,"i: Dir !"or #ndia #n8o+in L"d. : Ienkataraman, coApromoter and )xecutive Director of India Infoline !td., is a 6. &ech B)lectronics and )lectrical "ommunications )ngineering, II& Nharagpur= and an M6$ BIIM 6angalore=. .e oined the India Infoline board in Muly 4,,,. .e previously held senior managerial positions in I"I"I !imited, including I"I"I -ecurities !imited, their investment banking oint venture with M + Morgan of 0-$ and with 6QD and &aib "apital "orporation !imited. .e was also $ssistant Iice +resident with 8 ) "apital -ervices India !imited in their private e1uity division, possessing a varied experience of more than 4* years in the financial services sector. T% .oard o8 Dir !"or( $part from Hirmal Main and : Ienkataraman, the 6oard of Directors of India Infoline !td. comprises< Mr Ni+ (% 2i*a-( y #nd ) nd n" Dir !"or #ndia #n8o+in L"d. Mr. Iikamsey, 6oard member since February #FF( A a practising "hartered $ccountant and partner BNhim i Nunver i & "o., "hartered $ccountants=, a member firm of .!6 International, headed the audit department till 4,,F and thereafter also handles financial services, consultancy, investigations, mergers and ac1uisitions, valuations etcO an I"$I study group member for +roposed $ccounting -tandard R %F on Financial Instruments R :ecognition and Management,

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Finance "ommittee of &he "hamber of &ax "onsultants B"&"=, !aw :eview, :eforms and :ationali2ation "ommittee and Infotainment and Media "ommittee of Indian Merchants; "hamber BIM"= and Insurance "ommittee and !egal $ffairs "ommittee of 6ombay "hamber of "ommerce and Industry B6""I=. Mr. Iikamsey is a director of Miloni "onsultants +rivate !imited, .!6 &echnologies BMumbai= +rivate !imited and "hairman of .!6 India. Mr Sa" $a+ K%a""ar Non E< !,"i: Dir !"or #ndia #n8o+in L"d. Mr -at +al Nhattar, A 6oard member since $pril #FF4 A +residential "ouncil of Minority :ights member, "hairman of the 6oard of &rustee of -ingapore 6usiness Federation, is also a life trustee of -IHD$, a non profit body, helping the underAprivileged Indians in -ingapore. .e oined the India Infoline board in $pril #FF4. Mr Nhattar is a Director of public and private companies in -ingapore, India and .ong NongO "hairman of 8uocoland !imited listed in -ingapore and its parent 8uoco 8roup !td listed in .ong Nong, a leading property company of -ingapore, "hina and Malaysia. $ 6oard member of India Infoline !td, 8ateway Distriparks !td R both listed R and a number of other companies he is also the "hairman of the Nhattar .olding 8roup of "ompanies with investments in -ingapore, India, 0N and across the world. Mr Kran"i Sin%a #nd ) nd n" Dir !"or #ndia #n8o+in L"d. Mr. Nranti -inha R 6oard member since Manuary #FF( R completed his masters from the $gra 0niversity and started his career as a "lass I officer with !ife Insurance "orporation of India. .e served as the Director and "hief )xecutive of !I" .ousing Finance !imited from $ugust 4,,9 to December #FF# and concurrently as the Managing Director of !I".F! "are .omes Ba wholly owned subsidiary of !I" .ousing Finance !imited=. .e retired from the permanent cadre of the )xecutive Director of !I"O served as the Deputy +resident of the 8overning "ouncil of Insurance Institute of India and as a member of the 8overning "ouncil of Hational Insurance $cademy, +une apart from various other such bodies. Mr. -inha is also on the 6oard of Directors of .industan Motors !imited, !arsen & &oubro !imited, !I".F! "are .omes !imited, 8remach Infrastructure )1uipments and +ro ects !imited and "inemax BIndia= !imited. Mr Ar,n K. $,r:ar #nd ) nd n" Dir !"or #ndia #n8o+in L"d.

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Mr. $.N. +urvar ? 6oard member since March #FF9 ? completed his Masters degree in commerce from $llahabad 0niversity in 4,** and a diploma in 6usiness $dministration in 4,*/. Mr. +urwar oined the -tate 6ank of India as a probationary officer in 4,*9, where he held several important and critical positions in retail, corporate and international banking, covering almost the entire range of commercial banking operations in his illustrious career. .e also played a key role in coAcoordinating the work for the 6ankCs entry into the field of insurance. $fter retiring from the 6ank at end May #FF*, Mr. +urwar is now working as Member of 6oard of 8overnors of IIMA!ucknow, oined IIM?Indore as a visiting professor, oined as a .on.A +rofessor in HMIM- and he is also a member of $dvisory 6oard for Institute of Indian )conomic -tudies BII)-=, Daseda 0niversity, &okyo, Mapan. .e has now taken over as "hairman of IndiaIenture $dvisors +vt. !td., as well as I! & F- :enewable )nergy !imited. .e is also working as Independent Director in leading companyies in &elecom, -teel, &extiles, $utoparts, )ngineering and "onsultancy.

M#LESTONES KE47-

Incorporated on 49 3ctober 4,,( as probity research and services. !aunched internet portal wwwindiainfoline.com in may 4,,,. "ommenced distribution of personal financial products like MF;s and :6I;s 6ond in $pril #FFF.

!aunched online trading in shares branded as www.(paisa.com in Muly #FFF.

-tarted lifeAinsurance agency business in Dec. #FFF as corporate agent. 6ecame a depository participant of H-D! in -eptember #FF4. !aunched stock messaging services in May #FF%. $c1uired commodities broking license in March #FF'.

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6i("ory o8 #ndia #n8o+in +"d.

(e were originall" in orporated on ) to*er 18+ 1''% as Pro*it" Resear h and ,er!i es Pri!ate Limited at -um*ai under the .ompanies / t+ 1'%& with Registration No. 11 '#7'7. (e ommen ed our operations as an independent pro!ider of information+ anal"sis and resear h o!ering Indian *usinesses+ finan ial mar0ets and e onom"+ to institutional ustomers. (e *e ame a pu*li limited ompan" on /pril 28+ 2000 and the name of the .ompan" was hanged to Pro*it" Resear h and ,er!i es Limited. 1he name of the .ompan" was hanged to India Infoline. om Limited on -a" 2#+ 2000 and later to India Infoline Limited on -ar h 2#+ 2001. In 1'''+ we identified the potential of the Internet to ater to a mass retail segment and transformed our *usiness model from pro!iding information ser!i es to institutional ustomers to retail ustomers. 2en e we laun hed our Internet portal+ www.indiainfoline. om in -a" 1''' and started pro!iding news and mar0et information+ independent resear h+ inter!iews with *usiness leaders and other spe iali3ed features. In -a" 2000+ the name of our .ompan" was hanged to India Infoline. om Limited to refle t the transformation of our *usiness. )!er a period of time+ we ha!e emerged as one of the leading *usiness and finan ial information ser!i es pro!ider in India. In the "ear 2000+ we le!eraged our position as a pro!ider of finan ial information and anal"sis *" di!ersif"ing into transa tional ser!i es+ primaril" for online trading in shares and se urities and online as well as offline distri*ution of personal finan ial produ ts+ li0e mutual funds and R4I 4onds. 1hese a ti!ities were arried on *" our wholl" owned su*sidiaries. )ur *ro0ing ser!i es was laun hed under the *rand name of %paisa. om through our su*sidiar"+ India Infoline ,e urities Pri!ate Limited and www.%paisa. om+ the e5*ro0ing portal+ was laun hed for online trading in 6ul" 2000. It om*ined ompetiti!e *ro0erage rates and resear h+ supported *" Internet te hnolog" 4esides in!estment ad!i e from an e7perien ed team of resear h anal"sts+ we also offer real time sto 0 quotes+ mar0et news and pri e harts with multiple tools for te hni al anal"sis. / quisition of /gri -ar0eting ,er!i es Limited 89/gri9: In -ar h 2000+ we a quired 100; of the equit" shares of /gri -ar0eting ,er!i es Limited+ from their owners in e7 hange for the issuan e of %08+$82 of our equit" shares. /gri was a dire t selling agent of personal finan ial produ ts in luding mutual funds+ fi7ed deposits+ orporate

P a g e | $$ *onds and post5offi e instruments. /t the time of our a quisition+ /gri operated #2 *ran hes in ,outh and (est India ser!ing more than #0+000 ustomers with a staff of+ appro7imatel" 180 emplo"ees. /fter the a quisition+ we hanged the ompan" name to India Infoline. om <istri*ution .ompan" Limited.

Fac l t es
)ur main offi es are lo ated in appro7imatel" $+000 square feet of offi e spa e lo ated in -um*ai+ India. )ur India Infoline 4ran hes olle ti!el" o up" an additional 10+000 square feet of offi e spa e lo ated throughout India+ /s on -ar h #1+ 200%+ we ha!e 7# *ran hes a ross #& lo ations in India.

T#e ta&le &elo! s#o!s t#e c#an"es n t#e Re" stered Off ce of t#e 2om$an( s nce Incor$orat on*
Pre!ious /ddress 2085.+ /garwal -ar0et+ >ile Pane 8?ast:+ -um*ai 5 $00 0%7. 1+ ,nehdeep+ =o0hale Road+ >ile Parle 8?ast:+ -um*ai 5 $00 0%7. New /ddress 1+ ,nehdeep+ =o0hale Road+ >ile Parle 8?ast:+ -um*ai 5 $00 0%7+ 4uilding No. 2$+ 1st floor+ Nirlon .omple7+ )ff (estern ?7press 2ighwa"+ =oregaon 8?:+ -um*ai 5 $00 00&#. 6an.+1%+ 2001 <ate of .hange /ugust &+ 1'''

Reason for 2#an"e

Requirement of more floor spa e. Requirement of more floor spa e. 1he instan es when the name of the .ompan" was hanged are ited *elow@ Pre!ious Name Pro*it" Resear h and New Name Pro*it" Resear h and

P a g e | $% ,er!i es Pri!ate5Limited Pro*it" Resear h and ,er!i es Limited ,er!i es Limited India Infoline. om Limited

India Infoline. om Limited <ate of .hange /pril 28+ 2000

India Infoline Limited Reason for .hange .on!ersion from Pri!ate Limited to Pu*li Limited .ompan"

-a" 2#+ 2000

1o fo us on the retail finan ial intermediar" *usiness through an online set5up.

-ar h 2#+ 2001

1o fo us on the retail finan ial intermediar" *usiness through offline as well as online set5up.

MAR2+ 855=
5 India Infoline fi7es a pri e *and *etween Rs 70 and Rs 80 for its forth oming pu*li issue. 1he ompan" is oming out with pu*li issue of 1.18 rore shares with a fa e !alue of Rs 10 through the *oo0 *uilding route. 1he issue is slated to open on /pril 21 and lose on /pril 27. ?nam Ainan ial .onsultants Pri!ate Ltd would *e the sole *oo0 running lead manager to the issue while Intime ,pe trum Registr" Ltd is the registrar to the issue. 5India Infoline pu*li issue gets &.& times o!ersu*s ription 5IIL appoints R -ohan as >P

MAR2+ 855;
A India Infoline !td has informed that the 6oard of Directors of the "ompany have vide circular resolution passed on March 4F, #FF9 approved the appointment of Mr. $ N +urwar, exA "hairman of the -tate 6ank of India, as an independent director on the 6oard of the "ompany.

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A India Infoline !td has informed that pursuant to the resignation of Mr. Himish Mehta, "ompany -ecretary and "ompliance 3fficer of the "ompany. Ms. Falguni -anghvi has been appointed as the "ompany -ecretary with effect from 3ctober F/, #FF9. A &he "ompany has splits its face value from :s4F7A to :s#7A.

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O.5ECT#2ES O/ T6E ST1D4

&he ob ective of the research is to study and analy2e the awareness level of investors of mutual funds. &o measure the satisfaction level of investors regarding mutual funds. $n attempt has been made to measure various variable;s playing in the minds of investors in terms of safety, li1uidity, service, returns, and tax saving. &o get insight knowledge about mutual funds 0nderstanding the different ratios & portfolios so as to tell the distributors about these terms, by this, managing the relationship with the distributors &o know the mutual funds performance levels in the present market &o analy2e the comparative study between other leading mutual funds in the present market. &o know the awareness of mutual funds among different groups of investors. Finding out ways and means to improve on the services by #ND#A #N/OL#NE LTD.

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3ESEA3C6 MET6ODOLOG4

My research pro ect has a specified framework for collecting the data in an effective manner. -uch framework is called >:)-)$:". D)-I8H@. &he research process which was followed by me consisted following steps. A. $3O.LEM7 &he problem at hand was to study and measure the awareness level of people regarding mutual funds in the city. .. DE2ELO$#NG T6E 3ESEA3C6 $LAN 7 T% d : +o)- n" o8 3 ( ar!% $+an %a( "% 8o++o'in& S" )(7 4. D$&$ -30:")-< &wo types of data were taken into consideration i.e. -econdary data & primary data. My ma or emphasis was on gathering the primary data. &he secondary data has been used to make things more clear. (i) (ii) $ri-ary Da"a< Direct collection of data from the source of information, technology including personal interviewing, survey etc. S !ondary Da"a< Indirect collection of data from sources containing past or recent past information like 6ank;s 6rochures, $nnual publications, 6ooks, Fact sheets of mutual funds, Hewspaper & Maga2ines etc. #. :)-)$:". IH-&:0M)H&

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$ close friend 1uestionnaire was constructed for my survey. 5uestionnaire consisting of a set of 1uestions made to be filled by various respondents.

%. -$M+!IH8 +!$H &he sampling plan calls for three decisions. a) Sa-)+in& 1ni": I have completed my survey in "handigarh, 0nion &erritory. b) Sa-)+ SiO < &he sample consisted of (F respondents. &he sample was drawn from walk in customers of India Info line !td. &he selection of the respondents was done on the basis of simple random sampling. !) Con"a!" M "%od( I have contacted the respondents through personal interviews. C. "3!!)"&IH8 &.) IHF3:M$&I3H $fter this, I have collected the information from the respondents with the help of 1uestionnaire D. $H$!EQ) &.) IHF3:M$&I3H &he next step is to extract the pertinent findings from the collected data. I have tabulated the collected data & developed fre1uency distributions. &hus the whole data was grouped aspect wise and was presented in tabular form. &hus, fre1uencies & percentages were prepared to render impact of the study. ). +:)-)H&$&I3H- 3F FIHDIH8&his was the last step of the survey.

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DATA $3ESSENTAT#ON, ANAL4S#S AND #NTE3$3ETAT#ON

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COM$A3#SON O/ /O13 MA5O3 M1T1AL /1NDS

/3ANKL#N TEM$LETON #ND#A $3#MA $L1S Mutual Fund Scheme Name Scheme Type Scheme Category aunch !ate Franklin Templeton Mutual Fund Franklin India Prima Plus Open Ended Growth "#$Sep$%##&

S'I M(GN)M G O'(

Mutual Fund Scheme Name O-.ecti/e o0 Scheme S'I Mutual Fund S'I M(GN)M G O'( F)N! #& $ G*O+T, The O-.ecti/e o0 the Scheme is to pro/ide in/estors with ma1imum growth opportunity2

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Scheme Type Scheme Category aunch !ate MinimumSu-scription (mount

Open Ended Growth 34$5un$"336 "333

T(T( 7G*O+T,8 F)N!

Mutual Fund Scheme Name Tata Mutual Fund Tata Growth Fund $ Growth

The in/estment o-.ecti/e o0 the schemes will -e O-.ecti/e O0 Scheme to pro/ide income distri-ution 9 : or medium to long term capital gains2 The scheme will in/est in e;uity and e;uity related instruments o0 well researched growth oriented companies2 Scheme Type Scheme Category Minimum Su-scription *s26333:$ Open Ended Growth

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(mount

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*E I(NCE G*O+T, F)N!

Mutual Fund Scheme Name

*eliance Mutual Fund *eliance Growth Fund

O-.ecti/e o0 Scheme

The primary in/estment o-.ecti/e is to achie/e long term growth o0 capital -y in/esting in e;uity and e;uity related securities through a research -ased in/estment approach

Scheme Type Scheme Category aunch !ate

Open Ended Growth "6$Sep$%##6

Minimum Su-scription (mount 6333

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#n: ("- n" n d(9

/ro- "% a=o: &ra)% i" i( !+ ar "%a" "% r ar -any ) o)+ '%o %a: )ar"i!i)a" d in "% (,r: y and "% -ajor )or"ion o8 "% (,r: y indi!a" ( "%a" "% ) o)+ ar in" r (" d in in: ("in& in -,",a+ 8,nd( 8or "% (a* o "% ir 8a-i+y 8inan!ia+ ( !,ri"y. /ro- "% a=o: &ra)% i" a+(o r : a+( "%a" "% -inor )or"ion o8 "% &ra)% "%a" i( "o =,i+d a !or),( 8or r "ir - n" do ( no" )+ay a -ajor ro+ in "% in: ("- n" d !i(ion(.

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T% ( ar "% 8indin&( 8ro- "% (,r: y '%i!% in!+,d "% n,-= r o8 )ar"i!i)an"( and "% "y) o8 "% )ar"i!i)an"(. T%i( (,r: y in!+,d ( a++ "y) ( o8 )ar"i!i)an"( '%i!% -ay &i: <a!" r (,+"( 8or "% :a+,a"ion

W%i!% o8 "% 8o++o'in& do yo, "%in* a( a "a< (a:in& (!% - 9

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Co-)ari(on +ar& !a) "o) ) r8or-in& M,",a+ 8,nd(

T%i( &ra)% r )r ( n"( "% (!% - a(( "( o8 "% 8o,r -ajor !o-)ani (. T% :a+, ( - n"ion d in "% &ra)% ar in !ror (

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T%i( &ra)% r )r ( n"( "% +a" (" NA2I( :a+, ( o8 a++ "% 8o,r -ajor !o-)ani ( in '%i!% r +ian! !a)i"a+ i( "% on 'i"% %i&% (" NA2 and Ta"a i( "% on 'i"% "% +o' (" NA2.

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T%i( &ra)% ("and( a (y-=o+i! r )r ( n"a"ion o8 "% ann,a+ r ",rn( o8 "% 8o,r -ajor !o-)ani ( "o "% ir !,("o- r( 8or "% +a(" > -on"%(. T%i( :a+, i( o8 1@-ay 200D.

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T%i( &ra)% ("and( a (y-=o+i! r )r ( n"a"ion o8 "% ann,a+ r ",rn( o8 "% 8o,r -ajor !o-)ani ( "o "% ir !,("o- r( 8or "% +a(" A y ar(. T% :a+, i( o8 1@-ay 200D.

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T%i( &ra)% i( "% r (,+" o8 "% dai+y NA2I( o8 "% /ran*+in T -)+ "on #ndia )ri-a )+,( (!% - 8or "% +a(" on and %a+8 y ar.

T%i( a+(o r )r ( n"( "% "r nd o8 "% )r :io,( y ar(. T%i( da"a i( !o++ !" d =y !o++ !"in& "% NA2 :a+, ( o8 "% )r :io,( on and %a+8 y ar "% ir a: ra& i( "a* n -on"%+y and a &ra)% i( dra'n on "% =a(i( o8 "% a: ra& :a+, (.

P a g e | &2

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#n "% (a- -ann r a( <)+ain d a=o: "% r -ainin& "%r

&ra)%( o8 Ta"a Gro'"% 8,nd,

S.# Ma&n,- G+o=a+ 8,nd, r +ian! &+o=a+ 8,nd i( = n dra'n. T%i( &ra)% i( "% r (,+" o8 "% dai+y NA2I( o8 "% /ran*+in T -)+ "on #ndia )ri-a )+,( (!% - 8or "% +a(" on and %a+8 y ar. T%i( a+(o r )r ( n"( "% "r nd o8 "% )r :io,( y ar(.

T%i( da"a i( !o++ !" d =y !o++ !"in& "% NA2 :a+, ( o8 "% )r :io,( on and %a+8 y ar "% ir a: ra& i( "a* n -on"%+y and a &ra)% i( dra'n on "% =a(i( o8 "% a: ra& :a+, (.

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T%i( &ra)%i!a+ r )r ( n"a"ion (%o'( "% ) r! n"a& o8 "% n " a(( "( "% !o-)any %o+d( in " r-( o8 "% d =", ;,i"y and o"% r(. T% a=o: &ra)% (%o'( "% &ra)%i!a+ r )r ( n"a"ion o8 /ran*+in #ndia $ri-a $+,(

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T%i( &ra)%i!a+ r )r ( n"a"ion (%o'( "% ) r! n"a& o8 "% n " a(( "( "% !o-)any %o+d( in " r-( o8 "% d =", ;,i"y and o"% r(. T% a=o: &ra)% (%o'( "% &ra)%i!a+ r )r ( n"a"ion o8 3 +ian! Gro'"% /,nd.

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T%i( &ra)%i!a+ r )r ( n"a"ion (%o'( "% ) r! n"a& o8 "% n " a(( "( "% !o-)any %o+d( in " r-( o8 "% d =", ;,i"y and o"% r(. T% a=o: &ra)% (%o'( "% &ra)%i!a+ r )r ( n"a"ion o8 Ta"a Gro'"% /,nd.

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T%i( &ra)%i!a+ r )r ( n"a"ion (%o'( "% ) r! n"a& o8 "% n " a(( "( "% !o-)any %o+d( in " r-( o8 "% d =", ;,i"y and o"% r(. T% a=o: &ra)% (%o'( "% &ra)%i!a+ r )r ( n"a"ion o8 S.# Ma&n,- G+o=a+ /,nd.

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T% Gra)% i( =a( d on "% in!o- o8 "% !on(,- r and "% ir in: ("- n" in :ario,( (!% - (.

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. !ower income group of below # lakh are more attracted towards the income and money market -chemes as they cannot afford to take too much of risk. II. 6alanced scheme is more popular with the income group of # lakh to * lakh . &his group is even inclined towards growth -chemes to certain extent . III. +ersons with a salary of * lakh and above are fascinated by tax saving and money market schemes.

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T% Gra)% i( (%o'in& "% in8+, n"ia+ 8a!"or a-on& "% !on(,- r.

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 chunk are fascinated by the Hewspapers7 Maga2ine. II. -econd best instrument to fascinate the customer is the internet. 6ecause internet provide the easy and 1uickest way to get the information.

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W%i!% 8a!"or in8+, n! yo, -o(" "o in: (" "%ro,&% #ndia #n8o+in L"d9 F$"&3:6ank -ervices -afety Dord 3f Mouth $dvertisement +ast )xperience #FG '#G 4'G *G 49G +):")H&$8)

#NTE3$3ETAT#ON Dhen asked that what factor affect most while investing in Mutual Funds through India Infoline !td than wide preference is given to safety. '#G investors choose safety.#FG bank services, 49G past experience, 4'G word of mouth and *G advertisement.

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To %o' -,!% <" n" ar yo, (a"i(8i d 'i"% "% ( r:i! ( o88 r d =y #ndia #n8o+in L"d9

)xtremely -atisfied -atisfied &o !esser )xtent Dissatisfied &o !esser )xtent )xtremely Dissatisfied

9FG 4FG (G (G

INTERPRETATION

3ut of the respondents 9FG are extremely satisfied with the services offered by India Infoline !td 4FG are satisfied to lesser extent, (Gare extremely dissatisfied.

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#NTE3$3ETAT#ON

$s FII;s have entered Indian markets -ensex have crossed 4FFFF mark and investors have earned a lot in last financial year. Indians are becoming aware of various investment options. +eople have started taking risk as they want to book profits. Investors prefer more e1uity schemes than debt schemes, around *FG of the investors invest in e1uity schemes and balanced schemes. Investors want to take risk as they want to yield better returns. Investors want high returns, li1uidity, safety and tax benefit. $mong all investors gives want to have safety for their money. $round ,4G of the investors prefer open ended schemes rather than close ended schemes as there is flexibility in open ended schemes. Investors prefer both systematic investment plan and lump sum. It depends upon the availability of funds that the investor wants to invest in -I+ or as lump sum. -ome of the investors invest in both ways i.e. through -I+ as well as lump sum. 6asically it depends upon the availability of fund. Dhen 1uestions were asked about the performance of mutual funds in future (FG of investors said strong future, %(G of the investors said very strong future and 4(G of the investors said moderate future.

3ECOMMENDAT#ONS AND S1GGEST#ONS7

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"ustomer education of the salaried class individuals is far below standard. &hus $sset Management "ompany;s need to create awareness so that the salaried class people become the prospective customer of the future. )arly and mid earners bring most of the business for the $sset Management "ompany;s. $sset Management "ompany;s thus needed to educate and develop schemes for the person;s who are at the late earning or retirement stage to gain the market share. :eturn;s record must be focused by the sales executives while explaining the schemes to the customer. +ointing out the brand name of the company repeatedly may not too fruitful. &he target market of salaried class individual has a lot of scope to gain business, as they are more fascinated to Mutual Funds than the self employed. -chemes with high e1uity level need to be targeted towards self employed and professionals as they re1uire high returns and are ready to bear risk. -alary class individuals are risk averse and thus they must be assured of the advantage of >risk ? diversification@ in Mutual Funds. &here should be given more time & concentration on the &ierA% distributors. &he resolution of the 1ueries should be fast enough to satisfy the distributors. &ime to time presentation7training classes about the products should be there. &here should be more number of :elationship Managers in different :egions because one :M can handle a maximum of 4#( distributors efficiently and also to cover untapped market. :egular activities like canopy should be done so as to get more interaction with the distributors. :egular session should be organi2ed on the handling of the india infoline software so as to resolve the account statement problem. $ll the persons who have cleared the $MFI exam should be empanelled with Mutual Fund so as to be largest distributor base.

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-hould have to provide more advertisements, canopies in the shopping mall, main markets because 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.

CONCL1S#ON
&hese were my ob ectives of my pro ect &o get an insight knowledge about mutual funds 0nderstanding the different ratios & portfolios so as to tell the distributors about these terms, by this, managing the relationship with the distributors &o know the mutual funds performance levels in the present market &o analy2e the comparative study between other leading mutual funds in the present market. &o know the awareness of mutual funds among different groups of investors. &o evaluate consumer feedback on mutual funds Finding out ways and means to improve on the services by india infoline ltd. I satisfied my ob ectives of the pro ect in the following manner 4. "omplete insight knowledge about the mutual funds were mentioned in the pro ect #. Different ratios with complete graphical representation were explained in the pro ect %. &o 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. '. &o know the consumer awareness I have done the survey using different customers so as to analyse the views about the mutual funds and perception of the customer in the present scenario. (. &o evaluate the ways and means to improve india infoline ltd. I have mentioned various suggestions that are listed above

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A$$END#0

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M1EST#ONNA#3E
$E3SONAL DETA#LS7
Name< Mo-ile Num-er< (dress<======================================================= ============================================================= ============================================================= ============================================================= =============================== Occupation< ===================== (ge< ============================

1. O8 "% 8o++o'in& '%a" a" )r ( n" ar yo,r in: ("- n" n d(9 a. &o build a corpus for retirement b. &o save for children education7 marriage c. &o provide for medical emergencies d. &o provide for family financial security e. &o create wealth f. $ll of the above

2. W%i!% o8 "% 8o++o'in& yo, "%in* a( in: ("- n" 8or "a<- (a:in&9

a. Mutual funds b. Fixed deposit c. Insurance d. +pf e. $ll of the above

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>. 6a: yo, : r = n in: (" d in -,",a+ 8,nd(9 a. Ees b. Ho

@. #8 yo, %ad 3( 1000P- '% r yo, )r 8 r "o in: (" a. Mutual fund b. Fixed deposit c. Direct e1uity d. !ife insurance e. +ostal office deposit

(. O," o8 "% 8o++o'in& in '%i!% M,",a+ /,nd yo, %a: in: (" d9
a= *: &ata Mutual Fund . : Franklin &empleton . d: :eliance . e: I"I"I +rudential . f: -6I . g= 3ther If any ,+lease -pecify

*. To %o' -,!% <" n" ar yo, (a"i(8i d 'i"% "% ( r:i! ( o88 r d =y india in8o+in +"d r &ardin& -,",a+ 8,nd(9 a= )xteremly satisfied. b= -atisfied to the lesser extent d= Dissatisfied to lesser extent e= )xtremely dissatisfied.

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C. O," o8 "% 8o++o'in& '%i!% o)"ion 'o,+d yo, )r 8 r 9 a= "lose ended . b= 3pen ended .

8. Do yo, )r 8 r S#$ (Sy(" -a"i! #n: ("- n" $+an) or in: ("in& +,-) (,-9 a= b= -I+ !ump sum

c= Depends upon the financial condition

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/inan!ia+ ("a" - n"( o8 india in8o+in +"d. .a+an! (% "

./')in Million'0

Particulars S12/34S 1% %2+5S ! S!are 3a,ital S!are 6arrant' 7 18t'tan&ing'

! /e'erve' 7 S8r,l8'

Mar 2009 66.80 1$6)19 9778.8$ 10481)81 "7.0$ ".0# 18)08 104;;)8; 0 14$6)99 44;)4# 0 ;89)$2 0 4#)1$ 0 0 869#."2 0 .6" "0# .29 $#02.$9 0 2$0 .9" 994;)$0 26.7 "$86.#9 901$)1# 9$6)16 0 $8)1# 0)00

Mar 2008 7".0# 668)64 92 6.60 104;6)28 0 "#0 .68 1$0#)68 11801);# 0 ;8$)18 $#0)99 0 6$2)41 0 4);1 0 0 9" 6.80 0)00 "#.09 #$28."# 2"$#.7" 0.00 #""2.99 86;9);2 "$8. $ " 67.$$ 691#);8 1;81);4 0 2#)8; 0)00

Mar 2007 0".67 ##)19 2#$0.8" 28;9)6# $$6.82 #62.70 80;)#2 $909)19 0 9$0);; 24$)8# 0)00 489)14 0)00 0)00 0)00 0 "7"$. 0 0 0.00 "#07.2# 9 0.79 0.00 2"97.$0 44##)42 2$$ .20 "0.26 2;##)4# 14;;);9 0 #)80 0)2#

Mar 2006 $ ".0" 44)20 "2#8.#$ 19$$)## " .0" 808.8 82$)89 2##9)42 0 89)48 #2)$1 0 $#)19 0 0 0 0 "002.$9 0)00 0 $.88 20.9" 0.00 "72".6# 19;9)42 76.69 202.99 29;)68 1#19)94 0 2)01 0)00

Mar 200 #"6.22 0)00 207.0 #2$)29 "#.69 2.00 1#)68 #$8);# 0 44)94 $9)61 0 9)1$ 0 0 0 0 $0#.09 1)#6 0 "$.90 20.## 0.00 "##.8 16;)08 2#.88 "6.$7 40)$# 128)9$ 0 0)00 0)00

S!are!ol&er:' %8n&'
! Sec8re& Loan' ! 2n'ec8re& Loan'

Total 5ebt' Total Liabilitie' A<<L"3AT"1+ 1% %2+5S = ! Loan' .+on 38rrent A''et'0 ro'' Block Le''= Acc8m8late& 5e,reciation Le''= "m,airment o> A''et' +et Block Lea'e A&?8'tment A(c 3a,ital 6ork in <rogre'' <re@o,erative 4x,en'e' ,en&ing A''et' in tran'it ! "nve'tment' Market *al8e o> A8ote& "nve'tement' 38rrent A''et'B Loan' 7 A&vance' ! "nventorie'
! S8n&ry 5ebtor' ! 3a'! an& Bank ! 1t!er 38rrent A''et' ! Loan' an& A&vance'

Total 38rrent A''et' Le'' = 38rrent Liabilitie' an& <rovi'ion' ! 38rrent Liabilitie'
! <rovi'ion'

Total 38rrent Liabilitie' +et 38rrent A''et' Mi'cellaneo8' 4x,en'e' not written o>> 5e>erre& Tax A''et' 5e>erre& Tax Liability

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5e>erre& Tax A''et' ( Liabilitie' Total A''et' 3ontingent Liabilitie' $8)1# 104;;)8; $)41 2#)8; 11801);# 0 #)#6 $909)19 0 2)01 2##9)42 0 0 #$8);# 0

$ro8i" and +o(( a!!o,n"

./')in Million'0

Particulars No of Months ! 1,erating "ncome "ntere't income +et Sale' 4C<4+5"T2/4 = "ncrea'e(5ecrea'e in Stock <8rc!a'e o> S!are' ( 2nit' 4m,loyee 3o't ! 1,erating 7 4'tabli'!ment 4x,en'e'
! A&mini'tration' 7 1t!er 4x,en'e'

Mar 2009 "2 7" .# 0 #91#)$# 0 0 140;)$9 "82$.72 90. $ ;);0 0 $8$4)#2 1880)82 ".0" 1881)84 """.$7 2##)61 1#14)96 0 1#14)96 $ 6. 0 10#8)2# 2287.$0 140)00 $)91 $6)#1

Mar 2008 "2 6 7 .#6 0)00 6#9#)$6 0 0 1$2#)42 "990.92 97.6" 21)$1 0 $;$#)29 2640)0; "$9.0$ 298;)14 228.22 1;4)40 2$66)#2 @2;0)44 2096)09 789.20 1286)89 "760.99 60)00 22)#4 192)10

Mar 2007 Mar 2006 Mar 200 "2 "2 "2 2828.$6 $$9."2 2"#."7 0)00 0)00 0)00 2828)46 0)00 0)00 #$;);6 96#.#9 #$0."$ 20)6; 0 1864)18 ;64)28 #8.7" 1002);; 8#. # 12$)29 9;6)1; 0)00 9;6)1; 27$.97 #21)22 60$.69 $0)00 10)$; #6)66 44;)12 0 0 0)$8 7.9" $".68 0)#$ 0 #0)4; $;8)6$ # . 4$4)18 2".97 14)90 $;9)#1 0 $;9)#1 "#2.8" 264)6; 26 .$9 $0)00 #)89 $9)46 21$)19 0 0 0)66 6.7 "7.8# 1)$1 0 26)## 186)62 9."9 1;#)81 0.$# #)24 1;0)14 0 1;0)14 " .$0 194)94 0.79 0 #)#$ 16)##

<rovi'ion' an& 3ontigencie' Le''= <re@o,erative 4x,en'e' 3a,itali'e& Total 4x,en&it8re 1,erating <ro>it .4xcl 1"0 ! 1t!er "ncome 1,erating <ro>it
! "ntere't

5e,reciation <ro>it Be>ore Taxation 7 4xce,tional "tem' 4xce,tional "ncome ( 4x,en'e' <ro>it Be>ore Tax ! <rovi'ion >or Tax <ro>it' A>ter Tax
! A,,ro,riation'

4D8ity 5ivi&en& % 4arning' <er S!are Book *al8e

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GLOSSA34 O/ SOME CONCE$TS

AMC &he $M" 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. -)6I specifies that an $M" must be separate entity the trust that manages it. NA2 It is the value of unit of a Mutual Fund scheme and represents its true worth. H$I is arrived at by dividing total value of all investment made under the scheme by number of units of the scheme. H$I is critical yardstick of the funds performance. 1N#TS 0nits in a mutual fund scheme are similar to shares of a oint company. &hese are always in denominations of :s. 4F each the sum total of all the units constitutes corpus of mutual fund. S$ONSO3S -ponsor of a mutual fund are those who establish the mutual fund trust and the $M" they constitute the shareholders of the $M" and receive dividends on profits made by the $M". -)6I rules stipulate that mutual fund trust as well as the $M" must maintain an arms length relationship with the sponsors to avoid any conflict to interests, which may affect the unit holders. #NCOME /1ND &hese Funds invest largely in fixed income securities like bonds and debentures. -uch funds earn returns more regularly than a growth fund but level of returns over longer periods normally lag behind those offered by growth funds while returns in such funds may be regular, their scale may fluctuate depending upon the prevalent interest rates and credit 1uality of the debt securities.

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G3OWT6 /1NDS 8rowth funds predominantly invest in stock market securities and carry risks larger than income funds. -ince stock markets travel through a natural cycle of boom and bursts one should normally stay invested ine1uity funds for a longer times to earn higher returns. )1uity funds may earn higher but they also carry larger risks. For risk taking investor e1uity are best suited. .ALANCED /1NDS $ balanced fund is the mixture of income fund and growth fund invested partly in e1uity to achieve a tradeAof between risk and return. CLOSE ENDED In a closeAended fund an investor is allowed to subscribe only during the period of the initial offer. "loseAended funds mature after a specified period. O$EN ENDED /1NDS &hose funds in which investor can invest & withdraw whenever they wish, after the close of initial offer. Dithdrawals are allowed at H$I minus a back end load. LOCK #N $E3#OD &ime period during which investor can neither redeem nor they transfer their holdings to others. !ock in period is imposed to allow fund manager to deploy money for an ade1uate period of time to earn a reasonable return premature withdrawals may destabili2e the fund & are not beneficial to the interests of investors. MANAGEMENT /EES $n $M" that mangers & markets a mutual fund scheme is entitled to a management feeS 4G to #(G of the total funds managed, it could be charged to the scheme irrespective of the performance of the scheme. 3EDEM$T#ON Disbursement of unit capital on the maturity of that particular scheme to all its existing unit holders. MA3KET $3#CE &he price at which units of mutual funds are 1uoted in stock exchange where they are listed.

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3EG#ST3A3 3rgani2ation appointed by an $M" to the schemes it is registered, monitored, and regulated by -)6I, it provides re1uired services like system capabilities back up, accepts and processes investors applications in informs $M" about amounts received7disbursed for subscription7 purchase7 redemption it also handles communications with investors, perform data entry services and dispatches account statements. C1STODA#N 6anking organi2ation that keeps in safe custody all the securities & other instruments belonging to the fund to insure smooth inflow & outflow of securities. It is also approved regulated and registered with -)6I. E0#T LOAD Ialue of deduction from H$I on the date when one choose to withdraw from a fund, load is imposed because withdrawals carry transaction cost to $M" it can not be more than *G of H$I of corpus as prescribed by -)6I many schemes offer redemption facility without exit load. ENT34 LOAD "harge paid by 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. L#M1#D#T4 $bility of investors to change its unit into cash within minimum time as and when he needs money. T3ANS$A3ENC4 6asic feature of mutual funds is transparency, their functioning is very efficient, well monitored & transparent working of $M" is regulated by -)6I it is audited weekly, it has to work under strict guidelines issued by -)6I, and its H$I is calculated and published daily so that there is no chance of any default in the working of Mutual Funds.

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