PROJECT ON

“A study of Mutual Fund special reference

To

TATA MUTUAL FUND”

SUBMITTED BY:

NAME:-VIJAY KUMAR

ROLL NO:-0811002585

PGPM (3-years)

INSTITUTE OF MANAGEMENT TECHNOLOGY

GHAZIABAD
 Acknowledgement

We take the opportunity to express our gratitude to all the

respondents, who has helped us to achieve such results and
finish the project on time. This project could not have been
possible without their dedication, patience, assistance and
cooperation.

We thank our seniors Jasvinder Oberoi for helping us when

we needed some guidance for the project. We particularly
gratify prof. Arun Gupta for his guidance throughout the
project. We thank our mentor CA Pankaj Jain for providing
us with all the necessary statistics. We also thank our parents
who have selflessly financed our project work.

As we all know this project is very important for us for the

partial fulfilment of PGPM. As this project will provide us
with knowledge far greater than what we have in the books.
So the importance of this project is far greater than only
educational qualification.

Above all, we thank GOD, Almighty for the immense wishes

and blessings that gave us motivation and confidence to
complete this project on time.
 Verified respondents

S. No. Name Sex Age

2 Ankita saigal F 23
3 Abhilasha Gupta F 27
5 Akhilesh Jadav M 19
8 Bani walia F 24
9 Bandana Sharma F 22
10 Bhavna Kaur F 25
12 Danny Khanna M 28
17 Dimple Khanna F 23
18 Disha Kaur F 22
19 Deepshika Garg F 37
20 Dipali Jain F 24
21 Esha Kaur F 22
22 Fatema Begam F 28
23 Godhuli Agarwal F 31
24 Ganga Virani F 23
25 Gourav Sexana M 27
26 Himani Agarwal F 25
27 Jyoti Agarwal F 21
28 Janvi Kapoor F 25
30 Kangna Rai F 28
33 Karthik Chauhan M 28
34 Koyel Kundu F 22
35 Khusboo F 21
36 Kajol Sharma F 22
37 Latika gupta F 27
39 Manisha Saha F 23
40 Mousumi Ghosh F 24
42 Madhushree Mondal F 32
43 Manisha Chakraborty F 30
44 Monijita Moitra F 25
45 Natasha Srivastav F 33
47 Nandini Pradhan F 36
48 Neha Verma F 32
49 Neha Gupta F 22
50 Nikita Singh F 37
51 Nikita Shah F 38
52 Naina Sharma F 29
53 Payel Basu F 49
54 Piyali Basu F 30
55 Piya Chatterjee F 22
56 Priyanka Pal F 34
57 Pritha Mittal F 22
58 Priyambada Sharma F 25
59 Pratiksha Gupta F 37
60 Priyanka Chaudhury F 38
61 Pallavi Saxena F 27
62 Pritanjali Alluwalia F 36
63 Rimpa Pal F 32
64 Rajni Banerjee F 34
65 Reshmi Gupta F 31
66 Rupsa Banerjee F 32
67 Rupal Srivastav F 22
68 Somoshree Sinha F 30

70 Sonalika Biswas F 33
71 Sonhar Singh M 42
73 Sonali Singh F 50
74 Shreya Dey F 55
75 Sahana Dutta F 56

77 Sikha Agarwal F 40
78 Soma Kundu F 41

80 Sriji Mehta F 39
81 Sriparna Majumder F 43
82 Sukla Sarkar F 58
83 Suparna Chakraborty F 60

85 Sukla Sarkar F 40
86 Subha Gupta F 41
87 Suchi Singh F 39
88 Sunny Manchandani M 33
89 Sahana Dutta F 50
90 Sangita Chauhan F 31
91 Sikha Agarwal F 33
92 Soma Kundu F 27

94 Suchita Singh F 45
95 Sabita Kapoor F 40

97 Tanushree Ghosh F 34
98 Taniya Thakur F 32

100 Vaibhab Tripathy M 65

 Preface
There are a lot of investment avenues available today in the
financial market for an investor with an investable surplus.
He can invest in Bank Deposits, Corporate Debentures, and
Bonds where there is low risk but low return. He may invest
in Stock of companies where the risk is high and the returns
are also proportionately high. The recent trends in the Stock
Market have shown that an average retail investor always
lost with periodic bearish tends. People began opting for
portfolio managers with expertise in stock markets who
would invest on their behalf. Thus we had wealth
management services provided by many institutions.
However they proved too costly for a small investor. These
investors have found a good shelter with the mutual funds.

Mutual fund industry has seen a lot of changes in past few

years with multinational companies coming into the country,
bringing in their professional expertise in managing funds
worldwide. In the past few months there has been a
consolidation phase going on in the mutual fund industry in
India. Now investors have a wide range of Schemes to
choose from depending on their individual profiles.
 Contents
 Design of the study:
o Introduction of the study
o Objectives
o Statement of the problem
o Scope of the study
o Methodology of data collections
o Limitation of the study
Design
Of
The
Study
 Introduction to the study
A Mutual Fund is a trust that pools the savings of a number
of investors who share a common financial goal. The money
thus collected is then invested in Capital Market.

Instruments such as shares, debentures and other securities.

The
earned through these investments and the capital
appreciation realised are shared by its unit holders in
proportion to the number of units owned by them. Thus a
Mutual Fund is the most suitable investment for the common
man as it offers an opportunity to invest in a diversified,
professionally managed basket of securities at a relatively
low cost. The flow chart below describes broadly the
working of a mutual fund:

Mutual Fund Flow Chart

Classification of mutual funds in India-

1. Open-ended funds: Investors can buy and sell units of

open-ended funds at NAV-related price every day. Open-end
funds do not have a fixed maturity and it is available for
subscription every day of the year. Open-end funds also offer
liquidity to investments, as one can sell units whenever there
is a need for money.

2. Close-ended funds: These funds have a stipulated

maturity period, which may vary from three to 15 years.
They are open for subscription only during a specified
period. Investors have the option of investing in the scheme
during initial public offer period or buy or sell units of the
scheme on the stock exchanges. Some close-ended funds
repurchase the units at NAV-related prices periodically to
provide an exit route to the investors.

3. Interval Funds: These funds combine the features of both

open and close-ended funds. They are open for sale and
repurchase at a predetermined period.

4. Growth funds: They normally invest most of their corpus

in equities, as their objective is to provide capital
appreciation over the medium-to-long term. Growth schemes
are ideal for investors with risk appetite.

5. Income funds: As the name suggests, the aim of these

funds is to provide regular and steady income to investors.
They generally invest their corpus in fixed income securities
like bonds, corporate debentures, and government securities.
Income funds are ideal for those looking for capital stability
and regular income.

6. Balanced funds: The objective of balanced funds is to

provide growth along with regular income. They invest their
corpus in both equities and fixed income securities as
indicated in the offer documents. Balanced funds are ideal
for those looking for income and moderate growth.

7. Money market funds: These funds strive to provide easy

liquidity, preservation of capital and modest income. MMFs
generally invest the corpus in safer short-term instruments
like treasury bills, certificates of deposit, commercial paper
and inter-bank call money. Returns on these schemes hinges
on the interest rates prevailing in the market. MMFs are ideal
for corporate and individual investors looking to park funds
for short period.

8. Tax saving schemes: Tax saving schemes or equity-linked

savings schemes offer tax rebates to investors under section
88 of the Income Tax Act. They generally have a lock-in
period of three years. They are ideal for investors looking to
exploit tax rebates as well as growth in investments.

9. Special schemes: These schemes invest only in the

industries specified in the offer document. Examples are
InfoTech funds, FMCG funds, pharma funds, etc. These
schemes are meant for aggressive and well-informed
investors.

10. Index funds: Index Funds invest their corpus on the

specified index such as BSE Sensex, NSE index, etc. as
mentioned in the offer document. They try to mimic the
composition of the index in their portfolio. Not only are the
shares, even their weight age replicated. Index funds are a
passive investment strategy and the fund manager has a
limited role to play here. The NAVs of these funds move
along with the index they are trying to mimic save for a few
points here and there. This difference is called tracking error.

11. Sector specific schemes: These funds invest only

specified sectors like an industry or a group of industries or
various segments like ‘A' Group shares or initial public
offerings.

Features of mutual funds in India-

Affordability: Mutual funds allow you to start with small

investments. For example, if you want to buy a portfolio of
blue chips of modest size, you should at least have a few
lakhs of rupees. A mutual fund gives you the same portfolio
for meagre investment of Rs 1,000-5,000. A mutual fund can
do that because it collects money from many people and it
has a large corpus.

Professional management: The major advantage of

investing in a mutual fund is that you get a professional
money manager for a small fee. You can leave the
investment decisions to him and only have to monitor the
performance of the fund at regular intervals.

Diversification: Considered the essential tool in risk

management, mutual funds makes it possible for even small
investors to diversify their portfolio. A mutual fund can
effectively diversify its portfolio because of the large corpus.
However, a small investor cannot have a well-diversified
portfolio because it calls for large investment. For example, a
modest portfolio of 10 blue-chip stocks calls for a few a few
thousands.

Convenience: 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 about the investment decisions or
they do not have to deal with their brokerage or depository,
etc. for buying or selling of securities. Mutual funds also
offer specialized schemes like retirement plan, children's
plan, 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.
Cost effectiveness: A small investor will find that a mutual
fund route is a cost effective method. AMC fee is normally
2.5% and they also save a lot of transaction costs as they get
concession from brokerages. Also, they get the service of a
financial professional for a very small fee. If they were to
seek a financial advisor's help directly, they may end up pay
more. Also, the size of the corpus should be large to get the
service of investment experts, who offer portfolio
management.

Liquidity: You can liquidate your investments anytime you

want. Most mutual funds dispatch checks for redemption
proceeds within two or three working days. You also do not
have to pay any penal interest in most cases. However, some
schemes charge an exit load.

Tax breaks: You do not have to pay any taxes on dividends

issued by mutual funds. You also have the advantage of
capital gains taxation. Tax-saving schemes and pension
schemes give you the added advantage of benefits under
Section 88. Investments up to Rs 10,000 in them qualify for
tax rebate.

Transparency: Mutual funds offer daily NAVs of schemes,

which help you to monitor your investments on a regular
basis. They also send quarterly newsletters, which give
details of the portfolio, performance of schemes against
various benchmarks, etc. They are also well regulated and
Sebi monitors their actions closely.
Mutual Fund Industry-Past Vs
Present:
Historians are uncertain of the origins of investment
funds; some cite the closed-end investment companies
launched in the Netherlands in 1822 by King William I
as the first mutual funds, while others point to a Dutch
merchant named Adriaan van Ketwich whose
investment trust created in 1774 may have given the
king the idea. Ketwich probably theorized that
diversification would increase the appeal of investments
to smaller investors with minimal capital. The name of
Ketwich's fund, Eendragt Maakt Magt, translates to
"unity creates strength". The next wave of near-mutual
funds included an investment trust launched in
Switzerland in 1849, followed by similar vehicles
created in Scotland in the 1880s.

The idea of pooling resources and spreading risk using

closed-end investments soon took root in Great Britain
and France, making its way to the United States in the
1890s. The Boston Personal Property Trust, formed in
1893, was the first closed-end fund in the U.S. The
creation of the Alexander Fund in Philadelphia in 1907
was an important step in the evolution toward what we
know as the modern mutual fund. The Alexander Fund
 featured semi-annual issues and allowed investors to
make withdrawals on demand.
In 1920s and 1930s, the Mutual Fund popularity reached
a new high. There was record investment done in mutual
funds. But, before 1920s,the mutual funds were not like
the modern day mutual funds.

The modern day mutual funds came into existence in

1924, in Boston. Massachusetts Investors Trust
introduced the Modern Mutual Funds and the funds
were available from 1928. At present this Massachusetts
Investors Trust is known as MFS Investment
Management Company. After the glorious year of 1928,
Mutual fund ideas expanded to different levels and
different regulations came for well functioning of the
funds.

Mutual funds really captured the public's attention in the

1980s and '90s when mutual fund investment hit record
highs and investors saw incredible returns.

The origin of mutual fund industry in India is with the

introduction of the concept of mutual fund by UTI in the year
1963. Though the growth was slow, but it accelerated from
the year 1987 when non-UTI players entered the industry.
Phase 1. Establishment and Growth of Unit Trust of
India - 1964-87
Unit Trust of India enjoyed complete monopoly when it was
established in the year 1963 by an act of Parliament. UTI
was set up by the Reserve Bank of India and it continued to
operate under the regulatory control of the RBI until the two
were de-linked in 1978 and the entire control was tranferred
in the hands of Industrial Development Bank of India (IDBI).
UTI launched its first scheme in 1964, named as Unit
Scheme 1964 (US-64), which attracted the largest number of
investors in any single investment scheme over the years.

UTI launched more innovative schemes in 1970s and 80s to

suit the needs of different investors. It launched ULIP in
1971, six more schemes between 1981-84, Children's Gift
Growth Fund and India Fund (India's first offshore fund) in
1986, Mastershare (Inida's first equity diversified scheme) in
1987 and Monthly Income Schemes (offering assured
returns) during 1990s. By the end of 1987, UTI's assets under
management grew ten times to Rs 6700 crores.
Phase II. Entry of Public Sector Funds - 1987-1993
The Indian mutual fund industry witnessed a number of
public sector players entering the market in the year 1987. In
November 1987, SBI Mutual Fund from the State Bank of
India became the first non-UTI mutual fund in India. SBI
Mutual Fund was later followed by Canbank Mutual Fund,
LIC Mutual Fund, Indian Bank Muatual Fund, Bank of India
Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By
1993, the assets under management of the industry increased
seven times to Rs. 47,004 crores. However, UTI remained to
be the leader with about 80% market share.
Mobilis
ation as
Amou Assets
199 % of
nt Under
2- gross
Mobil Manage
93 Domesti
ised ment
c
Savings
UT
11,057 38,247 5.2%
I
Pub
lic
1,964 8,757 0.9%
Sec
tor
Tot
13,021 47,004 6.1%
al

Phase III. Emergence of Private Secor Funds - 1993-96

The permission given to private sector funds including
foreign fund management companies (most of them entering
through joint ventures with Indian promoters) to enter the
mutal fund industry in 1993, provided a wide range of choice
to investors and more competition in the industry. Private
funds introduced innovative products, investment techniques
and investor-servicing technology. By 1994-95, about 11
private sector funds had launched their schemes.
Phase IV. Growth and SEBI Regulation - 1996-2004
The mutual fund industry witnessed robust growth and
stricter regulation from the SEBI after the year 1996. The
mobilisation of funds and the number of players operating in
the industry reached new heights as investors started
showing more interest in mutual funds.

Invetors' interests were safeguarded by SEBI and the

Government offered tax benefits to the investors in order to
encourage them. SEBI (Mutual Funds) Regulations, 1996
was introduced by SEBI that set uniform standards for all
mutual funds in India. The Union Budget in 1999 exempted
all dividend incomes in the hands of investors from income
tax. Various Investor Awareness Programmes were launched
during this phase, both by SEBI and AMFI, with an objective
to educate investors and make them informed about the
mutual fund industry.

In February 2003, the UTI Act was repealed and UTI was
stripped of its Special legal status as a trust formed by an Act
of Parliament. The primary objective behind this was to
bring all mutal fund players on the same level. UTI was re-
organised into two parts: 1. The Specified Undertaking, 2.
The UTI Mutual Fund
Presently Unit Trust of India operates under the name of UTI
Mutual Fund and its past schemes (like US-64, Assured
Return Schemes) are being gradually wound up. However,
UTI Mutual Fund is still the largest player in the industry. In
1999, there was a significant growth in mobilisation of funds
from investors and assets under management which is
supported by the following data:
GROSS FUND MOBILISATION
(RS. CRORES)
PUBL PRIV
FR IC ATE TOT
TO UTI
OM SECT SECT AL
OR OR
31-
01-
Mar 11,6 21,37
Apri 1,732 7,966
ch- 79 7
l-98
99
31-
01-
Mar 13,5 59,74
Apri 4,039 42,173
ch- 36 8
l-99
00
31-
01-
Mar 12,4 92,95
Apri 6,192 74,352
ch- 13 7
l-00
01
01- 31- 4,64 13,613 1,46,26 1,64,5
Apri Mar 3 7 23
l-01 ch-
 02
01- 31-
5,50 2,20,55 2,48,9
Apri Jan- 22,923
5 1 79
l-02 03
31-
01-
Mar 65,69
Feb. * 7,259* 58,435
ch- 4
-03
03
31-
01-
Mar 5,21,63 5,90,1
Apri - 68,558
ch- 2 90
l-03
04
31-
01-
Mar 1,03,2 7,36,41 8,39,6
Apri -
ch- 46 6 62
l-04
05
31-
01-
Mar 1,83,4 9,14,71 10,98,
Apri -
ch- 46 2 158
l-05
06

ASSETS UNDER
MANAGEMENT (RS. CRORES)
PUBLI PRIVA
AS C TE TOT
UTI
ON SECT SECTO AL
OR R
 31-
53,3
Marc 8,292 6,860 68,472
20
h-99

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and
acquisitions recently, examples of which are acquisition of
schemes of Alliance Mutual Fund by Birla Sun Life, Sun
F&C Mutual Fund and PNB Mutual Fund by Principal
Mutual Fund. Simultaneously, more international mutal fund
players have entered India like Fidelity, Franklin Templeton
Mutual Fund etc. There were 29 funds as at the end of March
2006. This is a continuing phase of growth of the industry
through consolidation and entry of new international and
private sector players.
TATA INFRASTRUCTURE FUND PROFILE
HIGHLIGHTS / SUMMARY OF THE SCHEME
Name of the Scheme Tata Infrastructure Fund (TISF)
Type of Scheme An open ended equity scheme.
Investment Objective
The investment objective of the scheme is to provide
income distribution and / or medium to long term
capital gains by investing predominantly in equity /
equity related instruments of the companies in the
infrastructure sector.
Liquidity
The scheme is an open ended scheme. This scheme is
open for resale and repurchase of units at NAV
based price, with applicable loads, if any on every
business day on an ongoing basis.
Benchmark BSE SENSEX
Transparency of operation / NAV
Disclosure Determination of Net Asset Value (NAV) on
all business days.
Load (SIP / STP & non SIP)
Entry Load: Nil (Not applicable w.e.f August 1, 2009)
Exit Load:
1% of the applicable NAV, if redeemed on or before
expiry of 365 days from the date of allotment.
For Subscriptions by way of SIP / STP: 1% of the
applicable NAV, if redeemed on or before expiry of 24
months from the date of allotment.
The above load structure would be applicable for SIP
amount upto Rs 50 Lakhs per installment. For SIP
installment above Rs 50 Lakhs the prevailing load
structure for investment other than SIP will be
applicable.
Minimum subscription under each
Plan
Dividend Option: Rs. 5,000/- and in multiples of Re. 1/-
thereafter.
Growth Option: Rs. 5,000/- and in multiples of Re. 1/-
thereafter.
For additional investment Rs. 1,000/- and multiples of
Re. 1/- thereafter
Duration of the Schemes The scheme, being an open
ended scheme, has perpetual duration
Investment Options
The scheme offers two options for investments:
a) Dividend Option (payout / re-investment)
b) Growth Option*
* Growth Option offers an ‘NAV Appreciation Trigger
Facility’ under which if the NAV of this option
appreciates by 5% or 10% from the investors’ cost of
acquisition then appreciated amount i.e. 5% or 10%
as opted by the investor is either redeemed or swept to
‘Tata Floater Fund – Growth Option’ as per the
mandate given by the investor.
Kindly refer page no18 for further details on this facility.
A Mutual Fund - sponsored by Tata Sons Limited
(TSL) and Tata Investment Corporation Limited (TICL).
The Scheme is managed by Tata Asset
Management Limited (TAML).
Eligible for investment by banks, financial
institutions, bodies corporates, individual investors, etc.
Interpretation
For all purposes of this Scheme Information Document
(SID), except as otherwise expressly provided or
unless the context otherwise requires:
The terms defined in this SID includes the plural as
well as the singular.
Pronouns having a masculine or feminine gender
shall be deemed to include the other.
The term “Scheme” refers to both the options i.e.
Growth Option (including trigger facility) and Dividend
Option (Reinvestment & Payout)
I. INTRODUCTION
A. RISK FACTORS
Standard Risk Factors:
Investment in Mutual Fund Units involves investment
risks such as trading volumes, settlement risk, liquidity
risk, default risk including the
possible loss of principal.
As the price / value / interest rates of the securities in
which the scheme invests fluctuates, the value of your
investment in the scheme may go
up or down
Mutual Funds and securities investments are subject
to market risks and there can be no assurance and no
guarantee that the Scheme will
achieve its objective.
As with any investment in stocks, shares and
securities, the NAV of the Units under this Scheme can
go up or down, depending on the factors
and forces affecting the capital markets.
Past performance of the previous Schemes, the
Sponsors or its Group / Affiliates / AMC / Mutual Fund
is not indicative of and does not
guarantee the future performance of the Scheme.
The sponsors are not responsible or liable for any
loss resulting from the operations of the scheme
beyond the initial contribution of Rs. 1 lakh
made by them towards setting up of the mutual fund.
TATA INFRASTRUCTURE FUND
2
􀁸 Tata Infrastructure Fund is only the name of the
Scheme and does not in any manner indicate either the
quality of the Scheme, its future
prospects or the returns. Investors therefore are urged
to study the terms of the Offer carefully and consult
their tax and Investment Advisor
before they invest in the Scheme.
􀁸 The present scheme is not a guaranteed or assured
return scheme.
Scheme Specific Risk Factors:
The scheme being sector specific will be affected by
risks associated with the Infrastructure sector.
Risk Associated with overseas investments
􀁸 To the extent the assets of the scheme are invested
in overseas financial assets, there may be risks
associated with currency movements,
restrictions on repatriation and transaction procedures
in overseas market. Further, the repatriation of capital
to India may also be hampered
by changes in regulations or political circumstances as
well as the application to it of other restrictions on
investment. In addition, country risks
would include events such as introduction of
extraordinary exchange controls, economic
deterioration, bi-lateral conflict leading to
immobilization of the overseas financial assets and the
prevalent tax laws of the respective jurisdiction for
execution of trades or otherwise.
􀁸 The Scheme may also invest in ADRs / GDRs /
Other Foreign Securities as permitted by Reserve Bank
of India and Securities and Exchange
Board of India from time to time. To the extent that
some part of the assets of the Schemes may be
invested in securities denominated in
foreign currencies, Indian Rupee equivalent of the net
assets, distributions and income may be adversely
affected by the changes in the value
of certain foreign currencies relative to the Indian
Rupee. The repatriation of capital also may be
hampered by changes in regulations
concerning exchange controls or political
circumstances as well as the application to it of other
restrictions on investment as applicable.
􀁸 As the investment may be made in stocks of different
countries, the portfolio shall be exposed to the political,
economic and social risks with
respect to each country. However, the portfolio
manager shall ensure that his exposure to each country
is limited so that the portfolio is not
exposed to one country. Investments in various
economies will also diversify and reduce this risk.
􀁸 Currency Risk: The schemes may invest in securities
denominated in a broad range of currencies and may
maintain cash in such currencies.
As a consequence, fluctuations in the value of such
currencies against the currency denomination of the
relevant scheme will have a
corresponding impact on the value of the portfolio.
Furthermore, investors should be aware that
movements in the rate of exchange between
the currency of denomination of a fund and their home
currency will affect the value of their shareholding when
measured in their home
currency.
􀁸 In respect of the corpus of the Scheme that is
invested in overseas mutual fund schemes, investors
shall bear the proportionate recurring
expenses of such underlying scheme(s), in addition to
the recurring expenses of the Scheme. Therefore, the
returns attributable to such
investments by the Scheme may be impacted or may,
at times, be lower than the returns that the investors
could obtain by directly investing in
the said underlying scheme.
Liquidity and Settlement Risks
The liquidity of the Scheme’s investments may be
inherently restricted by trading volumes, transfer
procedures and settlement periods. From time to
time, the Scheme will invest in certain securities of
certain companies, industries, sectors, etc. based on
certain investment parameters as adopted
internally by TAML. While at all times the Asset
Management Company will endeavour that excessive
holding/investment in certain securities of
industries, sectors, etc. by the Scheme is avoided, the
funds invested by the Scheme in certain securities of
industries, sectors, etc. may acquire a
substantial portion of the Scheme’s investment portfolio
and collectively may constitute a risk associated with
non-diversification and thus could
affect the value of investments. Reduced liquidity in the
secondary market may have an adverse impact on
market price and the Scheme’s ability to
dispose of particular securities, when necessary, to
meet the Scheme’s liquidity needs or in response to a
specific economic event or during
restructuring of the Scheme’s investment portfolio.
Furthermore, from time to time, the Asset Management
Company, the Custodian, the Registrar,
any Associate, any Distributor, Dealer, any Company,
Corporate Bodies, Trusts, any Retirement and
Employee Benefit Funds or any Associate or
otherwise, any scheme / mutual fund managed by the
Asset Management Company or by any other Asset
Management Company may invest in the
Scheme. While at all times the Trustee Company and
the Asset Management Company will endeavour that
excessive holding of Units in the
Scheme among a few Unitholders is avoided, however,
the funds invested by these aforesaid persons may
acquire a substantial portion of the
Scheme’s outstanding Units and collectively may
constitute a majority unitholder in the Scheme.
Redemption of Units held by such persons may
have an adverse impact on the value of the Units of the
Scheme because of the timing of any such redemptions
and this may impact the ability of
other Unitholders to redeem their respective Units.
Investment Risks
The value of, and income from, an investment in the
Scheme can decrease as well as increase, depending
on a variety of factors which may affect
the values and income generated by the Scheme’s
portfolio of securities. The returns of the Scheme’s
investments are based on the current yields
of the securities, which may be affected generally by
factors affecting capital markets such as price and
volume, volatility in the stock markets,
interest rates, currency exchange rates, foreign
investment, changes in Government and Reserve Bank
of India policy, taxation, political, economic
or other developments, closure of the Stock Exchanges
etc. Investors should understand that the investment
pattern indicated, in line with prevailing
market conditions, is only a hypothetical example as all
investments involve risk and there is no assurance that
the Scheme’s investment objective
will be attained or that the Scheme be in a position to
maintain the model percentage of investment pattern
particularly under exceptional
circumstances.
The scheme may use techniques and instruments for
efficient portfolio management and to attempt to hedge
or reduce the risk of such fluctuations.
However these techniques and instruments if
imperfectly used have the risk of the scheme incurring
losses due to mismatches particularly in a
volatile market. The Fund’s ability to use these
techniques may be limited by market conditions,
regulatory limits and tax considerations (if any). The
use of these techniques is dependent on the ability to
predict movements in the prices of securities being
hedged and movements in interest rates.
There exists an imperfect correlation between the
hedging instruments and the securities or market
sectors being hedged. Besides, the fact that
skills needed to use these instruments are different
from those needed to select the Fund’s / Scheme’s
securities. There is a possible absence of a
liquid market for any particular instrument at any
particular time even though the futures and options
may be bought and sold on an organised
exchange. The use of these techniques involves
possible impediments to effective portfolio
management or the ability to meet repurchase /
redemption requests or other short-term obligations
because of the percentage of the Scheme’s assets
segregated to cover its obligations.
Risk Associated with Securitised Debt
Scheme may invest in domestic securitized debt such
as asset backed securities (ABS) or mortgage backed
securities (MBS). Asset Backed
Securities (ABS) are securitized debts where the
underlying assets are receivables arising from
automobile loans, personal loans, loans against
consumer durables, etc. Mortgage backed securities
(MBS) are securitized debts where the underlying
assets are receivables arising from loans
backed by mortgage of residential / commercial
properties. ABS/MBS instruments reflect the undivided
interest in the underlying pool of assets and
TATA INFRASTRUCTURE FUND
3
do not represent the obligation of the issuer of
ABS/MBS or the originator of the underlying
receivables. The ABS/MBS holders have a limited
recourse to the extent of credit enhancement provided.
If the delinquencies and credit losses in the underlying
pool exceed the credit enhancement
provided, ABS/MBS holders will suffer credit losses.
ABS/MBS are also normally exposed to a higher level
of reinvestment risk as compared to the
normal corporate or sovereign debt. At present in
Indian market, following types of loans are amortised:
􀁸 Auto Loans (cars / commercial vehicles /two
wheelers)
􀁸 Residential Mortgages or Housing Loans
􀁸 Consumer Durable Loans
􀁸 Personal Loans
The main risks pertaining to each of the asset classes
above are described below:
Auto Loans (cars / commercial vehicles /two wheelers)
􀁸 The underlying assets (cars etc) are susceptible to
depreciation in value whereas the loans are given at
high loan to value ratios. Thus, after a
few months, the value of asset becomes lower than the
loan outstanding. The borrowers, therefore, may
sometimes tend to default on loans
and allow the vehicle to be repossessed.
􀁸 These loans are also subject to model risk. ie if a
particular automobile model does not become popular,
loans given for financing that model
have a much higher likelihood of turning bad. In such
cases, loss on sale of repossession vehicles is higher
than usual.
􀁸 Commercial vehicle loans are susceptible to the
cyclicality in the economy. In a downturn in economy,
freight rates drop leading to higher
defaults in commercial vehicle loans. Further, the
second hand prices of these vehicles also decline in
such economic environment.
Housing Loans
􀁸 Housing loans in India have shown very low default
rates historically. However, in recent years, loans have
been given at high loan to value
ratios and to a much younger borrower classes. The
loans have not yet gone through the full economic cycle
and have not yet seen a period of
declining property prices. Thus the performance of
these housing loans is yet to be tested and it need not
conform to the historical experience
of low default rates.
Consumer Durable Loans
􀁸 The underlying security for such loans is easily
transferable without the bank’s knowledge and hence
repossession is difficult.
􀁸 The underlying security for such loans is also
susceptible to quick depreciation in value. This gives
the borrowers a high incentive to default.
Personal Loans
􀁸 These are unsecured loans. In case of a default, the
bank has no security to fall back on.
􀁸 The lender has no control over how the borrower has
used the borrowed money.
Further, all the above categories of loans have the
following common risks:
􀁸 All the above loans are retail, relatively small value
loans. There is a possibility that the borrower takes
different loans using the same income
proof and thus the income is not sufficient to meet the
debt service obligations of all these loans.
􀁸 In India, there is no ready database available
regarding past credit record of borrowers. Thus, loans
may be given to borrowers with poor credit
record.
􀁸 In retail loans, the risks due to frauds are high.
Securities Lending Risks
It may be noted that this activity would have the
inherent probability of collateral value drastically falling
in times of strong downward market trends,
rendering the value of collateral inadequate until such
time as that diminution in value is replenished by
additional security. It is also possible that
the borrowing party and/or the approved intermediary
may suddenly suffer severe business setback and
become unable to honour its commitments.
This, along with a simultaneous fall in value of collateral
would render potential loss to the Scheme. Besides,
there is also be temporary illiquidity of
the securities that are lent out and the scheme will not
be able to sell such lent out securities until they are
returned.
As with other modes of extensions of credit, there are
risks inherent to securities lending, including the risk of
failure of the other party, in this case
the approved intermediary, to comply with the terms of
the agreement entered into between the lender of
securities i.e. the scheme and the
approved intermediary. Such failure can result in the
possible loss of rights to the collateral put up by the
borrower of the securities, the inability of
the approved intermediary to return the securities
deposited by the lender and the possible loss of any
corporate benefits accruing to the lender
from the securities deposited with the approved
intermediary.
Interest Rate Risk
As with debt instruments, changes in interest rate may
affect the Scheme’s net asset value. Generally the
prices of instruments increase as interest
rates decline and decrease as interest rates rise. Prices
of long-term securities fluctuate more in response to
such interest rate changes than shortterm
securities. Indian debt and government securities
markets can be volatile leading to the possibility of
price movements up or down in fixed
income securities and thereby to possible movements
in the NAV.
Credit Risk
Credit risk or Default risk refers to the risk that an
issuer of a fixed income security may default (i.e. the
issuer will be unable to make timely principal
and interest payments on the security). Because of this
risk corporate debentures are sold at a higher yield
above those offered on Government
Securities which are sovereign obligations and free of
credit risk. Normally, the value of fixed income
securities will fluctuate depending upon the
changes in the perceived level of credit risk as well as
any actual event of default. The greater the credit risk,
the greater the yield required for
someone to be compensated for the increased risk.
Reinvestment Risk
This risk refers to the difference in the interest rate
levels at which cash flows received from the securities
in the schemes are reinvested. The
additional income from reinvestment is the “interest on
interest” component. The risk is that the rate at which
interim cash flows are reinvested may
be lower than that originally assumed.
Risks associated with Derivatives
􀁸 Derivative products are leverage instruments and
can provide disproportionate gains as well as
disproportionate losses to the investors.
Execution of such strategies depends upon the ability
of the Fund Manager to identify such opportunities.
Identification and execution of the
strategies to be pursued by the Fund Manager involved
uncertainty and decision of Fund Manager may not
always be profitable. No assurance
can be given that the Fund Manager will be able to
identify or execute such strategies.
TATA INFRASTRUCTURE FUND
4
􀁸 Derivative products are specialized instruments that
require investment techniques and risk analysis
different from those associated with
stocks and bonds. Derivatives require the maintenance
of adequate controls to monitor the transactions
entered into, the ability to assess the
risk that a derivative add to the portfolio and the ability
to forecast price of securities being hedged and interest
rate movements correctly.
There is a possibility that a loss may be sustained by
the portfolio as a result of the failure of another party
(usually referred to as the
“counterparty”) to comply with the terms of the
derivatives contract. Other risks in using derivatives
include the risk of mis-pricing or improper
valuation of derivatives and the inability of derivatives
to correlate perfectly with underlying assets, rates and
indices.
􀁸 The risks associated with the use of derivatives are
different from or possibly greater than, the risks
associated with investing directly in
securities and other traditional investments”.
B. REQUIREMENT OF MINIMUM INVESTORS IN
THE SCHEME
The Scheme/Plan shall have a minimum of 20
investors and no single investor shall account for more
than 25% of the corpus of the
Scheme/Plan(s). The two conditions mentioned above
shall be complied with on a calendar quarter basis, on
an average basis, as specified by
SEBI in case the Scheme / Plan(s) does not have a
minimum of 20 investors in the stipulated period, the
provisions of Regulation 39(2)(c) of the
SEBI (MF) Regulations would become applicable
automatically without any reference from SEBI and
accordingly the Scheme / Plan(s) shall be
wound up and the units would be redeemed at
applicable NAV. If there is a breach of the 25% limit by
any investor over the quarter, a rebalancing
period of one month would be allowed and thereafter
the investor who is in breach of the rule shall be given
15 days notice to redeem his exposure
over the 25 % limit. Failure on the part of the said
investor to redeem his exposure over the 25 % limit
within the aforesaid 15 days would lead to
automatic redemption by the Mutual Fund on the
applicable Net Asset Value on the 15th day of the
notice period. The Fund shall adhere to the
requirements prescribed by SEBI from time to time in
this regard.
C. SPECIAL CONSIDERATIONS
Investors are urged to study the terms of the SID
carefully before investing in this Scheme, and to retain
this SID for future reference.
Tax Consequences
Redemption by the unitholders due to change in the
fundamental attribute (if any, in future) of the scheme or
due to any other reason may entail tax
consequences for which the Trustees, AMC, Fund their
Directors / employees shall not be liable.
Disclosure / Disclaimer
To the best of the knowledge and belief of the Directors
of the Trustee Company, information contained in this
SID is in accordance with the SEBI
Regulations and facts and does not omit anything likely
to have a material impact on the importance of such
information.
Neither this SID nor the Units have been registered in
any jurisdiction. The distribution of this SID in certain
jurisdictions may be restricted or subject
to registration requirements and, accordingly, persons
who come into possession of this SID are required to
inform themselves about, and to
observe, any such restrictions. No persons receiving a
copy of this SID or any accompanying application form
in any such jurisdiction may treat this
SID or such application form as constituting an
invitation to them to subscribe for Units, nor should they
in any event use any such application form,
unless in the relevant jurisdiction such an invitation
could lawfully be made to them and such application
form could lawfully be used without
compliance with any registration or other legal
requirements. Accordingly, this SID does not constitute
an offer or solicitation to anyone in any
jurisdiction in which such offer or solicitation is not
lawful or in which the person making such offer or
solicitation is not qualified to do so or to
anyone to whom it is unlawful to make such offer or
solicitation. It is the responsibility of any persons in
possession of this SID and any persons
wishing to apply for Units pursuant to this SID to inform
themselves of, and to observe, all applicable laws and
Regulations of such relevant
jurisdiction.
Prospective investors should review / study this SID
carefully and in its entirety and should not construe the
contents hereof or regard the
summaries contained herein as advice relating to legal,
taxation, or financial / investment matters and are
advised to consult their own professional
advisor(s) as to the legal or any other requirements or
restrictions relating to the subscription, gifting,
acquisition, holding, disposal (sale, transfer,
switch or redemption or conversion into money) of
Units and to the treatment of income (if any),
capitalisation, capital gains, any distribution, and
other tax consequences relevant to their subscription,
acquisition, holding, capitalisation, disposal (sale,
transfer, switch, redemption or conversion
into money) of Units within their jurisdiction of
nationality, residence, domicile etc. or under the laws of
any jurisdiction to which they or any managed
funds to be used to purchase/gift Units are subject, and
(also) to determine possible legal, tax, financial or other
consequences of subscribing /
gifting to, purchasing or holding Units before making an
application for Units.
No person has been authorised to give any information
or to make any representations not confirmed in this
SID in connection with the new fund
offer / Subsequent Offer of Units, and any information
or representations not contained herein must not be
relied upon as having been authorised by
the Mutual Fund or the Asset Management Company
or the Trustee Company. Statements made in this SID
are based on the law and practice
currently in force in India and are subject to change
therein. Neither the delivery of this SID nor any sale
made hereunder shall, under any
circumstances, create any impression that the
information herein continues to remain true and is
correct as of any time subsequent to the date
hereof.
Notwithstanding anything contained in the SID the
provisions of SEBI (Mutual Funds) Regulations 1996
and guidelines thereunder shall be
applicable. The Trustee Company would be required to
adopt / follow any regulatory changes by SEBI / RBI etc
and /or all circulars / guidelines
received from AMFI from time to time if and from the
date as applicable. The Trustee Company in such a
case would be obliged to modify / alter any
provisions / terms of the SID during / after the launch of
the scheme by following the prescribed procedures in
this regard.
D. DEFINITIONS & ABBREVIATION
1 “Business Day”
Any day on which the Mumbai Head Office of Tata
Asset Management Limited is open for business
purposes
and the Banks in Mumbai / RBI clearing is functional.
2 “Business Hours” Business hours are from 10.00
A.M. to 3.00 P.M. on any Business Day.
3 “BSE’ / “NSE” Bombay Stock Exchange Limited /
National Stock Exchange of India Limited.
4 “Calendar Year” A Calendar Year shall be 12 full
English Calendar months commencing from 1st
January and ending on 31st
December.
5 “Custodian”
or “HDFC Bank Limited”
HDFC Bank Limited, a bank incorporated in Mumbai
with limited liability and includes its successors.
TATA INFRASTRUCTURE FUND
5
6 “CDSC”
Contingent Deferred Sales Charges permitted under
the Regulations for a ‘No Load Scheme’ to be borne by
the Unitholder upon exiting (whether by way of
redemption of inter-scheme switching) from the scheme
based
on the period of holding of units.
7 “Day” Any day as per English Calendar viz. 365 days
in a year.
8 “Entry Load” Amount that is paid by the investors at
the time of entry / subscription into the scheme.
9 “Exit Load” Amount that is paid by the investors at the
time of exit / redemption from the scheme.
10 “Financial Year”
A Financial Year shall be 12 full English Calendar
months commencing from 1st April and ending on 31st
March.
11 “Group” As defined in sub-clause (ef) of clause 2 of
MRTP Act, 1961.
12 “IMA” Investment Management Agreement dated
9th May, 1995, as amended from time to time, between
the TTCL
& TAML.
13 “Investor”
An investor means any resident or non-resident person
whether individual or not (legal entity), who is eligible
to subscribe units under the laws of his/her/their
country of incorporation, establishment, citizenship,
residence
or domicile and under the Income Tax Act, 1961
including amendments thereto from time to time and
who has
made an application for subscribing units under the
Scheme. Under normal circumstances, an Unitholder
shall
be deemed to be the investor.
14
“Net Asset Value” or
“NAV”
(a) In case of winding up of the Fund:
In respect of an Unit, the amount that would be payable
to the holder of that Unit on any date if the fund were
to be wound up and its assets distributed on that date
(valuing assets and liabilities in accordance with the
normal accounting policies of the Fund, but ignoring net
distributable income of the current financial year and
winding up expenses).
(b) Daily for Ongoing Sale/Redemption/ Switch:
In respect of a Unit, the amount that would be payable
by/to the investor / holder of that Unit on any Valuation
date by dividing the net assets of the Scheme by the
number of outstanding Units on the Valuation date.
15 “Net Assets”
Net Assets of the Scheme / Plan at any time shall be
the value of the Fund’s total assets less its liabilities
taking into consideration the accruals and the
provisions at that time.
16
“Non- Resident Indian” /
NRI
A person resident outside India who is a citizen of India
or is a person of Indian origin as per the meaning
assigned to the term under Foreign Exchange
Management (Investment in firm or proprietary concern
in India)
Regulations, 2000.
17 “NFO” New Fund Offer
18
“Permissible
Investments”
Investments made on account of the Unitholders of the
Scheme in securities and assets in accordance with
the SEBI Regulations.
19 “Portfolio” Portfolio at any time shall include all
Permissible Investments and Cash.
20 “Regulations”
Regulations imply SEBI Regulations and the relevant
rules and provisions of the Securities and Exchange
Board of India (Depositories and participants)
Regulations 1996, Public Debt Act 1944,the relevant
notifications
of the Government of India Ministry of Finance
Department of Revenue, (Central Board of Direct
Taxes), the
Income Tax Act, 1961; Wealth Tax Act, 1957, Gift Tax
Act, 1958, Foreign Exchange Management Act, 1999
as
amended from time to time and shall also include any
Circulars, Press Releases or Notifications that may be
issued by SEBI or the Government of India or the
Reserve Bank of India from time to time.
21 “Resident”
A resident means any person resident in India under
the Foreign Exchange Management Act, 1999 and
under
the Income Tax Act,1961, including amendments
thereto from time to time.
22 “Scheme” The offer made by Tata Mutual Fund
through this SID, viz., Tata Infrastructure Fund.
23 “SEBI” Securities & Exchange Board of India
established under the Securities & Exchange Board of
India Act, 1992.
24 “SEBI Regulations”
The Securities and Exchange Board of India (Mutual
Funds) Regulations, 1996 as amended from time to
time
and shall also include any Mutual Fund Regulations,
Circulars, Press Releases, or Notifications that may be
issued by SEBI or the Government of India to regulate
the activities and growth of Mutual funds.
25 “SID” Scheme Information Document
26 “SAI” Statement of Additional Information
27 “SIP” Systematic Investment Plan, a facility to invest
systematically (monthly / quarterly / half-yearly / yearly)
in the
scheme.
28 “SWP” Systematic Withdrawal Plan, a facility to
redeem systematically (monthly / quarterly / half-
yearly / yearly) from
the scheme.
29 “STP” Systematic Transfer Plan, a facility to switch
money / investment from this scheme to other
scheme(s) of Tata
Mutual Fund, systematically (monthly / quarterly / half-
yearly / yearly).
30 “TAML” Tata Asset Management Limited, the Asset
Management Company (AMC), a company within the
meaning of
the Companies Act, 1956 (1 of 1956) and includes its
successors and permitted assigns.
31 “TICL” Tata Investment Corporation Limited, a
sponsor of the TMF and a shareholder of TAML, a
company within the
meaning of the Companies Act, 1913 and includes its
successors and permitted assigns.
32 “TMF” or “Fund” Tata Mutual Fund, a trust
established under a Trust Deed dated 9th May, 1995,
under the provisions of The
Indian Trusts Act, 1882, bearing SEBI registration No.
MF/023/95/9.
33 “Total Assets”
Total Assets of the Scheme at any time shall be the
total value of the Schemes assets taking into
consideration
the accruals.
34 “Trust Deed”
The Trust Deed of the Mutual Fund dated 9th May,
1995, as amended from time to time, made between
TSL
and TICL as the settlors, and TTCL as the Trustee.
35 “TSL”
Tata Sons Limited, a sponsor of TMF and a
shareholder of TAML, a company within the meaning of
the
Companies Act, 1913 and includes its successors and
permitted assigns.
TATA INFRASTRUCTURE FUND
6
36
“TTCL or Trustee
Company”
Tata Trustee Company Limited, a company within the
meaning of the Companies Act, 1956 and includes its
successors and permitted assigns.
37 “Unitholder”
An Unitholder means any resident or non-resident
person whether individual or not (legal entity), who is
eligible
to subscribe to the Scheme and who has been allotted
Units under the Scheme based on a valid application.
38 “Units”
The security representing the interests of the
Unitholders in the Scheme. Each Unit represents one
undivided
share in the assets of the Scheme as evidenced by any
letter/ advice or any other statement / certificate /
instrument issued by TMF.
39 “Year” A Year shall be 12 full English Calendar
months.
E. DUE DILIGENCE BY THE ASSET MANAGEMENT
COMPANY
The following Due Diligence Certificate has been
submitted to SEBI:
It is confirmed that:
(i) the Scheme Information Document forwarded to
SEBI is in accordance with the SEBI (Mutual Funds)
Regulations, 1996 and the guidelines
and directives issued by SEBI from time to time.
(ii) all legal requirements connected with the running of
the scheme as also the guidelines, instructions, etc.,
issued by the Government and any
other competent authority in this behalf, have been duly
complied with.
(iii) the disclosures made in the Scheme Information
Document are true, fair and adequate to enable the
investors to make a well informed
decision regarding investment in the scheme.
(iv) the intermediaries named in the Scheme
Information Document and Statement of Additional
Information are registered with SEBI and their
registration is valid, as on date.