rN PROJECT REPORT ON INVESTING IN MUTUAL FUND) ACOMPARATIVE PERFORMANCE ANALYSIS; Business Administration (MBA) with Specialization in Finance UNDER THE GUIDANCE OF Reader In Commerce SUBMITTED BY Roll No:-t 2 Yr. MBA, 4th Sem UTKAL UNIVERSITY DIRECTOR OF DISTANCE & CONTINUING EDUCATIONCortiticate of the Baia ‘This is to certify that the project report entitled ‘INVESTING IN MUTUAL FUND, A COMPARATIVE PERFORMANCE ANALYSIS” is done by College Roll No :- is a student of Master in Business Administration. He fas carried out the project work under my guidance. He originally carries out this work and finished his report successfully. No part of this report has been submitted for the award of any other diploma or degree elsewhere. To the Gest of my Rnowledge, throughout the report preparation, he bears a very good moral character and diligent behavior. He is sincere and hard working I wish all success in his fe. Reader in CommerceMaxWealth Finance Private Limited #49, Nagarjuna Hills, Hyderabad- 500 082 Phone: 040-2435312, Fax: 040-23435313 Email: service@maxwealthindia.com Ref: Appt/HR/MW/10331/09 May 24, 2009 To Whomsoever It May Concern: This is to certify that A student of Master of Business Administration of DDCE, Utkal University has under gone six week training in Mutual Fund Sales & Performance with us. He has under gone the training under the guidance of our branch head Bhubaneswar. 1 wish him all success in his life. MANAGER HRACKNOWLEDGEMENT A project report of this kind is possible only with the encouragement and unstinted efforts of many people. Therefore, it is a pleasure to acknowledge my depth to some of them involved directly or indirectly and contributed substantially in production of this report. | wish to express my gratitude to . Faculty, Management Programme for extending all the help for the organisational study in Mutual Fund Industry and her unfailing interest and inspiring guidance throughout my project work. Finally, | would like to record my sincere appreciation to my friends and well-wishers for their patience and trust in me.DECLARATION | do hereby declare that the project report “INVESTING IN MUTUAL FUND, A COMPARATIVE PERFORMANCE ANALYSIS’ is an original work of mine and it is not submitted to any other institution or university for obtaining any degree or diploma at any time before. Date : Place : BhubaneswarEXECUTIVE SUMMARY In the world of diverse investment opportunities there is one investment avenue that stands apart-MUTUAL FUND. These funds have turned out to be preferred choice world over for both small and big investors due to various advantages. There are ideal investment avenues to meet various objectives like children education, retirement’s benefits, marriage and home etc. Mutual fund is @ boon for small investors because it is an easy and inexpensive way for an individual to capture the money that is to be made from stocks and bonds, without buying them directly. Investing in mutual fund is the perfect way to save money for the short term and long term future. ‘A mutual fund is an ideal investment vehicle for today's complex and modern financial scenario. Markets for equity shares, real estates, derivatives etc, have become mature and information driven prime changes in these assets are driven by global events occurring in far away places A typical investor is likely to have knowledge, skill, inclination and time to keep tracks of events, understand their implication and act speedily am 8individual find it difficult to keep track of ownership of his assets, investment, brokerage dues and bank transactions. A mutual fund is a solution of all these problems, it appoints professionally qualified and experienced staff that manages each of these functions on full time basis. These large pools of money collected in the fund allow hiring such staff at a very low cost to each investor. In effect, the mutual fund exploits alll these areas — research, investments and transaction processing .all over the world, thousands of mutual funds are offering different schemes The mutual funds have many advantages like portfolio management, diversification of savings, tax benefits ete which stands for its popularityBut mutual fund has its own disadvantages like, 1. Investors can not choose the securities they want to invest in. 2. They face the risk of fund manager not performing well. 3. Management fees charged by the fund reduce the returns available to the investors, Lastly, investors in mutual fund are not sure about the returns they got because return is totally based on funds performance.CONTENTS CERTIFICATE DECLARATION ACKNOLEDGEMENT EXECUTIVE SUMMARY RON o> CHAPTER-1 Introduction and research methodology » Introduction > Rational of the Study > Objectives of the study > Research Methodology > Limitation of the Project > Organisation of the Project CHAPTER-2 Evolution of Mutual Fund Industry in India > Introduction > Mutual Fund in India > Different phases of Development > Structure and Organisation of Mutual Fund > Guidelines to Investors CHAPTER-3 Promotion of Mutual Fund » Introduction > Marketing Mix > Service Planning & Designing > Pricing for Mutual Fund schemes > Promotions > Placement > People> Publicity > Physical evidence > Summary CHAPTER -4 Analysis of various mutual fund schemes of SBI & HDFC > Company Profile » Product Profile & Comparison » Systematic Investment Plan CHAPTER -5 Investors Awareness about Mutual Fund > Market Survey > Findings CHAPTER-6 Findings, Suggestions and Conclusion > Major Findings > Suggestions » Conclusion BIBLIOGRAPHY ANNEXUREINTRODUCTION FINANCIAL INDUSTRY, THE TALK OF THE DAY IS “MUTUAL FUND” Of late, mutual funds have become a hot favorite of millions of people all over the world; the driving force of mutual funds is the ‘safety of the principal's guaranteed, plus the added advantage of capital appreciation together with the income earned in the form of interest or dividend. People prefer mutual fund to bank deposits, life insurance and even bonds because with little money, they can get into the investment game. One can own a string of blue chips like ITC, TISCO, RELIANCE ete, through mutual funds .thus, mutual funds act as a gateway to enter into big companies hitherto inaccessible to ordinary investor with his small investment. To state in simple words, a mutual fund collects the savings from small investors, invest them in government and other corporate securities and earn income through interest and dividends, besides capital gains. It works on the principle of ‘small drops of water make a big ocean’. for instance, if one has Rs 1000 to invest, it may not fetch very much on its own. But, when it is pooled with Rs 1000 each from a lot of other people, then, one could create a ‘big fund’ large enough to invest in a wide varieties of shares and debentures on a commending scale and thus, to enjoy the economics of large scale operations. Hence mutual fund is nothing but a form of collective investment. it is formed by the coming together of a number of investors who transfer their surplus funds to a professionally qualified organization to manage it. To get the surOplus funds from investors, the fund adopts a simple technique. Each fund is divided into a small fraction called “units” of equal value .each investor is allocated units in proportion to the size of his investments. Thus every investor, whether big or small, will have a stake in the fund and can enjoy the wide portfolio of the investment held by the fund. Hence, mutual funds enable millions of small and large investors to participate in and derive the benefit of the capital market growth. it has emerged as a popular vehicle of creation of wealth due to high return, lower cost and diversified risk.The mutual fund industry in India has been on a roll as the assets under management is increasing day by day and it has increased to Rs.250000.00 From Rs.101567 crore in January 2000.the number of schemes offered by these mutual fund companies have also increased which cater to the varied needs of the investors. A booming economy, rise and fall in the stock market, a favorable regulatory environment, amongst a few of other factors have added to the growth of the industry. Mutual fund is for everyone. Around the world, millions of investors invest in mutual fund because of their safety, ease of investing and the many advantages they offer, investing in mutual fund has become so easy and the experience is much more enjoyable. In USA, the mutual fund industry has overtaken banking industry with more funds under mutual fund management than deposited with banks. The mutual fund industry in India manages around crores of assets, with the average age of investors decreasing, Its necessary that young breed of investors understand the importance of investing in mutual funds. Rationale of the study There are different investment avenues in the world like deposits in banks, post offices, insurances, real estate, capital markets etc, out of these investments capital market is providing more returns to the investors. investors need large amount of funds to invest in the capital markets and that is not possible on part of every prospective investor to arrange, to invest directly in the capital market .also the investors are not conversant with ups and downs of capital market, they lack the requisite investment management skills to ensure a much better return. The solution to all these problems is mutual fund. The popularity of the mutual fund has increased because the interest rates have been decreasing on the bank deposits whereas the mutual funds provide better returns. Investors enjoy the benefits of portfolio diversification, under which each investor a part owner of the entire assets is thus enabling him to hold a diversified portfolio with small capital he has invested.The professional who are able to select the right stocks at the right time manage the mutual funds, The investment management skills along with needed research into available investments option ensure a much better return than what an average investor can manage on his own, The risk of the investors is reduced as he is investing in the pool of funds with the other investors. When investors invest directly in stocks, he bears all the cost of brokerage and custody. But in case of a mutual fund the investor enjoys the economies of scale Liquidity is the big benefit availed by the investors. These are certain benefits of investing in the mutual fund Booming stock markets, conducive regulatory regime and incentives like making dividend tax free in the hands of the investors, The present study aim at understanding the mutual fund-it's workings and structure etc, and the comparative performance analysis to find out whether the promises made are really met or not ol es of the study The present study has been undertaken with the following specific objectives. + The highlight the mutual fund industry in India, * The evaluate the strategic marketing mix adopted by most of leading players, + To compare the features of mutual fund schemes launched by * To evaluate investors awareness’ regarding mutual fund schemes and the source of their awareness’, * To find out investors perception regarding the mutual fund schemes and whether the promises made by these mutual funds are really met or not, + To make suggestions, if any, for achieving excellence in mutual fund industry.Scope of the study The study is confined to the analysis of performance of mutual fund over the number of years. an attempt has also been made to study the Mutual fund industry's prospects in India, investors awereness about mutual fund and the comparative performance analysis of some schemes of SBI and HDFC Mutual Funds. To find out the investors awareness, 20 investors and prospective investors were being questioned through a systematic questionnaire findings of this study are purely based on literature and individual's survey. Research methodology The study is an exploratory and descriptive one, This project is mostly based on literature as well as market survey. It is also a qualitative and quantitative study and is well designed to meet the set objectives. Data collection method: Primary sources: oral interview and structured questionnaire to know the investors awareness. It was circulated to 20 individuals engaged in different service sectors in Bhubaneswar. Secondary sources: the common source for the secondary data includes articles, fact sheets of different mutual fund, magazines, and data from net portals Presentation of data The data collected has been processed and presented in such a manner so as to make the study more understandable. Data has been edited for more completeness and easy accessibility. General purpose and specific purpose table has been used. Charts and graphs have been made to make the study more interesting and easy understandable.Data analysis and interpretation: The tabular form of arranging data facilitates easy analysis and interpretation. a detailed analysis of investor's perception has been made and interpreted. Limitations of the project and scope As the mutual fund industry of the world is a large subject. only the mutual fund industry in India has been taken into consideration for study with the fast changing scenario, some aspect of the information provided may have been updated or changed during the course of repairing this project work and due to less mobility And limited sample size covering each section of the population was not possible. Other limitations are * Time constraint * Scope of research for marketing strategies is quite vast * Lack of cooperation from the mutual fund service providers + Lack of sufficient data and information available Therefore there lies a vast scope for further studies on the basis of finding provided in the report. Organization of subject matter The whole study has been divided into five chapters and these chapters are subdivided and include table, pictures, and charts, which facilitate easy understandings these chapters are; Chapter - it includes the mutual fund industry as a whole along with the objective, research methodology adopted for the study and limitations and further scope of improvement Chapter 2- it includes insight into mutual fund in India, its growth structure and organization,Chapter 3- it includes the marketing and investment aspects of mutual fund like marketing mix, service planning and designing, pricing promotion, placement etc. Chapter 4- mutual fund scheme wise analysis of a) Company profile b) Product profile and comparison c) Systematic investment plan Chapter 5- investor awareness about mutual funds. Chapter 6- includes findings, suggestions and conclusion of the study with reference Bibliography AnnexureMUTUAL FUND INDUSTRY — AN OVERVIEW Mutual fund are financial intermediaries which collect the savings of investor and invest them in a large and well diversified portfolio of securities such as money market instruments, corporate and government bonds and equity shares of joint stock companies. The first mutual fund to be set up b was UTI in 1964 under an act of parliament during the years 1987-1992,seven new mutual funds were established in the public sector in 1993, the government change its policy to allow the entry of private corporate and foreign institutional investors into the mutual fund segment by the end of march 2000, apart from UTI there were 36 mutual funds. Nine public sectors and 27 in private sector. The UTI dominated the mutual fund industry until 1994-1995 accounting for 76.5% of the total mobilization. Meanwhile the numbers of mutual fund especially in the private sector have grown along with the number of schemes matching the preference of investors. Like in 1987 public sector banks and insurance companies were permitted to set up mutual funds, since 1987, 6 public sector banks have set up mutual fund, To add to list are the LIC and GIC of India. There is also mutual fund with investment sourced abroad called “offshore funds’ SEBI formulated the mutual fund (regulation)1993,which for the first time established comprehensive regulatory framework for the mutual fund India since then several mutual funds have been set up by the private and joint sector MUTUAL FUND ‘Small drops of water make a big ocean’. Similar in the case withy mutual fund .a mutual fund is a pool of commingle funds invested by different investors who share a common financial goal but has no contract with each other. the money in turn is invested in various securities depending on the objectives of the mutual fund schemes and the profits/loss are shared among investors in proportion to there investments. To get the surplus funds from investors, the funds adopt a simpletechnique. each fund is divided into a small fraction called ‘units’ of equal value each investor is allocated units in proportion to the size of investment .hence mutual fund enables millions of small and large investors to participate in and derive the benefits of the capital market growth. MUTUAL FUND OPERATION FLOW CHART Retums are passed Investors pool their money back to the investors —=> with a registered mutual fund Generate fund with Mutual Fund — Fund Manager their pooled Investment <— invest his amount with securities Where does mutual fund invest? There are three types of market to invest 1) Equity market: it represents ownership or equity in a company popularly known as shares Ex-reliance, onge, tata motors etc 2) Bond market: these represent debt from the companies, financial instrument or government agencies. 3) Money market instrument: these include short term debt instrument such as treasury bills, certificate of deposits and inter bank call money.Unit Holders Savings AMG ;—_ Trust + | Investment Unit Holders Units Retums + ‘A mutual fund invites the perspectives investors to join the mutual fund by offering various schemes so as to suit to the requirements of different categories of investors. the resources of individual investors are pooled together and the investors are issued units/shares for the money invested. The amount so collected is invested in capital market instrument like shares and debentures and money market instruments like treasury bills, commercial papers etc For managing this fund, a mutual fund gets an annual fee of .125% of funds managed at the maximum as fixed by the SEBI (MF) regulations 1996 if the fund exceeds Rs 100 crore it's only 1%.of course, the regular expanses like custodial fee, cost of dividend warrants, fee for registration, the asset management fee etc are debited to the respective schemes. These expanses can't exceed 3% of the asset in the respective schemes each year. The remaining amount is given back the investors in full Advantages and disadvantages of mutual funds Advantages of mutual funds: Professionally managed The primary advantage of funds is the professional management of your money. Investors purchase funds because they do not have the time or the expertise to manage their own portfolio. A mutual fund is a relatively inexpensive way for a small investor to get a full-time manager to make and monitor investments.Diversification By owning shares/units in a mutual fund instead of owning individual stocks or bonds, your risk is spread out. The idea behind diversification is to invest in a large number of assets so that @ loss in any particular investment is minimized by gains in others. In other words, the more stocks and bonds you own, the less any one of them can hurt you Large mutual funds typically own hundreds of different industries. it wouldn't be possible for an investor to build this kind of a portfolio with a small of money. Because a mutual fund buys and sells large amounts of securities at a time, its transaction costs are lower than you as an individuals would pay. Just like an individual stock, a mutual fund allows you to request that shares to be converted into cash any time Simplicity Buying @ mutual fund is easy any bank has its own line of mutual funds and the minimum investment is small. Most companies also have automatic purchase plans whereby as little as 2s500 can be invested on monthly basis. Disadvantages of mutual funds: Professional management Many investors debate over whether or not the so called professionals are better than you or | at picking stocks. Management is by no means infallible, and even if the fund loses money the manager still takes his /her cut. Costs Mutual funds don't exist solely to make your life easier—all funds are in it for a profit. The mutual fund industry is masterful at burying costs under layers of jargon.Dilution It's possible to have too much diversification because funds have small holdings in so many different companies, high returns from a few investments often don't make much difference on the overall return. Dilution is also the results of a successful fund getting too big. When money pours into funds that have had strong success, the manager often has trouble finding a good investment for all the new. Taxes When making decisions about your money, fund managers don't consider your personal tax situation, For ex-when a fund manager sells a security, a capital gain 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 NAV (net asset value) - the NAV is the market value of the assets of the scheme minus its liabilities. The NAV per unit on any business day is calculated as follows. NAV= receivables +accrued income —liabilities -accrued liabilities/ Number of shares or units outstanding Initial Expenses When mutual fund scheme is launched certain expenses are incurred. These relating to printing, mailing, advertisement etc. they are linked to the corpus of the schemes, SEBI has prescribed a limit of 6 % on the overall initial expenses. Recurring expenses Mutual fund incur recurring expenses every year, These expenses include items like asset management fees, registers and custodial fees charged to profit and loss account of the schemeSale price It is the price investors pay when he invest in a scheme also called offer price. It may include a sales load. Repurchase price It is the price at which a close ended schemes repurchase its units and it may include a back end load. This is also called bid price Redemption price It is the price at which open ended schemes repurchase their units and close ended schemes redeem there units on maturity such price are NAV related Sales load Is a price charged by the scheme when it sales the units. Also called “front end load” schemes that do not charge a load are called “no load schemes’. “Back end load” or repurchase It's a charge collected by a schemes when it buys back the units from the unit holders. Corpus The total amount of money that a fund has at any pint of time. TYPES OF MUTUAL FUND Mutual fund differ from each other on the various factors like their term, investment types etc.Term of the fund 1) Open ended fund-an open ended fund or scheme is one that is available for subscription and repurchase on a continuous basis .these schemes do not have a fixed maturity period e.g. alliance95, Birla advantages. 2) Close ended fund.it can issue shares of mutual fund only in the beginning and can not redeem them or reissue them till the end of their fixed investment duration e.g. UTI master equity plan 98, ICICI power. Investment objective Equity funds- Aim to provide capital growth by investing in the shares of individual companies, Depending upon the funds objective, this could range from large blue- chip organization to small and new businesses. Any dividends received by the fund can be reinvested by the fund manager to provide further growth or paid to investors. Both risk and returns are high but they could be a good investment if you have a long term perspective. Bond/income fund Income funds are named appropriately; their purpose is to provide current income on a steady basis. When referring to mutual funds, the terms fixed income’ bond and income are synonymous. These terms denote funds that invest primarily in government and corporate debt. While fund holdings may appreciate in value, the primary objective of these funds is to provide a steady cash flow to investors. As such, the audience for these funds consists of conservative investors and retirees. Bond funds are likely to pay higher return s than certificates of deposits and money market instruments, but bond funds are not with out risk because there are many different types of bonds, bond funds can vary dramatically depending upon where they invest. For ex-a fund specializing in high yield junk bonds is much more risky than a fund that invests in government securities. Furthermore, nearly all bondfunds are subject to interest rate risk, Which means that if rates go up the value of the fund goes down? Balanced funds The objective of these funds is to provide a balanced mixture of safety income and capital appreciation. The strategy of balanced funds is to invest in a combination of fixed income and equities. A typical balanced fund might have a weighting of 60% equity and 40% fixed income. The weighting might also be restricted to a specified maximum or minimum for each asset class. A similar type of fund is known as an asset allocation fund. objectives are similar to those of a balanced fund, but these kinds of funds typically do not have to hold a specified percentage of any asset class .the portfolio manager is therefore given freedom to switch the ratio of asset classes as the economy moves through the business cycle Money market funds Money market or liquid funds are an appealing alternative to bank deposits because they aim to provide stability, liquidity, capital preservation and slightly higher interest rates than bank accounts. When you invest in a money market fund, the fund manager invests in cash assets such as treasury bills, certificates of deposit and commercial paper. Retums on these funds fluctuate much less compared to other funds, but they are not guaranteed. They are appropriate for corporate and individual investors who wish to park their surplus money in a fund for a short period Gilt funds These funds invest exclusively in government securities. Government securities have no default risk. NAVs of these schemes also fluctuate due to changes in interest rates and other economics factors as is the case with incoOme or debt oriented schemes e.g. investment plan (g), Templeton India govt securities, eteIndex fund Index fund replicate the portfolio of a particular index such as the BSE sensitivity index’s NSE 50 index etc these schemes invest in the same securities in the same weight age comprising an index NAV of such securities will rise or fall in accordance with the rise or fall in index, though not exactly by the same % due to some tracking errors in technical terms Tax savings schemes Schemes offer tax rebates to the investors under specific provisions of income tax act 1961 as the government offer tax incentives in specified avenues e.g. ELSS , pension schemes launched by mutual fund also offer tax benefits. Insurance plan ‘Some schemes launched by UTI and LIC offer insurance cover to investors. Sector specific funds These are the funds or schemes which invest in the securities of only those sectors or industries as specified in the offer documents .e.g. phrmacetucials, infrastructure software, fmeg, capital goods etc the return is dependent on the performance of their respective sector/industries. Systematic investment plan here the investor is given the option of preparing a predetermined number of post dated cheques in favor of the fund .he will get units on the date of the cheque at the existing NAV. Systematic withdrawal plan It is the reverse of SIP it allows the investor the facility to withdraw predetermined amount from his funds at a predetermined intervals. The investors unit will be redeemed at the existing NAV as on the day.Different phases of emergence of mutual fund * History of mutual fund © Growth since inception * Current status History of Indian mutual fund industry: The mutual fund industry in India started in 1963 with the formation of unit trust of India at the initiative of the govt of India and reserve bank of India. The history of mutual funds in India can be broadly divided into four distinct phases. First phases-1964-87 Unit Trust of India (UT!) was established on 1964 by an act of parliament .it was set up by the reserve bank of India and functioned under the regulatory and administrative control of reserve bank of India, in 1978 UTI was de-linked from the RBI and the industrial development bank of India(IDB!) took over the regulatory and administrative control in place of RBI .the first schemes launched by UTI was unit scheme 1964.at the end of 1988 UTI had Rs 6,700 corers of asset under management. Second phase-1987-1993 1987 marked the entry of non UTI, public sector mutual funds set up by public sector banks and life insurance corporation of India (LIC) and general insurance corporation(GIC),SBI mutual fund was the first non -UTI mutual fund established in June 1987 followed by Can bank mutual fund (dec-87), Punjab national bank mutual fund (aug-89),Indian bank mutual fund(nov 89),bank of India (JUNE90)bank of boroda mutual fund (oct 92)lic established its mutual fund in June 1989 while GIC had set up its mutual fund in December 1990.at the end of 1993,the mutual fund industry had assets under management of Rs 47004 crores. Third phase-1993-2003 With the entry of private sector funds in 1993, a new era started in the Indian mutual fund industry giving the Indian investors a wider choice of fund families. Also1993 was the year in which all mutual funds. Except UTI were to be registered and governed. The erstwhile kothari pioneer now merged with Franklin Templeton mutual fund India was the first private sector mutual fund registered in July 1993 In 1993 SEBI (mutual fund) regulations were substituted by a more comprehensive and revised mutual fund regulations in 1996.the industry now functions under SEBI (mutual fund) regulations 1996. The number of mutual fund houses went on increasing with many foreign mutual funds setting up fund in India and also the industry has witnessed several mergers and acquisitions. As at the end of January 2003, there were 33 mutual funds with total asset of Rs‘, 21,805 crores.the unit trust of India with Rs 44,541 crores of asset under management was way ahead of other mutual funds. Fourth phase-since February 2003 In February 2003, following the repeal of unit trust of India act 1963 UTI was bifurcated into two separate entities. One is the specified undertaking of unit trust of India with assets under management of Rs 29,635 crores as at the end of January 2003, representing broadly, the assets of US 64 schemes, and assured return and certain other schemes, The specified undertaking of unit trust of India, functioning under an administrator and under the rules framed by government of India does not come under the purview of the mutual fund regulations. The second is the UTI mutual fund ltd, sponsered by SBI, PNB, BOB, and LIC. it is registered with SEBI and functions under mutual fund regulations. With birufication of erstwhile UTI which had in March 2000 more than Rs 76000 crores of assets under management and with the setting up of a UTI mutual fund conforming to the SEBI different private mutual funds, the mutual fund industry has entered its current phase of consolidation and growth. as at the end of September, 2004 there were 29 funds which manage assets of Rs 153108 crores under 432 schemes.What is the structure of Indian mutual fund industry? There are many entities involved in a mutual fund. This is what makes it safer than other investment avenues. Everyone is accountable for three part in the fund structure. SEBI TRUSTEE a OPERATION Amc SPONSER MUTUAL FUND | FUND MANAGER | SCHEMES | INVESTORS Mutual Fund StructureOrganizational set up of mutual fund Sponsor-sponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. sponsor must contribute 40% of net worth of the investments managed and meet the eligibilities criteria prescribed under SEBI regulation 1996. Trust-mutual fund is constituted as trust accordance with the provisions of the Indian trust act 1982 by the sponsor. The trust deed is registered under the Indian registration act 1908. Trustee-trustee is usually a company or board of trustees (bot).the main responsibility of the trustee is to safeguard the interest of the unit holders and also ensure that the AMC functions in the interest of investors and in accordance with the SEBI regulation. AMC(asset management companies)-the AMC is appointed by the trustee as the investment manager of mutual fund at least 50% of directors of the AMC are independent directors who are not associated with the sponsors an any manner. The AMC must have a network of at least 10 crores at all times. Registered transfer agent- the AMC if so authorized by the trust deed appoints registrar and transfer agent to the mutual fund .the registers processes the application form, redemption, request and dispatches account holder statements to the unit holders. The registrar and transfer agent also handles communication with investors and updates investment records. Investors should be clear in their objective what they want to achieve from their investments-is it income, liquidity, capital gain, tax savings or a combination of all these. 1) Do not be swayed by peripherals-investors should exercise their judgment based on a study of financial papers and periodicals. instead of being guidedby the agents who may have a higher stake in a particular scheme due to the higher rate of commission and who may offer them higher incentives. Go through the investment mix carefully-investor should ensure that the fund portfolio consists of quality instruments and the composition is according to the fund's objectives, Past records are not always reliable-units are subject to market risks. at the same time the statutory warning in the offer letter that the past performance of a mutual fund is not reliable indication of future prospect it should be taken seriously by the investor. Know your fund managers-investors should look for professional competence and experience apart from experience in the composition of the AMC of a mutual fund which has floated the schemes.Introduction The Indian savings market is expanding rapidly .many of the small investors in rural and semi urban areas are also investing in financial markets. Moreover, the general profile of the investor is changing and the young investors are more concerned about safety and growth. All these factors necessitated the need for a sophisticated investment instruments for growth with safety. The response to this was aggressive marketing of the mutual fund. Marketing of services has been considered the most vital area of operation of mutual fund industry keeping in view the ever increasing competition of similar products. Marketing is the management process which identifies, anticipates and satisfies the customer's requirements profitably. Since the purpose of any organization is to create, win and retain a customer, the focal point of any marketing strategy of mutual fund should be the customer or the investors. Virtually all providers of goods and services want to deliver good quality; mutual fund is no exception to this. Mutual fund marketers must adopt their skills to fit the demands of a dynamic investment environment. In the case of mutual fund, managerial efficiency and investment skills would determine returns. Successful mutual fund marketing must create confidence among potential investors and strengthen their desire to put their money with a particular field. Organizational image, visibility of operational policies and quality of management from an indirect part of mutual fund market Marketing plan A well planned marketing strategy has to be designed to mobilize savings by educating investors and creating confidence about safety and returns. Marketing plan should be based on correlation matrix of firm product customer relation.Marketing mix Any marketing plan for mutual fund should include the following tools of marketing strategy to achieve the marketing objective in the target market. Marketing mi ments: * Product planning and designing * Pricing * Promotion/distribution * Placement * People * Process * Physical evidence Product planning and designing The mutual fund products are invested in instrument like shares, bonds etc, that is projected in the schemes. There is little scope of flexibilities so a lot of care to be taken while designing particular products .expected changes in the financial markets must be kept in view for the future investment retums and changing profiles of investors must be taken into account to identify the segments of saving markets likely to tap various segments of potential saving markets have varied expectation. Individual investor preference also changes under the influence of various economic factors like some interested in growth, regular income, etc Designing and developing a new scheme will be a research based task and new ideas will require the support of facts and exposure to feasibility test before being acceptable. It involves three processes A) conceptualization of the schemes B) drafting of schemes C) test marketing of schemes D) approval and authorization of schemesPricing Price represents cost to the seller of producing and distributing the financial services and to the buyer its cost of consuming. Within financial services the price can often be referred to in different ways such as charges, interest rates, premium etc. pricing has become a much more important element of marketing mix for financial service marketers in recent years as the competitions to attract new customer's increases. Organization goal is incentives to investors, commission to brokers; operational expanses are the major consideration in pricing the schemes, regulations of regulating authorities also plays a vital role in pricing decision. Mutual fund is priced through NAV of the particular investment in schemes. The NAV is the cumulative market value of the asset fund net of its liabilities. NAV per unit is represented by the ownership of one unit in the fund. It's calculated simply by dividing the net assets value of the fund by the number of units. Asset valu ‘Sum of market value of shares/debenture +liquid assets/cash held, if any 4dividends/interest accrued -amount due on unpaid assets -expanses accrued but not paid Promotion With the existence of many players in mutual fund industry. It has become very difficult for the investors group to choose one mutual fund over another. This has led the mutual fund to take to brand building by aggressive marketing techniques. By their very nature; mutual funds require high advertisement and sales promotion exercise to serve the different classes of investors. As a part of their marketing campaign, mutual fund competes by advertisement heavily to reinforce brand loyalty and product differentiation, Communication through advertisement is the most important promotional aid for any mutual fund .an advertisement campaign must aim at creating awareness of the product,comparative advantage of the product, future potential of the product, past performance of the similar products and superiority of the fund in relation to others in area of asset, management and performance serving. Mutual fund advertisements are regulated by the SEBI which prohibits any content which may mislead the investors. Promotion includes advertisement in newspaper and magazines besides national dailies. Hoardings and banners of the fund are put at important places of the city where people's movement are very high Placement/distribution Selection of appropriate distribution channels plays an important role in the successful implementation of different schemes of mutual fund. At HDFC mutual fund Company, the distribution channels are divided with the help of market research and the need of particular segments of investors. The distribution channels include: A) Branch location in different regions B) Investor's service centers (ISCs) €) Through agent network HDFC distribute its schemes mainly through investor's service centers and agent networking direct services persnnel performing under ISCs play a major role in maintaining relationships with investors, there by making distribution channel successful People People in the marketing mix comprises of two elements: A) investors (service takers) B) service personnel and agents (service providers) Process It includes delivery system of mutual funds. The fund manager must take suitable steps in delivering services to the investors, arrangements should bemade in the most logical way by identifying the steps involved organization policies and procedures carry more importance in making the process suitable .at HDFC, the process of delivering services to investors includes following. A) investor's interaction (may be by service personnel) B) selling mutual fund schemes as per investors needs C) allotting same day NAV D) Atthe time of redemption, same day credit is given to the investors. Physical evidence Intangibility is one the main characteristics of financial services, so there have to be some aspect of tangibility to attract investors. Physical evidence creates an impression in the minds of the investors about the organization and the intangible financial services. Physical evidence constitutes mainly two elements: A) core /essential services B) peripheral services Most of the mutual funds leading players provide following supporting services to the investors which are: A) distribution of prospectus and application forms B) same day NAV by online services C) quarterly journals in touch details of the funds performance D) online service helps in fast switch over E) ATM facility all over India F) Comparison between fund performance of different mutual fund schemes and also with index Summary * For financial organization like mutual fund their marketing mix consists of 7 p's- product, price, place promotion, people, process and physical evidence. * Mutual fund exercise little contro! over price+ The services they provide are far more unique and most part easily producible * A wider choice of product more flexibility products are all possible areas for building a competitive advantage.Company profile and product profile SBI mutual fund SBI mutual fund is one of the largest mutual fund in the country with an investor base of over 4.6 million with over 20 years of rich experience in fund management, mutual fund brings forward its expertise in consistently delivering value to its investor, Proven si wealth generation SBI mutual fund draws its strength from India’s largest bank SBI and societal general asset management, France SBI mutual fund is India's largest bank sponsored mutual fund and has enviable track record in judicious investments and consistent wealth creation. Expl 1g expertise and compounding growth Products offered A) equity schemes Magnum comma fund Magnum equity fund Magnum global fund Magnum index fund Magnum mideap fund Magnum multicap fund Magnum specific funds B)Sector specific funds MAFU FMCG fund MAFU emerging market MAFU IT fund MAFU pharma fund MAFU contra fund ‘SBI arbitrage opportunities fund ‘SBI blue chip fund© SBI infrastructure fund * SBI magnum tax gain scheme 1993 * SBI one India fund + SBI tax advantage fund series-1 C) Debt scheme * Magnum children benefit fund © Magnum gilt fund © Magnum income fund * Magnum income plus fund * Magnum insta cash fund + Magnum institutional income fund * Magnum monthly income fund © Magnum NRI investment fund * SBI capital protection oriented fund series-1 + SBI debt fund series, + SBI premium liquid fund * SBI short horizon fund D) Balanced fund Magnum balance fund * Magnum investment fund-flexi asset plan HDFC Asset Management Company limited HDFC Asset management company itd was incorporated under the companies’ act 1956, on December 10, 1999, and was approved to act as an asset management company for the HDFC mutual fund by SEBI vides its letter dated June 30 2000 Product offeredgrowth fund © HDFC equity fund * HDFC balanced fund * HDFC growth fund * HDFC midcap opportunities fund * HDFC top 200 funds * HDFC prudence fund + HDFC infrastructure fund + HDFC core and satellite fund * HDFC premium multicap fund + HDFC index fund-nifty + HDFC index fund- sensex HDF long term equity fund + HDFC arbitrage fund B) Children fund + CGF-investment plan * CGF-saving plan C) Fixed maturity plan * HDFC FMP 26 M august 2006 * HDFC FMP 90 days November 2007 * HDFC FMP 16 M January 2007 D) HDFC liquid fund * HDFC liquid fund © HDFC liquid premium fund * HDFC cash management call plan fund * HDFC cash management saving plan fund come fund * HDFC cash management fund * HDFC income fund* HDFC floating rate IF long term fund * HDFC floating rate IF short term fund * HDFC gilt fund * HDFC monthly income plan * HDFC multiple yields plan These are the various products offered by these mutual funds Product profile comparison For comparison between different products of mutual funds a mutual fund from public sector and other from private sector has been taken. Both the funds are very competitive and their performance is normal so they are mostly preferred by the investors To analyze the performance of the mutual fund | have taken some schemes of both the funds which are as follows: » Equity fund Balanced fund Children fund Gilt fund Index fund -@ aos Tax benefitEQUITY FUND (DIVERSIFIED) April 2009) Si. ]Name of | SBI Magnum Equity Fund HDFC Equity Fund No. | Scheme 1 | Objectives | Long term capital appreciation] Long term growth, capital in high growth companies, | appreciation in high growth liquidity in open ended scheme, | companies through combined portfolio of equity debt and money market. Launch date | January 2, 1991 January 1,195 Minimum | Rs. 1000.00 New Investors Rs. 5000.00 application Existing Investors Rs. money 1000.00 4 | Entry load _| investments < 5 crore = 2.25% | a) If the applications routed Investments > 5 crore = Nil through distributors Investments <5 crore = 2.25% Investments > 5 crore = Nil b) If the application are not routed through distributors = Nil 5 | Exitload — | Investment <5 crore = 1% Investments < 5 crore = 1% Investments > 5 crore = Nil Investments > 5 crore = Nil 6 | Asset Instruments % Instruments % Risk application | Risk Equity 80-100% pattern Equity upto 70% — High | Medium Debt upto 30% to Medium high Securitized Debt securities | 0-20% Low Debt upto 10% Low | & money market, to Money market balance Low | & cash medium 7 |Fundsize | Rs, 254.82 Crore Rs, 2908.35 Crore (in Rs,Jas on 31° April 8 | Asset Equity = 93.56% Equity = 99.14% collection | Debt 1% Debt =0% (ason 31” | others = 6.44% Others = 0.86%9. Top Company & of Net ‘Company % of Net portfolio Assets Assets holdings (as on 31° April 2009) Jindal Steel & Power | 7.90% | ICIC Bank Ltd. 494% Ltd Reliance industries [5.66% | SBI 5.94% itd BHEL 7.79% | ONGC 414% ‘Sun pharmaceuticals | 5.02% | Infosys BAD Industries Ltd technologies Ltd Jai Prakash 422% | Britannia industries [3.79% Associates Ltd. Itd Bharti Airtel Lid 470% | Crompton Greaves [4.17% Lid. LaTLd 408% | Sun 373% Pharmaceuticals Industries United phros: 3.58% | United 322% Phosphorous Ltd. (new) Associated cement | 5.15% | Bank of Baroda | 5.09% companies Ltd. 70 [NAV Date | NAV Date | NAV Dividend 2.14 | Dividend 25.51 29.04.09, 29.04.09 Growth 24.03 [Growth 127.09 29.04.09 29.04.09 44 Annual Last 5 years Since |Last 5 years Since returns inception inception 17.34% 13.60% | 18.37% 19.41% BSE 13.92% 13.92% 14.22% standard | 14.22% Interpretation: Out of these two equity diversified schemes of SBI Mutual Fund and HDFC Mutual Fund, HDFC Equity Fund is doing well in comparison to Magnum Equity Fund, HDFC Equity Fund generated last 5 year return of 18.37% which is higher than the annual retums of Magnum Equity Fund i.e, 17.34% . And the fund gave a 3 year compounded return of 41.36 and 41.34 respectively of dividend and growth plan which is also higher than Magnum Equity Funds returns i.e. 36.44 and 36.29%. Itshows the funds performance is consistent. The funds ability to churn healthy returns is attributed to the fund manager's stock selection strategy that involves identifying companies with sound fundamentals. The HDFC equity fund is ahead of other funds with similar objective and above the BSE standard i.e. 13.92% and also since inception it is ahead of its SBI counter part.2. BALANCED FUND Si. Name of Scheme Magnum Balanced | HDFC Balanced Fund No. Fund 1 Objectives Long term capital] Capital appreciation with appreciation along | current income from with the liquidity of an | combined portfolio of equity open ended scheme. | debt and money market instruments. & Launch date Dec, 31,1995 September 11, 2000 3 | Minimum application —_| Rs. 1000.00 New Investors Rs. 5000.00 money Existing Investors Rs 1000.00 4 Entry load Investments < 5 crore | a) If the applications routed = 2.25% through distributors Investments > 5 crore | Investments < 5 crore = =Nil 2.25% Investments > 5 crore = Nil b) If the application are not routed through distributors = Nil 5 | Exitload Investment <5 crore | Nil upto 6 months 1% Investments > 5 crore 6-12 month 0.5 % Investments > 5 crore = Nil 6 | Asset Instruments | % Risk Instruments [% | risk allocation Equities At least| Medium | Equities 60% | Medium 50% to High to high Debt Upto 40% | Medium [Debt — &| 40% | Low to securitized |<10% — |toHigh | money medium debt market Money Balance | Low Instrument market &cash 7 | Fund size | Rs. 306.86 Crore Rs. 90.36 Crore (as on 30 April 2009) 8 Asset Equity Equity freee Debt = = 13.54 Debt fas on = = 7.74% Apri 2009) | MEFS = 16.86 Others = 7.74%9. Top ‘Company % of Net ‘Company % of Net portfolio Assets Assets holdings (as on 31% April 2009) Current Assets 14.53 Reliance Industries [660 Bharti Airtel ltd 3.32 Coromandal 5.18 Fertilizers Ltd. Reliance Industries | 5.46 Dabur India 287 ITC ite 374 Sun 424 Pharmaceuticals Lita, BHEL Ltd 327 The Federal Bank {4.15 Lita, State bank of India | 2.85 Cat 362 itd ONGC 2.92 ITC 3.87 Hindustan unilever [2.64 ICICI Bank Lid 3.70 itd ICICI bank itd 317 Bio con 368 10C Lid, 433 Loan Securitization [4.23 Loan Securitization | 7.66 10 | Annual Last 5 years | Since Last 5 years | Since Return inception inception Dividend | 14.99 Dividend 13.34% 16.89 11.41% BSE standard 13.92% 14.22% 14.22% 13.92% 77) NAV Date | NAV Date | NAV Dividend 18.57 Dividend 73.04 29.04.09 29.04.09 22.04.08 [16.89 22.04.09 | 12.58 Growth 28.73 Growth 29.48 29.04.09 29.04.09 22,0409 | 26.89 22.04.09 | 28.44 INTERPRETATION: Magnum Balanced funds 5 year retum and retum since its inception ie. 16.89% and 14.99% is higher than HDFC balanced Fund’s retum of 11.41%and 13.34% respectively. It means magnum balanced fund’s NAV jis consistent in comparison to HDFC Balanced fund so the investors are investing in this fund.3. CHILDREN FUND SI. | Name of Scheme ] Magnum children’s benefit HDFC children’s gift fund No. plan saving plan 1 | Objectives Capital appreciation through | Long term capital appreciation actively management current}no assurance of — the income from combined portfolio | investment objective of of equity debt and money market | schemed plan. instruments. 2 _| Launch date January, 2002 March 02, 2001 3 | Minimum Rs. 1500.00 no maximum limit | New Investors Rs. 5000.00 application Existing Investors Rs. 1000.00 money 4 | Entry toad 1.50% a) If the applications routed through brokers = 1.25% b) If the application not routed through brokers = Nil 5 | Exit load Within 1 year = 3% Units subject to lock period = Within 1 year = 2% nil Within 1 year = 1% Units not subject to lock period 3% - if units redeemed/switched off within 1 year from the date of allotment 2% - if unit biw 1 year to 2" year of date of allotment. °% - if unit blw 2" year and 3% year from date of allotment. Nil — afte 3° year of allotment. 6 |Asset | Instruments | % Risk Instruments | % Risk allocation Equities Up to 25% |Medium | Equities 0-20% | High to High Debt Upto 100% |Low — to| Debt 80- | Low instrument Medium | securities &| 100% |to (securitized money market high debt) Govt instruments securities & money market instruments Securitized | Not more | Medium debt than 10% of | to high investment7 | Fund size (as on 30 April 2009) Rs.19.57 Crore Rs. 52.63 Crore 8 | Asset collection (as on 31" April 2009) Others = 16.86 Equity = 69.84% Debt = 26.4% Others = 3.76% 9. | Top portfol ‘Company & of Net ‘Company % of Net Assets Assets 31* April 2009) Tata sons Itd 12.74 P&G ltd 102 GOI7.56 16.15 Britannia industries [7.78 Ita GO16.05 2019 997 Infosys 093 technologies itd L&T finance itd 7.01 CRISIL Itd 0.86 Indian railways 772 ‘Sun Pharma itd finance corp Ite Reliance capital ltd [9.55 Glaxo smith Kine td [0.64 AbanLyod Chiles | 2.48 Choromondal 0.70 offshore Ltd. fertilizer Ite ‘Sundaram finance itd | 0.51 DSP MI Capital Lid, [0.54 Reliance industries [2.68 Sundaram Finance [0.23 itd Lid. Jammu & Kashmir [3.34 bank Ite Infosys technologies | 0.85 SBI 067 70 | Annual Return Last 5 years | Since Last 5 years | Since inception inception 659] 8.74 10.02 6.02 BSE standard NA NA 17 [NAV Date | NAV Date | NAV 78.33 17.68 29.04.09 29.04.09 Interpretation HDFC Children’s Gift Fund - Saving Plan is better terms return since inception i.e. 10.02% in comparison to Magnum Children benefit plan 8.74% but the 5 years compounded return of both the funds are all most same. Also both the fund's retum is below the BSE standard.4. GILT FUND si. Name of Magnum Gilt Fund - Long HDFC Gilt Fund No. Scheme term 1 | Objectives To provide the investors with | Generate credit risk free returns returns generate through | through — investments in investments in government | sovereign securities issued by securities issued by central| Central Government’ State Govt. & State Govt Government. 2 | Launch date _| January 1, 2003 duly 25, 2001 3 | Minimum Growth option — Rs. 25000 New Investors Rs. 5000.00 application Dividend option — Rs. 100,000 _| Existing Investors Rs. 1000.00 money 4 | Entry load Nil Nil 5 | Exitload Regular plan (1.15) — CDSC of | Nil 0.25% for exist within 90 days from date of investment 6 [Asset | iInstruments | % Risk Instruments ]% — | Risk allocation GO! debt 100% [Sovereign |GOldebt — | 100% | Sovereign secutities secutities State 100% | Low State 100% | Low Government Government debt securities debt securities GOI Treasury | 100% | Sovereign | GOI 100% | Sovereign bill Treasury bill 7 | Fund size | Rs. 248.23 Crore Rs, 19.95 Crore (as on 30 April 2008) 8 Asset [Equity =0.00 Equity = 0% sen Debt 3.15% Debt 97.16% (as on = 96.49% 9 $4 aprit | Cash & Equivalent = 96.49% Others = 2.84% 2009) 9. Top portfolio Company | & of Net ‘Company % of Net holdings (as on 31% Assets Assets April 2008) GOI6.05,2019 [63.62% | 8.33 GOI 2036 496 GOI7.56 12.93% |824 GOI 2018 28.17 GOI7.50 10.35% |7.27 GOI 2013 683 GOI620,2010 [1.63% | Current Assets 08410. [NAV Date NAV DATE | NAV LTDP | 29.04.09 70.42 [LTDP [29.0409 | 45.09 22.04.09 10.47 22.04.09 | 14.95 70 | Annual Returns Last years | Since LastS | Since inception inception | years 3.76% | 8.32% 418% 6.29% BSE standard NA 7.30% Interpretation HDFC Gift funds last 5 year retums is higher than Magnums gilt fund. But the inception return is higher in terms of magnum. So present earning is higher for HDFC so investors prefer this fund house.5. INDEX FUND SI. No. Name of Scheme Magnum Index Fund HDFC Index fund Nifty Plan Objectives Invest in stock comprising of S & P CNX nifty index, retum equivalent to total retums index of § & P CNX Nifty, Generate return that is commensurate with the performance of the Nifty Subject to tracking errors. Launch date February 4, 2002 July 17, 2002 Minimum Rs, 5000.00 New Investors Rs. 5000.00 application Existing Investors. Rs money 1000.00 Entry load Investment < 5 lakh =| Nil 1.25% Investment > lakh = Nil Exit load Nil Investment < Crore = 1% Investment > Crore = Nil Asset Instruments |% | Risk Instruments [% — | Risk allocation Stocks $&P | Upto [Medium | Securities ]95- | Medium + Nifty 100% |tohigh | covered by | 100% | to high Nifty Cash and call | Upto | Low Cash & 05% | Low to money 10% money medium market Fund size _| Rs. 14.93 Crore Rs.26.73 Crore (as on 30 April 2009) Asset Equity = 87.11% Equity = 97.78% foncaere Debt = 0.62% Debt =0% fas on ; = 12.279 = 2229 Giprit 2009) | C28 & Equivalent = 12.27% Others = 2.22% 3 Top portfolio Company | &ofNet] Company | % of Net holdings (as on 31** Assets Assets April 2009) Reliance 71.97 _ | Reliance 12.88 Industries Industries Ltd. Lid. ONGC 828 ONGC 838 Bharti Airtel | 5.97 NTPC 740 NTPC 7.21 Bharti Airtel 647 SBI 3.40 Infosys tech 392TCS tid. 265 BHEL 367 HLL tte 253 SBI 368 Infosys 3.81 TTC itd 314 technologies ICICIBank | 272 ICICI Bank 242 BHEL 259 Tata 277 consultancy itd 40. [NAV Date NAV DATE | NAV Dividend | 29.04.08 1523 | Nifty [29.04.09 | 37.04 Plan 22,0408 74.59 22.09.09 | 29.84 7 ‘Annual Returns Last 5 years] Since | Last5 years | Since inception inception Dividend 15.35 [14.53 17.06 20.50 BSE standard 157 21.47 Interpretation The 5 year returns of Magnum Index fund is better than HDFC Index Fund Nifty plan Le. 20.50% but its return since inception slightly less than HDFC i.e,15,35% to 17.06%. Investors will prefer magnum because its NAV is less than HDFCs, NAY, in this context they can get more units.6. TAX BENEFIT SI. No. Name of SBI TAX ADVANTAGE HDFC TAX SAVER (ELSS) Scheme FUND 1 Objectives Capital appreciation over a | Long term Capital gain by investing period of 10 years, investing | in equity investments of in equities to companies | companies. across large mid, small, market capitalization and income tax benefit 2 Launch date _| December 03, 2007 December 18, 1995 Minimum Rs. 500.00 New & Existing Investors application Rs, 500.00 money 4 Entry load NA Investment <5 Crore = 2.25% Investment > 5 Crore = Nil 5 Exit load Nil Nil 6 Asset Instruments | % Risk | Instruments] % Risk allocation Equities 80- [High — | Instrument | Maximum | Medium 100% 80% to high Debt and 0-20 |Low to] Debt& Minimum | Low to money market medium | money 20% medium market 7 Fund size | Rs. 856,05 Crore Rs, 1416.85 Crore (as on 30 April 2008) 8 Asset Equity = 67.57% Equity = 96.44% aa Debt =0% Debt =0% (as on : % i BS Se apr | OMerS = 32.43% Others = 3.56% 2008) 9. Top portfolio Company | &of ‘Company % of Net holdings (as on Net Assets 31% April 2008) Assets Reliance 5.89 | ICICI bank 5.56 Industries Ltd, LaTLtd 35 Dr reddy's lab 3.83 Infosys 346 | SBI 5.10 Technologies LidONGC 237 TCS itd 2.81 HDFC 2.44 | Crompton Greaves | 3.23 Ltd. Bharti Airtel 2.12 Bharti airtel 3.02 Ltd. Tata Steel Ltd. | 1.87 BPCL Ltd. 3.07 Reliance 1.86 Reliance industries | 3.02 Communication Ventures Aban lyod off 1.65 Hero Honda Itd 3.11 shore Itd. 10. | NAV Date NAV DATE NAV Dividend | 28.04.09 698 | Dividend | 29.04.09 | 34.85 22.01.08 676 22.04.09 | 33.56 growth 29.04.09 | 112.05 22.04.08 | 107.89 TW Annual Last S years] Since | Last5years | Since inception Returns inception Dividend NA [NA 21.06 29.08 BSE standard 77.89 10.75 Interpretation: HDFC Tax Saver (ELSS) fund size is greater than SBI’s Tax advantage fund SYSTEMATIC INVESTMENT PLAN Wealth is CREATED in TWO WAYS: EITHER IT IS painstakingly accumulated over years or acquired overnight though a windfall. But windfalls don’t happen in everybody's life, so the only route to wealth available to most ordinary folks is via patient accumulation. SIP or systematic investment planning is an effective means of doing just that. SIP is a method of investing a fixed sum on a regular basis in a mutual fund scheme. a fixed sum on a regular basis in a mutual scheme. Investing in recurring deposit or PPF or purchasing NSC regularly also comes under the definition of SIP,but they fare poorly vis-a-vis mutual funds because of low returns (8 percent). as they offer the option of paying premium on an annual, quarterly or monthly basis Contrary to the tendency in most people, who wake up to the need for investing at the last minute during the tax planning season and hurriedly look for funds to make the requisite investments, SIP entails investing in small doses every month on a given date. Doing so inculcates financial discipline, without which wealth accumulation would not be possible. A SIP can be started with just as little as Rs. 500 per month in any ELSS, or with Rs.1000 per month in a diversified equity scheme or in an ULIP. SIPs afford all the advantages of investing in equity-based instruments over direct investments in shares. In addiction, the entry load in SIP investments is lower and sometimes even nil, Moreover, SIPs work best in a volatile market, which is the bane of most stock market investors. The greater the volatility, the better it is for SIPs, says a study from Cholamandalam DBS (see the beauty of SIP) As for taxes, since SIPs are applicable to open-ended funds, no capital gains tax is charged if the units are sold after a year. If the units are sold after a year, then the gains are taxed at 10 per cent. Section 80C benefits, however, are available only to equity-based tax-saving funds. But in the case of ULIPs, all investments are eligible for section 80C deductions irrespective of the plan, while maturity proceeds are tax free. THE BEAUTY OF SIP The average cost of unit is always less than the average unit price irrespective of whether the markets are falling, rising or fluctuating,Amount | Rising market | Falling market _| Volatile market Month |investRs |NAV | Units |NAV | Units | NAV | Units 1 4,000.00 | 10.00 | 100.00 | 10.00 | 100.00 | 10.00 | 100.00 2 100000 |105 |9574 |950 | 105.26 |950 | 105.26 3 1,000.00 |11.00 |9091 |900 J111.11 |900 | 141.11 4 1,000.00 | 11.50 |8496 |8so /117.65 |820 | 121.95 5 1,000.00 |12.00 |83.38 |800 12500 |7.50 | 133.33 6 1,000.00 |1250 |80.00 |7.50 /13333 |800 | 125.00 7 4,000.00 |1300 |7572 |7.00 | 147.86 |7.00 | 4114.14 8 100000 |135 |7407 |650 | 15385 |975 | 102.56 9 4,000.00 | 1400 |71.43 |600 | 16667 |105 | 95.24 10 4,000.00 |1450 |6897 |55 181.02 | 11.25 | 88.89 4 1,000.00 | 15.00 |6697 |5.00 | 20000 |124 | 80.65 12 1,000.00 | 1550 |6457 |450 222.22 |1300 | 76.92 Total 153.00 | 959.02 |87.00 | 1,759.77| 118.10 | 1,252.02 Average Unit Price | 12.75 7.28 9.84 (Sum of NAVINo. of Investment ) Average Unit Cost | 12.51 6.82 9.58 (Total Investment/ Total units allotted)INVESTOR’S AWARENESS ABOUT MUTUAL FUND, MARKET SURVEY Findings 1) amarket survey through questionnaire a number of investor's, respective investors and people from all sections were being questioned through a systematic questionnaire it contained a wide range of questions which could provide a lot of information about the public interest and awareness towards mutual funds in the city. The data were collected and then analyzed and various findings and conclusion were drawn. 2) survey findings Market survey of Bhubaneswar shows that more than half of the population in unaware about mutual fund ‘A sample of 200 comprising of govt employees, businessmen, private sector employees and other professional shows the following findings. Awareness of mutual fund Category No. of respondent Percentage (%) Investors 80 40 Non-investor's 120 60 Total 200 100 Interpretati Findings shows that AMC need to concentrate over their promotional activity to pull the surplus money of a large mass on non investors to invest in mutual fund. it is also required to make people aware of advantages of investing money in mutual fund minimize the risk of direct investment in stock market.Reasons westment: The sample of 80 investor's has shown a no. of reasons of their investment ‘Category Frequency Return potential 3 Low cost 22 Choice of schemes 17 Transparency 10 Liquidity 29 Flexibility 2 45 40. [Return potential 35: 30. |@ Low cost 25 [Choice of schemes 20. (CO Transparency 15: a aan | Liquidity 10: Flexibility Frequency Finding shows that return potential is the most important factor that appeals the most of investors for their investment Liqudity which is one of the important attribute of open ended scheme contributes more or less towards the reason of their investment, low cost i.e, minimum application amount is very reasonable in different schemes and they are capable of paying that minimum amount. Most of them shows negative response towards transparency that mutual fund give in their monthly disclosure.Preference of mutual fund: Investor shows @ mixed response basing upon their origin of AMC. brand name previous performance and security. PERFORMANCE OF MUTUAL FUND CATEGORY NO. OF RESPONSE ‘SBI MF 18 TATA MF 42 HDFC MF 13 KOTAK MOHINDRA MF 9 UTI MF 20 ICICI PRU MF 15 RELIANCE MF 29 FRANKLIN TEMPLETON 7 30 OSBI MF HITATA MF 25 CHDFC MF 20 COKOTAK 15 MOHINDRA MF UTI MF 10 ICICI PRU MF 5 GRELIANCE MF 0 No. of response OFRANKLIN TEMPLETONMajority of preference goes to Reliance MF .also the graph shows the gradual shift of mindset of people towards the private mutual funds due to aggressive marketing, Varity of schemes and return potential of funds. Response of schemes: Different investors have given a mixed response to different mutual fund schemes basing on their past performance and meet their investment needs. The following findings can be illustrated in the form of graph, RESPONSE SCHEMES Category Frequency Growth scheme 42 Debt scheme 18 Income scheme 23 Balance scheme 79 Tax Saving scheme 22 a 45 40 © Growth scheme 35 30 @ Debt scheme 26 O Income scheme 20 15 CBalance scheme 10 5 @ Tax saving 0 scheme FrequencyMajority of investor's have invested in the growth scheme in different mutual funds are the return potential is quite high and predominant in the present scenario and they fill safe and secure to invest. the balanced fund schemes are also performing reasonably well which can be interpreted from the above findings followed by income and tax saving schemes. These schemes are quite suitable for the service holders in the govt. Organization and corporate. Reason of investor's satisfaction: The investor has given following response basing upon return potential of different schemes of mutual fund RESPONSE OF SATISFACTION RESPONSE NO. OF RESPONDENTS: Satisfied 52 Dissatisfied 28 The above findings suggest that a large chunk of investors are quite satisfied with the retums from their investment decisions in different mutual fund schemes. They are quite aware of taking the right decision while selecting a scheme taking into account the different parameters suitable to them.Indian mutual fund industry is moving towards greater regulation through Securities Exchange Board of India (SEBI) and Association of Mutual Fund Industries (AMFI) Greater emphasis is given on disclosure norms to protect the investor's interest, the funds discloses their holdings, they provide daily NAVs ,fund managers profile and perceptions, change of fund's NAVs overnight and for time period suitable to various audience of interest. Media has trespassed the role of reporter, taking active part in suggesting to investors in which funds they should invest so as to maximize their wealth and minimize their tax burdons. newer media of communications are being exploited to give information on real time basis e.g. internet, television etc. Reduction of interest rates on bank deposits is the main factor responsible for growth of mutual fund, Funds manager have developed different schemes to match the objective of various investors i.e. “to please all people all of the time” All fund managers have embraced aggressive approach to make profits by beating the time element factor i.e. to make correct decision at correct movement. The analysis of the schemes shows that they have performed well in the last year due to aggressive approach of aligning with the market performance of the scheme over the long term show they have performed well with the market boom. Major chunk of funds are invested in new economy stock like information techonology, tele-communication, infrastructure sector etc. fund manager's valuation procedure has changed from return on investment to the free cash flows of the entities in this sector and the potential of their future growth Increased focus on product innovation has seen industry players come out with several innovative schemes to attract potential investors and gain market share. Products like LIFESTYLE FUND, T.I.G.E.R FUND, and EXCHANGE TRADED FUND ETC are hot favorites among fund housesSUGGESTIONS . The investment avenues like bank deposits ete show the return per rupee basis; if the mutual fund also adopt the same basis then it will be easier to compare the mutual fund with other investment avenues. Efforts should be taken to tap semi-urban and rural markets and also encourage rural participation. Investors need to invest in schemes by keeping a close watch and the same way fund managers need to invest in the growth sector. Fund manager should invest an adequate portion in money market or keep cash equivalent “funds for sustaining redemption pressure that may arise due to adverse market movements” The industry need to emphasize more on corporate governance and disclosure practices. It should try to curb malpractices like late trading. Ete. which will go a long way in maintaining investors trust. . Further to push its growth the industry need to expand its investor's base by encouraging participation from retail investors, Equity fund have been major attraction to retail investors. Eliminating confusion of bull market as brilliant performance i.e. correction of fund and market should significantly reduced . To achieve economics of scale and diversification of risk, different funds and schemes are required to be merged. a number of merger and acquisition have taken in recent past for e.g. Canbank mutual fund took over GIC mutual, recently RELIGARE took over LOTUS India mutual fund,So far the mutual fund industry has been growing exceptionally well on the back of country’s booming economy, buoyant stock markets and a favorable interest rate regime. however,it has to develop strategies to show resilience when the tide turns i.e, when the bull comes to an end and interest rates hardens.CONCLUSION Given the present market scenario where the interest rate is falling every year to boost up the growth of industrial sector, earning good return on savings on term deposit from bank has become more difficult .so mainly for middle class and lower class people who park most of their savings in the banks are facing difficulties in generating a good retum on their savings So, it has been convenient vehicle for investment by the small investors as it gives good retum .generally, equity based mutual fund will give 15% to 20% annual return within a term of five years. Where as bank deposits will give about 6% to 7% annual return in five years. Mutual funds provide liquidity to investors, So mutual funds have really emerged as efficient tools of investment to retail investors. The different kind of mutual fund available in the market caters to varying needs of different segment of Indian investors. So mutual funds have really emerged as an efficient tool of investment to retail investors. The success of mutual funds in present days is largely spoken by the huge amount of money raised by AMC through their IPO's. To conclude, the industry must emphasize and practice what it peaches as one of the mutual fund house claims.” mutual is being fair with each other’BIBLIOGRAPHY Chandra, prasanna; "the investment games”-6" editions, TATA me grew hill publishing company itd, New Delhi Chartered financial analyst,” mutual funds: an over view’, July 2006, institute of chartered financial analyst , “security analysis and portfolio management’ AMI workbook THE ECONOMIC TIMES, THE BUSINESS STANDARDS “How mutual fund works” 5" edition’s chand and co. WEBSITES, WWW.HDFC.COM WWW.sB1,.COM WWW. MUTUALEUNDSINDIA COM WWW.AMEIINDIA.COM WWW.BSEINDIA.COMANNEXURE QUESTIONNAIRE. NAME- AGE GROUP-__21-30( ) 31-40( ) 41-50( ) 50 & ABOVE( ) SEX MALE (_) FEMALE( ) OCCUPATION GOVT. SERVICE( —) PVT.SERVICE( ) BUSINESS () OTHERS (_ ) ADRESS- PHONE NO- E-MAIL ID- DO YOU KNOW ABOUT MUTUAL FUND? (YES/NO) HAVE YOU INVESTED IN MUTUAL FUND? (YES/NO) FOR INVESTORS 1- What is the source of information? a) News paper/TV adds b) private agencies ¢) Friends and relatives 4) others 2-which mutual fund have you invested? a) SBI MF b) TATA MF c) UTI MF. d) HDFC MF e) FRANKLIN MF f) ICICI MF. g) KOTAK MF h) RELIANCE MF 3-what was the need of your investment? a) To acquire assets such as car, house etc b) To plan for children's future ° d ) To meet your monthly income ) To save for your retirement4-what was the reason of your investment in mutual fund? a) Return potential c) Transparency @) Choice of schemes b) low cost d) liquidity f) any other reason (Please specify) 5) In which scheme have you invested? a) Growth scheme b) debt scheme ¢) Income scheme d) balance scheme @) Tax saving scheme _f) any other scheme 6) What is the reason for selecting the scheme? a) Risk is low b) steady return c) Fund manager's potential —_d) portfolio investment @) Other reasons (please specify) 7) Does your investment fulfill your needs? (yes/no) 8) are you satisfied with return?(yes/no) 9) please rank from (1-5) (1-good 5-worst) Name | Return | Diversification | Professional | Transparency | Varity of potential management schemes ‘SBIMF TATA MF UTIMF HDFC MF FRANKLIN TEMP MF ICICI MF BIRLA MFFOR NON INVESTORS 1) Are you comfortable with investing in stock market? this will give you the opportunity to eam higher returns, but the risks will also be higher: a)highly comfortable —_b)comfortable c) Undecided d) non comfortable 2) Do you want to know about mutual fund? (Yes/no) 3) What do you think about mutual fund? a) It is risky b) return is uncertain ¢) Depends upon market d) any other 4) What you perceive about SBI? a)largest bank in India boldest bank in India c) Name can be trusted 4d) any other reason 5) Will you lke to invest in SBI mutual fund in future? (Yes/no) Your comments are path for our improvements. THANK YOU FOR YOUR VALUABLE CONTRIBUTIONfaa INVESTINGIN A" MUTUAL FUNDS: y esyurveamoymoneirgserioese WE Stereo Mutual Fund monitor SS Education for All Utkal University, Vani Vi Bhubaneswar, Orissa