Abstract summary

In few years Mutual Fund has emerged as a tool for ensuring one’s financial
well being. Mutual Funds have not only contributed to the India growth story but
have also helped families tap into the success of Indian Industry. As information and
awareness is rising more and more people are enjoying the benefits of investing in
mutual funds. The main reason the number of retail mutual fund investors remains
small is that nine in ten people with incomes in India do not know that mutual funds
exist. But once people are aware of mutual fund investment opportunities, the
number who decide to invest in mutual funds increases to as many as one in five
people. The trick for converting a person with no knowledge of mutual funds to a
new Mutual Fund customer is to understand which of the potential investors are
more likely to buy mutual funds and to use the right arguments in the sales process
that customers will accept as important and relevant to their decision.

This Project gave me a great learning experience and at the same time it
gave me enough scope to implement my analytical ability. The analysis and advice
presented in this Project Report is based on market research on the saving and
investment practices of the investors and preferences of the investors for investment
in Mutual Funds. This Report will help to know about the investors’ Preferences in
Mutual Fund means Are they prefer any particular Asset Management Company
(AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they
prefer or Which Investment Strategy they follow (Systematic Investment Plan or One
time Plan). This Project as a whole can be divided into two parts.

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 The first part gives an insight about Mutual Fund and its various aspects, the
Company Profile, Objectives of the study, Research Methodology. One can have a
brief knowledge about Mutual Fund and its basics through the Project. The second
part of the Project consists of data and its analysis collected through survey done on
40 people.

For the collection of Primary data I made a questionnaire and surveyed of 40

people. I also taken interview of many People those who were coming at the NJ
INDIA INVEST PVT LTD where I done my Project. I visited other AMCs in Bangalore
to get some knowledge related to my topic. I studied about the products and
strategies of other AMCs in Bangalore to know why people prefer to invest in those
AMCs.

This Project covers the topic “ROLE OF FINANCIAL ADVISOR IN

CREATING WEALTH AMONG INVESTOR” The data collected has been well
organized and presented. I hope the research findings and conclusion will be of use.

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 INTRODUCTION
BRIEF INTRODUCTION ABOUT NJ:
NJ India Invest (formerly known as NJ Capitastocks) was started in 1994 to
cater to the growing financial services sector. NJ India Invest evolved out as a client
focused need based investment advisory firm. At NJ we regard mutual fund as one
of the best investment avenue available to satisfy any kind of investment need. We
have gained expertise in analyzing mutual fund schemes, and an in-depth study on
various parameters is carried out on a regular basis.
BUSINESS
NJ India Invest Pvt. Ltd. is one of the leading advisors and distributors of
financial products and services in India. Established in year 1994, NJ has over a
decade of rich exposure in financial investments space and portfolio advisory
services. From a humble beginning, NJ over the years has evolved out to be a
professionally managed, quality conscious and customer focused financial /
investment advisory & distribution firm.
NJ prides in being a professionally managed, quality focused and customer
centric organization. The strength of NJ lies in the strong domain knowledge in
investment consultancy and the delivery of sustainable value to clients with support
from cutting-edge technology platform, developed in-house by NJ.
NJ has over 8,600* NJ Fundz Network Partners and over 4,500* normal advisors
associated with us. NJ presently has over Rs. 5,050* Crores of assets under advice.
NJ has over 130* PSCs (Partner Service Centers) in 22* states spread across India.
The numbers are reflections of the trust, commitment and value that NJ shares with
its clients.

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NJ’s MISSION:
Ensure creation of the desired value for our customers, employees and associates,
through constant improvement, innovation and commitment to service & quality. To
provide solutions which meet expectations and maintain high professional & ethical
standards along with the adherence to the service commitments.
NJ’s VISION:
To be the leader in our field of business through,
• Total Customer Satisfaction
• Commitment to Excellence
• Determination to Succeed with strict adherence to compliance
• Successful Wealth Creation of our Customers

PHILOSOPHY:

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 At NJ the Service and Investing philosophy are given the front seat which is
basically in order to inspire and shape the thoughts, beliefs, attitude, actions and
decisions of their employees.
A. Service Philosophy:
The service philosophy of NJ India Invest revolves around customer satisfaction.
It inspires the employees to

• Think of the customer first, take responsibility, and make prompt service to the
customer a priority
• Deliver upon the commitments & promises made on time
• Anticipate, visualize, understand, meet, exceed our customer's needs
• Bring energy, passion & excellence in everything we do
• Be honest and ethical, in action & attitude, and keep the customer’s interest
supreme
• Strengthen customer relationships by providing service in a thoughtful &
proactive manner and meet the expectations, effectively

B. Investing Philosophy:
NJ aims to provide Need-based solutions for long-term wealth creation. It believes
that

• Clients want need-based solutions, which fits them

• Long-term wealth creation is simple and straight
• Asset-Allocation is the ideal & the best way for long-term wealth creation
• Educating and disclosing all the important facets which the customer needs to be
aware of, is important
• The solutions must be unbiased, feasible, practical, executable, measurable and
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 flexible
• Constant monitoring and proper after-sales service is critical to complete the on-
going process

NJ puts emphasis in earning the trust and respect of the employees, customers,
partners, regulators, industry members and the community at large by following
service and investing philosophy with commitment and without exceptions.

NJ believes in “360° – “Advisory Platform” philosophy …

BUSINESS OBJECTIVES:
• To recruit partners to the company in the form of mutual fund advisors.
• To provide training and platform to the prospects to clear AMFI certification to
get them certified as mutual fund advisors.

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 • To provide independent advisors and firms with integrated, comprehensive
and practical business solutions.
• To provide the advisors and firms with complete insights, strategies and tools
to bring significant growth in business.
• To provide a 360° advisory platform to its partners to ensure transformation
and to exploit the opportunities available.
• To generate leads of insurance advisors through the interns in order to
educate them on the mutual fund advisory business.
• To help the interns achieve their targets of recruiting 5 advisors.

ABOUT FUNDS, PRODUCTS AND ITS CORE VALUES PRODUCTS

NJ offers advisory and distribution services on the following products…
1. Mutual funds – covering all AMCs & all schemes,
2. Life insurance – Prudential ICICI
3. Fixed deposits of companies,
4. Government/RBI bonds,
5. Infrastructure Bonds,
6. Approved securities for charitable trusts, etc
NJ’s main focus is though on mutual funds advisory and distribution. At NJ,
we believe that mutual funds, as an asset class, can be looked at for almost all of
the financial needs.

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Environment
Social
India have a huge educated population and working population who wants to invest
in the market but don’t know how to invest and don’t have time also. For them
mutual fund is an ideal product even a small investor of having Rs. 100 can invest in
a mutual fund and with a wide varieties of more than 900 products of mutual fund is
there in the customer which can suit the every kind of investors and there interest.
Within awareness about insurance as protection plus investment option for the
policy holders it’s no more the only tax saving machine. People invest in insurance
to enjoy many benefits now like protection, investment, tax saving…
For insurance agents mutual fund adds to their job profile and they can earn more
from their existing clients database as clients takes 2,3 policies only but it does not
mean he does not have extra money to invest. They can attract the left money of
clients to invest in mutual fund
Political
India government post liberalization have becomes investment friendly and
encouraged invested and set up a strong market control watch body called SEBI to
protect the interest of the investors and set up IRDA in 1999 to protect the interest of
insurance policy holders. Government have encouraged FDI and removed various
barriers for investment. AMFI is set as the mutual fund controlling body by the
government.
Economic
• According to market estimates, insurance market size is expected to touch
$52 billion in 2010, from $35 billion in 2007-08, a jump of nearly 50 per cent.
• 16% growth in life insurance sector.
• Mutual fund industry is growing 50-60% per annum in the last couple of
years…..
• Mutual fund industry is now more than $100 billions in India
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 • Vast untapped mutual fund market with only 2% market is trapped.
• India insurance sector have covered only 10% of the population, so vast
untapped insurance market is there.
• Even now at the time recession NJ has come out of it strongly and have
becomes the largest distributor of mutual fund in India
• The mutual fund market has comes down but still NJ share is raised from 13
to 16%.

NJ India Invest - Investment portfolio

• DSP Merrill Lynch Mutual Fund
• Birla Mutual Fund
• Alliance Capital Mutual Fund
• ING Vysya Mutual Fund
• Cholamandalam Mutual Fund
• Deutsche Mutual Fund
• ABN - AMRO Mutual Fund
• HDFC Mutual Fund
• Franklin Templeton Mutual Fund
• Reliance Mutual Fund
• HSBC Mutual Fund
• Unit Trust Of India
• Prudential ICICI Mutual Fund
• Kotak Mutual Fund

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 • Standard Chartered Mutual Fund
• SBI Mutual
• Principal Mutual Fund
• Tata Mutual
• JM Financial Mutual Fund
• LIC Mutual Fund
• Sahara Mutual Fund
• Sundaram Mutual Fund

NJ Advantage
Check list that differentiates NJ Fundz Network Partner from the crowd.
Services NJ Partner Non-NJ Advisor
Superior Client Service
Online Personal Investment Account to Clients
Quality, Comprehensive, Insightful Reports to Clients
Automatic Capturing of MF Transaction
Online Query Management Module for queries
Superior and comprehensive Product Offerings
Comprehensive Email Subscriptions
Effective Marketing and Sales Support
Web Brand presence with your ‘Own Website’
Complete access to Clients’ accounts
Comprehensive Marketing Support

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Comprehensive Sales Support
Regular Events, Seminars and Meets
Administration and Back-Office Support
Your own Online Business Account on Partners Desk
Automatically Updated Online MIS Reports
Insightful reports on Business and Clients
Transaction processing/acceptance at NJ Service
Centers
On-going Training and Personal Growth
Comprehensive training modules under I-Gurukul
Regular Interaction with Industry Experts
Regular Personal Meetings and Group Meetings
Support and help on an on-going day-to-day basis
Business Planning and Strategy
Business strategy and planning assistance from
experts

Technology In NJ

Technology has been and is our key strength. What we offer on the
technological front is unique and comprehensive. Our focus can be gauged from the
fact that we have a separate sister concern started for the sole purpose of providing
the best support to NJ in terms of technology. High infrastructural spending is done
to improve & strengthen our deliverables on this technological front. Finlogic
Technologies (India) Pvt. Ltd. does all the development work in-house on a
continuous basis through its team of talented professionals. All the tools, services,
products, etc offered by NJ have been developed in-house according to what we
feel.
In today’s world much is dictated by two important words – Information
and Technology. NJ realises this more than anyone else. And that’s why we make
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constant efforts to keep you ahead of the curve and ensure that you and your client
receive quality, accurate and timely information.
But technology by itself cannot make a difference. Only when technology
is combined with strong domain knowledge and understanding of customer
needs, can it truly help in making a significant difference. And this is what NJ has
achieved and aims to continue doing so.

Your Total Technology Solution

• Website creation and Management
• On-line Automatic Investment Accounts to all clients
• Centralised Online Automatic Advisor Account (Partners Desk) for
Management, MIS, Portfolio Access, etc
• Marketing, Sales and other support through application of technology
There exists a strong difference in quality, scope and type of reports
offered by NJ against other distributors. NJ, with very strong domain knowledge –
especially in mutual funds, and with investment-management perspective offers
reports that are superior to other advisors and brokers and are even superior
compared to what many good banks offer.
Further, the Partners Desk service offered by NJ is a pioneering effort in
the industry. The kinds of tools and reports offered on the Desk are unique, more
useful and superior to those offered by other distributors.
Data Management at NJ
NJ has made arrangements to receive the following …
• Details of transaction of any nature in Mutual Funds by any client, through our
Associates or us, on a Daily basis
• NAV, Dividend, and other details of all the Mutual Fund schemes on a Daily
basis
• Monthly Portfolio and other important information of all the Mutual Fund
schemes
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 • All relevant details of Direct Equities like – Prices, Dividends, Bonus, Market
Capitalisations, etc on a Daily basis
• All relevant market related information in addition to economic, event-specific,
key economic variables, etc on a Daily basis
All the data is effectively stored and managed at NJ and the same in used in
providing you and your clients with up-to-date information and reports.
SWOT ANALYSIS:
S: STRENGTH:-
• Strong base with presence in 22 states in India with 130 locations.
• Highly trained investment advisory team.
• The number one mutual fund distributor in India
• Tie up with all leading mutual fund and capital investment companies
• Enjoying monopoly in the market

W: WEAKNESSES:
• Low initial returns from mutual funds of 2-3% compared to 15 to 35% for the
advisors.
• Wide varieties of more than 900 mutual fund products very tough to find the
ideal product for investment.
O: OPPORTUNITIES:
• Very few mutual fund advisors and huge demand for them
• Regular and long term income stream from SIPs
• Add a wide variety of products, solutions available for clients
• Greater solution to meet diverse needs of the clients
T: THREATS:
• Current economic slowdown of mutual fund industry
• Many domestic and global companies are interested to enter due to vast
untapped market.
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CONTRIBUTION TOWARDS NJ INDIA INVESTS:
• To generate a huge number of leads or potential partners.
• To transform prospects into partners with proper guidance and education on
the business.
• To become part of NJ growth and expansion

SERVICES OFFERED

Mutual Fund Nest

The Mutual Fund Nest is a unique platform wherein your clients have a separate
mutual fund investment account, available online, automatically reflecting all mutual
fund transactions routed through you.

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This service will be great for all your mutual fund investors investing through you.
They will truly appreciate this 'Complete Online Mutual Fund Investment Account'
with truly comprehensive, insightful reports available to them. This service is a basic
service availed by all NJ Fundz Partner
Features
➢ Unique.
➢ On-line Automatic.
➢ Comprehensive.
WEB NEST

Web Nest is a great product and a must for any advisor. It basically is a service
wherein you get your own branded website with certain additional features/contents
along with a Client Desk from where your Clients can login to their on-line accounts.
You will have a choice of selecting the domain name as -
www.yourname.njfundz.com for your website.
Features
➢ Your Brand.
➢ On-line Automatic.
➢ Comprehensive.
Wealth NEST

Wealth Nest is a unique, revolutionary product/platform wherein your client will

have a complete investment account covering all the investment assets. You can
offer this unique, comprehensive investment account to your selected important
clients.
This service is ideal for your big clients - HNIs and Corporates alike, where you can
make a head start with this product and impress them and make them your loyal
clients. Such an integrated product with the quality, scope of reports is unique in the
industry.

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Features
➢ Unique .
➢ Assets Covered .
➢ On-line Automatic.
➢ Comprehensive .
Financial Planning Nest

As an advisor, you have the onus to undertake complete Financial Planning

for your clients. Financial Planning is in fact a must for every individual. A detailed
Financial Plan would make it possible for your clients to achieve their goals and
objectives in life. At NJ we realise the importance of Financial Planning (FP), both
from the perspective of an Advisor and a Customer.
NJ FP Nest is an online zone where you as an advisor would be in a position to
prepare detailed Financial Plans for your Clients. The Financial Plans of the clients
would be saved for your future references and for ongoing monitoring of the Plans.
The FP Nest would allow you to plan for the various goals and objectives for your
clients, and also take print-outs of the same so as to present it to your clients. You
can also prepare Financial Plans for your prospective clients from the FP Nest…
Needless to say, the FP Nest would make financial planning process, a very easy,
simple to understand exercise for you to undertake…
FP Nest Features:
Goal Planning for:
➢ Children's Education.
➢ Children's Marriage.
➢ Retirement.
➢ Purchase of Home \ Car.
➢ Protection to Family.
Taking in to consideration
➢ Risk profile of client
➢ Savings Potential
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 ➢ Existing Investments
➢ Existing Protection
With FP Nest you would now help your clients achieve their goals in life…
FP Nest is to be launched soon...
CRM Nest
Customer Relationship Management forms a crucial part in establishing a
growing and healthy relationship with your clients. Customer loyalty and satisfaction
plays a very important role in the success of any Advisor. Studies have shown that it
costs 7 times more to acquire a client than to retain a client. Hence proper customer
relationship management (CRM) forms an important element in the overall success
of the advisory business.
Realizing the importance of CRM, NJ will be soon launching CRM Nest. This module
will help advisors to effectively manage their clients and provide quality services to
them. The CRM Nest will also allow you to know your customers better. This is also
very crucial since different customers have different expectations from you. The
CRM Nest will also allow you to manage your time more productively and will help
you streamline your processes in a better way.
CRM Nest Features:
➢ Client Service Management
➢ Client Business
➢ Reports Time Management
➢ Automated Utilities
CRM Nest is to be launched soon
Life Nest
The existing hectic lifestyles and increasing complexities and uncertainties in
life have made protection a very crucial goal for each of us. Adequate protection of
family in advent for any unforeseen events or circumstances should be the first task
of any individual. As an advisor, you have the onus of helping your clients get proper
protection at all times.

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Life Nest will help you as an advisor to properly plan and monitor the protection of
your clients in a better way. Life nest will also give you information on the existing
insurance plans, their features, etc available in the markets. You may also track your
clients' investments in ULIPs and provide them updated reports on the same.
By adding Life Nest, you can better project yourself as a complete financial advisor
to your clients taking care of his investment and protection needs.
Life Nest Features:
Planning Protection for your Clients
Tracking investments in ULIPs (updated on daily basis)
Premium Due reports for Clients and much more …
Life Nest is to be launched soon...
BRAND VALUES: BE CUSTOMERIC CENTRIC
Delivers on promises
➢ Knowledgeable about the markets and customer needs
➢ Can be trusted with customer money
➢ Focus on doing rather than just talking
Treats customer fairly
➢ Offers good quality products and services
➢ Offers clarity in prices and conditions
➢ Communicates openly and without jargon
Is easy to deal with
➢ Accessible when needed
➢ Flexible solutions fitting with customer needs

NJ INDIA INVEST: - PLANS FOR INDIA

 Building a large, professional and effective sales force;
 Sophisticated product and service concepts;
 Reliability, transparency and consistency in all operation;
 Long-term commitment to Indian people.
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 COMPETITORS
NJ India Invest does not have any private competitors in the market apart from the
banks.

Management:
The management at NJ brings together a team of people with wide experience
and knowledge in the financial services domain. The management provides direction
and guidance to the whole organization. The management has strong visions for NJ
as a globally respected company providing comprehensive services in financial sector.
‘Customer First’ philosophy is deeply ingrained in the management of NJ. The
aim of the management is to bring the best to the customers in terms of
1. Range of products and services offered
2. Quality Customer Service
3. All the key members of the organization put in great focus on the processes &
systems under the diverse functions of business. The management also focuses on
utilizing technology as the key enabler for all the activities and to leverage the
technology for enhancing overall customer experience.
The key members of the management are:
Mr. Neeraj Choksi Managing Director (North Division)
Mr. Jignesh Desai Managing Director (South Division)
Sales Team:
Mr. Misbah Baxamusa National Head
Mr. Kulbhushan Nandwani A.V.P.
Mr. Prashant Kakkad A.V.P.
Executive Team:

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 Mr. Shirish Patel (Information Technology) Mr. Vinayak Rajput (Finance &
Operations)
Mr. Abhishek Dubey (Marketing & Development) Mr. Viral Shah (Research)
Mr. Dhaval Desai (Human Resources)

NJ Service Commitments …

Service is not in words, service in action

The service commitments are to guide the actions of the people at NJ. Clearly
stated, advisors can freely communicate any such actions/events wherein they feel
that any of the following commitments have been breached / compromised. At NJ they
desire to honour their commitments at all points of time and to all their advisors
without any bias.
➢ To provide advisor-focussed need-based valued services
➢ To provide reliable, accurate and timely information
➢ To maintain all records in privacy
➢ To optimise services/benefits at least justifiable cost
➢ To develop and grow the advisors’ business
➢ To provide constructive after sales service
➢ To honour our service commitments

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Past Recognitions:
Some of the awards & recognitions that NJ has received in past …
Year 2000:
For Outstanding Performance presented by Chairman, Prudential Plc. at
London
Year 2002:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at
London
Year 2003:
For Outstanding Performance presented by Group Chief Executive, Prudential Plc. at
London
Year 2004:
Among Most Valued Business Associates presented by HDFC Standard Life at
Edinburgh, Scotland
Year 2004:
For Outstanding Performance by Deputy CEO, Prudential Singapore at Malaysia
Year 2006:
Award for mobilising the Highest Number of SIPs at National Level by Fidelity Mutual
Fund Plc at Mumbai
Year 2006:
Award in Vietnam

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INTRODUCTION TO MUTUAL FUND AND ITS VARIOUS ASPECTS

Mutual fund is a trust that pools the savings of a number of investors who
share a common financial goal. This pool of money is invested in accordance with a
stated objective. The joint ownership of the fund is thus “Mutual”, i.e. the fund
belongs to all investors. The money thus collected is then invested in capital market
instruments such as shares, debentures and other securities. The income
earned through these investments and the capital appreciations realized are
shared by its unit holders in proportion 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.
A Mutual Fund is an investment tool that allows small investors
access to a well-diversified portfolio of equities, bonds and other securities.
Each shareholder participates in the gain or loss of the fund. Units are issued and
can be redeemed as needed. The funds Net Asset value (NAV) is determined each
day.

Investments in securities are spread across a wide cross-section of

industries and sectors and thus the risk is reduced. Diversification reduces the risk
because all stocks may not move in the same direction in the same proportion at the
same time. Mutual fund issues units to the investors in accordance with quantum of

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money invested by them. Investors of mutual funds are known as unit holders.
When an investor subscribes for the units of a mutual fund, he becomes part owner
of the assets of the fund in the same proportion as his contribution amount put up
with the corpus (the total amount of the fund). Mutual Fund investor is also known as
a mutual fund shareholder or a unit holder.
Any change in the value of the investments made into capital market
instruments (such as shares , debentures etc) is reflected in the Net Asset Value
(NAV) of the scheme. NAV is defined as the market value of the Mutual Fund
scheme's assets net of its liabilities NAV of a scheme is calculated by dividing the
market value of scheme's assets by the total number of units issued to the investors.

Mutual Funds Industry in India

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.

In the past decade, Indian mutual fund industry had seen a dramatic improvements,
both quality wise as well as quantity wise. Before, the monopoly of the market had
seen an ending phase, the Assets Under Management (AUM) was Rs. 67bn. The
private sector entry to the fund family rose the AUM to Rs. 470 bn in March 1993
and till April 2004, it reached the height of 1,540 bn.

Putting the AUM of the Indian Mutual Funds Industry into comparison, the total of it
is less than the deposits of SBI alone, constitute less than 11% of the total deposits
held by the Indian banking industry
The main reason of its poor growth is that the mutual fund industry in India is new in
the country. Large sections of Indian investors are yet to be intellectuated with the
concept. Hence, it is the prime responsibility of all mutual fund companies, to market
the product correctly abreast of selling.

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Low Penetration of Mutual Funds in INDIA
Few people have been exposed to the idea & advantages of mutual funds
and even fewer actually invest in mutual funds, because of lack of adequate no. of
advisors

The mutual fund industry can be broadly put into four phases according to the
development of the sector. Each phase is briefly described as under
First Phase - 1964-87

Unit Trust of India (UTI) was established on 1963 by an Act of Parliament. It was set
up by the Reserve Bank of India and functioned under the Regulatory and
administrative control of the Reserve Bank of India. In 1978 UTI was de-linked from
the RBI and the Industrial Development Bank of India (IDBI) took over the regulatory
and administrative control in place of RBI. The first scheme launched by UTI was
Unit Scheme 1964. At the end of 1988 UTI had Rs.6,700 crores of assets under
management.

Second Phase - 1987-1993 (Entry of Public Sector Funds)

Entry of non-UTI mutual funds. SBI Mutual Fund was the first followed by Canbank
Mutual Fund (Dec 87), Punjab National Bank Mutual Fund (Aug 89), Indian Bank
Mutual Fund (Nov 89), Bank of India (Jun 90), Bank of Baroda Mutual Fund (Oct
92). LIC in 1989 and GIC in 1990. The end of 1993 marked Rs.47,004 as assets
under management.

Third Phase - 1993-2003 (Entry of Private Sector Funds)

With the entry of private sector funds in 1993, a new era started in the Indian mutual
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fund industry, giving the Indian investors a wider choice of fund families. Also, 1993
was the year in which the first Mutual Fund Regulations came into being, under
which all mutual funds, except UTI were to be registered and governed. The
erstwhile Kothari Pioneer (now merged with Franklin Templeton) was the first private
sector mutual fund registered in July 1993.
The 1993 SEBI (Mutual Fund) Regulations were substituted by a more
comprehensive and revised Mutual Fund Regulations in 1996. The industry now
functions under the SEBI (Mutual Fund) Regulations 1996.

The number of mutual fund houses went on increasing, with many foreign mutual
funds setting up funds in India and also the industry has witnessed several mergers
and acquisitions. As at the end of January 2003, there were 33 mutual funds with
total assets of Rs. 1,21,805 crores. The Unit Trust of India with Rs.44,541 crores of
assets under management was way ahead of other mutual funds.

Fourth Phase - since February 2003

This phase had bitter experience for UTI. It was bifurcated into two separate entities.
One is the Specified Undertaking of the Unit Trust of India with AUM of Rs.29,835
crores (as on January 2003). The Specified Undertaking of Unit Trust of India,
functioning under an administrator and under the rules framed by Government of
India and does not come under the purview of the Mutual Fund Regulations.

The second is the UTI Mutual Fund Ltd, sponsored by SBI, PNB, BOB and LIC. It is
registered with SEBI and functions under the Mutual Fund Regulations. With the
bifurcation of the erstwhile UTI which had in March 2000 more than Rs.76,000
crores of AUM and with the setting up of a UTI Mutual Fund, conforming to the SEBI
Mutual Fund Regulations, and with recent mergers taking place among different
private sector funds, the mutual fund industry has entered its current phase of

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consolidation and growth. As at the end of September, 2004, there were 29 funds,
which manage assets of Rs.153108 crores under 421 schemes.

Mutual Fund
The idea behind a mutual fund is simple: Many people pool their money in a fund,
which invests in various securities. Each investor shares proportionately in the fund's
investment returns -- the income (dividends or interest) paid on the securities and
any capital gains or losses caused by sales of securities the fund holds.
Every mutual fund has a manager, also called an investment adviser, who directs
the fund's investments according to the fund's objective, such as long-term growth,
high current income, or stability of principal. Depending on its objective, a fund may
invest in stocks, bonds, cash investments, or a combination of these financial
assets.

* But exactly how does a mutual fund's NAV increase?

• There are a couple of ways that a mutual fund can make money in its
portfolio. (They're the same ways that your own portfolio of stocks, bonds,
and cash can make money).
• A mutual fund can receive dividends from the stocks that it owns. Dividends
are shares of corporate profits paid to the stockholders of public companies.
The fund might have money in the bank that earns interest, or it might receive
interest payments from bonds that it owns. These are all sources of income
for the fund. Mutual funds are required to hand out (or "distribute") this
income to shareholders. Usually they do this twice a year, in a move that's
called an income distribution.
• At the end of the year, a fund makes another kind of distribution, this time
from the profits they might make by selling stocks or bonds that have gone up
in price. These profits are known as capital gains, and the act of passing them
out is called a capital gains distribution.

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TYPES OF MUTUAL FUNDS
• Equity Funds
• Growth and Value Funds
• Large-Cap and Small-Cap Funds
• Bond Funds
• Foreign Stock Funds
• Money-Market Funds
• Sector Funds
• Asset Allocation Funds
ORGANISATION OF A MUTUAL FUND

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Sponsors: A Sponsor is the person who alone or in cooperation with another body
corporate establishes a mutual fund. Sponsor must contribute at least 40% of the
net worth of the Investment managed and meet the eligibility criteria prescribed
under the Securities and Exchange Board of India (Mutual Funds) Regulations,
1996.The Sponsor is not responsible or liable for any loss or shortfall resulting from
the operation of the Schemes beyond the initial contribution made by it towards
setting up of the MutualFund.

Trustee: Trustee is usually a company or board of trustees. The main responsibility

of the trustee is to safeguard the interest of the unit holders and ensure that AMC
functions in the interest of the investors.

Asset Management Company (AMC): The AMC is appointed by the Trustee as the
Investment Manager of the Mutual Fund. The AMC is required to be approved by the
Securities and Exchange Board of India (SEBI) to act as an asset management
company of the Mutual Fund. At least 50% of the directors of the AMC are
independent directors who are not associated with the Sponsor in any manner. The
AMC must have a net worth of at least 10 crore at all time
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Custodians
Mutual funds are required by law to protect their portfolio securities by placing them
with a custodian. Nearly all mutual funds use banks as their custodian. The SEC
requires any bank acting as a mutual fund custodian to comply with various
regulatory requirements designed to protect the fund’s assets, including provisions
requiring the bank to segregate mutual fund portfolio securities from other bank
assets.
Transfer Agents
Mutual funds and their shareholders also rely on the services of transfer agents to
maintain records of shareholder accounts, calculate and distribute dividends and
capital gains, and prepare and mail shareholder account statements, federal income
tax information, and other shareholder notices. Some transfer agents also prepare
and mail statements confirming shareholder transactions and account balances, and
maintain customer service departments to respond to shareholder inquiries.

TYPES OF MUTUAL FUNDS

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Types of Mutual Fund Schemes
Schemes can be differentiated by two broad parameters:
(a) their stated investment objective
(b) their constitution Stated Investment Objective Of Schemes:
Schemes can be classified by way of their stated investment objective such as
Growth Fund Balanced Fund, Income Fund etc.

Equity Schemes
These schemes, also commonly called Growth Schemes, seek to invest a majority
of their funds in equities and a small portion in money market instruments. Such
schemes have the potential to deliver superior returns over the long term. However,
because they invest in equities, these schemes are exposed to fluctuations in value
especially in the short term.
Equity schemes are hence not suitable for investors seeking regular income or
needing to use their investments in the short-term. They are ideal for investors who
have a long-term investment horizon. The NAV prices of equity fund fluctuates with
market value of the underlying stock which are influenced by external factors such
as socal, political as well as economic.

General-Purpose Equity Schemes

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The investment objectives of general-purpose equity schemes do not restrict them to
invest in specific industries or sectors. They thus have a diversified portfolio of
companies across a large spectrum of industries. While they are exposed to equity
price risks, diversified general-purpose equity funds seek to reduce the sector or
stock specific risks through diversification. They mainly have market risk exposure.

Sector Specific Equity Schemes

These schemes restrict their investing to one or more pre-defined sectors, e.g.
technology sector.They depend upon the performance of these select sectors only
and are hence inherently more risky than general-purpose equity schemes. Ideally
suited for informed investors who wish to take a view and risk on the concerned
sector.

Special Schemes
Index schemes An Index is to used as a measure of the performance of the market
as a whole, or a specific sector of the market. It also serves as a relevant
benchmark to evaluate the performance of mutual funds. Some investors are
interested in investing in the market in general rather than investing in any specific
fund. Such investors are happy to receive the returns posted by the markets. As it is
not practical to invest in each and every stock in the market in proportion to its size,
these investors are comfortable investing in a fund that they believe is a good
representative of the entire market. Index Funds are launched and managed for
such investors.

Tax Saving Schemes

Investors (individuals and Hindu Undivided Families ("HUFs")) are being encouraged
to invest in equity markets through Equity Linked Savings Scheme ("ELSS") by
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offering them a tax rebate. Units purchased cannot be assigned / transferred/
pledged / redeemed / switched - out until completion of 3 years from the date of
allotment of the respective Units. The Scheme is subject to Securities & Exchange
Board of India (Mutual Funds)
Regulations, 1996 and the notifications issued by the Ministry of Finance
(Department of Economic Affairs), Government of India regarding ELSS. Subject to
such conditions and limitations, subscriptions to the Units not exceeding Rs.10, 000
would be eligible to a deduction, from income tax, of an amount equal to 20% of the
amount subscribed.

Debt Schemes

These schemes, also commonly known as Income Schemes, invest in debt

securities such as corporate bonds, debentures and government securities. The
prices of these schemes tend to be more stable compared with equity schemes and
most of the returns to the investors are generated through dividends or steady
capital appreciation. These schemes are ideal for conservative investors or those
who are not in a position to take higher equity risks. However, as compared to the
money market schemes they do have a higher price fluctuation risk and compared to
a Gilt fund they have a higher credit risk.
Income Schemes
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These schemes invest in money markets, bonds and debentures of corporate
companies with medium and long-term maturities. These schemes primarily target
current income instead of capital appreciation. Hence, a substantial part of the
distributable surplus is given back to the investor by way of dividend distribution.
These schemes usually declare quarterly dividends and are suitable for conservative
investors who have medium to long term investment horizon and are looking for
regular income through dividend or steady capital appreciation.
Liquid Income Schemes
Similar to the Income scheme but with a shorter maturity than Income schemes.

Money Market Schemes

These schemes invest in short term instruments such as commercial paper ("CP"),
certificates of deposit ("CD"), treasury bills ("T-Bill") and overnight money ("Call").
The schemes are the least volatile of all the types of schemes because of their
investments in money market instrument with short-term maturities. These schemes
have become popular with institutional investors and high net-worth individuals
having short-term surplus funds.
Gilt Funds
These primarily invest in Government Debt. Hence, the investor usually does not
have to worry about credit risk since Government Debt is generally credit risk free.
Hybrid Schemes
These schemes are also commonly called balanced schemes. These invest in both
equities as well as debt. By investing in a mix of this nature, balanced schemes seek
to attain the objective of income and moderate capital appreciation. Such schemes
are ideal for investors with a conservative, long-term orientation.
The Constitution of Schemes

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Schemes are classified as Close-ended or Open-ended depending upon whether
they give the investor the option to redeem at any time (open-ended) or whether the
investor has to wait till maturity of the scheme.
Open Ended Schemes
The units offered by these schemes are available for sale and repurchase on any
business day at NAV based prices. Hence, the unit capital of the schemes keeps
changing each day. Such schemes thus offer very high liquidity to investors and are
becoming increasingly popular in India.
Please note that an open-ended fund is NOT obliged to keep selling/issuing new
units at all times, and may stop issuing further subscription to new investors. On the
other hand, an open-ended fund rarely denies to its investor the facility to redeem
existing units.
Close Ended Schemes
The unit capital of a close-ended product is fixed as it makes a one-time sale of fixed
number of units. These schemes are launched with an initial public offer (IPO) with a
stated maturity period after which the units are fully redeemed at NAV linked prices.
In the interim, investors can buy or sell units on the stock exchanges where they are
generally listed. Unlike open-ended schemes, the unit capital in Close-ended
schemes usually remains unchanged. After an initial closed period, the scheme may
offer direct repurchase facility to the investors. Close-ended schemes are usually
more illiquid as compared to open-ended schemes and hence trade at a discount to
the NAV. This discount tends towards the NAV closer to the maturity date of the
scheme.
Interval Schemes
These schemes combine the features of open-ended and Close-ended schemes.
They may be traded on the stock exchange or may be open for sale or redemption
during pre-determined intervals at NAV based prices.

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Advantages of Mutual Funds
Mutual funds have become popular because they offer 4 advantages:
• Diversification. A single mutual fund can hold securities from hundreds or
even thousands of issuers, far more than most investors could afford on their
own. This diversification sharply reduces the risk of a serious loss due to
problems in a particular company or industry.
• Professional management. Few investors have the time or expertise to
manage their personal investments every day, to efficiently reinvest interest or
dividend income, or to investigate the thousands of securities available in the
financial markets. They prefer to rely on a mutual fund's investment adviser.
With access to extensive research, market information, and skilled securities
traders, the adviser decides which securities to buy and sell for the fund.
• Liquidity. Shares in a mutual fund can be bought and sold any business day,
so investors have easy access to their money. While many individual
securities can also be bought and sold readily, others aren't widely traded. In
those situations, it could take several days or even longer to build or sell a
position.
• Convenience. Mutual funds offer services that make investing easier. Fund
shares can be bought or sold by mail, telephone, or the Internet, so one can
easily move their money from one fund to another as per their financial needs
change.
One can even schedule automatic investments into a fund from their bank account,
or they can arrange automatic transfers from a fund to their own bank account to
meet expenses. Most major fund companies offer extensive recordkeeping services
to help you track your transactions, complete your tax returns, and follow your funds'
performance.

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Caveats of Investing in Mutual Funds
As with any investment, mutual funds come with some caveats, and you should
understand those before you invest.
• No guarantees. Mutual funds are regulated by the U.S. Securities and
Exchange Commission (SEC), which requires funds to disclose the
information an investor needs to make sound decisions. Unlike bank
deposits, mutual fund shares are not insured or guaranteed by the Federal
Deposit Insurance Corporation (FDIC) or any other agency of the U.S.
government. In fact, the value of a mutual fund may fluctuate, even if the fund
invests in U.S. government securities.
• Diversification "penalty." While diversification eliminates the risk of
catastrophic loss that would occur if you own a single security whose value
plummets, it also limits the potential for making a killing in the market if that
security's value shoots up. It's important to note that diversification does not
protect you from a loss caused by an overall decline in financial markets.
• Potentially high costs. Mutual funds can be a lower-cost way to invest when
compared with buying individual securities through a broker. However, a
combination of sales commissions and high operating expenses at some fund
companies will reduce your investment returns. Compare the costs of mutual
funds. High costs can badly damage the returns you receive as a
shareholder.
• Tax impact. The profits on a mutual fund investment are typically subject to
federal (and often, state and local) income tax unless you're investing through
a tax-free retirement or education account. If you invest in a regular taxable
account, then dividend and taxable interest distributions you receive are
taxed as ordinary income each year. A mutual fund also is required to
distribute its net realized capital gains each year, and those distributions are
taxed as either short-term gains (the same tax rate as ordinary income) or

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 long-term gains (taxed at a lower rate), depending on how long the fund held
the securities.
• A fund that buys and sells securities frequently may add to your tax bill with
hefty capital gains distributions. You would also incur taxes on your capital
gains-and pay taxes at short-or long-term rates depending on how long you
had held the shares-if you redeem shares in a fund at a price higher than you
paid for them.

Diversification with Mutual Funds

Mutual funds provide not only diversification within a portfolio but also diversification
among portfolios. For instance, the same $5,000 that was insufficient to purchase
even one bond could, in many instances, purchase both a diversified stock mutual
fund and a diversified bond mutual fund. If you are a young investor with limited
finances just beginning to set aside funds for your retirement, the ability to diversify
among stocks and bonds is a significant advantage.
It is impossible to overstate the critical role of diversification in an intelligent
investment program. Diversification greatly reduces and can even eliminate the
specific risk that comes with the ownership or just a few individual stocks and bonds.
(Even a broadly diversified portfolio, however, cannot eliminate the market risk of
price volatility.) Yet, with this substantial reduction in risk, there is no loss whatsoever
of long-term return for investors in the aggregate. Diversification, then, is at the very
heart of mutual fund investing.

Professional Management with Mutual Funds

The second principle of mutual fund investing is professional management.
Managing an investment portfolio entails selecting and supervising the fund's
holdings. The investment professionals who manage the fund must do so strictly in
accordance with the fund's basic investment objectives and policies. For instance, if
you invest in a particular balanced fund, you may be promised that a highly
diversified list of blue chip stocks will comprise 60% to 70% of total net assets and a
37 | P a g e
diversified list of high-grade bonds will comprise the remainder. The professional
manager has an obligation to meet these standards under all circumstances.
Managers must also endeavor to add value over and above the returns generally
provided in the financial markets in which they work, a challenging task. On the one
hand, it might seem the supreme irony that, on average, the records of professional
portfolio managers of mutual funds are undistinguished when compared to
unmanaged averages of the returns achieved in the broad financial markets. On the
other hand, since it is impossible for all managers as a group to add value in the
aggregate, it is not at all surprising that the performance records of many
professional investment advisers leave much to be desired. To say the least, the
market is a tough bogey.

Liquidity with Mutual Funds

The third principle of mutual fund investing is liquidity. Mutual fund shares may be
acquired or liquidated at a moment's notice at the fund's next determined net asset
value per share. What is more, there is no direct cost of market impact, wherein
buying securities tends to drive prices higher and selling securities tends to push
prices lower. Nor is there a charge when shares are liquidated (although in some
cases a 1% redemption fee is charged and in other cases a contingent deferred
sales load may be assessed).
Owning securities individually, of course, is also apt to provide a reasonable level of
liquidity. However, mutual funds can easily be converted into cash at a fraction of the
cost you would incur in selling individual stocks or bonds. More, the ability to switch
easily among different investment options provides remarkable flexibility in building a
diversified portfolio, especially considering the costs involved in exchanging
individual securities.
For instance, if you want to exchange, say, $10,000 of stock A for $10,000 of bond
B, you might pay a brokerage firm a commission of about 2% to sell the stock (after
having already paid a commission to purchase the stock) and an effective
commission of about 1% to buy the bond. Shifting your allocation from stocks to
38 | P a g e
bonds would cost you about $300, an expense that would be repeated each time
you made an exchange. But if you were to request a similar exchange from a stock
mutual fund into a bond mutual fund and you were moving between funds within the
same no-load family, the transaction would cost you nothing.

When Should You Adjust Your Mutual Fund Portfolio?

Mutual funds should be bought to be held. It is hard to imagine why so many
investors engage in the frequent shuffling of the mutual funds they own and even
harder to imagine that their returns are enhanced by doing so. Nonetheless, there
are times when you should adjust your portfolio, even if you are a long-term investor.
• When a particular type of equity fund consistently underperforms its
carefully selected peers.
To each his own as to the amount of time that should be allowed to elapse before
taking action, but its suggest that one or two years of unexplained and dramatic
underperformance or four or five consecutive years of marginal
underperformance are generally appropriate indicators. If ones fund's
performance does not meet this criteria then the fund should be liquidated and
replaced with one that does.

• When a fund changes its objectives or policies.

If one has selected, for example, a balanced fund that subsequently becomes a
bond fund, it is time for a change. If your fund radically changes its traditional
portfolio turnover policy, it may be time for a change. Substantial modifications of
any of the criteria that were material factors in your initial selection of the fund
are also grounds for divorce.
• When a fund's expense ratio rises significantly.
Particularly in bond, balanced, and money market funds, an increase in fees to
the manager represents a reduction of income to you and is highly unlikely to be
offset by enhanced capital return. Conversely, you should be alert to new low-

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 cost opportunities that may emerge as the industry becomes more price
competitive, and should move to a new fund if cost is likely to be a principal
factor in determining its performance.
• When your investment objectives change.
Obviously, as you move through your investment life cycle, changes in asset
allocation are required. In this case, while the specific types of funds may
change, you may well wish to remain in the same fund family if its funds have
earned your respect in the past.

Dollar-Cost Averaging
One of the great conveniences of investing in mutual funds is that most fund
companies make it easy to put your investment program on autopilot -- that is, to
invest on a regular basis.
Investing regularly is a great habit to develop, not just for building wealth, but also
for managing the ups and downs of the market. Investing a fixed amount in a
particular fund at regular intervals is a strategy called more shares when the price is
low and fewer when the price is high. As a result, the average cost of your shares is
typically lower than the average market price per share during the time you're
investing.
You're already benefiting from dollar-cost averaging if you're participating in an
employer-sponsored retirement plan that withholds money from your paychecks.
This is a convenient, systematic way to build an investment portfolio.
Because the amounts you invest remain constant, you can easily budget for them.
Dollar-cost averaging cannot eliminate the risks of investing in financial markets. It
doesn't ensure a profit or protect you against a loss in declining markets, nor will it
prevent a loss if you stop dollar-cost averaging when the value of your account is
less than your cost. You should also consider your willingness and ability to invest
continually-even through periods of market decline-since the advantages of dollar-
cost averaging depend on your making regular purchases through thick and thin.

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No investment method can guarantee a profit if you sell at the bottom of the market.
But if you're a patient investor who contributes a fixed amount of money in regular
installments, you can greatly reduce a loss that would result if the market dropped
sharply right after you'd made a large investment.
Mutual Funds: How To Read A Mutual Fund Table

Columns 1 & 2: 52-Week High and Low - These show the highest and lowest prices
the mutual fund has experienced over the previous 52 weeks (one year). This
typically does not include the previous day's price.

Column 3: Fund Name - This column lists the name of the mutual fund. The
company that manages the fund is written above in bold type.

Column 4: Fund Specifics - Different letters and symbols have various meanings.
For example, "N" means no load, "F" is front end load, and "B" means the fund has
both front and back-end fees. For other symbols see the legend in the newspaper in
which you found the table.

Column 5: Dollar Change -This states the dollar change in the price of the mutual
fund from the previous day's trading.

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Column 6: % Change - This states the percentage change in the price of the mutual
fund from the previous day's trading.

Column 7: Week High - This is the highest price the fund traded at during the past
week.
Column 8: Week Low - This is the lowest price the fund traded at during the past
week.

Column 9: Close - The last price at which the fund was traded is shown in this
column.

Column 10: Week's Dollar Change - This represents the dollar change in the price of
the mutual fund from the previous week.

Column 11: Week's % Change - This shows the percentage change in the price of
the mutual fund from the previous week.

FREQUENTLY USED TERMS

Net Asset Value (NAV)
Net Asset Value is the market value of the assets of the scheme minus its liabilities.
The per unit NAV is the net asset value of the scheme divided by the number of units
outstanding on the Valuation Date.
Sale Price

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Is the price you pay when you invest in a scheme? Also called Offer Price. It may
include a sales load
Repurchase Price
Is the price at which a close-ended scheme repurchases its units and it may include
a back-end load? This is also called Bid Price.
Redemption Price
Is the price at which open-ended schemes repurchase their units and close-ended
schemes redeem their units on maturity? Such prices are NAV related.
Sales Load
Is a charge collected by a scheme when it sells the units. Also called, ‘Front-end’
load. Schemes that do not charge a load are called ‘No Load’ schemes.
Repurchase or ‘Back-end’ Load
Is a charge collected by a scheme when it buys back the units from the unitholders

INVESTMENT STRATEGIES

1. Systematic Investment Plan: under this a fixed sum is invested each month on
a
fixed date of a month. Payment is made through post dated cheques or direct debit
facilities. The investor gets fewer units when the NAV is high and more units when
the
43 | P a g e
NAV is low. This is called as the benefit of Rupee Cost Averaging (RCA)

2. Systematic Transfer Plan: under this an investor invest in debt oriented fund and
give instructions to transfer a fixed sum, at a fixed interval, to an equity scheme of
the
same mutual fund.

3. Systematic Withdrawal Plan: if someone wishes to withdraw from a mutual fund

then he can withdraw a fixed amount each month.

RISK Vs RETURN

Are there any risks involved in investing in Mutual Funds?

Mutual Funds do not provide assured returns. Their returns are linked to their
performance. They invest in shares, debentures, bonds etc. All these investments
involve an element of risk. The unit value may vary depending upon the performance
44 | P a g e
of the company and if a company defaults in payment of interest/principal on their
debentures/bonds the performance of the fund may get affected. Besides incase
there is a sudden downturn in an industry or the government comes up with new a
regulation which affects a particular industry or company the fund can again be
adversely affected. All these factors influence the performance of Mutual Funds. 49
Some of the Risk to which Mutual Funds are exposed to is given below:
Market risk
If the overall stock or bond markets fall on account of overall economic factors, the
value of stock or bond holdings in the fund's portfolio can drop, thereby impacting
the fund performance.
Non-market risk
Bad news about an individual company can pull down its stock price, which can
negatively affect fund holdings. This risk can be reduced by having a diversified
portfolio that consists of a wide variety of stocks drawn from different industries.
Interest rate risk
Bond prices and interest rates move in opposite directions. When interest rates rise,
bond prices fall and this decline in underlying securities affects the fund negatively.
Credit risk
Bonds are debt obligations. So when the funds invest in corporate bonds, they run
the risk of the corporate defaulting on their interest and principal payment obligations
and when that risk crystallizes, it leads to a fall in the value of the bond causing the
NAV of the fund to take a beating

PROBLEM DEFINITION
➢ Lack of awareness of mutual funds.
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 ➢ Wrong understanding of mutual funds

OBJECTIVES
➢ To advise to the investor about NJ invest.
➢ To creating wealth awareness to investor
➢ Benefits in investing in mutual funds.

Limitation
➢ Some of the persons were not so responsive.
➢ Possibility of error in data collection because many of investors may have not
given actual answers of my questionnaire.
➢ Sample size is limited to 40 visitors of NJ , Bangalore Main branch out of
these only 12 had invested in Mutual Fund.
➢ The sample size may not adequately represent the whole market.
➢ Some respondents were reluctant to divulge personal information which can
affect the validity of all responses.
➢ The research is confined to a certain part of Bangalore.

Scope of the study

Investor want to know about mutual funds and reduces the misconception
about the mutual funds. This study help out to spread the awareness of mutual fund to
investor , before investing in mutual funds the every investor to have little knowledge
about the mutual fund work out. Every fund shows that “Mutual fund investment are
subject to market risk . Please read the offer document carefully before investing ”.
This study titled “ Awareness campaign for mutual fund”

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Methodology
Fundamental to the success of any research project is sound research
design. A research design is purely and simply the frame work or plan for a study
that guides the collection & analysis of the data. A good research has the
characteristic; problem definition specific method of data collection and analysis,
time required for research projects an estimate of expenses to be incurred. The
function of a research design is to ensure that the required data is required data are
collected and that they collected accurately and economically. This is a blue print
that is followed in completing a study
The main objective of my project is a “ROLE OF FINANCIAL ADVISOR IN
CREATING THE WEALTH AMONG INVESTOR “ , the design was purely
exploratory in nature . All research projects must starts with exploratory research.
This is preliminary phase at and the major emphasis is on discovery of ideas &
insights. The exploratory study particularly helpful in breaking broad and vague
problem in to smaller , more precise sub problem statements , hopefully in the form
of specific hypothesis , exploratory study can be used.
Data collection, sample size & questionnaire
For extensive study of any work information is essential which combines
various inputs and which presents integrated reports without which the project
remains in complete
Data collection
Data collection is a process of collecting original information of specific
purpose. As in case of everyday life , if we want to have first hand information on
any happening or event , we either ask someone who know about it or we observe it
ourselves, or we both the same is applied to the research . Thus, the two main
methods by which primary data can be collect are observation and communication.
Landing questionnaire and personal observation collected primary data and
secondary data is form company professionals and official websites.

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Duration of Study:
The study was carried out for a period of two months, from 20th April to 20th June
2008.

Sample size
A part of a population, or a subset from a set of units, which is provided by
some proves or other, usually by deliberate selection with the object if investing the
properties of the parent population or set.
Sampling is the proves of selecting certain items, which are considered by
researcher as the true representatives of population considered of the research
study.
Research methodology
Research methodology

Source of data collection

Primary data
Secondary data

➢ Directly contact with investor. Collected database form websites.

➢ Through reference numbers.
➢ Tele-calling
Sample size : 40 Investor
Sampling procedure : Non Probability Sampling Method
Sampling type : Convience sampling

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Sampling area : Bangalore
Sampling design : Exploratory Research Design
Research instrument : Structured Distinguished Questionnaire
Description of the research design
Achieve the objectives of the project all possible information relevant the
investor profile were collected. Taking the help of the theoretical mode, the most
appropriate methodology was decided.
SAMPLING PROCEDURE
Sample unit
Who is to be surveyed? The marketing researches must define the targeted
population that will be sampled. Once this unit is determine a sampling frame must
be developed so that every one in the targeted population has as equal of known
chance of being sampled.
Sample size
How many people should be surveyed? Sampled give more reliable results
than small samples. However it is necessary to sample the entire target population
or even a substation portion to achieve reliable results. Sample of less than 1% of
population often provide good reliability, given a credible sampling procedure.
Data collection instrument
The questionnaire is the most common instrument in collect primary data. A
questionnaire of a set of question presented to respondents for their answers. The
questionnaire very flexible in that there any number of way to ask questions.
Questionnaire need to be carefully developed tested and debugged before they are
administrated on a large scale. Once a usually spot several errors a casually
prepared questionnaire.
In preparing a questionnaire the professional researcher carefully chooses
the questions and their form, working and sequence.

49 | P a g e
 A common types of errors occurs in the questions asked , that is in including
question that cannot would not , or need to be answered and in omitting questions
that be answered each question should be checked to determine whether it
contributes in the research objectives.
The question should flow in a logical order on the respondents demographics
come last because they are more personal and less interesting to the respondents.
Sampling procedure
How could the respondents be chosen? To obtain a representative sample a
probability sample of the population should be drawn. The question should flow in a
logical order question on the respondent demographics come last because they are
more personal and less interest in to the respondent.
Sources of data
Proposed study is under taken with the help of both primary and secondary
data collected through distributions, investor perception, and loyalty from the
company.
Primary data
The primary data have been collected from the customer through well structured
questionnaire. It was administered to a sample of 40 investor.
Questionnaire design
Close ended question
Questions, which restrict the interviewee’s answer to pre-defined options,
are called close-ended questions. Close-ended questions give respondents a finite
set of specified responses to choose firm. Such questions are deemed appropriate
when the respondent has a specific answer to give a , when the researcher has a
specified answer in mind , when detailed narrative information is not needed or
when there is a finite numbers of ways to answer a question. These questions are
common in survey researches.

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Binary question
These are also known as dichotomous questions as they permit only two possible
answers. The respondent has to choose of the two permissible answers. Binary
questions are helpful in collecting in simple, factual data and they should be used to
record classification data about the interviewee.
These questions have the response options “yes” or “No” or “True” or “False” or
“Agree” or “Disagree”. Such questions should generally not be included in a
questionnaire because these choices may not cover the whole range of possible
responses. The respondent might be compelled to give answers whether or not they
represent their true feelings. This tends to affect the survey’s accuracy.
This questionnaire I used the some of the binary question, which the
respondents give limited options for answer. It will reduce the time of the
respondent.
For example:
Do you feel that there are enough competent financial advisors in the market?
a) Yes b) No

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Financial advisor
A Financial Planner is someone who uses the Financial Planning process to
help you figure out how to meet your life goals. The Planner can take a 'big picture'
view of your financial situation and make Financial Planning recommendations that
are suitable for you. The Planner can look at all your needs including budgeting and
saving, taxes, investments, insurance and retirement planning. Or, the Planner may
work with you on a single financial issue but within the context of your overall
situation. This big picture approach to your financial goals sets the Planner apart
from other Financial Advisors, who may have been trained to focus on a particular
area of your financial life.
Requirements to become advisor
Association of mutual funds in India is the governing body of mutual fund
industry. As per AMFI requirements for any individual or corporate to become mutual
fund distributor, obtaining AMFI certification is must. You have to clear AMFI
certification exam after which you get ARN (AMFI Registration Number).
Parameters to choose your Financial advisor
While you may choose to work with different advisors for different investment
needs or work with a single trusted Financial Planner year after years, you will find
the following parameters useful in deciding if the advisor you are choosing deserves
your confidence and trust.

• Qualifications – Check what qualification he has in the field of personal

finance. Professionals like Certified Financial Planners (CFP Certificates) go
through elaborate education program & adhere to strict ethical guidelines.

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 • Experience – Choose an advisor who has prior experience counseling
individuals on their financial needs.

• Association /Professional Membership – Find the credibility of the Financial

Advisor’s employer or the professional organization he is associated with.

• Reference – Always ask for two references of his clients. Asking references
keeps the advisor on toes and doesn’t let him take you for granted. Also be
ready to give reference if you are satisfied with his services

Questions to ask a Financial Planner before hiring him/her

While looking out for a competent Financial Planner/ Wealth Manager,
Financial Consumers below are the questions listed to ask a Financial Planner
before hiring him/her.
1.What experience do you have?
Choose a personal Financial Planner who has sufficient experience counseling
individuals on their financial needs
2.What are your qualifications?
Look for a personal Financial Planner who has proven experience in topics such as
insurance, tax planning, investments, estate planning or retirement planning.
3.What services do you offer?
The services a personal Financial Planner offers depend on a number of factors
including credentials, licenses and areas of expertise.
4.What is your approach to personal Financial Planning?
Ask the personal Financial Planner about the type of clients and financial situations
he or she typically likes to work with. Make sure the personal Financial Planner’s
viewpoint on investing is not too cautious or overly aggressive for you.
5.Will you be the only person working with me?

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The personal Financial Planner may work with you himself or herself or have others
in the office assist in the process. You may want to meet everyone who will be
working with you.

6.How will I pay for your services?

As part of your Financial Planning engagement, the personal Financial Planner
should clearly tell you in writing how he or she will be paid for the services to be
provided.
7.How much do you typically charge?
While the amount you pay the personal Financial Planner will depend on your
particular needs, the planner’s level of experience and your geographic location, the
personal Financial Planner should be able to provide you with an estimate of
possible costs based on the work to be performed.
8.Could anyone besides me benefit from your recommendation?
The planner may also have relationships or partnerships that should be disclosed to
you, such as business he or she receives for referring you to an insurance agent,
accountant or attorney for implementation of the Financial Planning
recommendations.
9.Have you ever been publicly disciplined for any unlawful or unethical actions in
your professional career?
Ask what organizations the planner is regulated by and contact these groups to
conduct a background check
10.Can I have it in writing?
Ask the personal Financial Planner to provide you with a written letter of
engagement that details the services that he or she will provide. Keep this document
in your files for future reference

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Role of financial advisor
• Help individuals plan their financial futures
• Make Important decisions regarding …
• Investments & Finance
• Goals, dreams, obligations in life
• Advise / Service …
• Affluent clients – HNIs, Corporate
• Retail Clients
Financial planning
Financial Planning is the process of meeting your life goals through the
proper management of your finances. Life goals can include buying a house, saving
for your child's higher education or planning for retirement. The financial planning
process consists of six steps that help you take a 'big picture' look at where you are
currently. Using these six steps, you can work out where you are now, what you may
need in the future and what you must do to reach your goals. The process involves
gathering relevant financial information, setting life goals, examining your current
financial status and coming up with a strategy or plan for how you can meet your
goals given your current situation and future plans.
Benefits
Financial Planning provides direction and meaning to your financial decisions.
It allows you to understand how each financial decision you make affects other
areas of your finances. For example, buying a particular investment product might
help you pay off your mortgage faster or it might delay your retirement significantly.

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By viewing each financial decision as part of the whole, you can consider its short
and long-term effects on your life goals. You can also adapt more easily to life
changes and feel more secure that your goals are on track.

Top 10 Qualities required by a good financial advisor

The major obstacle for an investor is the search to identify a good financial advisor. I
am
Giving you and idea about the personal and career qualities highly required by a
good financial advisor to choose him as your own.

Personal Qualities

1. He should be well qualified and have master knowledge in his area

2. He should have considerable experience as a financial advisor with successful

performance background.

3. He should have a passion to the work and should not be lazy. He should have
well idea and knowledge about the services and products available in the market to
select the best among them for a customer.

4. He should be accessible by a customer at any time.

5. A good financial advisor should not be greedy or only profit minded fellow.

6. He should have enough feedback from his satisfied customers to add glory to his
career.

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Career Qualities

7. He should be able to understand the investment objective of a customer in a high

degree by considering major factors like age, living standard, financial position of the
customer..

8. He should be well enough to identify the risk profile of the customer.

9. Advisor should be able to advise and select suitable investment products as per
the objective and risk profile of a customer.
10. An advisor should have the ability to track and balance the portfolio of a
customer
considering major factors like market conditions, which may affect the portfolio.

Financial planning process has six steps :

➢ Establishing and defining the client-Planner relationship.
➢ Gathering client data, including goals.
➢ Analyzing and evaluating your financial status.
➢ Developing and presenting Financial Planning recommendations and/or
alternatives.
➢ Implementing the Financial Planning recommendations.
➢ .Monitoring the Financial Planning recommendations.

1. Establishing and defining the client-Planner relationship

The Financial Planner should clearly explain or document the services to be
provided to you and define both his and your responsibilities. The Planner should
explain fully how he will be paid and by whom. The Planner should also disclose any
restrictions on his ability to give unbiased advice and disclose any conflicts of

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interests. You and the Planner should agree on how long the professional
relationship should last and how decisions will be made.
2. Gathering client data, including goals.
The Financial Planner should ask for information about your financial
situation. You and the Planner should mutually define your personal and financial
goals, understand your time frame for results and discuss, if relevant, how you feel
about risk. The Financial Planner should gather all the necessary documents before
giving you the advice you need.

3. Analyzing and evaluating your financial status.

The Financial Planner should analyze your information to assess your current
situation and determine what you must do to meet your goals. Depending on what
services you may have asked for, this could include analyzing your assets, liabilities
and cash flow, current insurance coverage, investments or tax strategies.
4. Developing and presenting Financial Planning recommendations and/or
alternatives.
The Financial Planner should offer Financial Planning recommendations that
address your goals, based on the information provided by you. The Planner should
go over the recommendations with you to help you understand them so that you
make informed decisions. The Planner should also listen to your concerns and
revise the recommendations as appropriate.
5. Implementing the Financial Planning recommendations.
You and the Planner should agree on how the recommendations will be
carried out. The Planner may carry out the recommendations or serve as your
'coach', coordinating the whole process with you and other professionals such as
solicitors or stockbrokers.
6. Monitoring the Financial Planning recommendations.

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 You and the Planner should agree on who will monitor your progress towards
your goals. If the Planner is in charge of the process, she should report to you
personally to review your situation and adjust the recommendations, if needed, as
your life changes
How to make financial planning work for investor
You are the focus of the Financial Planning process. As such, the results you
get from working with a Financial Planner are as much your responsibility as they
are those of the Planner. To achieve the best results from your Financial Planning
engagement, you will need to be prepared to avoid some of the common mistakes
shown above by considering the following advice:
➢ Set measurable goals
➢ Understand the effect of each financial decision
➢ Re-evaluate your financial situation periodically
➢ Start planning as soon as you can
➢ Be realistic in your expectations
➢ Realize that you are in charge
Set measurable goals
Set specific targets of what you want to achieve and when you want to
achieve results. For example, instead of saying you want to be 'comfortable' when
you retire or that you want your children to attend 'good' schools, you need to
quantify what 'comfortable' and 'good' mean so that you'll know when you've
reached your goals.
Understand the effect of each financial decision
Each financial decision you make can affect several other areas of your life. For
example, an investment decision may have tax consequences that are harmful to
your estate plans. Or a decision about your child's education may affect when and
how you meet your retirement goals. Remember that all of your financial decisions
are interrelated
Re-evaluate your financial situation periodically
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Financial Planning is a dynamic process. Your financial goals may change over the
years due to changes in your lifestyle or circumstances, such as an inheritance,
marriage, birth, house purchase or change of job status. Revisit and revise your
Financial Plan as time goes by to reflect these changes so that you stay on track
with your long-term goals
Start planning as soon as you can
Don't delay your Financial Planning. People, who save or invest small amounts of
money early, and often, tend to do better than those who wait until later in life.
Similarly, by developing good Financial Planning habits such as saving, budgeting,
investing and regularly reviewing your finances early in life, you will be better
prepared to meet life changes and handle emergencies.
Be realistic in your expectations
Financial Planning is a common sense disciplined approach to managing your
finances to reach life goals. It cannot change your situation overnight; it is a life long
process. Remember that events beyond your control such as inflation or changes in
the stock market or interest rates will affect your Financial Planning results.
Realize that you are in charge
If you're working with a Financial Planner, be sure you understand the Financial
Planning process and what the Planner should be doing. Provide the Planner with all
of the relevant information about financial status. Ask questions about the
recommendations offered to you and play an active role in decision-making.
Wealth cycle for investors
Stage Financial needs Investment preferences
Accumulation stage Investing for long term identified Growth options and long term products.
financial goals High risk appetite

Transition Stage Near term needs for funds as pre- Liquid and medium term investments.
specified needs draw closer Lower risk appetite

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 Reaping Stage Higher liquidity requirements Liquid and medium term investments.
Preference for income and debt products.

Inter Generational transfer Long term investment of inheritance Low liquidity needs.
Ability to take risk and invest for the long
term.

Sudden wealth surge Medium to long term Wealth preservation

Preference for low risk products

Rights of investor
➢ Investors are entitled to receive dividends declared in a scheme within 30
days
➢ Redemption proceeds have to be sent to investors within 10 days.
➢ If an investor fails to claim the dividend or redemption proceeds he has the
rights to claim it up to a period of 3 years from the due date at the then
prevailing NAV.
➢ Mutual funds have to allot units within 30 days of the IPO an also open the
scheme for redemption, if it is an open -ended scheme
➢ Mutual funds have to publish their half yearly results in at least one national
daily and publish their entire portfolios, at least once in 6 months . Such
disclosure should be done within 30 days from 6 monthly account closing
dates of the fund
➢ Trustees will have to ensure that any information having a material impact on
the unit holders investments should be made public by the mutual fund
➢ If 75% of the unit holders so decide, 1)The scheme can be wound up
2)Meeting of unit holders can be called 3)Appointment of the AMC of the
mutual fund can be terminated

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 ➢ If there is any change in the fundamental attributes of the scheme, the unit
holders have to be notified through a letter. They also have a right to
repurchase at NAV without any load, before such change is effected.
➢ Unit holders have the right to inspect certain documents

Types of investor
Conservative
You have an investment time horizon of less than 5 years, or you are at or
near retirement and are relying on income from your savings, retirement, and
investments to cover your living expenses. Your overall tolerance for risk is
extremely low; therefore,
You're only willing to accept minimal principal fluctuations in return for current
income.

You're willing to tolerate principal fluctuation to achieve current income that keeps
pace with inflation.

Moderate
You have an investment time horizon between 6 and 10 years. You expect
your income to remain about the same or increase with the rate of inflation. If you're
in retirement,

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 You desire growth of principal in addition to current income. You have some
investment experience and are willing to tolerate periods of negative rates of return
in order to achieve some capital appreciation.

Overall, you're an experienced investor and are comfortable with short-term

negative rates of return and loss of principal because, over time, you expect to
generate higher return on your overall investment.

Aggressive
Your investment time horizon is more than 10 years. You expect your income
to increase over time and are looking to accumulate and grow your investment
portfolio to achieve your retirement income objectives.
If you're in retirement, you want to achieve substantial capital appreciation, and
you understand the accompanying risk to your invested principal.
You're a highly experienced investor and are comfortable with negative rates of
return and loss of principal during some years because, over time, you expect to
generate substantial return on your overall investment.
How they are create portfolio for investor
Model portfolios recommended for investors according to their life cycle
stages
Young unmarried professionals:
– 50% in aggressive equity funds.
– 25% in high yield bond funds, growth and income funds.
– 25% in conservative money market funds.
Young couple with 2 incomes and 2 children:
– 10% in money market funds.
– 30% in aggressive equity funds.
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 – 25% in high yield bond funds and long term growth funds.
– 35% in municipal bond funds.
Older couple single Income :
– 30% in short term municipal funds
– 35% in long term municipal funds
– 25% in moderately aggressive equity
– 10% emerging growth equity

Recently retired couple:

– 35% in conservative equity funds for capital preservation / income
– 25% in moderately aggressive equity for modest capital growth
– 40% in money market funds
Recommended portfolio for investors
Accumulation phase
• Diversified Equity : Sector and balanced funds
– 65 – 80%
• Income and gilt funds :
– 15 – 30%
• Liquid funds and bank deposits :
– 5%
Distribution phase
• Diversified Equity and balanced funds:
– 15 – 30%
• Income funds :
– 65 – 80%

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 • Cash funds:
– 5%

Tax saving options available for investor under 80C

Every high salaried people are likely go to ELSS fund (Equity Linked Saving
Scheme). Mutual fund investor is mainly on returns and tax efficient return from
investment’s. under 80 C 100000 is tax-free .
• Section 88 was scrapped and 80 C was introduced in finance bill 2005.
• Instead of offering tax rebates, investment under Section 80 C qualifies for
deduction from gross total income.
• Sectoral investment cap has been removed under Section 80 C as was the
case under Section 88.
• This allows investor to invest as per his/her risk profile.

Options available under 80 C

Min / Max
Scheme Name Type Tenure(Lock in) Annualised Returns Risk
Amount (Rs.)

National Savings Certificate(NSC) Static 6 years 8.16% 100 / No Limit Low

15 years(loan after 3
Public Provident Fund(PPF) Static 8% 500 / 70000 Low
years)
Generally on 12% of Basic
Employee Provindent Fund(EPF) Static 9.5% Low
retirement Salary
Depend upon
Life Insurance Static more than 3 year NA Low
scheme features
Take example of two investor
Infrastructure Bonds Static 3 years 5.25-5.50% 5000/ No limit Moderate

Depend upon
Mr. Ram prefersDynamic
investingmore
• Insurance Plan(ULIP)
Unit Linked Rs.70000 in PPF
than 3 year to upon
Depend earnoption
secured NA
return. Heoption
has
invested this amount
Equity Link Saving Plan(ELSS) of 31st March
Dynamic 3 years of every year since
15%(assumed) * 1996.
500 / No Limit High

• Mr. Shyam has invested Rs.70000 every year on 31st March in ELSS scheme
(Birla Sunlife Tax Relief 96) since 1996.
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 • Both have invested Rs.9.1 lacs till 31st March 2008.

Who will take a wise decision?

• Stock markets are down by 60% in 2008 from 21000 to 9000.
• Mr. Ram feels proud on his decision of not investing in ELSS and choosing
PPF.
Look who has made more profit?

As on 31.10.08
Benefits of ELSS over other instruments
• There are very few instruments in Sec 80C which are dynamic, i.e., returns
are depend upon the market - ELSS is among them
• ELSS - Being a equity scheme dividends are tax free (most of ELSS schemes
have impressive dividend payout record)
• ELSS – Being a equity scheme capital gains generated at the time of
redemption is tax free whereas other instruments like PPF and life insurance
may subject to tax at the time of realization.
• Interest on NSC and such instruments is subject to tax according to tax
liability of investor - net yield would be unattractive
• No or lesser entry load on Systematic investment in ELSS while other
instruments have no additional benefit of systematic investment
• Expenses are quite low in ELSS compare to ULIP, as in ULIP expenses are
higher (upfront charges are 20%-40%) while in ELSS entry load is 2.25% for
lump sum investment
• Infrastructure Bonds* net yields only around bank’s saving rate (3.5%) which
is quite unattractive
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 • ELSS can be looked beyond tax saving instrument as it can generate even
better returns than diversified equity funds due to lower redemption pressure
on Fund Manager
Performance of some ELSS
Scheme Name 1 Year 2 Years 3 Years 5 Years 7 Years 10 Years

SBI Magnum Tax Gain Fund 148.29 118.48 73.53 19.73 34.46 20.02

Prudential ICICI Tax Plan-Gr 112.98 89.01 66.34 35.85 NA NA

HDFC Taxsaver - Gr 111.26 89.32 65.64 36.91 NA NA

HDFC Long Term Advantage Fund - Gr 75.66 77.77 62.61 NA NA NA

Birla Equity Plan 67.57 67.36 61.03 21.56 NA NA

Tata Tax Saving Fund 75.89 73.68 53.79 25.58 23.13 NA

Sundaram Tax Saver - Gr 91.48 73.55 52.71 25.11 NA NA

Franklin India Taxshield Gr 61.76 62.24 48.20 21.61 NA NA

Principal Tax Savings Fund 60.97 62.39 47.26 33.16 NA NA

Alliance Capital Taxrelief 96 41.04 53.08 42.16 18.89 38.81 NA

Category Average 72.18 66.78 49.65 24.81 32.13 20.02

Wealth creation through Systematic 46.87
BSE Sensex
investment plan (SIP)
44.04 32.70 10.70 12.92 7.69

A systematic investment plan is a regular investment plan enabling an

investor to purchase units of a mutual fund schemes. While investor goes for
investing in mutual funds , he generally identifies the scheme as per his risk profiles
and invests a predetermined amount in the class at the fund’s prevailing the Net
Asset Value (NAV).The timing of the investments in such a case may they turn out to
be favorable or unfavorable.
As an example, an investor can spread out an investments of Rs. 1000 over a
ten months period with Rs. 100 being invested ever month. The number of units
accruing in periodic investments is dependent on the NAV of the scheme that is
prevailing at the time of the purchase of the fund. Thus , with the help of SIP , one
can do away with the need of timing the market , Added to this , SIP bring in the
much-needed disciplined approach towards investments habits.
Rupee-cost Averaging

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 SIP are primarily modeled with the underlying concept of Rupee-cost
Averaging, the Indian version of the dollar-cost averaging. This unique strategy
facilitates investors to restrict their unit purchase in a rising market and expands
them in a falling market. It is a common observation that in a short term, shares
prices rise and fall in tandem with market movements that are primarily driven by the
sentiments rather than the fundamentals.
When the share price of particular scrip falls due to any negative sentiments,
it is bound to bounce back; the only uncertain thing is the timing of such a reversal.
Such a knee-jerk reaction provides the investor an opportunity to buy more stocks at
a lower price and thus lower his averages acquisition cost.
An illustration of SIP
If the investor opts for SIP , investing Rs. 1000 per month in a scheme that has NAV
of RS. 10 initially
a) Rising market
Month Amount invested NAV Units allotted
1 1000 10 100.00
2 1000 12 83.33
3 1000 14 71.43
4 1000 16 62.50
.
Average purchase of NAV is Rs.13.
Average cost per unit is Rs. 12.61.

b) Falling market
Month Amount invested NAV Units allotted
1 1000 10 100.00
2 1000 8 125.00
3 1000 6 166.67
4 1000 4 250.00

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 Average purchase of NAV is Rs.7.0
Average cost per unit is Rs. 6.23.
c) Volatile market
Month Amount invested NAV Units allotted
1 1000 10 100.00
2 1000 12 83.33
3 1000 8 125.00
4 1000 10 100.00
.
Average purchase of NAV is Rs.10.0
Average cost per unit is Rs. 9.80
For example of
RELIANCE SYSTEMATIC INVESTMENT PLAN
Reliance Systematic Investment Plan
Invest as little as Rs. 100 per month.
Investment Objective: Reliance Vision Fund and Reliance Growth Fund aims to
achieve long-term growth of capital by investment in equity and equity-related
securities through a research-based investment approach.
Sponsor: Reliance Capital Limited. Trustee: Reliance Capital Trustee Co. Limited.
Investment Manager: Reliance Capital Asset Management Limited
Statutory Details: The Sponsor, the Trustee and the Investment Manager are
incorporated under the Companies Act 1956.
Date NAV (Rs.) Units Amount (Rs.)
12/4/04 80.52 1.24 100.00
10/5/04 81.49 1.23 100.00
10/6/04 71.87 1.39 100.00
12/7/04 72.64 1.38 100.00
10/8/04 81.74 1.22 100.00
10/9/04 87.49 1.14 100.00
Total 475.75 7.60 600.00

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 Average Cost 78.91
Average Price 79.29

Start early - The power of compounding

Suppose A & B invest Rs. 100 every month earning interest @ 8% p.a. on a
monthly compounding basis. A starts at the age of 25 years & B starts at the age of
35 years. Both of them invest for 5 years (Rs. 6000) & hold their investments till 60
years of age. A’s investment would have appreciated to approx. Rs. 74,430 whereas
B’s investment would have grown to approx.
Rs. 34,475 only. Thus, A’s investment would have almost doubled by just starting
earlier than B.

Achieve your financial goals

Reliance Systematic Investment Plan is an effective tool for financial planning. Be it
your child’s education, marriage or buying a home. With Reliance SIP, you can
choose a pertinent regime and achieve your goals, systematically. To see how you
can achieve your goals see the Reliance Vision Fund and Reliance Growth Fund
table along side
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Benefits of SIP
➢ Rupee cost averaging
➢ Compounding affect.
➢ Disciplined regular investment
➢ Better returns reduced risk
➢ Ideal for any type of investor
➢ helps in financial planning’s
Downsides of SIP
➢ In falling market, SIP does not ensure profit.
➢ Security risk.
Objectives
➢ To advise to the investor about NJ.
➢ To creating wealth awareness to investor.
➢ Benefits in investing in mutual funds.

Advice the investor about NJ

NJ India Invest Pvt. Ltd is one of the leading advisors and distributors of
financial products and services in India. Established in the year 1994, NJ has over a
decade of rich exposure in financial investment space, portfolio advisory services
and distribution of financial products.
It has rich experience of mutual fund industry of 14 years. Wide network in
more than 21 states at 135 locations with Asset Under Management (AUM) of Rs.
5500 cr. Have strong network of 10000 partners working with NJ.
NJ has 3 basic strengths with regards to providing services to its customers:
1. Professionally managed
2. Quality focused
3. Customer centric

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 The strength of NJ lies in the strong domain knowledge in investment
consultancy and the delivery of sustainable value to clients with support from
cutting-edge technology platform, developed in-house by NJ.
• Professional managed Few investors have the time or expertise to manage
their personal investments every day, to efficiently reinvest interest or
dividend income, or to investigate the thousands of securities available in the
financial markets. They prefer to rely on a mutual fund's investment adviser.
With access to extensive research, market information, and skilled securities
traders, the adviser decides which securities to buy and sell for the fund.
• Quality focused
NJ mainly focus on customercentric, customer is king of any. We
depend on us . we providing wonderful service to investor
Service in words, service in action
Service is the key to unlocking customer satisfaction, which again is the key for
sustainability of any business. At NJ we understand this very well. NJ has set strict
processes in place to deliver quality services to customers. Here strict quality
service standards are set and a well-defined process is established and followed
religiously by our quality customer service teams. Performance is evaluated on a
frequent basis and glitches are ironed out.
But quality service also involves quality people in addition to processes. NJ gives
significant focus to proper training and development of the people involved in the
service delivery chain.
Further we,
• Have well-defined "Privacy Policy" to keep clients’ information confidential &
internal audits done on the same at regular intervals
• Receive various statistics which are analysed on an ongoing basis to improve
the service standards

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We are committed to improve and enhance our services and undertake new service
initiatives. Such and other services differentiate us from other service providers in
the industry.
Service Commitments …
The service commitments are to guide the actions of the people at NJ. Clearly
stated, advisors can freely communicate any such actions/events wherein they feel
that any of the following commitments have been breached / compromised. At NJ
we desire to honour our commitments at all points of time and to all our advisors
without any bias.
• To provide advisor-focused need-based valued services
• To provide reliable, accurate and timely information
• To maintain all the records in privacy
• To optimize services/benefits at least justifiable cost
• To develop and grow the advisors’ business
• To provide constructive after sales service
To honor our service commitments
To creating wealth awareness to investor
The main aim of the financial advisor to create the wealth for his clients.
Investor do not know how create portfolio for his investments. Certified advisor
creating wealth awareness for clients about the SIP, growth fund and income funds.
Benefits in investing in mutual funds
• Diversification. A single mutual fund can hold securities from hundreds or
even thousands of issuers, far more than most investors could afford on their
own. This diversification sharply reduces the risk of a serious loss due to
problems in a particular company or industry.
• Professional management. Few investors have the time or expertise to
manage their personal investments every day, to efficiently reinvest interest or
dividend income, or to investigate the thousands of securities available in the
financial markets. They prefer to rely on a mutual fund's investment adviser.
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 With access to extensive research, market information, and skilled securities
traders, the adviser decides which securities to buy and sell for the fund.
• Liquidity. Shares in a mutual fund can be bought and sold any business day,
so investors have easy access to their money. While many individual
securities can also be bought and sold readily, others aren't widely traded. In
those situations, it could take several days or even longer to build or sell a
position.
• Convenience. Mutual funds offer services that make investing easier. Fund
shares can be bought or sold by mail, telephone, or the Internet, so one can
easily move their money from one fund to another as per their financial needs
change.
One can even schedule automatic investments into a fund from their bank
account, or they can arrange automatic transfers from a fund to their own bank
account to meet expenses. Most major fund companies offer extensive
recordkeeping services to help you track your transactions, complete your tax
returns, and follow your funds' performance.

Findings

➢ 28% of people know about mutual fund. This show that lack awareness about
mutual fund. Wrong understanding of fund, most of people thinks that they
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 investing in equity market. In Bangalore most of the people are educated,
they must know about the mutual funds.
➢ Advisors are helpful in mitigating the risks associated with investments. They
will all risk involved in the mutual fund.72 % investor says those advisors are
help justify risk in investment.
➢ Advisors are very helpful in construct portfolio for his investor. They know the
investor objectives & goals. 75 % of investor says that advisor diversifying
portfolio for him.
➢ Advisor does the financial planning according to the investor objectives and
goals. Most of the investor they says advisor know their objectives and goals
of investor.
➢ Most of investor in Bangalore know about the tax benefits and insurance
coverage for his investment. 80% of investor knows the benefits of investing
in mutual funds.20 % of investor their do not know their benefits of the
investment.
➢ Most of advisor tells his clients about the market conditions about
performances,NFO etc. They will tell which times to invest to grow their
investment. 62 % of investor gaining advice from financial advisor.
➢ Most of investor feels that benefit from the advice of Financial advisor
outweigh your costs. 55% investor feels that they are costly for fee charged
by advisor.
➢ Advisor will help you in tracking the amount of wealth created by providing
access to information. 65% of investor advisor help out in creating wealth for
investor.
➢ 45 % investor says that financial advisor give relevant market information like
the introduction of new schemes, NFOs, performance etc on a timely basis.
➢ 37 % of investor happy with decision in behalf of advisor .

Achievements & Learning

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Leads generated
Every day we will be in field work around Bangalore . Daily we have met the
insurance agents and presentation of BOP to advisor. Then we have convert in to
value pack I had generated 150 leads and 7 advisor are attended in the BOP but no
value pac
Marketing skills
`The defines as “the process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods and services to create exchanges
that satisfy individual and organizational goals”.
Communication skills
Communication takes when we talk between two or more persons. In this
project we learned about the communication skills.
Eleven reasons for selling mutual funds
➢ Easy to make more clients
➢ Less competition in the market.
➢ More satisfaction to the clients.
➢ Good business / Revenue potential.
➢ Multi-leverage existing client’s base.
➢ Retention and loyalty of clients.
➢ Strong industry growth ahead.
➢ Greater choice of products and solutions.
➢ To be a complete financial advisor.
➢ Beating competition and to grow / expand.
➢ Helps in promoting your existing products.

Suggestions and Recommendations

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 ➢ The most vital problem spotted is of ignorance. Investors should be made
aware of the benefits. Nobody will invest until and unless he is fully
convinced. Investors should be made to realize that ignorance is no longer
bliss and what they are losing by not investing.
➢ Mutual funds offer a lot of benefit which no other single option could offer. But
most of the people are not even aware of what actually a mutual fund is?
They only see it as just another investment option. So the advisors should try
to change their mindsets. The advisors should target for more and more
young investors. Young investors as well as persons at the height of their
career would like to go for advisors due to lack of expertise and time.
➢ Mutual Fund Company needs to give the training of the Individual Financial
Advisors about the Fund/Scheme and its objective, because they are the
main source to influence the investors.
➢ Before making any investment Financial Advisors should first enquire about
the risk tolerance of the investors/customers, their need and time (how long
they want to invest). By considering these three things they can take the
customers into consideration.
➢ Younger people aged under 35 will be a key new customer group into the
future, so making greater efforts with younger customers who show some
interest in investing should pay off.
➢ Customers with graduate level education are easier to sell to and there is a
large untapped market there. To succeed however, advisors must provide
sound advice and high quality.
➢ Systematic Investment Plan (SIP) is one the innovative products launched by
Assets Management companies very recently in the industry. SIP is easy for
monthly salaried person as it provides the facility of do the investment in EMI.
Though most of the prospects and potential investors are not aware about the
SIP. There is a large scope for the companies to tap the salaried persons.

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 ➢ it provides opportunity to create wealth in long term which allows investor to
combine tax saving with wealth creation objective.
The only option that can beat inflation by wide margin in long term return

Conclusion
Running a successful Mutual Fund requires complete understanding of the
peculiarities of the Indian Stock Market and also the psyche of the small investors.
This study has made an attempt to understand the financial behavior of Mutual Fund
investors in connection with the preferences of Brand (AMC), Products, Channels
etc. I observed that many of people have fear of Mutual Fund. They think their
money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund
and its related terms. Many of people do not have invested in mutual fund due to
lack of awareness although they have money to invest. As the awareness and
income is growing the number of mutual fund investors are also growing.

“Brand” plays important role for the investment. People invest in those
Companies where they have faith or they are well known with them. There are many
AMCs in Bangalore but only some are performing well due to Brand awareness.
Some AMCs are not performing well although some of the schemes of them are
giving good return because of not awareness about Brand. Reliance, UTI, SBIMF,
ICICI Prudential etc. they are well known Brand, they are performing well and their
Assets Under Management is larger than others whose Brand name are not well
known like Principle, Sunderam, etc. Distribution channels are also important for the
investment in mutual fund. Financial Advisors are the most preferred channel for the
investment in mutual fund. They can change investors’ mind from one investment
option to others. Many of investors directly invest their money through AMC because
they do not have to pay entry load. Only those people invest directly who know well
about mutual fund and its operations and those have time.

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 Data interpretation and tabulation
1.Which of these products help you to create wealth for investor
This question says that what are the ways to create wealth for investor. Most
of the people believes that bank fixed deposit are safe one because are not interest
to invest in shares & Mutual funds.

Particulars Total
Shares 10
Insurance 6
Mutual fund 12
Bank deposits 15

Interpretation
This figure tells that most of the investor wanted to play as safe way.
Nowadays young investor are really came from that , they are willing to take a high
risk & return .Mutual fund industry are growing stages at moment , they have
number of schemes offer different return according to the investor need. According
to the chart 28% of investor willing to invest in mutual funds in the Bangalore . most
of the people invested in bank deposit . out of 35% investor likely to out their money
in the bank.

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2.Do financial advisor help you in mitigating the risk associated with investment ?
This question deals with financial advisor are explain risk when you are
investing in the mutual funds. Advisor are already had experience in this field. They
will guide you every thing before they are go to invest in mutual funds. Advisor will
do all job for you & they will send performance report for investor.

Particulars Total
Yes 29
No 11

Interpretation
In this chart 72% of investor advisor are mitigating risk in behalf of investor.
Investor mainly expected that return earned by mutual fund . That called as Net
assets value should be increase on always aim for investor.

3.Do financial advisor help you in diversifying your portfolio ?

This question says that advisor helped in your diversifying portfolio for
investor. Portfolio means group of securities They will construct portfolio for investor.
It should be consist according to their investor needs. It depends on age , family &
social status.

Particulars Total
Yes 30
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 No 7
May Be 3

Interpretation
In this chart 75% advisor should construct portfolio for their clients. Construct
the portfolio depends on age, family & social status. Young investor took more risk &
earning the high return for their investment.

4. Does your advisor prioritize your objective & plan to meet those objective using
assets ?
This question says that your objectives are understand by advisor. They will
guide you to achieve them using assets like human, intellectual and financial
capital.
particulars Total
Yes 27
No 13

Interpretation
In this tells about 67% of advisor will do financial planning for clients .most advisor
meet their objectives of investor to achieve their targets. Some times market
conditions are unpredictable it will be change.
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5..Are you aware of the other benefits like insurance & tax considerations apart form
returns?
This question tells that investor aware of the insurance & tax consideration
of investments. Present days most investor know about the all benefits of the
investments..
Particulars Total
Yes 31
No 9

Interpretation
In this chart deals with 80% of investor know their tax and insurance benefits in
mutual fund. This shows that most of the investor know that the tax consideration &
insurance for their investments.

6.. Does your advisor advise you in different market conditions & enough investment
options?

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 This question tells that investor know their different conditions are rare
because they don’t time survey in the market . Advisor give the options where to
invest in mutual funds & give the investment options to investor.
Particulars Total
Yes 25
No 15

Interpretation
In this chart , 62% investor shows that most of the investor says that advisor
they advice the investor each & ever moment in the mutual funds. Advisors give
enough investments options to their investor.

7. Does your benefits from the advice of Financial advisor outweigh your costs?
This questions says that advisor charges more than cost. Investor thinks that
little more than expectation because they will mainly depend on returns form
investments.

Particulars Total
Yes 18
No 22

Interpretation

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In this chart 55% of investor shows that most investor feels that it was more cost
than. So every one preferred that investing in individually, they will take more risk &
surely they get maximum return from investments. Most of investor ready to take
decision without consulting advisor.

8. Do Financial advisors help you in tracking the amount of wealth created by

providing access to information?
This question says that advisor giving the right information to increase the
wealth for investor. They will send their performance report for every week to their
investor.
Particulars Total
Yes 26
No 14

Interpretation
Most of investor gaining information from advisor, 65% of investor following path of
the advisor . Help them to gain more wealth for their investments. Every advisor they
will watch market conditions . They guide the investor in such way to get more
wealth.

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9. Does your Financial advisor give relevant market information like the introduction
of new schemes, NFOs, performance etc on a timely basis?
This question shows that advisor track your investment growth & giving the
information about introduction new schemes in market.
Particulars Total
Yes 18
No 15
Some time 7

Interpretation
In this chart shows that 45% of investor , know about the market information
regarding NFO , performance etc. .Advisor guide you each & every moment in the
invest path. They will guide about the new schemes & NFO in available in market.
Performance reports of investment they send you in mail or in papers . we know
about the investment are performance well.

10. Are you happy with the decisions made according to the advisors?
This question says that decision are taken by investor behalf on advisor. They
are happy on the decision based on advisor.
Particulars Total
Yes 15

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 No 14
Moderate 11

Interpretation
In this chart 37% of investor happy decisions with advisor. 35% of investor
are because they feel badly with advisor decision .

CLIENT DESK (software view )

Client Desk Advantages – Clients
• Strong differentiated offering – the quality & scope of the reports is
unmatched
• All the mutual fund business done by the clients of NJ Fundz Network
Partners is automatically uploaded online
• The values of the Portfolio are updated on a daily basis so that you know the
exact worth of your investments
• For the Partners, it would help in branding their business & offering value-
added services to the
Client Desk Advantages – Partners
• Client Desk would help creating a brand / preference for your services
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 • Would greatly help in the following areas …
– Client Acquisition
– Client loyalty & Retention
– Business Generation
– Shifting of other mutual funds investments under you
• The Client Desk is freely available to all your clients who make mutual fund
investments through you as a Partner of NJ
Using this Client Desk Demo
• This demo gives a first hand view of the Client Desk and the reports /
contents of the “online investment account” of your clients
• You can show slides of this presentation to your prospective clients or simply
study them for your own understanding
• The Demo has links on the top of each slide which on clicking would talk you
to the relevant report / page
Entering the Client Desk
• The client desk can be entered from either of the following
– www.njfundz.com or
– www.yoursite.njfundz.com if you are a Web Nest subscriber

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Client desk
Valuation report

Summary report

Insights report

Customized report

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Profit and loss reports

Performance reports

Utilities

Other reports

Valuation report

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Valuation report – Data wise

Valuation Report – Type wise

Valuation Report – Scheme wise

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Valuation Report – Scheme wise Summary

Valuation Report – Client wise Summary

Transaction report

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Customized P & L Report - Menu

Profit & Loss Report

Transaction slip printing

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Questionnaire

1. Which of these products help you to create wealth for investor

a) Shares b) Insurance c) Mutual funds d) Bank deposits.

2. Do financial advisors help you in mitigating the risks associated with investments?

a) Yes b) No

3. Do financial advisors help you in diversifying your portfolio?

a) Yes b) No

4. Does your advisor prioritize your objective & plan to meet those objectives using assets?

a) Yes b) No

5. Are you aware of the other benefits like insurance & tax considerations apart form
returns?

a) Yes b) No

6. Does your advisor advise you in different market conditions?

a) Yes b) No

7. Does your benefits from the advice of Financial advisor outweigh your costs?

a) Yes b) No

8. Do Financial advisors help you in tracking the amount of wealth created by providing
access to information?

a) Yes b) No

9. Does your Financial advisor give relevant market information like the introduction of new
schemes, NFOs, performance etc on a timely basis?
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 a) Yes b) No

10.Are you happy with the decisions made according to the advisors? a)Yes b) No

Name : Thank You

Mobile No:

References

www.njfundznetwork.com
www.njfundz.com
www.mutualfundadvisorindia.com
www.fpsbindia.org
www.google.com
www.amfiindia.com
MUTUAL FUNDS IN INDIA – ICFAI Tripura Books

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Glossary
MF- Mutual fund.
SIP – Systematic Investment Plan.
BOP – Business Opportunity Presentation.

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