1

INTRODUCTION

About Mutual Funds

Mutual Fund is a trust that pools the savings of a number of investors who share a ommon finan ial goal! Each scheme of a mutual fund can have different character and objectives. Mutual funds issue units to the investors, which represent an equitable right in the assets of the mutual fund. 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 appreciation reali ed is shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual !und 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. D"FINITION # $"TU% OF MUTUA& FUND' "n #Mutual !und $ook%, published by "nvestment company of &.'.., #( Mutual !und is a financial service organi ation that receives money from shareholders, invest it, earns returns on it, attempts to make it grows and aggress to pay the share holders cash on demand for the current value of his #investment%. The investment managers of the funds manage these savings in such a way that the risk is minimi ed and steady return is ensured.

'ecurities and E)change $oard of "ndia *Mutual !unds+ ,egulations, 1--. define /Mutual !und0 as , #a fund established in the form of a trust to raise monies

through the sale of units to the public or a section of the public under one or more schemes for investing in securities, including, money market instrument%.

Mutual fund stru ture2

The structure consists of2 $ponsor'

'ponsor is the person who acting alone or in combination with another body corporate establishes a mutual fund. 'ponsor must contribute at least 456 of the net worth of the "nvestment Managed and meet the eligibility criteria prescribed under the 'ecurities and E)change $oard of "ndia *Mutual !unds+ ,egulations, 1--..The 'ponsor is not responsible or liable for any loss or shortfall resulting from the operation of the 'chemes beyond the initial contribution made by it towards setting up of the Mutual !und. Trust' The Mutual !und is constituted as a trust in accordance with the provisions of the "ndian Trusts (ct, 1771 by the 'ponsor. The trust deed is registered under the "ndian ,egistration (ct, 1-57 Trustee' Trustee is usually a company *corporate body+ or a $oard of Trustees *body of individuals+. The main responsibility of the Trustee is to safeguard the interest of the unit holders and inter alia ensure that the (M8 functions in the interest of investors and in accordance with the 'ecurities and E)change $oard of "ndia *Mutual !unds+ ,egulations, 1--., the provisions of the Trust 9eed and the :ffer 9ocuments of the respective 'chemes. (t least 1;3rd directors of the Trustee are independent directors who are not associated with the 'ponsor in any manner Asset Management Compan(' The Trustee as the "nvestment Manager of the Mutual !und appoints the (M8. The (M8 is required to be approved by the 'ecurities and E)change $oard of "ndia *'E$"+ to act as an asset management company of the Mutual !und. (t least

<56 of the directors of the (M8 are independent directors who are not associated with the 'ponsor in any manner. The (M8 must have a net worth of at least 15 core at all times.

Registrar or Transfer agent'

The (M8 if so authori ed by the Trust 9eed appoints the ,egistrar and Transfer (gent to the Mutual !und. The ,egistrar processes the application form= redemption requests and dispatches account statements to the unit holders. The ,egistrar and Transfer agent also handles communications with investors and updates investor records

T(pes of Mutual Funds'

<

O)*"CTI+"$
To understand various types of mutual funds. offered by the $harti()a "nvestment Managers To understand the risks factors associated with mutual funds. To 'tudy the performance of funds. To compare the returns of a particular mutual fund with the market returns. To 'tudy the best ta) saving funds. To ,ank the best fund.

 To analyses and evaluate the performance of 9iversified Equity !unds and

balanced funds of various mutual funds based on past data.

$enchmarking the performance of the schemes NAV against

relevant market indices.

D"$I,N OF T-" $TUD.

The main focus is on various investment avenues for investors with particular to funds of $harti()a >vt ?td. AIM OF T-" $TUD. The main objective behind this study is to learn about the industry to conduct an e)tensive study of different schemes and portfolios managed by (sset Management 8ompanies *(M80s+ Scope of the study The study is basically made to analy e the various schemes to highlight the diversity of investment that mutual fund offer. Through the study one would understand how common man could fruitfully convert pittance into great penney by wisely investing into the right scheme according to his risk abilities.

R"$"ARC- M"T-ODO&O,.
Data olle tion methods' The study is based on both primary and secondary data and e)amines the trading mechanism in stock market. The results are drawn mainly from secondary data collected. %rimar( data' %rimar( data has been collected in the form of questionnaire collected from the companies. @uestionnaire consists of both open ended and closeA ended questions.

$e ondar( data' $e ondar( data has been collected from various sources such as2 >ublications of the company $usiness maga ines Cournals, te)t books Debsites (nnual reports

"n order to gain information on current practices and problems, the area chosen for study are the emerging and competitive companies in and around Eyderabad 8ity. &IMITATION$ OF T-" $TUD. ?argely depending on secondary data i.e. gather the data from various books and websites. 'hort period of time. (s the study is based on three years data only entire findings cannot be generali ed. The study does not give the e)act investment profile in a particular company. The study does not give the proportion of investment of the portfolio. The financial data of the company is not completely available. 8overage area was only limited to Eyderabad city The sample si e collected may not represent the whole population

COM%AN. %ROFI&"'

)-ARTIA/A IN+"$TM"NT MANA,"R$ &IMIT"D' $harti()a "nvestment Managers >rivate ?imited is a joint venture between (F( group comprising of (F( "nvestment Managers, (F( (>E *through GM">?+ and $harti Hentures ?imited. De have a proposed presence in more than 35 locations across the country during launch and plan to establish branches in over <5 locations by the end of 1557. This will ensure that $harti (F( "nvestment Managers *$("M+ becomes one of the (sset Management 8ompanies with a large presence in the country at the time of launch. ,lobal shared resour es 8ombining robust investment processes and a focus on innovation, $harti (F( "nvestment Managers is connected to nearly <55 investment management professionals worldwide and an overwhelming pool of research. Dith risk management being an integral part of product development, our investment teams are empowered to take necessary decisions and are made accountable for every investment process. Understanding the Indian mar0et 8onstantly on the move to seek promising ideas, our e)perienced !und Managers are keenly tuned to the intricacies of the "ndian economy, as also the global markets and its comple)ities. This mi) of foresight, reach and unimpeachable local understanding will give $harti (F( "nvestment Managers an e)ceptional capability to mark the future of asset management on ever competitive "ndian soils. $harti (F( "nvestment Managers >rivate ?imited *$("M+ was incorporated on 13th (ugust 155B and is headquartered in Mumbai, the commercial hub of "ndia. Dith a proposed presence in more than 35 locations across the country during launch and plans of having branches in over <5 locations by end of 1557, $("M would be able to boast one of the largest footprints for any (M8 in the country during launch. This indicates the retail focus of the (M8. Dith best practices brought in from world leaders in financial protection, $("M aims to be an aggressive player in the "ndian (sset Management "ndustry.

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Joint Venture partners

(F( "nvestment Managers is a multiAe)pert investment manager backed by the (F( Iroup, a world leader in financial protection. Established in 1--4 as a standalone, whollyAowned subsidiary, (F( "M manages both (F( Iroup and third party assets. "ts J(ssets &nder ManagementJ as on 9ecember 31, 155B stood at &'K757 billion. Dith nearly .55 fund managers and research analysts, (F( "M manages over 755 funds offering e)pertises across all major asset classes and alpha strategies, and has three global ranges2 (F( Dorld !unds, (F( ,osenberg Equity (lpha Trust L Easy ET!. (F( "M is ranked 14th best asset manager in the world. "ts multiAe)pert business model combines the strength of a large global organi ation with the reactivity and entrepreneurial mindset of small empowered teams of e)perts. This combination enables it to offer its clients superior and innovative investment solutions across all asset classes, from !i)ed "ncome and Equity through to ,eal Estate, 'tructured !inance, >rivate Equity and !unds of Eedge !unds. "ts strong global coverage, with offices in 11 countries staffed with people of more than 75 nationalities, enables it to manage investment products with a worldwide focus while staying close to its clients to deliver an optimal service, wherever their location. !inally, (F( "nvestment Managers priority is to attract, motivate and retain the best talents in the industry. Outstanding %erforman e (F( "M received the $est !rench (sset Manager award by Talents de la Iestion and the European (sset Manager of the Mear by !unds Europe in 155B.N :ver <56 of (F( "nvestment Managers0 funds are in the first two quartiles over 3 years.NN

:ne of the Oey competitive advantages lies in (F( "nvestment Managers multi A e)pert organi ation which combines the strength of global shared resources with the reactivity and entrepreneurial mindset of small empowered team of e)perts.

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11

$harti Hentures ?imited is part of the $harti Iroup, one of "ndia0s most respected business houses. "t is a dynamic conglomerate with business interests in diverse fields including Telecom 'ervices, 'oftware, "nsurance and ,etail. $harti (irtel ?imited., the group0s flagship company is among the top < listed entities in market capitali ation in "ndia, boasting of over <B million customers and an annuali ed revenue of &'K B billion*(s on 9ecember 31, 155B+

$harti Iroup is headed by its founder, 'unil $harti Mittal P an entrepreneur par e)cellence P who was named $usiness ?eader of the Mear 155B by G9TH >rofit, 8E: of the Mear 155. by !rost L 'ullivan and Ernst L Moung Entrepreneur of the Mear, 1554.

)harti Airtel A olades

,anked 3rd on shareholder returns in the $usiness Deek "T 155 ?ist, 155B

!eatured among the !orbes Ilobal 1555 ?eading 8ompanies, 155.

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 (warded 08ompany of the Mear 155B0 for corporate e)cellence by The Economic Times

A/A Asia %a ifi -oldings 1through NMI%&2 (F( (sia >acific Eoldings *(F( (>E+ is part of the Ilobal (F( Iroup, with its head office in Melbourne and operations spanning (ustralia, Gew Qealand, Eong Oong, 'ingapore, Thailand, "ndonesia, >hilippines, 8hina, "ndia and Malaysia. (F( (>E has around K-B..< billion of funds under management and 4,155 employees. They are the main provider and distributor of financial products, wealth management and services across numerous brands like (F(, $harti (F( ?ife, >T (F( ?ife "ndonesia, >hillipine (F( ?ife etc. Gational Mutual "nternational >ty. ?imited *GM">?+ is a wholly owned subsidiary of (F( (>E.

O%"RATION$ R"+I"3 AND OUT&OO4 9uring the year under review, (F( "nvestment Managers settled a trust called $harti (F( Mutual !und *the !und+.&nder a 9eed of Trust dated Govember 1., 155B, "t appointed the $harti (F( Trustee 'ervices >rivate ?imited *$(T'+ as the Trustee of the !und. 9uring the current financial year 1557A5- */current year0+, the 8ompany received approval from the 'ecurities L E)change $oard of "ndia */'E$"0+ to act as asset manager for $harti (F( Mutual !und. The !und was registered as a mutual fund with 'E$" vide registration certificate dated March 31, 1557. )usiness %lan

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 The 8ompany has formulated a < year $usiness >lan, with the thrust being to achieve top quartile ranking in < years and be a full service asset manager. Dith a view to enable business launch by Culy 1557, all the necessary preparations in terms of hiring of staff, setting up offices, putting in place "T infrastructure and appointment of various service providers is in advanced stage of completion.

T"AM %ROFI&" OF )-ARTIA/A IN+"$TM"NT MANA,"R$ &TD !

)OARD OF DIR"CTOR$

Mr. (nthony !asso, 8hairman Mr. $adri (garwal Mr. Emmanuel Hercoustre Mr. 'anjay 'a)ena Mr. ' O Mitra Mr. (nil Earish Mr. 'udhir 8hand Mr. 'anjay Iupta

C-I"F "/"CUTI+" OFFIC"R#MANA,"R 9uring the current year, Mr! $andeep Dasgupta was appointed as Manager of the 8ompany, within the meaning of 'ection 1*14+ of the 8ompanies (ct, 1-<.

1<

COM%AN. $"CR"TAR. Mr. Manish Ihiya

PRODU !S O" !#$

O%PAN&

1. Equity !unds2 $harti()a Ta) (dvantage !und $harti()a Equity 9A'">

1. 9ebt !unds2 $harti()a A/A Treasur( %lus $hartiA/A &i5uid Fund $hartiA/A $hort Term In ome Fund

3. Eybrid !unds2 $harti(F( ,egular ,eturn !und

"5uit( Funds' The aim of growth funds is to provide capital appreciation over the medium to longA term. 'uch schemes normally invest a major part of their corpus in equities.

1.

)hartiA6a A/A "5uit( fund' The )hartiA6a "5uit( fund is a diversified equity scheme with the objective of generating longAterm capital appreciation from a diversified portfolio of predominantly equity and equityArelated securities including equity derivatives.

Scheme Details:

Categor( "nvestment :bjective

An open7ended in ome s heme To generate income and long-term capital appreciation through a diversified portfolio of predominantly equity and equityrelated securities including equity derivatives across all market capitalization. The scheme is in the nature of diversified multi-cap fund. The Scheme is not providing any assured or guaranteed returns. There can be no assurance that the investment objectives of the Scheme will be realized. 'L> 8GF Gifty "nde) >rateek (grawal ,egular, Eco L "nstitutional >lans. &nder each of the >lans,

$enchmark "nde) !und Manager "nvestment >lans ; :ptions2

1B

following :ptions are available2 R Irowth :ption R $onus :ption R ,egular 9ividend :ption and @uarterly 9ividend :ption offering 9ividend ,eAinvestment and 9ividend >ayA out facilities Minimum "nvestment; ,edemption2 ,egular >lan A ,s.<, 555;A Eco >lan A ,s.<,555;A "nstitutional >lan A ,s.< crore. Multiples of ,e1 thereafter. Minimum ,edemption2 The minimum amount of redemption shall be ,s 1,555 or equivalent &nit value, or entire account balance whichever is lower. 9aily '">;'T>*(vailable for all $usiness 9ays only+ 9aily and Monthly '"> ; 'T> available for a minimum of .months. Minimum installment for 9aily '">;'T> 2 ,s.355 and in multiples of ,s. 155;A thereafter. Monthly '">;'T> is ,s.1,555 L in multiples of ,s.155;A thereafter.

Load Structure: Categor( An open7ended in ome s heme " o %lan Entry ?oad

!or investments S ,s. 1 1.<56 8r A 1.<6 !or investments T ,s. 1

%ur hases made under $I% 8 $T% 1.<56

Institutional %lan Gil

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E)it ?oad

8r A Gil $y a !:! *irrespective of the amount of >urchase+ A Gil (s a result of 9ividend ,eAinvestment A Gil $elow ,s.18r.2 16 if 16 if redeemed 16 if redeemed Gil within . months within . months redeemed within . months ,s18r. and upto ,s.<8r2 5.1<6 if redeemed with 3 months (bove ,s.<8r. A Gil

8ompetitive and ta) efficient returns compared to $ank !o)ed 9eposits2

$ank !9 $harti (F( ,egular ,eturn !und Irowth :ption Dith 9ouble 9ouble "nde)ation (mount pf "nvestment *,s+ (ssumed ,eturns*annuali ed+ Tenure *in days+ Maturity (mount*,s+ Irowth 9ividend*,s+ Iross Iain *,s + "nde)ed 8ost *,s + 15555 -.<56 455 11541 1541 G( 15555 -.<56 455 11541 1541 11114 Dithout "nde)ation 15555 -.<56 455 11541 1541 G"? 15555 -.<56 455 11541 1541 1541 G"? $harti (F( ,egular ,eturn !und 9ividend :ption

1-

"nde)ed ?ong term 8apital Iain *,s + Ta) ,ate Ta) *,s+ >ost Ta) Iain *,s+ >ost Ta) (nnuali ed ,eturn

G( 33.--6 3<4 .7B ..1B6

A1B3 11...6 G"? 1541 -.<56

G( 11.336 117 -13 7.416

G( 14.1.1<6 11-11 7.316

)hartiA6a Ta6 Advantage Fund' $harti()a "nvestment Managers brings you a fund that can help you save up to ,s.33,--5;AN with benefits under 758 of the "ncome Ta) (ct and earn returns.

Fund Details' Categor(' Fund Manager' NFO Opens' NFO Closing' NFO Re7opens' Investment Ob9e tive' :penAended equityAlinked savings scheme >rateek (grawal 9ecember 11, 1557 !ebruary 11, 155!ebruary 1B, 155The 'cheme seeks to generate longAterm capital growth from a diversified portfolio of predominantly equity and equityA related securities across all market capitali ations. The 'cheme is in the nature of diversified multiAcap fund. The 'cheme is not providing any assured or guaranteed returns.*There can be no assurance that the investment objectives of the 'cheme will be reali ed.+ ,s. 15;A per unit for cash 'L> 8GF Gifty "nde) ,s. <55;A and in multiples of ,s. <55;A for purchases including purchases through

NFO Issue %ri e' )en hmar0 Inde6' Minimum Appli ation Amount'

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'ystematic "nvestment >lan *'">+ or 'ystematic Transfer >lan *'T>+ and additional purchases. Minimum Redemption Amount' Mode of sale and redemption of Units' ,s. <55;A *or equivalent &nit value+ or account balance, whichever is lower G(H will be declared and published on all $usiness 9ays. The &nit holders may tender the units for redemption on all business days at the (pplicable G(H plus e)it load, if applicable. ,egular >lan P Dhere the purchase amount is less than ,s. 1 crores2 1.1<6 of the (pplicable G(H, Dhere the purchase amount is ,s. 1 crores or above2 Gil= Eco >lan P 1.1<6 of the (pplicable G(H= "nvestments through '">; 'T> P 1.1<6 of the (pplicable G(H Gil Monthly '"> Monthly 'T> 'D> *'ubject to lock in period of 3 years+

"ntr( &oad'

"6it &oad' $pe ial Fa ilities'

%lans Available'

The 'cheme offers following >lans2 1. Eco >lan 1. ,egular >lan " o %lan' Eco >lan is available for purchase transactions *including switch, '"> etc+ of upto ,s. 1 lakhs only. This >lan cannot be chosen if the value of any purchase transaction e)ceeds ,s. 1 lakhs. !or investors opting for this >lan, all investor communications including account statements, annual reports, portfolio statements, and other statutory information shall be communicated; sent to them e)clusively in electronic format to their registered eAmail address. 9ividend and redemption payments will be made only by way of direct credit; E8'; ,TI'; GE!T to their registered bank mandate. !or investors choosing the Eco >lan, a lower annual recurring e)pense ratio as described under the >ara $ titled #(nnual 'cheme ,ecurring E)penses% under 'ection H #!ees and E)penses% of the 'cheme "nformation 9ocument will apply. Dhere the value of any purchase transaction is greater than ,s.

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1 lakhs, then such investments can be placed only in ,egular >lan. "f the investor; &nit holder has erroneously chosen Eco >lan, the entire amount will be automatically placed in ,egular >lan. "n such cases, unless the "nvestor specifies distinct :ptions; preferences, the :ptions and preferences as chosen under Eco >lan folio, if any, will automatically apply. (ll communications to a &nit holder having Eco >lan folio would continue to be sent in electronic format *eAmail, sms, etc+. Each of the >lans have following :ptions2 R Irowth :ption for capital appreciation R 9ividend :ption offering 9ividend ,eAinvestment and 9ividend >ayAout facilities

Options Available'

Instruments Equity and equity related securitiesN 9ebt L Money market securities; instrumentsNN

Normal Allo ation 1: of Net Assets2 756 to 1556 56 to 156

Ris0 %rofile 1-igh8 Medium8 &ow2 Eigh ?ow to Medium

)harti A/A "5uit( D7$I% $harti (F( "nvestment ManagersJ new 9A'"> lowers the average purchase cost by entering the markets everyday, with a small investment amount. (vailable in three convenient daily investment installment amounts and durations, you can start your 9A '"> in $harti (F( Equity !und with as less as ,s.355;A everyday *every $usiness 9ay only. &nits at (pplicable G(H+ through an easy auto debit available with si) major banks only.*E9!8 $ank, "9$" $ank, Ootak Mahindra $ank, ()is $ank,

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"ndusind $ank L $ank of $aroda *8ore banking branches only+ (M8 may notify other banks from time to time.+ $ heme Details' 'cheme Game 8ategory !und Manager 9ate of (llotment "nvestment objective $harti (F( Equity !und (n openAended Equity Irowth fund >rateek (grawal :ctober 11, 1557 To generate income and longAterm capital appreciation through a diversified portfolio of predominantly equity and equityArelated securities including equity derivatives, across all market capitali ations. The 'cheme is in the nature of diversified multiA cap fund. The 'cheme is not providing any assured or guaranteed returns. Eowever, there can be no assurance that the investment objectives of the 'cheme will be reali ed. $enchmark "nde) 2 'L> 8GF Gifty "nde) &oad $tru ture' 9A'"> is available with $harti (F( Equity !und in the ,egular >lan *9efault+ and Eco >lan, with compulsory Irowth :ption. Entry ?oad 2 Gil E)it ?oad 2 3.<6, if redeemed within 1 year from date of allotment 1.<6, if redeemed after 1 year but within 3 years from date of allotment. Gil, if redeemed after 3 years from date of allotment. )enefits of D7$I%' ;2 &ower Average Cost Even the best of e)perts would find timing the market to be a huge challenge. They would buy into the market in a structured way over a period of time and achieve the best average cost. Dhile '"> investments were being made on a regular basis, there was still a possibility that the market may be up on the chosen day. 9A'"> eliminates this by participating in the markets on a daily basis. <2 Convenien e A 'mall ticket si e A 'hort investment commitment period A :ne set of instructions. 2 2 2 2 2

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=2 $(stemati and Dis iplined Investing A ,upee 8ost (veraging on a 9aily $asis A $enefit from market Holatility in the short term by spreading your investment. A >ower of 8ompounding A $y remaining invested for a long term, let the power of compounding work to your advantage. A (vailable across major banks A E9!8 $ank, "9$" $ank, Ootak Mahindra $ank, ()is $ank, "ndusind $ank and $ank of $aroda. Debt Funds' BhartiAxa Treasury Plus $harti (F( Treasury >lus is a scheme that is focused on providing high liquidity while seeking to deliver reasonable market related returns. The fund aims to minimi e risk by investing a portfolio of debt and money market instruments. The scheme will invest primarily in the shorter end of the yield curve with the fle)ibility to also invest in medium duration securities to enhance performance.

Scheme Details: Categor( "nvestment :bjective An open7ended in ome s heme The 'cheme seeks to deliver reasonable market related returns with lower risk and higher liquidity through a portfolio of debt and money market instruments.

The 'cheme is not providing any assured or guaranteed returns. !urther, there is also no assurance that the investment objective of the 'cheme will be achieved. $enchmark "nde) 8,"'"? ?iquid !und "nde) !und Manager 'ujoy Oumar 9as &nit offer price ,s.1,555;A per unit Entry load Gil E)it load 5.1<6 if redeemed before B days

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"nvestment >lans ; ,etail >lan A Irowth L 9ividend ,einvestment *weekly frequency+ :ptions "nstitutional >lan A Irowth, 9ividend ,einvestment *daily, weekly L monthly frequency+ L 9ividend >ayout *monthly frequency+ Minimum ,etail >lan A ,s.<,555;A "nvestment "nstitutional >lan A ,s.1 crore Minimum ,etail >lan A ,s.1,555;A (dditional "nstitutional >lan A ,s.1 lakh "nvestment

)harti A/A &i5uid Fund $harti (F( ?iquid !und is a scheme that is focused on providing high liquidity while seeking to deliver reasonable market related returns. The fund aims to minimi e credit risk by investing in a portfolio of debt and money market instruments.

Scheme Details:
Categor( "nvestment :bjective An open7ended li5uid s heme The 'cheme seeks to deliver reasonable market related returns with lower risk and higher liquidity through a portfolio of high quality debt and money market instruments. The 'cheme is not providing any assured or guaranteed returns. !urther, there is also no assurance that the investment objective of the 'cheme will be achieved. 8,"'"? ?iquid !und "nde)

$enchmark "nde) !und Manager 'ujoy Oumar 9as &nit offer price,s.1, 555;A per unit during G!:. Entry load Gil E)it load Gil "nvestment ,etail >lan A Irowth L 9ividend ,einvestment *weekly frequency+ >lans ; :ptions "nstitutional >lan A Irowth, 9ividend ,einvestment *daily, weekly L monthly frequency+ L 9ividend >ayout *monthly frequency+ Minimum ,etail >lan A ,s.<,555;A "nvestment "nstitutional >lan A ,s.1 crore 'uper A "nstitutional >lan A ,s.1< crores Minimum ,etail >lan A ,s.1,555;A (dditional "nstitutional >lan A ,s.1 lakh "nvestment 'uper A "nstitutional >lan A ,s.1 lakh

1<

)harti A/A $hort Term In ome Fund $harti (F( 'hort Term "ncome !und is an openAended income scheme which seeks to generate income and capital appreciation by investing in a diversified portfolio of debt and money market securities.

Categor(' :penAended income 'cheme Fund Manager' 'ujoy Oumar 9as NFO Opening' 9ecember 3, 1557 NFO Closing' 9ecember 15, 1557 Investment Ob9e tive' The 'cheme seeks to generate income and capital appreciation by investing in a diversified portfolio of debt and money market securities. Eowever, there can be no assurance that the income will be generated *regular or otherwise+ or the investment objectives of the 'cheme will be reali ed. )en hmar0 Inde6' 8,"'"? 'hort Term $ond !und "nde) NFO Issue %ri e' ,s. 15;A per unit for cash %lans Available' ,egular and "nstitutional Options Available' Regular %lan R Irowth :ption for capital appreciation R 9ividend ,eAinvestment :ption for regular income *with monthly and quarterly frequency of dividend reAinvestment+ R 9ividend >ayAout :ption for regular income *with monthly and quarterly frequency of dividend payAout+.

Institutional %lan R Irowth :ption for capital appreciation R 9ividend ,eAinvestment :ption for regular income *with weekly, monthly and quarterly frequency of dividend reAinvestment+ R 9ividend >ayAout :ption for regular income *with monthly and quarterly frequency of dividend payAout+.

1.

Minimum Appli ation'

R ,egular >lan P ,s. <,555 R "nstitutional >lan P ,s. 1< lakhs *in multiples of ,e. 1 thereafter for both plans+. Minimum Additional Investment' R ,egular >lan P ,s. 1,555 R "nstitutional >lan P ,s. 1, 55,555 *"n multiples of ,e. 1 thereafter for both plans+. Minimum Redemption Amount' ,s. 1,555;A *or equivalent &nit value+ or account balance, whichever is lower. Mode of sale and redemption of Units' G(H will be declared and published on all $usiness 9ays. The &nit holders may tender the units for redemption on all business days at the (pplicable G(H plus e)it load, if applicable. "ntr( &oad' 1Appli able during New Fund Offer and Ongoing Offer %eriod2 Gil "6it &oad' 1Appli able during New Fund Offer and Ongoing Offer %eriod2 5.1<6 if redeemed within 35 days of date of allotment.

$pe ial Fa ilities' R Monthly '"> R Monthly 'D> *!i)ed L (ppreciation option+ R Monthly 'T> *from any schemes of the !und into this 'cheme or from this 'cheme to any other scheme, subject to the terms of the respective schemes+.

Instruments

Indi ative allo ation 1: of total assets2 1Minimum 7 Ma6imum2

Ris0 %rofile

1B

Money market securities and debt securities including government securities, corporate debt, securiti ed debtN and other debt instruments with average maturity less than or equal to 3B5 days or have put options within a period not e)ceeding 3B5 days 9ebt instruments including government securities, corporate debt, securiti ed debtN and other debt instruments with average maturity greater than 3B5 days

356 to 1556

?ow to Medium

56 to B56

Medium

-(brid Fund' Dhich would provide you with regular returns. $harti (F( ,egular ,eturn !und is your first step in that direction. Io aheadU Make the most of this opportunity. The scheme provides for 9ividend options *with monthly, quarterly and annual frequency+. 9eclaration of dividend is subject to availability of distributable surplus and approvals of Trustee. &nder dividend option, where dividend payout is less than ,s. <55;A, it will be compulsorily reAinvested.

Fund Manager'

!i)ed "ncome investments P Mr. 'ujoy Oumar 9as Equity investments P Mr. >rateek (grawal NFO Open Date' Canuary 17, 155NFO Close Date' !ebruary 14, 155NFO Re7open Date' March 1., 155Investment Ob9e tive' The 'cheme seeks to generate regular income through investments in fi)ed income securities and also to generate long term capital appreciation by investing a portion in equity and equity related instruments.

17

Eowever, there can be no assurance that the income can be generated, regular or otherwise, or the investment objectives of the 'cheme will be reali ed. )en hmar0 Inde6' 8,"'"? M"> $lended "nde) NFO %ri e' ,s. 15;A per unit for cash Investment %lans 8 ,egular L Eco >lans. &nder each of the plans, following Options' options are available. A Irowth :ption for capital appreciation A 9ividend ,eAinvestment :ption *with Monthly, @uarterly and (nnual frequency of dividend reAinvestment+ A 9ividend >ayAout :ption for regular income *with Monthly, @uarterly and (nnual frequency+ Minimum Appli ation (pplications under the 'cheme for >urchases and Amount' (dditional >urchases shall be made for minimum amount of and in multiples of2 Multiples Minimum Minimum %lan of> Additional investment thereafter investment Eco >lan ,s. 15,555 ,e. 1 ,s. 1,555 ,egular ,s. 15,555 ,e. 1 ,s. 1,555 >lan Minimum Redemption The minimum amount for redemption shall be ,s. 1,555;A Amount' or equivalent &nit value or entire account balance whichever is lower. &oad $tru ture' Entry ?oad 2 Gil E)it ?oad 2 16 if redeemed before 11 months from date of allotment $pe ial %rodu ts 8 Monthly '"> Fa ilities available' Monthly L @uarterly 'D> *!i)ed and (ppreciation option+ Monthly 'T> *!rom any 'chemes of the !und into this 'cheme or from this 'cheme to any other 'cheme, subject to terms of that other 'cheme+

1-

INDU$TR. %ROFI&"'
%U!UA' "UNDS (N (ND(AN S $NAR(O

!#$ #(S!OR& O" %U!A' "UNDS) Dhen three $oston 'ecurities e)ecutives pooled their money together in 1-14 to create the first mutual fund, they had no idea how popular mutual funds would become. The mutual fund industry in "ndia started in 1-.3 with the formation of &nit Trust of "ndia, at the initiative of the Iovernment of "ndia and ,eserve $ank the. The history of mutual funds in "ndia can be broadly divided into four distinct phases First %hase ? ;@AB7CD &nit Trust of "ndia *&T"+ was established on 1-.3 by an (ct of >arliament. "t was set up by the ,eserve $ank of "ndia and functioned under the ,egulatory and administrative control of the ,eserve $ank of "ndia. "n 1-B7 &T" was deAlinked from the ,$" and the "ndustrial 9evelopment $ank of "ndia *"9$"+ took over the regulatory and administrative control in place of ,$". The first scheme launched by &T" was &nit 'cheme 1-.4. (t the end of 1-77 &T" had ,s..,B55 crores of assets under management. $e ond %hase ? ;@CD7;@@= 1"ntr( of %ubli $e tor Funds2

35

1-7B marked the entry of nonA &T", public sector mutual funds set up by public sector banks and ?ife "nsurance 8orporation of "ndia *?"8+ and Ieneral "nsurance 8orporation of "ndia *I"8+. '$" Mutual !und was the first nonA &T" Mutual !und established in Cune 1-7B followed by 8anara bank Mutual !und *9ec 7B+, >unjab Gational $ank Mutual !und *(ug 7-+, "ndian $ank Mutual !und *Gov 7-+, $ank of "ndia *Cun -5+, $ank of $aroda Mutual !und *:ct -1+. ?"8 established its mutual fund in Cune 1-7- while I"8 had set up its mutual fund in 9ecember 1--5. (t the end of 1--3, the mutual fund industry had assets under management of ,s.4B, 554 crores. Third %hase ? ;@@=7<EE= 1"ntr( of %rivate $e tor Funds2 Dith the entry of private sector funds in 1--3, a new era started in the "ndian mutual fund industry, giving the "ndian investors a wider choice of fund families. (lso, 1--3 was the year in which the first Mutual !und. ,egulations came into being, under which all mutual funds, e)cept &T" were to be registered and governed. The erstwhile Oothari >ioneer *now merged with !ranklin Templeton+ was the first private sector mutual fund registered in Culy 1--3. The 1--3 'E$" *Mutual !und+ ,egulations were substituted by a more comprehensive and revised Mutual !und ,egulations in 1--.. The industry now functions under the 'E$" *Mutual !und+ ,egulations 1--.. The number of mutual fund houses went on increasing, with many foreign mutual funds setting up funds in "ndia and also the industry has witnessed several mergers and acquisitions. (s at the end of Canuary 1553, there were 33 mutual funds

31

with total assets of ,s. 1, 11,75< crores. The &nit Trust of "ndia with ,s.44,<41 crores of assets under management was way ahead of other mutual funds.

Fourth %hase ? sin e Februar( <EE= "n !ebruary 1553, following the repeal of the &nit Trust of "ndia (ct 1-.3 &T" was bifurcated into two separate entities. :ne is the 'pecified &ndertaking of the &nit Trust of "ndia with assets under management of ,s.1-,73< crores as at the end of Canuary 1553, representing broadly, the assets of &' .4 scheme, assured return and certain other schemes. The 'pecified &ndertaking of &nit Trust of "ndia, functioning under an administrator and under the rules framed by Iovernment of "ndia and does not come under the purview of the Mutual !und ,egulations. The second is the &T" Mutual !und ?td, sponsored by '$", >G$, $:$ and ?"8. "t is registered with 'E$" and functions under the Mutual !und ,egulations. Dith the bifurcation of the erstwhile &T" which had in March 1555 more than ,s.B.,555 crores of assets under management and with the setting up of a &T" Mutual !und, conforming to the 'E$" Mutual !und ,egulations, and with recent mergers taking place among different private sector funds, the mutual fund industry. Eas entered its current phase of consolidation and growth. (s at the end of 'eptember, 1554, there were 1- funds, which manage assets of ,s.1<3157 crores under 411 schemes.

31

33

R"+I"3 OF &IT"RATUR"

4e( Differen es between lose and open ended s hemes

$!No 1 1 3 4 < .

Feature 8apitali ation (ny time entry (ny time e)it Ta) advantages ?isted on e)change (vailable for a fi)ed mutual fund

Open end &nlimited Mes Mes Mes Ienerally no Go

Close end ?imited Go Go Go Mes Mes

$ hemes a ording to Investment Ob9e tive' ( scheme can also be classified as growth scheme, income scheme, or balanced scheme considering its investment objective. 'uch schemes may be openA ended or closeAended schemes as described earlier. 'uch schemes may be classified mainly as follows2

34

,rowth 8 "5uit( Oriented $ heme' The aim of growth funds is to provide capital appreciation over the medium to longA term. 'uch schemes normally invest a major part of their corpus in equities. 'uch funds have comparatively high risks. These schemes provide different options to the investors like dividend option, capital appreciation, etc. and the investors may choose an option depending on their preferences. The investors must indicate the option in the application form. The mutual funds also allow the investors to change the options at a later date. Irowth schemes are good for investors having a longAterm outlook seeking appreciation over a period of time. In ome 8 Debt Oriented $ heme' The aim of income funds is to provide regular and steady income to investors. 'uch schemes generally invest in fi)ed income securities such as bonds, corporate debentures, Iovernment securities and money market instruments. 'uch funds are less risky compared to equity schemes. These funds are not affected because of fluctuations in equity markets. Eowever, opportunities of capital appreciation are also limited in such funds. The G(Hs of such funds are affected because of change in interest rates in the country. "f the interest rates fall, G(Hs of such funds are likely to increase in the short run and vice versa. Eowever, longAterm investors may not bother about these fluctuations. )alan ed Fund'

3<

The aim of balanced funds is to provide both growth and regular income as such schemes invest both in equities and fi)ed income securities in the proportion indicated in their offer documents. These are appropriate for investors looking for moderate growth. They generally invest 45A.56 in equity and debt instruments. These funds are also affected because of fluctuations in share prices in the stock markets. Eowever, G(Hs of such funds are likely to be less volatile compared to pure equity funds.

Mone( Mar0et or &i5uid Fund' These funds are also income funds and their aim is to provide easy liquidity, preservation of capital and moderate income. These schemes invest e)clusively in safer shortAterm instruments such as treasury bills, certificates of deposit, commercial paper and interAbank call money, government securities, etc. ,eturns on these schemes fluctuate much less compared to other funds. These funds are appropriate for corporate and individual investors as a means to park their surplus funds for short periods. ,ilt Fund' These funds invest e)clusively in government securities. Iovernment securities have no default risk. G(Hs of these schemes also fluctuate due to change in

3.

interest rates and other economic factors as are the case with income or debt oriented schemes. Inde6 Funds ' "nde) !unds replicate the portfolio of a particular inde) such as the $'E 'ensitive inde), 'L> G'E <5 inde) *Gifty+, etc. These schemes invest in the securities in the same weight age comprising of an inde). G(Hs of such schemes would rise or fall in accordance with the rise or fall in the inde), though not e)actly by the same percentage due to some factors known as Vtracking errorV in technical terms. Gecessary disclosures in this regard are made in the offer document of the mutual fund scheme.

There are also e)change traded inde) funds launched by the mutual funds, which are traded on the stock e)changes. $e tor spe ifi funds8s hemes' These are the funds;schemes, which invest in the securities of only those sectors or industries as specified in the offer documents. e.g. >harmaceuticals, 'oftware, !ast Moving 8onsumer Ioods *!M8I+, >etroleum stocks, etc. The returns in these funds are dependent on the performance of the respective sectors;industries. Dhile these funds may give higher returns, they are more risky compared to diversified funds. "nvestors need to keep a watch on the performance of those

3B

sectors;industries and must e)it at an appropriate time. They may also seek advice of an e)pert. Ta6 $aving $ hemes' These schemes offer ta) rebates to the investors under specific provisions of the "ncome Ta) (ct, 1-.1 as the Iovernment offers ta) incentives for investment in specified avenues. e.g. Equity ?inked 'avings 'chemes *E?''+. >ension schemes launched by the mutual funds also offer ta) benefits. These schemes are growth oriented and invest preAdominantly in equities. Their growth opportunities and risks associated are like any equityAoriented scheme. Fund of Funds 1FoF2 s heme' ( scheme that invests primarily in other schemes of the same mutual fund or other mutual funds is known as a !o! scheme. ( !o! scheme enables the investors to achieve greater diversification through one scheme. "t spreads risks across a greater universe. &oad or no7load fund' ( ?oad !und is one that charges a percentage of G(H for entry or e)it. That is, each time one buys or sells units in the fund, a charge will be payable. This charge is used by the mutual fund for marketing and distribution e)penses. 'uppose the G(H per unit is ,s.15. "f the entry as well as e)it load charged is 16, then the investors who buy would be required to pay ,s.15.15 and those who offer their units for repurchase to the mutual fund will get only ,s.-.-5 per unit. The investors should

37

take the loads into consideration while making investment as these affect their yields;returns. Eowever, the investors should also consider the performance track record and service standards of the mutual fund, which are more important. Efficient funds may give higher returns in spite of loads. ( noAload fund is one that does not charge for entry or e)it. "t means the investors can enter the fund;scheme at G(H and no additional charges are payable on purchase or sale of units. Mutual funds cannot increase the load beyond the level mentioned in the offer document. (ny change in the load will be applicable only to prospective investments and not to the original investments. "n case of imposition of fresh loads or increase in e)isting loads, the mutual funds are required to amend their offer documents so that the new investors are aware of loads at the time of investments.

Assured return s heme' (ssured return schemes are those schemes that assure a specific return to the unit holders irrespective of performance of the scheme. ( scheme cannot promise returns unless such returns are fully guaranteed by the sponsor or (M8 and this is required to be disclosed in the offer document. "nvestors should carefully read the offer document whether return is assured for the entire period of the scheme or only for a certain period. 'ome schemes assure

3-

returns one year at a time and they review and change it at the beginning of the ne)t year. Asset allo ation funds' These funds invest in various asset classes including, but not limited to, equities, fi)ed income securities, and money market instruments. They seek high total return by maintaining precise weightings in asset classes. Ilobal asset allocation funds invest in a mi) of equity L debt securities issued worldwide

Fle6ible portfolio fund' These funds invest in common stocks, bonds, other debt securities, and money market securities to provide high total return. These funds may invest up to155 percent in any one type of security and may easily change weightings depending upon market conditions

-igh (ield funds' These funds invest twoAthirds or more of their in lower rated &.'. corporate bonds .Dorld bond funds invest in debt securities offered by foreign companies and governments. They seek the highest level of current income available worldwide N"T A$$"T +A&U" 1NA+22 ( unit is a basic measure of investment in a mutual fund. Each scheme or plan will have different market values depending on the market value of the underlying

45

asset it has invested in. This value is called net asset value. 'imilarly market value of underlying asset changes everyday, net asset value also varies on dayAtoAday basis. G(H is computed using a formula2 *Total assets P liabilities+ ; Go. :f assets 'uppose investing 1555 rupees in a plan F that has G(H of 15 rupees, then the units would be 155. Risk * Return profile (n investor normally prioriti es his investment needs before undertaking an investment. 'o different goals will be allocated different proportions of the total disposable amount. "nvestments for specific goals normally find their way into the debt market as risk reduction is of prime importance. This is the area for the riskA averse investors and here= mutual funds are generally the best option. The reasons are not difficult to see. :ne can avail of the benefits of better returns with added benefits of anytime liquidity by investing in openAended debt funds at lower risk. Many people have burnt their fingers by investing in fi)ed deposits of companies who were assuring high returns but have gone bust in course of time leading to distraught investors as well as pending cases in the 8ompany ?aw $oard. This risk of default by any company that one has chosen to invest in can be minimi ed by investing in mutual funds as the fund managers analy e the companies0 financials more minutely than an individual can do as they have the e)pertise to do so. They can manage the maturity of their portfolio by investing in instruments of varied maturity profiles. 'ince there is no penalty on preAmature withdrawal, as in the cases of fi)ed deposits, debt funds provide enough liquidity. Moreover, mutual funds are better placed to absorb the fluctuations in the prices of the securities as a result of interest rate variation and one can benefits from any such price movement. (part form liquidity, these funds have also provided very good postAta) returns on yearAtoAyear basis. Even historically, we find that some of the debt funds

41

have generated superior returns at relatively low level of risks. :n an average debt funds have posted returns over 15 percent over oneAyear hori on.

Risk !olerance+R eturn $,pected 'o/

"ocus

Suita-le products

.enefits offered -y %"s

Debt

%edium

&artially Debt$ &artially (quity

#igh

(quity

ank! "ompany #D$ Debt based #unds alanced #unds$ Some Diversified (quity #unds and some debt #unds$ )i' of shares and #i'ed Deposits "apital )arket$ (quity #unds *Diversified as well as Sector+

%iquidity$ etter &ost-Ta' returns

%iquidity$ etter &ost-Ta' returns$ etter )anagement$ diversification

Diversification$ ('pertise in stock picking $ %iquidity$ Ta' free dividends

Optimal %ortfolio Theor( and Mutual Funds' :ne e)amination of the relationship between portfolio returns and risk is the efficient frontier, a curve that is a part of the modern portfolio theory. The curve forms from a graph plotting return and risk indicated by volatility, which is represented by standard deviation. (ccording to the modern portfolio theory, funds lying on the curve are yielding the ma)imum return possible given the amount of volatility.

$tandard Deviation'

41

The standard deviation essentially reports a fund0s volatility, which indicates the tendency of the returns to rise or fall drastically in a short period of time. ( security that is volatile is also considered higher risk because its performance may change quickly in either direction at any moment. The standard deviation of a fund measures this risk by measuring the degree to which the fund fluctuates in relation to its mean return, the average return of a fund over a period of time. )eta' Dhile standard deviation determines the volatility of a fund according to the disparity of its return over a period of time, beta, another useful statistical measure, determines the volatility, or risk, of a fund in comparison to that of its inde) or benchmark. ( fund with a beta very close to 1 means the fund0s performance closely matches the inde) or benchmarkWa beta greater than 1 indicates greater volatility than the overall market, and beta less than 1 indicates less volatility than the benchmark. "nvestors e)pecting the market to be bullish may choose funds e)hibiting high betas, which increases investors0 chances of bearing the market. "f an investor e)pects the market to be bearish in the near future, the funds that have betas less than 1 are a good choice because they would be e)pected to decline less in value than the inde).

R7$5uared 1R<2'

43

The ,Asquared of a fund advises investors if the beta of a mutual fund is measured against an appropriate benchmark. Measuring the correlation of a fund0s movements to that of an inde), ,Asquared describe the level of association between the fund0s volatility and market risk, or more specifically, the degree to which a fund0s volatility is a result of the dayAtoAday fluctuations e)perienced by the overall market. ,Asquared values range between 5 and 1, where 5 represents the least correlation and 1 represents full correlation. "f a fund0s beta has an ,Asquared value that is close to 1, the beta of the fund should be trusted. :n the other hand, an ,A squared value that is close to 5 indicates that the beta is not particularly useful because the fund is being compared against an appropriate benchmark. (n inappropriate benchmark will skew more than just beta. (lpha is calculated using beta, so if the ,Asquared value of a fund is low, it is also wise not to trust the figure given for alpha.

Alpha' &p to this point, we have learned how to e)amine figures that measure risk posed by volatility, but how do we measure the e)tra return rewarded to you for taking on risk posed by factors other than market volatilityX Enter alpha, which measure how much if any of this e)tra risk

Eelped the fund outperform its corresponding benchmark. &sing beta, alpha0s computation compares the fund0s performance to that of the benchmark0s riskA adjusted returns and establishes if the fund0s returns outperformed the market0s given

44

the same amount of risk. !or e)ample, if a fund has an alpha of 1, it means the fund outperformed the benchmark by 16. Gegative alphas are bad in that they indicate that the fund under performed for the amount of e)tra, fundAspecific risk that the fund0s investors undertook. Con lusion' This e)planation of these four statistical measure provide with the basic knowledge on using them apply the premises of the optimal portfolio theory, which uses volatility to establish risk and states a guideline for determining how much of a fund0s volatility carries a higher potential for return.

Organi0ation of a %utual "und

Advantages of mutual fund investments

4<

%rofessional management' Mou avail of the services of e)perienced

and skilled professionals who are backed by a dedicated investment research team, which analyses the performance and prospects of companies and selects suitable investments to achieve the objectives or the scheme. Diversifi ation' Mutual !unds invest in a number of companies across a broad crossAsection of industries and sectors. This diversification reduces the risk because seldom do all stocks decline at the same time and in the same proportion. Mou achieve this diversification through a Mutual !und with far less money than you can do on your own. Convenient Administration' "nvesting in a Mutual !und reduces paperwork and helps you avoid many problems such as bad deliveries, delayed payments and unnecessary followAup with brokers and companies. Mutual !unds save your time and make investing easy and convenient. Return %otential' :ver a medium to long term, Mutual !unds have the potential to provide a higher return as they invest in a diversified basket of selected securities. &ow Costs' Mutual !unds are a relatively less e)pensive way to invest compared to directly investing in the capital markets because the benefits of scale in brokerage, custodial and other fees translate into lower costs for investors. &i5uidit(' "n openAended schemes, you can get your money back promptly at net asset value related prices from the Mutual !und itself. Dith closeAended schemes, you can sell your units on a stock e)change at the prevailing market price or avail of the facility of direct repurchase at G(H related prices, which some closeAended, and interval schemes offer you periodically. Transparen (' Mou get regular information on the value of your investment in addition to disclosure on the specific investment made by your scheme, the proportion invested in each class of assets and the fund manager0s investment strategy and outlook.

4.

Fle6ibilit(' Through features such as regular investment plans, regular

withdrawal plans and dividend reinvestment plans, you can systematically invest or withdraw funds according to your needs and convenience. Choi e of $ hemes' Mutual !und offers a family of schemes to suit 3ell Regulated' (ll Mutual !unds are registered with 'E$" and they your varying needs over a lifetime. function within the provision of strict regulations designed to protect the interests of investors. The operations of Mutual !unds are regularly monitored by 'E$".

Disadvantages of mutual fund investments 1. Mutual funds are restricted to EquityA diversified schemes only. 1. Mutual funds are restricted to Irowth plan only. >erformance evaluation is done to five mutual funds by taking first day of the month Get (sset Halues for two years only.

M"A$URIN, MUTUA& FUND %"RFORMANC"

The investor would be interested in tracking the value of his investments, whether investing directly in the markets or indirectly through mutual funds The investor would have to make intelligent decisions whether to get an acceptable return on the investments in the funds selected or to switch to another fund. The investor therefore needs to understand the basis of performance measurement for the fund and acquire the basic knowledge of the different measures of evaluating the performance of a fund. :nly then investor would be in a position to judge correctly whether the fund is performing well or not, and make right decisions.

4B

R"TURN ON IN+"$TM"NT OR TOTA& R"TURN 3IT- DI+ID"ND$ R"IN+"$T"D AT NA+2 a+ The Most 'uitable measure %urpose2 The shortcoming of the simple total return is overcome by computing the total return with reinvestment of dividends in the fund itself at the G(H on the date of distribution *e)Adividend date+. The appropriate measure of the growth of an investor0s mutual fund holdings is, therefore the return on investment on accumulative basis over a certain time period. Total return with reinvestment is such a measure of cumulative wealth accumulation, and the same as ,:". Formula2 Total return on investment2 YZ*&nits held [ div;e)AdivG(H+NendG(H\ P begin G(H] ;begin G(H N 155 $uitabilit(2 Total return with distributions reinvested at G(H is a measure accepted by mutual fund tracking agencies such as 8redence in Mumbai and Halue

research in Gew 9elhi. "t is appropriate for measuring performance of accumulation plans, monthly;quarterly income schemes and debt funds that distribute interim dividends. Cumulative aggregate vs! Average annualiFed returns2 %urpose2 Dhile deploying any of the measures described above, it must be remembered that absolute G(Hs do not give a complete picture and that consistent performance with respect to total return and compounded annual return is of paramount importance. Many mutual fund schemes, notably from &nit Trust of "ndia, are based on cumulative returns over a long time period, e.g. 8hildren0s Iift Irowth !und or

47

,ajala)mi !und. Dhen an investor receives a cumulative figure at the end of a long period, care should be taken to compute an annuali ed average compounded rate of return from the cumulative. Many mutual funds present schemes with cumulative growth option or with dividend option. 8omparison between two such schemes is possible only after the cumulative returns are into average annuali ed returns. Formula2 To convert cumulative return to average annuali ed return2 The maturity value of an original investment will be2 (^>N*1[,;155+, > ^ principal ( ^ maturity value of investment, G ^ period of

investment in years, , ^ annuali ed compounded rate in 6 The growth in maturity value can be converted to average annuali ed return as follows2 , ^ Y*Gth root of (;>\]N 155

"ntr(8"6it &oad ?oad is the fee charged to an investor while buying or selling units, as a percentage of the schemes G(H. The amount charged by a fund house on purchase of a scheme is known as entry load. 'imilarly, an e)it load is the charge paid to the fund house if an investor chooses to e)it the scheme within the specific period. Entry;E)it load is changed as per and in circumstances specified in respective offer documents.

No &oad Fund ( no load fund is one that doesnt charge a processing fee either at the time of entry or e)it.

NA+

4-

"+A&UATIN, FUND %"RFORMANC"

Importan e of )en hmar0ing in "valuating %erforman e The measures described earlier are absolute, meaning that none of the measures should be used to evaluate the fund performance in isolation. ( fund0s performance can only be judged in relation to investor0s e)pectations. Eowever, it is important for the investor to define his e)pectations in relation to certain #guide posts% on what is possible to achieve, or moderate his e)pectations with realistic investment alternatives available to him in the financial markets. These guide posts or indicators of performance can be thought of as benchmarks against which a fund0s performance ought to be judged. !or e)ample, an investor0s e)pectations of returns from an equity fund should be judged against how the overall stock market performed, in other words how much the stock market inde) itself moved up or down, and whether the fund gave a return that was better or worse than the inde) movement. "n this e)ample, we can use a market inde) like 'L> 8GF Gifty or $'E 'EG'EF as #benchmarks% to evaluate our investor0s mutual fund performance.

<5

Eistorically in "ndia, investors0 only options were &T" schemes or bank deposits. &T" itself tended to #benchmark% its returns against what interest rates were available on bank deposits of 3;<Ayear maturity. Thus, for long period, &' .4 scheme dividends were compared to bank interest rate and investors would be happy if the dividend yield on &' .4 units was greater than comparable deposit interest rate. Thus, investors in "ndian mutual funds tend to routinely compare bank interest rates with returns on mutual fund schemes. Eowever, with increasing investment options in the market, bank interest rates should not be used to judge a mutual funds performance in all cases. ?et us therefore take a look at how to choose the correct benchmarks of mutual fund performance. $asis of choosing an appropriate performance benchmark2 (ppropriate benchmark for any fund has to be selected by reference to2 1. The asset class it invests in thus, an equity fund has to be judged by an appropriate benchmark from the equity markets, a debt fund performance against a debt market benchmark and so on= and 1. The fund0s stated investment objective. !or e)ample, if a fund invests in longA term growth stocks, its performance ought to be evaluated against a benchmark that captures growth stocks performance.

Players in the market

AN1 2rindlays .enchmark .irla

3% 4otak '( %ahindra

<1

Sun 'ife .O. an -ank holamandalam Deutsche DSP %errill 'ynch $scorts "irst (ndia PN. PR(N (PA' ( ( ( Prudential Reliance S.( apital

Standard hartered SUN "5 Sundaram !ata !aurus U!( 1urich (ndia

"ranklin !empleton 2( #D" #S. ('5"S

.anks Vs %utual "unds

"ndia is at the first stage of a revolution that has already peaked in the &.'. he &.'.boasts of an (sset base that is much higher than its bank deposits. "n "ndia, mutual fund assets are not even 156 of the bank deposits, but this trend is beginning to change. This is forcing a large number of banks to adopt the concept of narrow banking wherein the deposits are kept in Iilts and some other assets, which improves liquidity and reduces risk.
)an0s Mutual Funds

<1

Returns Administrative Ris0 Investment options Networ0 &i5uidit( Gualit( of assets Interest al ulation

?ow Eigh ?ow ?ess Eigh penetration (t a cost Got transparent

$etter ?ow Moderate More ?ow but improving $etter Transparent

Minimum balance between Everyday 15th L 35th of every month

,uarantee

Ma)imum ,s. 1 lakh on Gone deposits

Mutual Funds and $")I !or the smooth conduct and regulation of the mutual fund several guidelines have been issued by the 'E$" regarding the investment, disclosure, accountability distribution of its profits to its members and the investment companies. 'E$" has issued regulation and code of conduct in 1--3, which provided a basic legal framework for the functioning of the mutual fund. The Mutual !und regulation act 1--., has provided a sound floating and considerable leeway to fund management. A%"(

The (ssociation of Mutual !unds in "ndia *(M!"+ is dedicated to developing the "ndian Mutual !und "ndustry on professional, healthy and ethical lines and to enhance

<3

and maintain standards in all areas with a view to protecting and promoting the interests of mutual funds and their unit holders. A%"( O-6ectives)

To define and maintain high professional and ethical standards in all areas of operation of mutual fund industry To recommend and promote best business practices and code of conduct to be followed by members and others engaged in the activities of mutual fund and asset management including agencies connected or involved in the field of capital markets and financial services. To interact with the 'ecurities and E)change $oard of "ndia *'E$"+ and to represent to 'E$" on all matters concerning the mutual fund industry. To represent to the Iovernment, ,eserve $ank of "ndia and other bodies on all matters relating to the Mutual !und "ndustry. To develop a cadre of well trained agent distributors and to implement a programme of training and certification for all intermediaries and other engaged in the industry. To undertake nation wide investor awareness programme so as to promote proper understanding of the concept and working of mutual funds.

To disseminate information on Mutual !und "ndustry and to undertake studies and research directly and;or in association with other bodies.

SEBI

"n 1-77 the 'ecurities and E)change $oard of "ndia *'E$"+ was established by the Iovernment of "ndia through an e)ecutive resolution, and was subsequently upgraded

<4

as a fully autonomous body *a statutory $oard+ in the year 1--1 with the passing of the 'ecurities and E)change $oard of "ndia (ct *'E$" (ct+ on 35th Canuary 1--1. "n place of Iovernment 8ontrol, a statutory and autonomous regulatory board with defined responsibilities, to cover both development L regulation of the market, and independent powers have been set up. >arado)ically this is a positive outcome of the 'ecurities 'cam of 1--5A-1. The basic objectives of the $oard were identified as2

To protect the interests of investors in securities. To promote the development of 'ecurities Market. To regulate the securities market and for matters connected therewith or incidental thereto.

'ince its inception 'E$" has been working at targeting the securities and is attending to the fulfillment of its objectives with commendable eal and de)terity. The improvements in the securities markets like capitali ation requirements, margining, establishment of clearing corporations etc., reduced the risk of credit and also reduced the market. 'E$" has introduced comprehensive regulatory measures, prescribed registration norms, eligibility criteria, the code of obligations and the code of conduct for different intermediaries like, bankers to issue, merchant bankers, brokers and subAbrokers, registrars, portfolio managers, credit rating agencies, underwriters and others. "t has framed byAlaws, risk identification and risk management systems for 8learing houses of stock e)changes, surveillance systems, etc. which has made dealing in securities both safe and transparent for the end investor. (nother significant event is the approval of trading in stock indices *like 'L> 8GF Gifty L 'ense)+ in 1555. ( market "nde) is a convenient and effective product because of the following reasons2

"t acts as a barometer for market behavior. "t is used to benchmark portfolio performance. "t is used in derivative instruments like inde) futures and inde) options. "t can be used for passive fund management as in case of "nde) !unds.

<<

ANA&.$I$ # INT"R%R"TATION

<.

To summari e findings of any project study the data collected needs analysis of the raw data can be made meaningful simple and appropriate. >resentations of such interpretations help to draw conclusion from the analy ed data. This analysis is based on the data collected from the companies belonging to the sectors namely, Manufacturing "T*software development+ Marketing*software marketing+ Medical transcription >ublications Training and 9evelopment E)ports 8onstruction

8ompanies are grouped depending on the staff si e and infrastructure of the company as follows2 'mall 'mall to medium Medium Medium to ?arge ?arge

&atest NA+'

<B

NA+ -istor( on 1-th !eb, 155-

D")T FUND )harti A/A $hort Term In ome Fund "nstitutional >lan A 1-;51;155Irowth "nstitutional >lan A 1-;51;155Monthly 9ividend "nstitutional >lan A 1-;51;155@uarterly 9ividend "nstitutional >lan A 1-;51;155Deekly 9ividend ,egular >lan A Irowth 1-;51;155,egular >lan A Monthly 1-;51;1559ividend ,egular >lan A @uarterly 1-;51;1559ividend 15.5-17 -.7B3B 15.555. -.7137 15.5771 -.7B53 15.5771 15.5-11 -.7B31 15.5555 -.7131 15.57B. -.7.-7 15.57B. 5.555. 5.555. 5.555. 5.555. 5.555. 5.555< 5.555. 5.51 5.51 5.51 5.51 5.51 5.51 5.51

)harti A/A "5uit( Fund Eco >lan A $onus 1-;51;155Eco >lan A Irowth 1-;51;155Eco >lan A @uarterly 1-;51;1559ividend Eco >lan A ,egular 1-;51;1559ividend ,egular >lan A $onus 1-;51;155,egular >lan A Irowth 1-;51;155,egular >lan A @uarterly 1-;51;1559ividend ,egular >lan A ,egular 1-;51;1559ividend "nstitutional >lan A 9aily 1-;51;1559ividend "nstitutional >lan A 1-;51;155Irowth "nstitutional >lan A 1-;51;155-

-.1355 -.1355 -.1355 -.1355 -.1155 -.1155 -.1155 -.1155 1555.5555 15<<...51 1553..11-

-.1555 -.1555 -.1555 -.1555 -.1-55 -.1-55 -.1-55 -.1-55 1555.5555 15<<.4B.. 1553.44B4

5.5355 5.5355 5.5355 5.5355 5.5355 5.5355 5.5355 5.5355 5.5555 5.173. 5.1B4<

5.33 5.33 5.33 5.33 5.33 5.33 5.33 5.33 5.55 5.51 5.51

<7

Monthly 9ividend "nstitutional >lan A 1-;51;155Deekly 9ividend ,egular >lan A Irowth 1-;51;155,egular >lan A Deekly 1-;51;1559ividend

1555.-<3B 15<1.11-1555.7B17

1555.BB-. 15<1.5<-7 1555.B115

5.1B41 5.1B51 5.1.17

5.51 5.51 5.51

Bharti AXA Li uid !und Institutional Plan - Daily 19/02/2009 Dividend Institutional Plan 19/02/2009 Growth "e#ular Plan 19/02/2009 - Growth "e#ular Plan - $ee%ly 19/02/2009 Dividend &u'er Institutional 19/02/2009 Plan - Daily Dividend &u'er Institutional 19/02/2009 Plan Growth 1000.0000 1000.0000 0.0000 0.00

1053.7218

1053.5 7!

0.17 2

0.02

1050.3097

1050.1 17

0.1!80

0.02

1000.

87

1000.2955

0.1532

0.02

1000.0000

1000.0000

0.0000

0.00

105 .8059

105 .!28!

0.1773

0.02

<-

&ast ; .ear Eolding >eriod Can 155B to 9ec 155B

&ast < .ears Can 155. to 9ec 155B

&ast = .ears Can 155< to 9ec 155B

&ast H .ears Can 1553 to 9ec 155B

Monthly '"> 9aily '"> Total "nvestment 'pread over (verage per unit cost Total no. of units !inal Halue 11555 11months 1<5<3 5.75 1.1B1 11555 !irst11days 137<B 5.7B 1B<.-

Monthly '"> 9aily '"> 14555 14months 117<1 1.7B 3B777 14555 !irst14days -<77 1.<5 <5B71

Monthly '"> 9aily '"> 3.555 3.months !irst3.days 151-B 3.<3 B1.11 .43< <.<1134-5 3.555

Monthly '"> 9aily '"> .5555 .5months !irst.5days ..7< 7.-7 171.57. .<1-.117..41.5555

CA,R

=B!C:

BA!B:

<H!A:

BH!H:

<H!C:

BA!A:

<B!@:

<H!H:

Gote2 "nvestments in the $'E 'ense) has been considered in the above illustration. This is only an illustrate for the purpose of e)plaining the feature. (ctual returns may vary substantially.

>E *>rivate equity+ investment in "ndia to fall by a third in 155>rivate equity investment in "ndia "n 155- is e)pected to tumble by more than a third to K< billion to KB billion, similar to the fall in 1557, as investor aversion rises and asset owners stick to high price e)pectations, industry players said. >E firms will also be busy tending to "ndian portfolios battered in the stock market meltdown, speakers at a private equity conference in Mumbai said on Thursday.

.5

VThe sustainable private equity deal volumes in this market would be just about <5 percent of the last couple of years,V >uneet $hatia, managing director at >E firm T>I, said at the conference. VThe price of being prudent and diversified has just not delivered,V he said, referring to the sharper fall in developing market indices than in major industrial markets. "ndiaJs benchmark stock inde) S.$'E'G_ fell <1.4 percent in 1557, its worst year ever, ending a fiveAyear bull run that saw the market rise si)Afold. "t is down ..3 percent so far in 155-. >rivate equity investments in "ndia fell 37.1 percent to just over K15.B billion in 1557, in line with the drop across the (siaA>acific region, according to (sian Henture 8apital Cournal research. (lmost threeAquarters of the private equity investment in "ndia over the last two years was in listed entities that have dropped sharply and these are weighing on >E firmsJ ability to invest, said Gitin 9eshmukh, 8E: of private equity at Ootak "nvestment (dvisors. The best opportunities in 155- would come from buying nonAcore assets or distressed units of large conglomerates and picking up stakes in nonAcyclical sectors, said >arvinder 'ingh, principal at $ain 8apital. ANNUA& R"%ORT OF )-ARTIA/A IN+"$TM"NT MANA,"R$ %+T &TD *155BA57+ FINANCIA& R"$U&T$ >articulars In ome' "nterest "ncome Total "6penses Employee 8osts (dministrative and :ther E)penses 9epreciation;(morti ation >reliminary E)penses written off Total >eriod ended March 31, 1557 7,1<3 C>;H= 77,5-1 .5,4-7 4,1.3 15,155 ;A<>CH=

.1

&oss before Ta6 >rovision for Ta) *!$T and Dealth Ta)+ &oss after Ta6

;HB>DEE .51 ;HH>=E<

FRAN4&IN T"M%&"TON ,RO3T- FUND'

$#% MONTCN/ 8 ."AR CulA5. (ugA5. 'epA5. :ctA5. GovA5. 9ecA5. CanA5B !ebA5B MarA5B (prA5B MayA5B CunA5B CulA5B (ugA5B 'epA5B :ctA5B GovA5B 9ecA5B NIFT. 1134.1< 5.5<43 11-<.B< 5.1<5B 13B<.-< 5.531. 1415.7< 5.11B1 1.51..< 5.53<5 1.<B..< 5.1<3. 1-11.1< A5.5B41B.-.55 5.54B3 17<1.B5 A5.51B7 171-..< A5.51-1 1B...B5 A5.14.< 1<5B.-5 5.51-4 1<3B.15 5.5..3 1.3-.5< A5.5511 1.3<.4< 5.57<4 1BB<.1< 5.511B 1B-B.B< 5.5-14 1-.1.5< 5.5B75 11.4B 11.<7 15.<11..14.B4 1..75 31.4< 1-.35 35.11 1-.-. 1-.17 1<.77 1.... 1B.73 17.<1 35.74 35.<3 33.1< 5.5-.7 5..3.B 5.5<34 5.145. 5.5733 5.1B3< A5.5.74 5.51B. A5.55<5 A5.511B A5.11.1 5.5351 5.5435.5147 5.5713 A5.5151 5.57-1 5.1315 5.5515.511B 5.5511 5.51.1 5.5511 5.513. 5.55<. 5.5511 5.5553 5.5557 5.511< 5.5554 5.5544 5.5555 5.55B3 5.5551 5.5574 5.55.1 5.55-4 5.45<4 5.5515.51-7 5.55.5.5351 5.554B 5.5557 5.5555 5.555< 5.513< 5.5555.5515.555. 5.55.. 5.5551 5.55B5.51B4 ROR1/2 NA+ ROR1.2 /I/ .I. /I. Avg1/2 A+,1.2 5.55<3 5.5144 5.54B. 5.5-.5 5.1157 5.<7B< 5.551B 5.551B 5.5541 5.51B- 5.5-B3 5.5-14 5.551- 5.55<1 5.5341 5.51.. 5.113B 5.1143 5.55<1 A5.1547 A5.11B. 5.5513 5.51B4 A5.511. 5.5551 A5.54BB A5.5<41 5.555B A5.5<-5 A5.5B15.51B5 A5.1B.4 A5.1.<3 5.555. A5.515< A5.51-1 5.551- 5.53.4 A5.55<3 A5.5551 A5.5311 A5.5144 5.55.- 5.5<<< 5.5311 A5.5551 A5.51B1 A5.5<-3 5.5571 5.5.1< 5.53-5.5153 5.5471 5.5717 5.555. 5.514. 5.5555 5.55-< 5.5555 5.51<3 5.5115 5.5553 5.5513 5.553< 5.5311 5.5551 5.5513 5.5515 5.5531 5.5553 5.5537 5.5513 5.5513 5.34<1 5.5555 5.5574 5.5511 5.51<< 5.5137 5.555< 5.5515.55<1 5.51B3 5.5554 5.5555 5.555. 5.5515 5.553< 5.551. 5.55./7 .7 RJ< TJ<

.1

CanA57 !ebA57 MarA57 (prA57 MayA57 CunA57 CulA57 MayA57 CunA57 CulA57 (ugA57 'epA57 :ctA57 CanA5!ebA5$UM A+,

111<.55 A5.51.1 15<-.7< 5.5111574.45 A5.5575 15.B..< A5.5B35 1-1..B< 5.57-1 157B.<< 5.5<-. 1111.-5 5.5475 1317.5< 5.53B7 145<.B< 5.5-31 1.35.5< A5.5-1< 137..B< 5.1357 1.-7.-< 5.5<57 173<.-< 5.54B7 1-B1.<< 5.5<15 3113.15 5.1111 ;!EDHA E!E<@@

3B..4 3..47 3B.31 3..3B 3<.55 3..-7 37.<1 45.BB 43.51 4B.54 43.11 4B.1B <5.57 <5.-. <3.74

A5.5357 5.5135 A5.51<< A5.53BB 5.5<.. 5.541. 5.5<74 5.5<45.5-3B A5.5711 5.5-3B 5.5<-4 5.51B. 5.5<.< 5.115;!DDED E!EB@<

5.555B 5.5551 5.5551 5.55<3 5.55B5.553< 5.5513 5.5514 5.557B 5.557. 5.51B1 5.551. 5.5513 5.551. 5.511. E!<=BE

5.5555.555< 5.555. 5.5514 5.5531 5.551B 5.5534 5.5535 5.5577 5.55.. 5.5577 5.553< 5.5553 5.5531 5.514. E!A<AA

5.5557 5.5553 5.5551 5.551B 5.55<5 5.551< 5.5517 5.5511 5.557B 5.55B< 5.5113 5.5535 5.5557 5.5515.513. E!=E=;

A5.5<.5 A5.5755 A5.5175 A5.51.1 A5.53B- A5.5B4B A5.151- A5.57.5.5<-1 5.55B4 5.51-B A5.55B. 5.5171 5.55-1 5.55B- 5.55<B 5.5.33 5.544< A5.1114 A5.1354 5.155- 5.544< 5.515- 5.5151 5.51B- A5.531. 5.5111 5.55B3 5.5711 5.5B1B

5.5531 5.5553 5.5514 5.515. 5.553< 5.5555.5553 5.5551 5.5545 5.51<5 5.5151 5.5554 5.5553 5.5554 5.55.7 E!<EE@ E!EEHA

5.55.4 5.555B 5.55<. 5.55B< 5.5551 5.5551 5.5551 5.5555 5.5515 5.51B5 5.5515 5.5551 5.5515 5.5551 5.55<1 E!H=D; E!E;B@

FRAN4&IN T"M%&"TON

CA&UCTION$ '

TR".NORKs Measure

.3

Formula for T1m2 1Avg ROR 7 RFR2 8 )eta Eere (vg ,:, ^ 5.51-,!, ^ $eta ^ ^ T1m2 L E!EEE@ 3 6J *nNsum*)Ny+Asum*)+sum*y++;*nNsum*)`1++Asum*)`1+ 1.514B

Formula for T1i2 Eere

1Avg ROR 7 RFR2 8 )eta (vg ,:, ^ 5.54-1 ,!, ^ $eta ^ ^ 3 6J *nNsum*)Ny+Asum*)+sum*y++;*nNsum*)`1++Asum*)`1+ 1.514B

T1i2 L

E!EE;H

$-AR%"Ks Measure 1Avg ROR 7 RFR2 8 Formula for $1m2 1Avg ROR 7 RFR2 8 $!D Eere (vg ,:, ^ 5.51-,!, ^ '.9 ^ $1m2 L 7E!=AEB 3 6J 5.5B.$1i2 L Formula for $1i2 $!D Eere (vg ,:, ^ 5.54-1 ,!, ^ '.9 ^ E!;H<D 3 6J 5.11<B

The responses collected from each and every respondent through the questionnaire are tabulated and presented as follows2

Table no! ;' Dhat is your annual incomeX Annual In ome <5555 to 155555 155551 to 155555 155551 to <55555 No of response 45 <5 15 Response in : 45 <5 15

.4

<55551 L above

AA

AA

,raph no! ;'

Annual Income
200001500000 500001()ove 50000100000 50000-100000 100001-200000 200001-500000 100001200000 500001-()ove

Interpretation' !rom the above table of 155 investors showing the details of income or

salary class to which they belong to. <56 of investors belong to the income class below 15551 to 1<555 per month, 156 of investors belong 1<551 to 35555 of income class, 456 of investors belong 7555 to15555 of income class .

Table no! <' Eow much amount you are ready to invest per monthX "nvestment ?ess than 1<555 1<555 to <5555 <5555 to 155555 155555 L above Go. of investors 15 45 45 5 6 15 45 45 5

.<

,raph no! <'

0*

20* + 25000 25000-50000 50000-100000 ,100000 0*

0*

Interpretation' !rom the above table of 155 investors showing the details of investment to which they belong to 156 of investors belong less than 1<555 p.m, 456 of investors belong 1<555 to <5555 of income class, 456 of investors belong <5555 to 155555 of income class, and no investor above 155555 and above income category.

Table no! =' Dhich !actor influenced you to investX !actors influenced ,etirement Ta) benefits 8hildren0s Go. of respondents 15 45 45 6 15 45 45

..

:thers ,raph no! ='

!actors In"luencin# to In$est

%o& o" 'espondents 50 0 30 20 10 0 "etire-ents .a/ 0ene1its 2hildren3s !actors 20 0 4thers 0 0

Interpretation' 'hows the factors influencing to invest, 156 of investors are purpose of retirement, 45 6 of investors are purpose of ta) benefits and 45 6 of investors are purpose of children0s and remaining are others.

Table no! B' ,anking of investment of your income

.B

Mutual !unds 1 !i)ed 9eposits 1 'hare L. 'ecurities $onds < >ost :ffice 3 ,eal estate 4

. 1 4 1 < . 1 < 3 4 1 3

< . 1 3 1 4

. 1 1 3 < 4

1 . < 4 3 1

. 4 < 1 3 1

1 1 < 3 4 .

1 4 1 1 < 1

1 . 1 4 4 .

31 3B 37 31 3. 33

,raph no!B'

types o" )onds

'an(in# to in$est the income

5utual 6unds 7 ! 5 3 2 1 0 1 2 3 5 ! 7 8 9 "eal estate ran(s 6i/ed De'osits &hare 7 &e8urities 0onds Post 411i8e

Interpretation' 'hows the ranks which has given by the investors. !ew respondents were given a best rank to Mutual funds. Then they gave the ne)t rank to fi)ed deposits, after that most of the investors were given the ne)t rank to 'hares and securities.

.7

Table No! H' Eave you ever invested in any mutual fundX Ever invested in any Go. of respondents mutual fund Mes 75 Go 15 6 75 15

,raph no! H'

%*& o" 'espondents in$ested in +utual !unds

:o 20*

55

9es :o

9es 80*

Interpretation' !rom the *table no - L graph no -+ we find that 15 respondents are not invested in any mutual fund and 75 of investors are invested in mutual funds.

.-

Table No! A2 "n which mutual fund you are investedX "nvested in which mutual fund "8"8" ($G 8E:?( $",?( T(T( ! TEM>?ET:G :TEE,' Go. of respondents .5 35 15 45 15 15 5 6 45 17 . 14 . . 5

,raph no! A'

Type o " +utual !unds

%o& o" 'espondents 50 0 30 20 10 0 ! 2! 18 28 10 28 8 &20 &0I

I2I2I

;D62 ;&02

2I.I Ban(s

(5<=

Interpretation !rom table no ., we find that 4.6 are invested in "8"8", 1.6 are invested in E8!8, 176 are invested in E'$8, 176 are invested in 8"T", 156 are invested in (MEF, 176 are invested in '8$, 76 are invested in '$".

B5

Table No! D' >eriod of investmentX

"nvestment time ?ess than 1 year 1 year to 1 years 1 years to 3 years 3 years L more ,raph no! D'

6 15 75 5 5

Period o" In$estment in ,ears

0*

20*

+ 1 9ear 2 9ears 3 9ears , 3 9ears

80*

Interpretation' !rom table no B we found that 156 are less than oneAyear period and 756 are more than oneAyear period.

B1

Table No! C' Eave you heard about $harti()a Mutual fundX (bout $harthi()a Mes Go Go. of respondents 75 15 6 75 15

,raph no! C'

'espondents -no.n a)out BhartiAxa +utual !unds

:o 20*

9es :o

9es 80*

Interpretation' !rom table no 7 the number of respondents heard about $harti()a mutual funds are 756 and 156 does not know about $harti()a mutual funds.

B1

Table No! @' Eow did you know about $harti()a mutual fundsX Onow about it (dds !riends Maga ines Gews papers Go. of respondents 45 .5 35 <5 6 11 33 1B 17

,raph no! @'

Introduction to BhartiAxa +utual !unds

Type o" Introduction :ews Pa'ers 5a#a>ines 6riends (dds 0 20 0 %o& o" /ustomers !0 80

Interpretation'

B3

!rom table no - we found that <56 through newspapers, 356 through maga ines, .56 through friends, 456 through adds and will know from different types.

B4

Table No! ;E' Eow you are feeling to "nvestment in mutual fundX Mutual fund e)pressed Hery good Iood (verage >oor Go. of respondents 15 45 <5 5 6 15 45 <5 5

,raph no! ;E'

+utual !unds Expressed )y 'espondents

!0 50 0 30 20 10 0 %o& o" 'espondents 50 0

10 0 ?.Good Good (vera#e Poor

'esponses

Interpretation' !rom the table no 15 finding that mutual fund are e)pressed in different types. 156 says very good, 456 says good and <56 says average.

B<

Table No! ;;' Mour most important investment goalX 1. 1. 3. ?ooking at low risk investment options Taking a risk market fluctuates My main concern is long term wealth ma)imi ation Go. of respondents 15 <5 45 6 15 <5 45

"nvestment goal 1 1 3 ,raph no! ;;'

Important In$ester 0oal in In$estin#

1

17*

2 3

50* 33*

Interpretation'

>eople are not bothered about the investment. They are interested in investing in mutual funds. They are looking towards them as a long term investments rather than a short term investment plans.

B.

BB

$UMMAR. OF FINDIN,$

1. $harti()a Equity !und *(n :penAended Equity Irowth !und+ is better to invest. $ecause in this fund the company is presenting @uarterly 9ividend and many other benefits are there. 1. (nd at the same time the company is presenting 9aily '">, starting at ,s.355. 3. $harti()a is presenting Qero balance !olio to the investors. This will help the company to attract the investors. 4. (s per my Onowledge a fund with a better diversification of funds and opting for changes based upon the market fluctuation. &nder the eyes of efficient fund manger can produce a high return with a low risk under any circumstances. <. "nvestor education has been one of the issues. 9uring the study researcher found that many of the customers are not completely aware of mutual funds and the industry. 'o people will prefer bank deposits as the best investment avenue, which will serve their investment needs and the safer one. .. >eople who are aware of mutual funds find mutual funds as on of the good investment option that will give better returns with moderate risk. B. :ver 456 of the investors fall in the annual income below 1 lakh :ver 456 of the investors have a monthly savings of 1<555 P <5555 L 456 of the investors have a monthly savings of <5555A155555 !riends L relatives act as the major influences in formulating investment portfolios. 7. Onowledge about mutual fund L their various schemes is moderate among investors.

B7

-. More than 756 of the investors are ready to park their money for a period of 1 P 1 years. 15. :ver fifty percent of the investors believe that mutual funds taking a risk market fluctuates. 11. More than .56 of the investors are interested to have quarterly portfolio review.

CONC&U$ION

1. "nvestment goals vary from person to person. Dhile somebody wants security, others might give more weight age to returns alone. Dith objectives defining any range, it is obvious that the products required will vary as well. 1. The mutual fund industry is still in its infancy stage as compared to the developed markets in &', where the banking industry and the mutual fund industry rival each other as investment vehicles but in "ndia to reach that stage will require lot of efforts on the part of the fund houses. 3. "nvestor education has been one of the issues. The investor did not focus upon the issues such as, why a person wanted to invest or whether a particular product suited him or not. Dhile educating the customer might not have been on the cards earlier, the things are beginning to change now. 4. Mutual funds assume greater importance in a scenario of increasing inflation. Dith inflation hovering around < 6 to . 6, poised for greater heights, investing in avenues, which just offer breakeven returns, e)poses the investment portfolio to inflation risk. "nvestment in equity either directly or through the mutual fund route provides an

B-

effective hedge mechanism against such a potent threat. 'o, investing in mutual funds is a better option for investors depending upon their objective and requirements.

75

R"COMM"NDATION$ # $U,,"$TION$

"t can be said that, falling interest rates and recent developments in the

investment climate in the country, have led to investment avenues dwindling drastically. $ut Mutual !unds are any day a safe bet for investors of different are groups, motives and other preferences. 'ince (sset Management companies offer a range of !unds respective "nvestment philosophies, an investor can benefit only by investing in appropriate fund, which shall meet his requirements. "n "ndia most of the people are income middle level they cannot invest heavy amount. 'o mutual fund is right investment for such people. The mutual fund company should concentrate on cash rich companies

like the Trusts, cash rich private companies, etc to generate, more funds for the investment. ( through market research is to be done by the Mutual !und companies before they launch any schemes. They should understand the need of the customers *i.e., investment plan and the purpose+ and Taylor accordingly. "t is important to select the fund carefully. The most important factor

while selecting a fund is the suitability. ( fund may be best available in the market if it doesn0t match the requirement, skip the fund. The performance of the mutual fund over a long time hori on should be taken into consideration.

71

The company should come up in the future with some more schemes in

such a way that should give returns, safe and liquidity so that the investors should get better confidence L believe it. "n the share market lot of fluctuations will be present so in mutual fund they have average better returns, so that the investors will be safe. "n the present scenario customer needs good returns and the investment $harti()a Equity !und *(n :penAended Equity Irowth !und+ is

should be safe, liquidity. These three terms should be present. better to invest. $ecause in this fund the company is presenting @uarterly 9ividend and many other benefits are there.

15 steps before investing in mutual funds

1+ Mutual !und Mou are not going to get very far in mutual fund investing if you donJt understand what a mutual fund is. 1+ Annual Return The first thing you are going to see mutual fund companies doing, is touting their returns. There are a few ways to measure a fundJs return A be sure you know the differences. 3+ "6pense Ratio E)pense ratios are probably the most important ratio when it comes to mutual fund investing. 9onJt buy a mutual fund until you understand what an e)pense ratio is. 4+ Net Asset +alue Mutual fund prices are measured by Get (sset Halue or G(H. G(Hs are calculated and published every day. They are easy to understand, but come with their own suppress. <+ Fund $t(le V'tylesV mean a lot of different things in the investing world. !ind out why style is an important factor in fund investing.

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.+ Inde6 Fund "nde) funds should be a part of every portfolio. ?earn what they are and what makes them such a great investment. B+ Turnover Ratio 9epending on your situation, this ratio may be a key piece of data in the mutual fund selection process. This ratio is especially important in ta)able accounts. 7+ Fund %rospe tus $y law, all mutual fund companies are required to provide you with a prospectus before you invest. ?earn what a prospectus is and what you should do with it. -+ &oad ?oads are something to watch out for. They come in many shapes and forms *backA end, frontAend+. $e sure to learn what a load is before you invest in a mutual fund. 15+ Money Market !unds ?ooking for a safe place to stash your cashX Money market funds are a great place. !ind out why.

)I)&IO,RA%-.
The readings listed here had proved to be helpful in learning and completion of my >roject. MagaFines' $usiness world P The Mutual !und "ndustry Referred )oo0s' Making mutual funds work for you P The investors concise guide (M!"*9.,.Mehta 'E$" 8hairman, 1555+ 'ecurity (nalysis*9ogulas Eamilton $ellemore,155B+ Mutual !unds in "ndia by 'adak

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 (M!" work +isited 3ebsites' http2;;www.mutualfundindia.com http2;;www.pruicici.com http2;;www.valueresearchonline.com http2;;www.amfiindia.com http2;;www.cholamutual.com

http2;;www.nseindia.com http2;;www.google.com

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