CERTIFICATE

This is to certify that the Project Work titled Performance Measurement and Investors Perception on Equity Fund in India is a bonafide work of Mr. Sangram Keshari Jena, Enrollment No. 2005373216. This project report, submitted in partial fulfillment for the award of degree of MBA - Finance of Pondicherry University carried out under my guidance and supervision. This project work is original and not submitted earlier for the award of any degree/diploma or associateship of any other University/Institution. I wish him all success in his future Endeavour.

Place: Bhubaneswar Date: 30/11/2007

Sidhartha K. Dhal, M.B.A. Branch Manager Centrum Broking Pvt. Ltd. 1st Floor, Samabaya Bhawan Janpath, Unit IX Bhubaneswar 751022

DECLARATION
I, Mr. Sangram Keshari Jena, hereby declare that the project work entitled Performance Measurement and Investor Perception on Equity Fund In India is the original work done by me and submitted to Pondicherry University in partial fulfillment of requirements for the award of Master of Business Administration in Finance is a record of original work done by me under the guidance of Mr. Sidhartha Kumar Dhal of Centrum Broking Private Limited. Enrollment No.: 2005373216 Date: 30/11/2007 Sangram Keshari Jena

ii

ACKNOWLEDGEMENT
The summer training came out to be a great source of learning and experience. It is therefore my foremost developed performance duty to acknowledge deep felt gratitude to all those who rendered me all possible help and assistance in the completion of this project work. I express my gratitude to Mr. Abhaya Kumar Das, Assistant Manager, Centrum Broking Private Limited who rendered me this opportunity; by his special supervision I could able to complete this Project Work. I take this opportunity to express heartfelt gratitude to Mr. Ashok Kumar Moharana for providing all possible help and encouragement as a project manager, which was the main force behind the execution of different surveys of the project. It is a great privilege to express deep sense of gratitude and in debtness to the esteemed guide Mr. Sidhartha Kumar Dahl, Branch Manager, Centrum Broking Private Limited for his keen interest, constant encouragement and indefatigable enthusiastic guidance. This learning would not have been completed without the cooperation of the Mutual Fund investors & AMC Houses of Bhubaneswar. Therefore, I would like to thank them all.

Sangram Keshari Jena

iii

PREFACE
As a part of MBA - Finance curriculum of Pondicherry University, I had engaged myself in Centrum Broking Private Limited to complete my project work under the guidance of Mr. Sidhartha Kumar Dhal. In the organization under the guidance of Mr. Sidhartha Kumar Dhal, I have been experienced to the business of Mutual Fund, how it operates, how it works, its NAV calculation, do financial performance measurement of some leading players & get practical knowledge about its marketing. In between the project, I have visited lot of probable and prospective customers and give them knowledge about Mutual Fund schemes and also converting the probable customers to customers by selling some mutual funds viz. Franklin India Blue Chip Fund. I have also known the peoples responses and awareness towards private and public sector Mutual Funds. I shall be amply awarded if the findings, recommendations and other study proves beneficial for the organization in augmenting its effects towards excellence.

iv

CONTENTS
SL. NO I. II. III. IV. CHAPTER NAME Declaration Certificate Acknowledgement Preface PAGE NO.

Chapter I
1.1 1.2 1.3 1.4

Introduction

1-6

Introduction Indian Economy & Equity Market Objectives Of Study Chapter Skeleton

Chapter II
2.1 2.2 2.3 2.4 2.5 2.6 2.7

Introduction To _________(company name)

Overview About.. Vision Quality Objectives Board Of Directors Centrum Achievements Milestones

7-12

SL. NO

CHAPTER NAME

PAGE NO.

Chapter III
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9

Mutual Funds an Overview

Meaning and Definition of Mutual Fund The Origin of Mutual Fund Indian Scene Growth of the Indian Mutual Fund Industry Working Cycle Of Mutual fund Characteristics of Mutual Fund Types of Mutual Fund Schemes Advantages of Mutual Funds Disadvantages and Defects of Mutual Funds

13-40

Chapter IV 47
IV.1 IV.2 IV.3 IV.4

Regulatory Framework

41-

Regulatory Framework of Mutual Funds in India Guidelines Issued By RBI Guidelines given By SEBI The SEBI norms for Private Sector Mutual Funds

Chapter V Research Methodology & Investors Perception 4869

5.1 5.2 Research Methodology Study Of Investors Perception about Mutual Fund

Chapter VI 70-90
6.1 Introduction

Peer Group Comparative

Analysis

6.2 6.3 6.4 6.5 6.6 6.7

Growth Fund Tax Saving Fund Large Cap Fund Mid Cap Fund Technology Fund Index Fund

SL. NO NO.

CHAPTER NAME

PAGE

Chapter VII 96
7.1 7.2 7.3 7.4 Bibliography Glossary

Findings And Recommendations

91-

Findings Recommendations Limitations of Studies Conclusion

CHAPTER I
INTRODUCTION

1.1:- INTRODUCTION
Economic scenario worldwide has radically changed in recent years. Various important political and economic developments have taken place after mid eighties. Unrestricted and competitive economic activities became necessary for economic development. After the demise of communist U.S.S.R and finalization of GATT Treaty, it became clear that industries have to face international competition to survive. Moreover market economy is developing, realizing this fact our Government changed its economic policy in 1991 and accordingly accepted the principles of GLOBALISATION and LIBERLISATION for first economic development it becomes necessary to develop large and sound capital market. It is possible only when large part of population participate in industrial investment process. For this purpose it requires it to attract untapped conservative small savings from common household. By now general public of our country was not participating reasonably well in companies shares and other securities. There are many factors responsible for this reluctance and hesitation on their part, such as lack of knowledge of portfolio management, complexity of industrial investment process, stock exchange activities and fear of high-risk involved in industrial investment etc. Out of total savings which are 20% of GDP since 70s contributed predominantly by household only 5% of these savings were invested directly in industries. A large part of such savings were put in various schemes of bank deposits, post offices, savings certificates and Government sponsored bonds etc. Although a part of such saving was also invested in industries indirectly, yet this proportion was not satisfactory seeing the requirement of our industries. Keeping in view to attract such funds, it is being realized that some such mechanism and media should be adopted which may help to divert a large part of these funds to industries according to their growing requirements. Mutual fund institutions/instruments are new development in lime with this mechanism. These funds are collecting money from persons of varied background including a large section of lower and middle segments and further investing them in various securities of different industries. Thus these small savings are

participating in industrial investment through these mutual funds which was not possible before otherwise. Financial planning is the most crucial step. But in todays busy world, one hardly gets time to track anything other than ones own business. Everyone earns money but most of us unaware how to save those money in a better, safer and profitable way. In the world of diverse investment opportunities, there is one investment avenue that stands apart Mutual Funds. The funds have turned out to be preferred choice world over for both small and big investors due to their numerous advantages. Mutual Funds are all about long-term financial planning. They are in ideal investment avenue to meet objectives like childrens education, marriage and retirement planning. As more investors opt for these funds, newer schemes are floated to clear to every need of the investor. This has resulted in a broad array of choices. Anyone, no matter what their age or income level, should and can invest in Mutual Funds. Mutual Funds are and easy and inexpensive way for an individual to capture the money that is to be made from stocks and bonds, without buying them directly. Investing in Mutual Funds is a perfect way to save money for the short term and long term future with least risk.

1.2:- INDIAN ECONOMY AND EQUITY MARKET

With the expected GDP growth above 8% in 2007-08, the Indian economy will be witnessing four consecutive years of above 7% growth. This was earlier achieved in the mid nineties after that the growth went lower and became more volatile too. There were reasons for that. The interest rates were very high, but the real interest rates were low or sometimes negatives. The consumption was not in tune with the capacity expansion and the high cost and uncompetitive products, killed many business. So the growth momentum could not continue. But now the situation is different. Even when

everything is going good, these is still a cautious approach to ensure that things do not go overboard. This is what the best part of the present situation is. The latest estimates of GDP growth for January-March 2008 quarter were significantly better than consensus expectations with the economy growing and showing sequential acceleration from the from the preceding quarters growth rate. This has led to an upward revision of GDP growth for FY2007-08. All the sectors of the economy grew handsomely. The trend in the agricultural sector may need to be closely watched in the coming quarters for the sustainability of the recent acceleration in growth. ? ? ? ? ? ? ?

1.3:- IMPORTANCE OF THE TOPIC

Although there are many financial instrument and schemes operating today but the scholar has choosed mutual fund as his topic because there are so many importance attached with mutual funds, which cannot be avoidable. The first and most important advantages of choosing this fund is good return as compared to other investment. If we compare bank rates with mutual funds return then we find a remarkable difference. Mutual funds play a very significant role in mobilizing the savings of those investors who have surplus income and channelisation of these savings in those avenues where there is a demand of funds. These institutions employ their resources in such a manner as to offer for their investors the combined benefit of low risk, steady return, high liquidity and capital appreciation through diversification and expert management. If we compare banks with mutual funds then it can be concluded as follows:

BANKS V/S MUTUAL FUNDS

BANKS Returns Administrative Exp. Risk Investment options Network Liquidity Quality of assets Interest calculation Guarantee Low High Low Less High penetration At a cost Not transparent Minimum balance between 10th & 30th of every month Maximum Rs.1 lakh on deposits

MUTUAL FUNDS Better Low Moderate More Low but improving Better Transparent Everyday

None

Small and medium investors used to burn their fingers in stock market but mutual funds offers wide portfolio investment. Professionals who are well trained and have adequate experience in the field of investment manage the funds and it is not always available in case of other investment.

It also offers tax benefits. Apart from dividends, interest and capital appreciations the investors gets tax benefits i.e. some schemes are deductible under income tax act and wealth tax act. Mutual funds also permitted the investors to exchanges their units from one schemes to other. One cannot derive such flexibility in any other investments. It also facilitate liquidity i.e. units can be sold and purchase at any time according to the need of the investors. Another important thing is that the investor is free from record keeping of dividend payments, bonus issues, price movements etc. The investor has to keep a record only one deal with the mutual funds. Therefore, I have choose mutual funds as the project topic because mutual funds plays a very significant role in mobilizing the savings of those investors who have surplus income and canalization of these savings in those avenues where there is a demand of funds. The investors get the combined benefits of low risks, steady return, high liquidity and capital appreciations through diversification and expert management.

1.4:- CHAPTER SKELETON

The whole project is divided into eight chapters supported by tables, pictures and charts for easy understanding of data.

Chapter-I: - Introduction & Objectives of Study Chapter-II: - Research Design Chapter-III: - Company Profile Chapter-IV: - Mutual Funds - An Overview Chapter-V: - Data Analysis & Interpretation Chapter-VI: - Findings Chapter-VII: - Suggestions Chapter-VIII: - Conclusion

CHAPTER II
RESEARCH DESIGN

2.1:-NATURE OF STUDY As per the project topic, the nature of the present study is very much of theoretical in character and extends the theoretical study of the management processes, which are to be implemented. 2.2:-SCOPE OF STUDY The study is confined to the operation of Mutual Funds in the State of Orissa. 2.3:-OBJECTIVES OF STUDY The main objective of the study is to estimate the demand of Mutual Fund Schemes classified according to investment objectives. The specific objectives are: To know the awareness about Mutual Funds. To estimate demand of Mutual Fund Schemes. To know the investors perception and preference about different Mutual Fund Schemes. To find out the needs of investors at the time of reinvestment.

 To suggest means and ways to improve the overall Mutual Fund Industry.

2.4:-DATA COLECTION
The data required for the study had been collected mainly from Primary and secondary sources. The primary data are collected from number of respondents and the secondary data are collected from various magazine like Business India, Mutual Fund Insight, etc. from newspapers like The Economic Times, The Business Line, etc and websites like amfiindia.com, etc. mutualfundsindia.com, valueresearchonline.com, moneycontrol.com,

centrum.co.in and also from various finance books.

2.5:-LIMITATIONS OF STUDY
The number of sample is 100. It is very time consuming and expensive. Some investors do not take interest in filling the questionnaire. The area chosen for study i.e. Bhubaneswar, Temple City may not reflect the demographic make up of the national average and national investment perception.

CHAPTER III
INTRODUCTION TO CENTRUM

Centrum is jointly promoted by Mr. Chandir Gidwani, a Chartered Accountant, having more than a decade of experience in the financial services industry & The Cassinath Group, promoted by late Mr. Khushroo P. Byramjee. Centrum was incorporated in 1977. It is a SEBI registered Category I Merchant Banker, listed on The Stock Exchange, Mumbai (BSE). Over the last two decades, it has expanded into a full-service investment banking company. Today its primary role is that of a responsible intermediary with a strong professional base. Its forte is providing advisory and innovatively structured financial solutions in the area of fund raising, infrastructure development, government borrowing, corporate restructuring and money market intermediation. At the retail level, Centrum provides investment advisory service and distributes financial products like mutual funds, insurance products, etc.

MANAGEMENT The Centrum Board brings together a group of highly respected and successful stalwarts of Indian business. Centrum Capital Limited is jointly promoted by Mr. Chandir Gidwani, a Chartered Accountant, having more than a decade of experience in the financial services industry & The Cassinath Group, promoted by Late Mr. Khushroo P. Byramjee. The Cassinath Group is one of the largest Stevedore in the Bombay Port and also local partner of P&O Ports in India.

The Board of Directors Mr. Berjis M. Desai Chairman

Mr. Chandir G. Gidwani Vice Chairman Mrs. M. K. Byramjee Mr. K. V. Krishnamurthy Ms. Sonia Gidwani Mr. P. G. Kakodkar Mr. Manmohan Shetty Mr. Rishad Byramjee Mr. Ibrahim S. Belselah Mr. Rajesh V. Nanavaty

The Operating Team The day-to-day operations of the Company are guided by a Managing Committee comprising:

Mr. T.R.Madhavan Mr. Rajendra Naik Mr. Sandeep Anand Mr. Anuj Joshi

Managing Director Executive Director Executive Director

The Managing Committee is supported by a team of professionals with varied experience in the fields of banking, financial services and capital markets comprising MBAs, Chartered Accountants, Chartered Financial Analysts and Cost Accountants.

Key Personnel

Mr. T. R Madhavan

Managing Director

Mr. T. R. Madhavan has joined Centrum Capital Limited as Managing Director from 01st September 2005. Prior to Centrum, Mr. Madhavan was the MD and CEO of Dhanalakshmi Bank Ltd. Mr. Madhavan brings with him over 3 decades of experience in the Banking Sector. A B.E. Mechanical (Hons) and a C.A.I.I.B, he started his career with Bank of India in 1972. He worked in various branches, Regional and Zonal Offices of the Bank. During his long stint with Bank of India he was posted in New York as Vice President of the New York Branch. Some of the other assignments handled by him at Bank of India were: Assistant General Manager in charge of Mumbai Overseas Branch (1996-1998), Dy. General Manager in charge of New Delhi Corporate Banking branch with aggregate business of Rs. 2500 crores, (1998-2000), General Manager (Credit) Bank of India.(2000-2004). He was also a Director on the Board of IL & FS Investment Managers Ltd., Securities Trading Corporation of India Ltd., Common wealth Finance Corporation Ltd; Hongkong, as nominee of Bank of India. Other than the job itself he was a very active member in Banking and some of his special assignments are outlined below: Member of the IBA Committee on construction Industry under the Chairmanship of Shri. B. D. Narang, CMD, Oriental Bank of Commerce. Member of the Working Group on Financing for Purchase of Vehicles under the Chairmanship of Shri R.V. Shahstri, CMD, Canara Bank. Member of the Working Group on Credit Information Bureau (India) Ltd. (CIBIL) constituted under the chairmanship of Shri S.R. Iyer. Member of the Working Group on Wilful Defaulters under the Chairmanship of Shri S.S. Kohli, CMD, Punjab National Bank.

Mr. Rajendra Naik

Executive Director

Mr. Rajendra Naik holds a Business Management degree from the Sydenham Institute of Management. He has over eleven years of experience in the Financial Services industry. Mr. Naiks profile includes Business Origination & Relationship Management for all the product lines of the company. He also holds additional responsibility for the Project Financing Group.

Mr. Sandeep Anand

Executive Director

Mr. Sandeep Anand has a rich experience of 19 years in heading North India Operations for two financial services companies in India. His hands-on experiences in managing the retail financial services business and understanding of the financial markets in North India has earned many laurels for Centrum Capital in all activities. Mr. Anand has tremendous relationship building capabilities, which bring to Centrum, tremendous advantage in sourcing new business.

Mr. Anuj Joshi

Mr. Anuj Joshi Currently handles the Relationship Management Group overseeing business origination from the corporate sector. He has an experience of over 13 years in diverse fields such as IT and Media.

ACHIEVMENT

We believe Centrum has been able to achieve its enviable performance because of our fundamental strength in the way we approach each assignment. The core values of this approach are Focus on providing unique, tailored solutions to each unique situation. Our determination to provide optimum, innovative solutions every time. Our passion to 'challenge the obvious.' Centrum's proactive approach to business is bolstered by its teams of professionals empowered to exploit business opportunities. This, together with a strong sense of commitment, has been instrumental in establishing strong sense of commitment, has been instrumental in establishing strong business relationships with reputed corporate houses, Public Sector Undertakings (PSUs) and State Level Undertakings (SLUs). This approach has helped Centrum achieve significant milestones in a relatively short period: Association with fund raising of over Rs. 40,000 crs in the last 5 years through Debt and Equity Products. Ranked 1st amongst the Merchant bankers for moblisation of funds for PSU and PSU Banks in the country (April - December 2004, Prime Database) Ranked 5th amongst the Merchant bankers for moblisation of debt in the country (April - December 2004, Prime Database) Ranked 3rd amongst the Merchant bankers for moblisation of Short Term Debt in the country (April - December 2004, Prime Database)

Syndicated Project Finance and Team Loans of over Rs. 6000 crs in the last 5 years for public sector, state government enterprises and corporates. As CentrumDirect Ltd as one of the top 5 full-fledged moneychangers in the country. A wide distribution network of 31 branches pan India and also the Middle East (Dubai). Prime Ranking Highest Mobiliser of PSU and PSU Banks 5th Highest Mobiliser of Debt in Private Placements 3rd Highest Mobiliser of Short Term Debt 5th Highest Mobiliser in Equity & Hybrid Issues Highest Mobiliser for Adlabs Films - IPO 4th Highest Mobiliser for Vijaya Bank - IPO 5th Highest Mobiliser for Andhra Bank - IPO 6th Highest Mobiliser for Bharti Tele Ventures - IPO PROJECT FINANCE GROUP (PFG) HIGHLIGHTS Volume in excess of Rs.3500 crore successfully syndicated in the current period from July 2003 to June 2004. Chunk of proposals are in the Power sector where we have syndicated loans for thermal as well as hydel projects. Apart from this, Centrum has also done work in Irrigation, Urban Development, Roadways, Hospitality, Entertainment, Pharmaceuticals, Logistics, Processed Foods, Specialty Chemicals, Renewable Energy, FMCG, Mining

Key deals executed Narmada Hydro Development Corporation Syndicated a loan of Rs.1858 crore for the Indira Sagar Project in a record time of 4 months. Satluj Jal Vidyut Nigam Syndicated Rs.650 crore for the Nigam to pay back high cost loans, thus saving 5.65% per annum. Kerala Infrastructure Investment Fund Board Syndicated a loan of Rs.600 crore in a record time of 25 days. The exercise has resulted in an interest saving of Rs.95 crore, and is the largest tranche borrowing by a Kerala Government Undertaking, syndicated by a sole arranger. APGENCO First ever R&M project to be mandated to a private syndicator. Total loan of Rs.450 crore tied up with a consortium of 13 banks, with SBI as the lead bank. The entire requirement was tied up without any equity contribution from the promoters. Karnataka Neeravari Nigam Limited Syndicated Rs.320 crore on a sole arranger basis for the Corporation to swap its high cost bonds. Grid Corporation of Orissa Arranged for the swapping of high cost debt (in the form of bonds) with cheaper term loans to an extent of Rs.200 crore. This was one the first such interest saving exercises of its kind in Orissa. MSEB Syndicated Rs.200 crore for the Khaparkheda Thermal Power Project. Successfully syndicated deals across a variety of Banking products like Working Capital, FCNR Loans, Project Loans, Debt Swaps, Short Term and Medium Term Corporate Loans, Unsecured Loans, and Securitised Debt. Established excellent relationships across a wide spectrum of Private and Public Sector Banks and FIs like Bank of India, Dena Bank, Union Bank of India, Central Bank of India, UTI Bank, PNB, OBC, UCO Bank, Canara Bank, Indian Overseas Bank, Dhanalaxmi Bank, LIC, State Bank of Indore etc.

From a humble beginning, have emerged as one of the largest big ticket loan syndicators in the private sector. DEBT MARKET GROUP (DMG) HIGHLIGHTS: Humble beginning in 1997 with a Rs. 100 crore issue for Karnataka Electricity Board. Consistent rankings amongst the top 5 merchant bankers in the Debt Market over the years. (Source: Prime Database) Excellent relationships with Institutional Investors like Banks, Insurance Companies, Provident & Pensions Funds, Mutual Funds, Port Trusts and Corporate Treasuries. Associated with Debt Issues of over Rs. 30,000 crs in the last 5 years. One of the few intermediaries specializing in Short Term Corporate Debt like Commercial Papers and MIBOR Linked NCDs. Empanelled with over 2000 Provident, Pension and Gratuity Fund Trust all over the country. Operations encompassing both Primary & Secondary Debt Markets. Some key deals executed: Rs. 480 crores bought out deal for Maharashtra Patbandhare Vittiya Company Ltd (MPVC), a Govt. of Maharashtra Enterprise. Rs. 200 crores Guaranteed Short Term Notes for Krishna Bhagya Jala Nigam (KBJNL), a Govt. of Karnataka Enterprise. Bank Subordinate Debt (Tier II) issues for Most PSU Banks like Bank of India, Union Bank, Syndicate Bank, Indian Overseas Bank, Central Bank of India, Canara Bank, Dena Bank, UCO Bank, Bank of Maharashtra, ICICI Bank, Kotak Mahindra Bank etc.

Large Bond mandates for PSUs: Power Finance Corporation (over Rs. 3000 crs), REC (over Rs. 5000 crs), Konkan Railway Corporation Ltd (over Rs. 1500 crs) HUDCO (over Rs. 2500 crs), SAIL (over Rs. 2000 crs), Nuclear Power Corporation (over Rs. 2000 crs) Corporate Clientele Customer satisfaction is a top priority at Centrum, and we are pound of our association with over 500 large and medium corporate houses, Government Enterprises, Banks, Developmental Financial Institutions and State Governments. Here is a representative list of our clients Institutions and Banks LIC, ICICI, IDBI, IFCI, IIBI, HDFC, IL&FS, SIDBI, GIC and subsidiaries, UTI, Andhra Bank, Bank of Baroda, Central Bank of India, Corporation Bank, Dena Bank, Federal Bank, HDFC Bank, Bank of Maharashtra, Indian Overseas Bank, Punjab National Bank, Ratnakar Bank, State Bank of India and its associate banks, Syndicate Bank, Vijaya Bank Private Sector Corporate Houses : Associated Cement Companies, Airfreight Group, Aventis Group, Birla Group, BPL Group, Ciba Group, Godrej Group, Hero Group, Indian Hotels, Kalyani Group, Kirloskar Group, Larsen and Toubro, LIC Hosuing Finance, RPG Group, Piramal Group, TATA Group, TVS Group Port Trusts: Cochin Port Trust, Mumbai Port Trust, Tuticorin Port Trust, Jawaharlal Nehru Port Trust Public Sector Undertakings:

Bharat Electronics Limited, Bharat Heavy Electricals Limited, HMT Limited, HUDCO, ITI Limited, Karnataka State Financial Corporation, Komkan Railway Corporation Limited, Krishna Bhagya Jala Nigam Limited, M. S. E. B, B. E. S. T, Maharashtra Krishna Valley Development Corporation, M. P .S. R. T. C, M. S. R. T. C, Mysore Sales International Limited, PFC, PGCIL, Power Finance Corporation of India Limited, Rural Electrification Corporation, Steel Authority of India Limited, Tapi Irrigation Development Corporation State Electricity Boards: Andhra Pradesh, Haryana, Karnataka, Madhya Pradesh, Maharashtra, Punjab and Rajasthan SERVICES Centrum is a recognized leader in its business segments. Investment Banking Division Distribution Forex Consulting

About Us

Services

Investment Banking Division (IBD)

This encompasses both Debt and Equity solutions Debt Primary Debt Placement Secondary Debt Services The Group's services are a form of repackaging. Investments or fund raising programs may be encumbered by factors like tax structures, regulatory constraints, credit ratings, yield mismatch. The Group offers services to convert these hurdles into opportunities by structuring the underlying investment in innovative ways that fits the requirement of our clients. Equity Private Equity and Venture Capital Syndications Initial Public Offers (IPOs) Advisory Services Share Buybacks Mergers, Acquisitions & Takeovers Identifying and structuring synergistic amalgamations; Offers pricing and execution

About Us

Services

Distribution

Centrum has created a 100% subsidiary called CentrumDirect Limited to be able to achieve its ambitious goals in the retail end of the business. CentrumDirect offers its extensive retail investor-base a gamut of financial products ranging from mutual funds to bonds, fixed deposits to public issues, as well as investment advice to fit each individual's specific profile. The products also include life and non-life insurance for both individuals and corporate investors. CentrumDirect also caters to the investment needs of NRI Clients. CentrumDirect also operates as full-fledged money changers (FFMC), nationally and internationally. Centrum is already one of the top 5 fullfledged money changers in India. Its branch network now covers 12 top towns. Outside India, Centrum manages the Asia Exchange Centre at Dubai, UAE.

About Us

Services

Forex

Centrum's 100% subsidiary, CentrumDirect Limited, pursues its objectives in the area of full-fledged money changing (FFMC), nationally and internationally. Centrum is already one of the top 5 full-fledged money changers in India. Its branch network now covers 12 top towns. Outside India, Centrum manages the Asia Exchange Centre at Dubai, UAE

About Us

Services

Project Finance Group

The Project Finance Group offers the services of Project appraisals, Syndication of Term Loans and Working Capital limits. In essence, the Group provides 'capital distinguished by knowledge'. Therefore its services cover a wide spectrum: Structuring & Syndication Lease & Hire Purchase Money Markets Structuring of Short Term Finance Solutions Placement of Preference Shares/ Non-Convertible Debentures Securitisation of Debt PROJECT FINANCE GROUP (PFG) HIGHLIGHTS Volume in excess of Rs.3500 crores successfully syndicated in the current period from July 2003 to June 2004. Chunk of proposals are in the Power sector where we have syndicated loans for thermal as well as hydel projects. Apart from this, Centrum has also done work in Irrigation, Urban Development, Roadways, Hospitality, Entertainment, Pharmaceuticals, Logistics, Processed Foods, Specialty Chemicals, Renewable Energy, FMCG, Mining Successfully syndicated deals across a variety of banking products like Working Capital, FCNR Loans, Project Loans, Debt Swaps, Short Term and Medium Term Corporate Loans, Unsecured Loans, and Securitised Debt. Established excellent relationships across a wide spectrum of Private and Public Sector Banks and FIs like Bank of India, Dena Bank, Union Bank of India, Central Bank of India, UTI Bank, PNB, OBC, UCO Bank, Canara Bank, Indian Overseas Bank, Dhanalaxmi Bank, LIC, State Bank of Indore etc.

From a humble beginning, have emerged as one of the largest big ticket loan syndicators in the private sector.

Overview: Mutual Funds Serviced by CENTRUM BirIa Sunlife Mutual Fund GIC Mutual Fund JM Mutual Fund Morgan Stanley Kotak Mutual Fund Principal Mutual Fund SBI Mutual Fund FranklinTempleton Mutual Fund Tata Mutual Fund Standard Charterd Mutual Fund

CHAPTER IV
MUTUAL FUND AN OVER-VIEW

4.1:-MUTUAL FUND

A mutual fund is a common pool of money in to which investors with common investment objective place their contributions that are to be invested in accordance with the stated investment objective of the scheme. The investment manager would invest the money collected from the investor in to assets that are defined/ permitted by the stated objective of the scheme. For example, an equity fund would invest equity and equity related instruments and a debt fund would invest in bonds, debentures, gilts etc. Benefits of Mutual Funds When an investor invest his funds in any Mutual Fund it is smart decision but it is also necessary that he must be aware of the benefits he will get out of it.

FIG: Shows the benefits that an investor gets by investing in Mutual Fund.

There are numerous benefits of investing in mutual funds and one of the key reasons for its phenomenal success in the developed markets like US and UK is the range of benefits they offer, which are unmatched by most other investment avenues. We have explained the key benefits in this section. The benefits have been broadly split into universal benefits, applicable to all schemes and benefits applicable specifically to open-ended schemes. Universal Benefits Affordability A mutual fund invests in a portfolio of assets, i.e. bonds, shares, etc. depending upon the investment objective of the scheme. An investor can buy in to a portfolio of equities, which would otherwise be extremely expensive. Each unit holder thus gets an exposure to such portfolios with an investment as modest as Rs.500/-. This amount today would get you less than quarter of an Infosys share! Thus it would be affordable for an investor to build a portfolio of investments through a mutual fund rather than investing directly in the stock market. Diversification It is said as the The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period of time equities might under perform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect your principal investment as well as help you meet your return objectives.

Variety Mutual funds offer a tremendous variety of schemes. This variety is beneficial in two ways: first, it offers different types of schemes to investors with different needs and risk appetites; secondly, it offers an opportunity to an investor to invest sums across a variety of schemes, both debt and equity. For example, an investor can invest his money in a Growth Fund (equity scheme) and Income Fund (debt scheme) depending on his risk appetite and thus create a balanced portfolio easily or simply just buy a Balanced Scheme. Professional Management Qualified investment professionals who seek to maximize returns and minimize risk monitor investor's money. When you buy in to a mutual fund, you are handing your money to an investment professional that has experience in making investment decisions. It is the Fund Manager's job to Find the best securities for the fund, given the fund's stated investment objectives; Keep track of investments and changes in market conditions and adjust the mix of the portfolio, as and when required. Tax Benefits What tax benefits are available to those who invest in mutual funds?

Dividends declared by debt-oriented mutual funds (i.e. mutual funds with less than 65% of assets in equities), are tax-free in the hands of the investor. However, a dividend distribution tax (which varies for individual and corporate investors) is to be paid by the mutual fund on the dividends declared. Dividends declared by equity-oriented funds (i.e. mutual funds with more than 65% of assets in equities) are tax-free in the hands of investor. There is also no dividend distribution tax applicable on these funds. Diversified equity funds, sector funds, balanced funds (with more than 65% of net assets in equities) are examples of equity-oriented funds.

Regulations Securities Exchange Board of India (SEBI), the mutual funds regulator has clearly defined rules, which govern mutual funds. These rules relate to the formation, administration and management of mutual funds and also prescribe disclosure and accounting requirements. Such a high level of regulation seeks to protect the interest of investors. Mutual Fund Structure There is a general structure for Mutual Fund, which each organization should possess according to Securities and Exchange Board of India.

FIG: Shows the structure of Mutual Fund.

The structure consists of: Sponsor Sponsor is the person who is acting alone or in combination 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 Mutual Fund. Trust The Mutual Fund is constituted as a trust in accordance with the provisions of the Indian Trusts Act, 1882 by the Sponsor. The trust deed is registered under the Indian Registration Act, 1908. Trustee Trustee is usually a company (corporate body) or a Board 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 AMC functions in the interest of investors and in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996, the provisions of the Trust Deed and the Offer Documents of the respective Schemes. At least 2/3rd directors of the Trustee are independent directors who are not associated with the Sponsor in any manner.

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 times. Registrar and Transfer Agent The AMC if so authorized by the Trust Deed appoints the Registrar and Transfer Agent to the Mutual Fund. The Registrar processes the application form; redemption requests and dispatches account statements to the unit holders. The Registrar and Transfer agent also handles communications with investors and updates investor records. Types of Schemes There are different types of schemes regarding Mutual Fund. They are as follows:

FIG: Shows the different types of schemes regarding Mutual Fund.

Schemes can be classified by way of their stated investment objective such as Growth Fund, Balanced Fund, and Income Fund etc. Equity Oriented 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 social, political as well as economic.

FIG: Shows the Potential Returns and Risk involved in Equity oriented schemes.

FIG: Shows graph between potential returns and risk involved in Equity oriented schemes.

General Purpose Schemes 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. HDFC Growth Fund is a generalpurpose equity scheme.

Sector Specific Schemes These schemes restrict their investing to one or more pre-defined sectors, e.g. technology sector. Since they depend upon the performance of select sectors only, these schemes are inherently more risky than general-purpose schemes. They are suited for informed investors who wish to take a view and risk on the concerned sector. Special Schemes Index schemes The primary purpose of an Index is to serve as a measure of the performance of the market as a whole, or a specific sector of the market. An Index 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. An example to such a fund is the HDFC Index Fund.

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 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, as prescribed under Section 88 of the Income-tax Act, 1961, 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. HDFC Tax Plan 2000 is such a fund. Real Estate Funds Specialized real estate funds would invest in real estates directly, or may fund real estate developers or lend to them directly or buy shares of housing finance companies or may even buy their securities assets. Debt Based Schemes

FIG: Shows the potential returns and risk of Debt based schemes.

FIG: Shows graph between the potential returns and risk of Debt based schemes.

These schemes, also commonly called 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 not in a position to take higher equity risks, such as retired individuals. 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 These schemes invest in money markets, bonds and debentures of corporate with medium and long-term maturities. These schemes primarily target current income instead of capital appreciation. They therefore distribute a substantial part of their distributable surplus to the investor by way of dividend distribution. Such 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. HDFC Income Fund, HDFC Short Term Plan and HDFC Fixed Investment Plans are examples of bond schemes. Liquid Income Schemes It is similar to the Income scheme but with a shorter maturity than Income schemes. An example of this scheme is the HDFC Liquid Fund. 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 This scheme primarily invests in Government Debt. Hence, the investor usually does not have to worry about credit risk since Government Debt is generally credit risk free. HDFC Gilt Fund is an example of such a scheme. Hybrid Schemes These schemes are commonly known as balanced schemes. These schemes 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 and are ideal for investors with a conservative, longterm orientation. HDFC Balanced Fund and HDFC Childrens Gift Fund are examples of hybrid schemes. Schemes can be classified as Closed-ended or Open-ended depending upon whether they give the investor the option to redeem at any time (openended) 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.

Benefits of Open-ended Schemes Liquidity In open-ended mutual funds, you can redeem all or part of your units any time you wish. Some schemes do have a lock-in period where an investor cannot return the units until the completion of such a lock-in period. Convenience An investor can purchase or sell fund units directly from a fund, through a broker or a financial planner. The investor may opt for a Systematic Investment Plan (SIP) or a Systematic Withdrawal Advantage Plan (SWAP). In addition to this an investor receives account statements and portfolios of the schemes. Flexibility Mutual Funds offering multiple schemes allow investors to switch easily between various schemes. This flexibility gives the investor a convenient way to change the mix of his portfolio over time. Transparency Open-ended mutual funds disclose their Net Asset Value (NAV) daily and the entire portfolio monthly. This level of transparency, where the investor himself sees the underlying assets bought with his money, is unmatched by any other financial instrument. Thus the investor is in the know of the quality of the portfolio and can invest further or redeem depending on the kind of the portfolio that has been constructed by the investment manager. Closed 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 listed. Unlike open-ended schemes, the unit capital in closed-ended schemes usually remains unchanged. After an initial closed period, the scheme may offer direct repurchase facility to the investors. Closed-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 closed-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. Risk involved in Investment Though it is considered that we get maximum benefits and maximum returns out of the investment but there is some risk involved in investing our valuable funds. Thus, it is justified to take correct decisions before investing. We must be aware of the various risk involved in our investments.

FIG: Shows the risks involved in investment.

The Risk-Return Trade-off The most important relationship to understand is the risk-return trade-off. Higher the risk greater the returns/loss and lower the risk lesser the returns/loss. Hence, it is up to you, the investor to decide how much risk you are willing to take. In order to do this you must first be aware of the different types of risks involved with your investment decision. Market Risk Sometimes prices and yields of all securities rise and fall. Broad outside influences affecting the market in general that led to this kind of situation. This is true, may it be big corporations or smaller mid-sized companies. This is known as Market Risk. A Systematic Investment Plan (SIP) that works on the concept of Rupee Cost Averaging (RCA) might help mitigate this risk. Credit Risk The debt servicing ability (may it be interest payments or repayment of principal) of a company through its cash flows determines the Credit Risk faced by you. This credit risk is measured by independent rating agencies like CRISIL who rate companies and their paper. A AAA rating is considered the safest whereas a D rating is considered poor credit quality. A well-diversified portfolio might help mitigate this risk. Inflation Risk

Things you hear people talk about: Rs. 100 today is worth more than Rs. 100 tomorrow. Remember the time when a bus ride costed 50 paise? Mehangai Ka Jamana Hai. The root cause, Inflation. Inflation is the loss of purchasing power over time. A lot of times people make conservative investment decisions to protect their capital but end up with a sum of money that can buy less than what the principal could at the time of the investment. This happens when inflation grows faster than the return on your investment. A welldiversified portfolio with some investment in equities might help mitigate this risk. Interest Rate Risk In a free market economy interest rates are difficult if not impossible to predict. Changes in interest rates affect the prices of bonds as well as equities. If interest rates rise the prices of bonds fall and vice versa. Equity might be negatively affected as well in a rising interest rate environment. A welldiversified portfolio might help mitigate this risk. Political/Government Policy Risk Changes in government policy and political decision can change the investment environment. They can create a favorable environment for investment or vice versa. Liquidity Risk Liquidity risk arises when it becomes difficult to sell the securities that one has purchased. Liquidity Risk can be partly mitigated by diversification, staggering of maturities as well as internal risk controls that lean towards purchase of liquid securities. Various intelligent decisions can help us to lessen our risk factor while we are investing. It includes diversified decision of investment. Diversification

It is said as The nuclear weapon in your arsenal for your fight against Risk. It simply means that you must spread your investment across different securities (stocks, bonds, money market instruments, real estate, fixed deposits etc.) and different sectors (auto, textile, information technology etc.). This kind of a diversification may add to the stability of your returns, for example during one period, equities might under perform but bonds and money market instruments might do well enough to offset the effect of a slump in the equity markets. Similarly, the information technology sector might be faring poorly but the auto and textile sectors might do well and may protect you principal investment as well as help you meet your return objectives. Financial Planning Your Goals! The first and most important step in your life as an investor is to define your goals at the onset of your investing activity. This will map the road ahead for you in terms of time, amount, type of asset and risk. At this point of time you must also decide how much you are willing to save. When you look at defining your goals think carefully and try to include all your requirements, here are a few things that might help you: Retirement In how many years? How much money will you need? How long will you need it for? Daughters/Sons wedding When and how much? Daughters/Sons education When and how much? Purchase of big-ticket items e.g. House, Car etc. Again, when and how much?

A simple way to get an overall perspective is to draw a time line starting from today with the amount you have saved up till now labeled at time zero. Going forward you can label your major outflows as and when they occur till retirement and then the steady outflows for your retirement income. Please remember your worst enemy Inflation and factor this into your targets. Remember that in an inflationary environment an apple will cost more tomorrow than today. For example:

Let us say that you have Rs. 5,00,000 saved up today. In addition to this you figure that in year 10 you will need Rs. 5,00,000 for your daughters wedding. Also you decide with your wife that you will retire in thirty years time and will need Rs. 6,00,000 per year for 15 years after that. You also decide that you want to play it safe and want to invest only in debt products. Taking an annual rate of return of 7.00%you will have to save Rs. 38,042 per year for thirty year and you will be able to withdraw Rs. 4,61,958 (5,00,000 38,042) for your daughters wedding in year 10. Another scenario with 9.00% is available as well. Now let us assume that you and your wife require Rs. 20,00,000 per annum for 15 years after retirement and want to spend Rs. 15,00,000 on your daughters wedding. Knowing this you decide to take the additional risk of investing your money in equities that historically do tend to provide double-digit returns in the long run. Assuming an annual rate of return on 13.00% per annum you would have to save Rs. 36,328 per year for thirty years to achieve your goals. An example with a 15.00% return is provided as well. Investors usually diversify their investment between debt and equities and earn returns that are commensurate with their asset allocations. There are various leading companies popular in Mutual Fund. They are as follows Reliance Mutual Fund Prudential ICICI Mutual Fund Kotak Mutual Fund Sundaram Mutual Fund HDFC Mutual Fund Let us have a brief idea about all the institutions providing us different available schemes of mutual fund .Let us start with the very popular Reliance group.

Reliance Mutual Fund Reliance Mutual Fund is a Mutual Fund registered with the Securities and Exchange Board of India and hence the entire income of the Mutual Fund will be exempt from income tax in accordance with the provisions of Sections 10(23D) of the income tax Act, 1961. Reliance Mutual Fund (RMF) has been established as a trust under the Indian Trusts Act, 1882 with Reliance Capital Limited (RCL), as the Settlor/Sponsor and Reliance Capital Trustee Co. Limited (RCTCL), as the Trustee. RMF has been registered with the Securities & Exchange Board of India (SEBI) vide registration number MF/022/95/1 dated June 30, 1995. The name of Reliance Capital Mutual Fund has been changed to Reliance Mutual Fund effective 11th. March 2004 vide SEBI's letter no. IMD/PSP/4958/2004 date 11th. March 2004. Reliance Mutual Fund was formed to launch various schemes under which units are issued to the Public with a view to contribute to the capital market and to provide investors the opportunities to make investments in diversified securities. The main objectives of the Trust are To carry on the activity of a Mutual Fund as may be permitted at law and formulate and devise various collective Schemes of savings and investments for people in India and abroad and also ensure liquidity of investments for the Unit holders; To deploy Funds thus raised so as to help the Unit holders earn reasonable returns on their savings and To take such steps as may be necessary from time to time to realise the effects without any limitation. According to the Mutual Fund structure

The Sponsor is : the Corporate Office, Reliance capital limited; The investment manager is: corporate office, Reliance Capital Asset Management Limited; The Trustee is: Corporate office, Reliance Capital Trustee Co. Limited. The various continuous offers of open-ended schemes at NAV based prices of Reliance are as follows: Reliance Growth Fund- An open-ended Equity Growth scheme. Reliance Vision Fund- An open-ended Equity Growth scheme. Reliance Banking Fund- An open-ended Banking Sector scheme. Reliance Diversified Power Sector Fund- An open-ended Power Sector Scheme. Reliance Pharma Fund- An open-ended Pharma Sector Scheme. Reliance Media and Entertainment Fund- An open-ended Media and Entertainment sector scheme. Reliance NRI Equity Fund- An open-ended Diversified Equity Scheme. Reliance Equity Opportunities Fund- An-open ended Diversified Equity Scheme. Reliance Index Fund- An open-ended Index Linked Scheme. Thus, these are some of the schemes provided by the reliance Mutual Fund that an investor can judge and select one out of many and can invest in order to get some profit out of the investment. Prudential ICICI Mutual Fund: Prudential ICICI Mutual Fund is the Mutual Fund registered under the Securities and Exchange Board of India Act, 1992.

Prudential ICICI Asset Management Company enjoys the strong parentage of prudential plc, one of UK's largest players in the insurance & fund management sectors and ICICI Bank, a well-known and trusted name in financial services in India. Prudential ICICI Asset Management Company, in a span of just over six years, has forged a position of pre-eminence in the Indian Mutual Fund industry as one of the largest asset management companies in the country with assets under management of Rs. 23559.60 crores (as of March 31, 2006). The Company manages a comprehensive range of schemes to meet the varying investment needs of its investors spread across 68 cities in the country. According to the Mutual Fund structure: The Sponsors is: Prudential Corporation Holdings Limited. The Investment Manager is: Prudential ICICI Asset Management Company Limited. The Trustee is: Prudential ICICI Trust Limited. The various schemes provided by the Prudential ICICI Mutual Fund are: 1.Debt Funds: Liquid Plan Short Term Plan Income Plan Gilt Plan Flexible Income Plan Income Multiplier Fund Monthly Income Plan 2.Balanced Funds:

Balanced Fund 3.Equity Funds: Growth Plan Tax Plan FMCG Fund Technology Fund Dynamic Plan Power Discovery Fund Stocks Targeted At Returns Fund The particulars of Schemes of Prudential ICICI Mutual Fund have been prepared in accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996. Now it depends on the investor to choose one out the above schemes, which they think will be beneficiary to them. Kotak Mutual Fund: Kotak Mutual Fund is a Mutual Fund registered with Securities and Exchange Board of India and as such is eligible for benefits under Section 10(23D) of the Act. Accordingly; its entire income is exempt from tax. Kotak Mahindra Mutual Fund (KMMF) is managed by Kotak Mahindra Asset Management Company Ltd., a wholly owned subsidiary of Kotak Mahindra Bank Ltd. Kotak Mahindra Mutual Fund launched its Schemes in December 1998 and today manages over Rs.10, 837.54 cr. of assets for closed to 4,30,919 investors in various schemes The Sponsor is: Kotak Mahindra Bank Limited.

The Trustee is: Kotak Mahindra Trustee Corporation. Limited. The Asset Management Company is: Kotak Mahindra Asset Management Corporation Limited. The various Continuous offers provided by the Kotak Mutual Fund are as follows: Kotak Mahindra Global India Scheme- An open-ended Equity Growth Scheme. Kotak Mahindra Technology Scheme- An open ended Equity Growth Scheme. Kotak ELSS Scheme-An open ended Equity-Linked Savings Scheme. Kotak Equity FOF- An open ended Equity Fund of Funds Scheme. Kotak Mahindra Liquid Scheme- An open ended Debt Scheme. Kotak Cash Plus Fund- An open-ended Income Oriented Scheme. These are few among many such schemes. It is the duty of the investor to judge in which schemes they will invest so that they can get maximum amount of return from it.

HDFC Mutual Fund HDFC Mutual Fund is a Mutual Fund registered with the Securities and Exchange Board of India and hence the entire income of the Mutual Fund will be Exempt from income tax in accordance with the provisions of Section 10(23D) of the income tax Act, 1961. Vision To be a dominant player in the Indian mutual fund space, recognized for its high levels of ethical and professional conduct and a commitment towards enhancing investor interests. Sponsors

HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED (HDFC) HDFC was incorporated in 1977 as the first specialized housing finance institution in India. HDFC provides financial assistance to individuals, corporate and developers for the purchase or construction of residential housing. It also provides property related services (e.g. property identification, sales services and valuation), training and consultancy. Of these activities, housing finance remains the dominant activity. HDFC currently has a client base of over 8,00,000 borrowers, 12,00,000 depositors, 92,000 shareholders and 50,000 deposit agents. HDFC raises funds from international agencies such as the World Bank, IFC (Washington), USAID, CDC, ADB and KfW, domestic term loans from banks and insurance companies, bonds and deposits. HDFC has received the highest rating for its bonds and deposits program for the ninth year in succession. HDFC Standard Life Insurance Company Limited, promoted by HDFC was the first life insurance company in the private sector to be granted a Certificate of Registration (on October 23, 2000) by the Insurance Regulatory and Development Authority to transact life insurance business in India.

Standard Life Investments Limited

The Standard Life Assurance Company was established in 1825 and has considerable experience in global financial markets. In 1998, Standard Life Investments Limited became the dedicated investment management company of the Standard Life Group and is owned 100% by The Standard Life Assurance Company. With global assets under management of approximately US$186.45 billion as at March 31, 2005, Standard Life Investments Limited is one of the world's major investment companies and is responsible for investing money on behalf of five million retail and institutional clients worldwide. With its headquarters in Edinburgh, Standard Life Investments Limited has an extensive and developing global presence with operations in the United Kingdom, Ireland, Canada, USA, China, Korea and Hong Kong. In order to meet the different needs and risk profiles of its clients, Standard Life Investments Limited manages a diverse portfolio covering all of the major markets world-wide, which includes a range of private and public equities, government and company bonds, property investments and various derivative instruments. The company's current holdings in UK equities account for approximately 2% of the market capitalization of the London Stock Exchange. Management: HDFC Trustee Company Limited: A company incorporated under the Companies Act, 1956 is the Trustee to the Mutual Fund vides the Trust deed dated June 8, 2000, as amended from time to time. HDFC Trustee Company Limited is a wholly owned subsidiary of HDFC Limited. HDFC Asset Management Company Limited (AMC):

It was incorporated under the Companies Act, 1956, on December 10, 1999, and was approved to act as an Asset Management Company for the Mutual Fund by SEBI on July 3, 2000. The registered office of the AMC is situated at Ramon House, 3rd Floor, H.T. Parekh Marg, 169, Back bay Reclamation, Church gate, Mumbai - 400 020. In terms of the Investment Management Agreement, the Trustee has appointed HDFC Asset Management Company Limited to manage the Mutual Fund. The present share holding pattern of the AMC is as follows:

Particulars

HDFC Standard Life Investments 49.90 Limited

% OF THE PAID UP SHARE CAPITAL 50.10

HDFC Mutual Fund Products

Open ended Growth Schemes

HDFC Growth Fund HDFC Equity Fund HDFC Top 200 Fund HDFC Capital Builder Fund HDFC Core & Satellite Fund HDFC Premier Multi-Cap Fund Open-ended Balanced Schemes HDFC Balanced Fund HDFC Prudence Fund Open-ended Equity Linked Savings Schemes HDFC Long Term Advantage Fund HDFC Tax Saver Open ended Index Linked Scheme HDFC Index Fund Open-ended Monthly Income Scheme HDFC Monthly Income Plan Thus, these are the schemes offered by HDFC Mutual Fund

CHAPTER V DATA ANALYSIS &

INTERPRETATION

DATA ANALYSIS AND INTERPRETATION After the data was collected these were quantified and entered into the computer to make the graphs. This study was mainly a qualitative study about mutual fund and an effort has been make to quantify the findings of the data gathered from the respondents. Based on the finding the analysis was done keeping in mind the objective of the study special effort was made to find out major gaps and suggest way and mean how to increase the market share of overall mutual funds. Table No 1 Awareness of Mutual Funds among Investors Option Aware Unaware Percentage 65% 35%

AWARENESS OF MUTUAL FUNDS AMONG INVESTORS

Aware Unaware

From the study conducted about mutual find it is clear that 65% of the respondents are aware and on the other hand 35% are unaware of other investment opportunities.

Table No 2 Source of Information Source of Information Print Media Electronic Media Consultants Agents Others Percentage of Respondents 26.7 13.3 21.7 33.3 5

SOURCE OF INFORMATION
35 30 25 20 15 10 5 0
Print Media Electronic Media Consultants Agents Others

33.3 26.7 21.7 13.3 5 Series1

In pursuit of knowing the source of information which have influenced the respondents about different scheme, it was found that majority of the respondents have giving their opinion that Agents has influenced them most with (33.3%), followed by Print Media (26.7%), consultants (21.7%), Electronic Media (13.3%) etc.

Table No. 3 Unaware Investors as per Occupation

Occupation Student Professional Govt. Servants Business Others

Percentage of Unawareness 28.5 14.3 14.2 21.5 21.5

OCCUPATION WISE UNAWARENESS OF INVESTORS ABOUT MUTUAL FUNDS

30 25 20 15 10 5 0
e d S tu

28.5 21.5 14.3 14.2 21.5

al

ts

ss

nt

io n

er v

in e

ss

B us

P ro

fe

ov

t.

th

er s

an

As per the study Mutual Funds should give some special attention for creating unawareness among study, business and others.

Table No. 4 Aware Investors as per Occupation

Occupation Student Professional Govt. Servants Business Others

Percentage of Awareness 7.7 26.9 30.8 23.1 11.5

OCCUPATIONS WISE AWARENESS OF INVESTORS ABOUT MUTUAL FUNDS

35 30 25 20 15 10 5 0 Percentage 26.9 7.7 30.8 23.1 11.5

P ro fe ss io na l G ov t. S er va nt s

S tu de nt

B us in es s

Occupation

As per the study Govt. Servants and professionals have a good awareness about Mutual Funds. As regards the question whether the respondent has

th er s

invested in any Mutual Fund or not 95% respondent has given their opinion of having investment in Mutual Funds.

Table No. 5 Aware about different Mutual Fund Schemes

Occupation UTI Scheme Kothari Pioneer Scheme Birla Sunlife scheme SBI Mutual Fund Scheme LIC Mutual Fund Scheme Others

Percentage of Awareness 95 25 32 58 60 62

AWARENESS ABOUT DIFFERENT MUTUAL FUND SCHEMES

100 Percentage 80 60 40 20 0 UTI Scheme Kothari Pioneer Scheme Birla Sunlife scheme SBI Mutual LIC Mutual Fund Fund Scheme Scheme Others 25 32 95 58 60 62

Scheme

In order to know as to which Mutual Fund scheme the respondents is aware of, it was found that they were quite familiar with a number of Mutual Fund Scheme like UTI Scheme, Kothari Pioneer, Birla Sunlife, SBI Mutual Fund, LIC Mutual Fund etc. The table and figure given above it is clear that UTI scheme has the largest awareness level (95%) followed by other funds (62%).

Table No. 6 Different Mutual Fund Schemes adopted by Investors

Scheme UTI Scheme

Percentage of Respondent 70

Kothari Pioneer Scheme Birla Sunlife scheme SBI Mutual Fund Scheme LIC Mutual Fund Scheme Others

20 25 52 65 61

DIFFERENT MUTUAL FUND SCHEMES ADOPTED BY INVESTORS

80 70 60 50 40 30 20 10 0 Percentage 70 52 20 25 65 61

UTI Kothari Birla Scheme Pioneer Sunlife Scheme scheme

SBI LIC Mutual Mutual Fund Fund Scheme Scheme

Others

Scheme

As regards the question weather the respondents have invested in any of the above Mutual Fund Scheme. It was found that most of the respondents have invested in UTI Scheme (70%), followed by LIC Mutual Fund Scheme (65%), and others (61%).

Table No. 7 Awareness about different type of Mutual Fund

Type of Fund Income Growth Balance Others

Percentage of Awareness 60% 80% 40% 58%

AWARENESS ABOUT DIFFERENT TYPES OF MUTUAL FUND

58%

60% Income Growth Balance

40% 80%

Others

In order to know awareness about different type of Mutual Fund. It was found that respondents ware aware of Growth Fund (80%), followed by Income Fund (60%), Others (58%) and Balance Fund (40%).

Table No. 8 Investors Preference in different type of Mutual Fund

Scheme Income Growth Balance Others

Percentage of Respondent 45 75 32 48

INVESTORS PREFERENCE IN DIFFERENT TYPES OF MUTUAL FUND

48

45 Income Growth Balance

32 75

Others

In order to know preference about different type of Mutual Fund. It was found that most of respondents have invested in Growth Fund (75%), followed by Income Fund (45%), Others (48%) and Balance Fund (32%).

CHAPTER

VI SUMMERY
6.1:-SUMMRY OF FINDINGS

Based upon the survey undertaken, it has been found that awareness relating to Mutual Fund is good. Out of 100 samples it was found that 65 respondents have aware off. As regards the question whether the

respondent has invested in any Mutual Fund or not. 95% respondent has given their opinion of having investment in mutual fund. As per the occupation it was found that Govt. Servant are well aware of Mutual Funds and they have invested in different schemes. Most of them have investment in UTI Schemes. The main source of information is Agents (33.3%). Followed by Print Media (26.7%). Perception about growth fund is good and most of them have invested in growth fund followed by income fund and other funds. Most of the respondents have invested in Mutual Fund for over five years and want to keep for three year and above and like their investment to grow steadily and at the time of reinvestment most want to invest in growth fund.

CHAPTER

VII SUGGESTIO NS
7.1:-SUGGESTIONS

 From the finding I come to the conclusion that Mutual fund industry should follow the following strategy to maintain and increase market share. Through 65% of investor are aware about the mutual fund. The industry (Mutual Fund) should promote more innovative schemes through different media to increase the market share in financial market. Especially balanced and income scheme should come out with more effective promotional strategy through agents and consultants. All the private sector mutual fund gives a steady return to compete with the government undertaking funds. Promotion is looking at the sale point level. The company should take effective measures in this field. The company needs to create the awareness in the rural consumers by putting hoardings, banners, glow sign boards and leaflets at different rural outlets. It will be better if the company promote its advertisement with the local (Oriya) celebrities, Super Stars, Album Stars to promote sales in this region. And also the company give more effort on the advertisement of mother brands. So special steps need to taken for other brands to make the company as the market leader. With the above view, I feel advertisement plays a key role for sustaining the product and the company at large. In short, it can be said that, no

advertisement No sales, No sales, No turnover No profit. So the advertisement should be more attractive in all forms.

CHAPTER VIII CONCLUSIO N

8.1:-CONCLUSION
Mutual funds play a very significant role in mobilizing the savings of those investors who have surplus income and canalization of these savings in those avenues where there is a demand of funds. These institutions employ their resources in such a manner as to offer for their investors the combined benefit of low risk, steady return, high liquidity and capital appreciation through diversification and expert management. Due to lack of adequate information about the corporate securities, the common investor finds it difficult to participate and even if he does so his resources being small, he can at best hold one or two companies securities. But mutual funds take care of both these difficulties. The institutions issuing mutual funds employ expert management investment analysis to allocate the assets in such a way that the investors get maximum returns. Diversification and expert investment knowledge ensure steady and regular earnings to the funds and a share in general prosperity. Savings pooled by mutual funds are invested largely in industrial securities. Mutual funds raise resources from a large number of small savers and make funds available to industrial concerns who may find it burden to raise finance directly from individual savers.

Thus by playing the role of financial intermediation mutual funds provides a convenient and effective link between savings and investment. To increase the performance of funds, the funds must declare bonuses in favorable times to help book profits in a tax friendly manner. It should also pay dividends during the rising NAVS (net asset values). Therefore, to conclude, each scheme has its own importance. The choice of the scheme depends upon the type of investor i.e. their risk taking capability, age, return requirements etc. Some investors are conservative in nature, some are moderate and some are aggressive in nature. The performance of funds depends upon the rate of interest flows, inflation rate; net inflows, percentage growth in GDP, the investment pattern of the funds, govt. policies etc.

ANNEXURE

QUESTIONNAIRE
Dear Investor, I Mr. Ashok Kumar Moharana an interviewer conducting survey in the Bhubaneswar Temple City to write a project report for partial fulfillment of M.B.A. Degree on the topic Market Potential of Mutual Funds in the State of Orissa. Would you please spend a few minutes to answer the same, I assure you that your answer will be kept completely confidential and will be used only for academic purpose.

1.

Are you aware of mutual funds ? (a) (b) Yes No

If yes proceed with question-2, (Other wise tick A.B,C) A) What other investment opportunities are you aware off. 1) 2) 3) 4) 5) Saving Bank Postal Deposits Government Bonds LIC Share Market

Others (If any please specify)____________________________ B) Where you have invested ? 1) 2) Saving Bank Postal Deposits

3) 4) 5)

Government Bonds LIC Share Market

Others (If any please specify)____________________________

C)

After a valuable awareness will you be interested for investing in mutual fund? 1) 2) Yes No

2.

From where you got the information about different schemes. a) b) c) d) e) Print Media Electronic Media Consultant Agent Others (If any please specify)

3.

Are you aware of the following schemes (a) (b) (c) (d) (e) (f) UTI Schemes Kothari Pioneer Schemes Birla Sunlife schemes SBI Mutual Funds Schemes LIC Mutual Funds Others (If any please specify)

A)

In which scheme. You have invested ? (a) (b) (c) (d) (e) (f) UTI Schemes Kothari Pioneer Schemes Birla Sunlife schemes SBI Mutual Funds Schemes LIC Mutual Funds Others (If any please specify)

4)

What factors motivated you to invest in the above ? Rank them as 1st, 2nd, 3rd and 4th RANK 1st 2nd 3rd 4th

REASONS (a) High return but risk (b) Low but constant rate of return (c) Liquidity (d) Tax purpose Others (if any please specify)________________________________________ 5) Are you aware of the following types of funds ? (i) (ii) Income fund Growth fund

(iii) Balanced fund

(iv) Others (if any please specify) (A) In which scheme you have invested ? (i) (ii) Income fund Growth fund

(iii) Balanced fund (iv) Others (if any please specify) (B) Express you satisfaction from the following funds. By marking (A, B, C,D & E) A= Highly satisfied, B = Satisfied. C = Cant Say, D = Dissatisfied & E = Highly Dissatisfied. (i) (ii) Income fund Growth fund

(iii) Balanced fund (iv) Others (if any please specify)_____________________________ 5. How long have you been investing in the above schemes ? (a) (b) (c) 6. (a) (b) (c) For the last 0-2 years. For the last 2-5 years For over 5 years and above Upto 1 year 1-2 year 2-3 year

What is your time horizon ?

(d) 7. (a) (b) (c) 8. (a) (b) (c) (d)

3 year and above At an avg. rate @ 10% Steadily (@12%) Fast (@ above 12%) Income fund Growth fund Balanced fund Others (If any please specify)

You would like your investment to grow ?

At the time of reinvestment which fund will you prefer.

Personal Details : Name :_________________________________________________________ Age : (a) (b) (c) (d) (e) Below 30 31-40 41-50 51-60 61 & above

BIBILIOGRAPHY
BOOKS REFERRED: Financial Markets and Services - Gordon and Natarajan Financial Markets and Institutions - Mohan and Khan Mutual Fund Hand Book Invest India Mutual Funds in India H. Sadak BUSINESS MAGAZINES Mutual Fund Insight Business Today Business World WEB SITES www.centrum.co.in www.valueresearchonline.com www.mutualfundsindia.com www.amfiindia.com www.reliancemutual.com