PREFACE

As we know that B.B.A program is more concern with the practical aspect of the business world. The B.B.A students need to gain more and more practical experience. It is not possible for them to have this from classroom lectures only. So in the sixth Semester the students have to undergo with the Project Report. As MUTUAL FUND is one of the booming sector in current market and in this sector the name LIC NOMURA MUTUAL FUND its own space and doing project with this would provide us with knowing of the MUTUAL FUND as a whole and in this we shall know about the what is mutual fund,its way of working,its advantages & market schemes,and how can we describe our knowledge either that we achieved after doing the study of this sector. Thus as per syllabus we have to take project. This project has helped us a lot to gather much practical knowledge about mutual fund and other functional areas. In our curriculum we have to cover four area of the company and to gather the information related to those areas like general information, personnel department, marketing department and finance department. Being a mutual fund firm has somewhat different working. And so as per the working areas of company we have covered this information. So whatever information we have covered is as per our knowledge and experience with the mutual fund. It had given added

advantage to us by making us aware this new immerging concept of the investment. During project we have gone through this concept in glance.

DECLARATION
I hereby declare that the project entitled LIC NOMURA MUTUAL FUND is an independent analysis work carried out by me as a part of BBA curriculum, University of barkatullah under the guidance of prof. AJAY MISHRA & prof. DEVKANAYA. This report has not been submitted for any award of any degree of this or any other University.

Date:30-06-11

SHIKHA PRADHAN ( SHGC BHOPAL )

ACKNOWLEDGEMENT
With regard to my Project with Mutual Fund I would like to thank each and every one who offered help, guideline and support whenever required. First and foremost I would like to express gratitude to Manager LIC MUTUAL FUND and other staffs for their support and guidance in the Project work.. I am extremely grateful to my guides, for their valuable guidance and timely suggestions. I would like to thank all faculty members of SANT HIRDARAM GIRLS COLLEGE for the valuable guidance & support. I would also like to extend my thanks to my members and friends for their support specially and lastly, I would like to express my gratefulness to the parents for seeing me through it all.

SHIKHA PRADHAN

CONTENTS
CHAPTER NO. PARTICULARS PAGE NO. REMARKS

PROJECT REPORT

PREFACE DECLARATION CERTIFICATE ACKNOWLEDGEMENT CONTENTS SUMMARY OF THE PROJECT

RESEARCH DESIGN

RATIONAL OF PROJECT OBJECT OF STUDY RESEACRH METHODOLOGY SAMPLING METHOD

 SAMPLING AREA TOOLS USED LIMITATIONS

II

INTRODUCTION TO THE TOPIC PROFILE OF THE ORGANISATION

DATA REPRESENTATION

III

ANALYSIS & INTERPRETATION

IV

MAJOR FINDINGS

SUGGESTIONS

CONCLUSION BIBLIOGRAPHY

ANNEXURE

SUMMARY OF THE PROJECT

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

This Project gave me a great learning experience and at the same time it gave me enough scope to implement my analytical ability. The analysis and advice presented in this Project Report is based on market research on the saving and investment practices of the investors and preferences of the investors for investment in Mutual Funds. This Report will help to know about the investors Preferences in Mutual Fund means Are they prefer any particular Asset Management Company (AMC), Which type of Product they prefer, Which Option (Growth or Dividend) they prefer or Which Investment Strategy they follow (Systematic Investment Plan or One time Plan). This Project as a whole can be divided into two parts. The first part gives an insight about Mutual Fund and its various aspects, the Company Profile, Objectives of the study, Research Methodology. One can have a brief knowledge about Mutual Fund and its basics through the Project. The second part of the Project consists of data and its analysis collected through survey done on 200 people. For the collection of Primary data I made a questionnaire and surveyed of 200 people. I also taken interview of many People those who were coming at the LIC Branch where I done my Project. I visited other AMCs in BHOPAL to get some knowledge related to my topic. I studied about the products and strategies of other AMCs in BHOPAL to know why people prefer to invest in those AMCs. This Project covers the topic THE MUTUAL

FUND IS BETTER INVESTMENT PLAN. The data collected has been well organized and presented. I hope the research findings and conclusion will be of use.

RATIONAL OF PROJECT
This study is analysis of THE MUTUAL FUND IS BETTER INVESTMENT PLAN . It is helpful to know about the mutual funds. This study was conducted by the researcher in bhopal because of constraints of time and money study could not be extended to other cities. As Bhopal being a popular and among the good cities of India is a good market of financial products & also here customers of different classes like business segment, service segment, and professional segment are in excess. Since there port aims at finding the potential for financial products at bhopal itself taking into consideration certain limits and problems, the area was chosen on the basis of coverage of product no. of respondents.

OBJECT OF STUDY
Decision-Making requires relevant and correct information for collecting the data which can be used for decisionmaking. Objective of data collection should be very clear, objective guide us to collect the right data from right source. The main objective of the study listed as follow: To study the concept of Mutual Fund, Various type of Mutual Fund schemes and when a particular scheme is ideal for investors. To study of various open-ended schemes of LICMF with primary objective of those scheme and prepare summary of those schemes. To study of the fundamental concepts of performance measures to understand the concept of risk adjusted rate of return for investment decision. To find out the Preferences of the investors for Asset Management Company. To know the Preferences for the portfolios. To know why one has invested or not invested in LIC Mutual fund To find out the most preferred channel.

 To find out what should do to boost Mutual Fund Industry.

RESEARCH METHODOLOGY
This report is based on primary as well secondary data, however primary data collection was given more importance since it is overhearing factor in attitude studies. One of the most important users of research methodology is that it helps in identifying the problem, collecting, analyzing the required information data and providing an alternative solution to the problem .It also helps in collecting the vital information that is required by the top management to assist them for the better decision making both day to day decision and critical ones.

A.SAMPLING METHOD
Research is totally based on primary data. Secondary data can be used only for the reference. Research has been done by primary data collection, and primary data has been collected by interacting with various people. The secondary data has been collected through various journals and websites.

B.SAMPLING AREA
The sample was selected of them who are the

customers/visitors of LIC NOMURA mutual fund, Bairagarh Branch, irrespective of them being investors or not or availing the services or not. It was also collected through personal visits to persons, by formal and informal talks and through filling up the questionnaire prepared.

C.TOOLS USED

The data has been analyzed by using mathematical/Statistical tool.

Sample size: The sample size of my project is limited to 200 people only. Out of which only 120 people had invested in Mutual Fund. Other 80 people did not have invested in Mutual Fund. Sample design: Data has been presented with the help of bar graph, pie charts, line graphs etc.

D.AREA COVERED
THE AREA COVERED IN MY PROJECT IS BAIRAGARH & BHOPAL.

LIMITATIONS

The time constraint also put pressure for data collection and the analysis for data. The report includes Fundamental analysis but doesnt include deep technical analysis. Hence study is limited by considering only fundamental factors.

Some of the persons were not so responsive.

Possibility of error in data collection because many of investors may have not given actual answers of my questionnaire.

Sample size is limited to 200 visitors of LIC NOMURA MUTUAL FUND , Bairagarh Branch, out of these only 120 had invested in Mutual Fund.

The sample size may not adequately represent the whole market.

Some respondents were reluctant to divulge personal information which can affect the validity of all responses.

The research is confined to a certain part of bairagarh/Bhopal.

INTRODUCTION TO THE TOPIC

WHAT IS A MUTUAL FUND?
A mutual fund is a pool of money that is managed on behalf of investors by a Professional Money Manager. The manager uses the money to buy stocks, bonds or other securities according to specific investment objectives that have been established for the fund. In return for putting money into the fund, youll receive either units or shares that represent your proportionate share of the pool of fund assets. In return for administering the fund and managing its investment portfolio, the fund manager charges fees based on the value of the funds assets. Simply, A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. Anybody with an investible surplus of as little as a few thousand rupees can invest in Mutual Funds. These investors buy units of a particular Mutual Fund scheme that has a defined investment objective and strategy. The money thus collected is then invested by the fund manager in different types of securities. These could range from shares to debentures to money market instruments, depending upon the scheme's stated objectives. The income earned through these investments and the capital appreciation realised by the scheme are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost. Mutual funds are open-ended investment funds, meaning that new investors can contribute money to the fund at any time, and existing investors can return their units or shares to the fund for redemption at any time. When you redeem your units or shares of a mutual fund you will receive a cheque based on the current market value of the funds portfolio.

NAV (NET ASSET VALUE)

The value of each unit of the mutual fund, known as the net asset value (NAV), is mostly calculated daily based on the total value of the fund divided by the number of shares currently issued and outstanding. The value of all the securities in the portfolio in calculated daily. From this, all expenses are deducted and the resultant value divided by the number of units in the fund is the funds NAV.

NAV =

Total value of the fund. No. of shares currently issued and outstanding

INVESTORS TRACK CAN THE NAV

The NAV shall be calculated everyday including holidays and declared on each business day in accordance with the SEBI guidelines from time to time and will be displayed / available at the Corporate office, Registrars office and other Authorized Centers such as the Area Offices. The NAV along with the sale and repurchase prices will also be published in atleast 2 daily newspapers along with the sale and repurchase price on all business days accordance with SEBI guidelines, and made available on our website and AMFI website on a daily basis.

THE SALE/REPURCHASE PRICE CALCULATED

Sale /Repurchase prices will be Calculated as per the prevailing load structure as follows:

SALE PRICE =

NAV1 ENTRY LOAD

REPURCHASE PRICE = NAV1 ENTRY LOAD

ENTRY/EXIT LOAD
There are various administrative and other costs associated with the issue /redemption of units by an investor.These costs are charged to the scheme in the form of entry / exit load respectively. The funds collected as Load would be credited to a separate account in the Scheme accounts and would be utilised to meet such expenses as permitted under the SEBI regulations. The Trustees reserve the right to review the sale, repurchase / redemption load from time to time and fix it subject to condition that the repurchase price shall not be lower than 93 % of the NAV and the sale price shall not be higher than 107% of the NAV and the difference between the repurchase price and sale price shall not exceed 7% of the sale price as prescribed by SEBI.

Concept of Mutual Fund

The flow chart below describes broadly the working of a mutual fund:

A Mutual Fund is a trust that pools the savings of a number of investors who share common financial goal, investments may be in shares, debt securities, money market securities or a combination of these. Those securities are professionally managed on behalf of the unit-holders, and each investor holds a pro-rata share of the portfolio i.e. entitled to any profits when the securities are sold, but subject to any losses in value as well. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a Mutual Fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed basket of securities at a relatively low cost.

HOW DOES A MUTUAL FUND WORK?

MUTUAL FUND CONSTITUENTS

An understanding of a fund's constituents and their respective roles help you in developing realistic expectations from your fund, choosing between funds and evaluating options in case of problems with your investment. A mutual fund pools and invests the savings of a number of investors sharing a common financial goal in its schemes. These schemes invest in various debt and equity instruments, depending on their objectives and the prevailing regulatory environment. Indian mutual funds are governed by two different structures. The Unit Trust of India follows one defined by the UTI Act, 1963, and its subsequent amendments. All other mutual funds follow the Securities and Exchange Board of India's (Mutual Funds) Regulations, 1996, which are more rigorous from the viewpoint of disclosure and accountability. Despite the differences, all mutual funds comprise four constituents -sponsors, trustees, asset management companies (AMCs) and custodians.

A Mutual Fund comprises of the following entities: 1.Fund Sponsor: The sponsor initiates the idea to set up a mutual fund. It could be a registered company, scheduled bank or financial institution. For Birla Mutual Fund, the sponsor is Birla Growth Funds. In a joint venture like Sun F&C Mutual Fund, Foreign & Colonial Emerging Markets is the sponsor and SUN Securities (India) Ltd, the co-sponsor. A sponsor has to satisfy certain conditions, such as on capital, track record (at least five years' operation in financial services), defaultfree dealings and a general reputation of fairness.The sponsor appoints the trustees, AMC and custodian. Once the AMC is formed, the sponsor is just a stakeholder. However, sponsors do play a key role in bailing out an AMC during a crisis (Canara Bank's rescue of Canbank Mutual Fund).
2.

Trustees: Trustees hold a fiduciary responsibility towards

unitholders by protecting their interests. Sometimes, as with Canara Bank, the trustee and the sponsor are the same. For others, like SBI Funds Management, State Bank of India is the sponsor and SBI Capital Markets the trustee. Trustees float and market schemes, and secure necessary approvals. They check if the AMC's investments are within defined limits, whether the fund's assets are protected, and also ensure that unitholders get their due returns.

Trustees also review any due diligence done by the AMC. For major decisions concerning the fund, they have to take unitholders' consent. They submit reports every six months to Sebi; investors get an annual report. Trustees are paid annually out of the fund's assets -- 0.05 per cent of the weekly average net asset value.
3.

the ones who manage your money. An AMC takes investment decisions, compensates investors through dividends, maintains proper accounting and information for pricing of units, calculates the NAV, and provides information on listed schemes and secondary market unit transactions. It also exercises due diligence on investments, and submits quarterly reports to the trustees. A fund's AMC can neither act for any other fund nor undertake any business other than asset management. Its net worth should not fall below Rs 10 crore. And, its fee should not exceed 1.25 per cent if collections are below Rs 100 crore and 1 per cent if collections are above Rs 100 crore. Sebi can pull up an AMC if it deviates from its prescribed role.

Fund Managers/ Asset Management Company: They are

Custodian : Often an independent organisation, it takes custody of securities and other assets of a mutual fund. Among public sector mutual funds, the sponsor or trustee generally also acts as the custodian. A custodian's responsibilities include receipt and delivery of securities, collecting income, distributing dividends, safekeeping of units and segregating assets and settlements between schemes. Their charges range between 0.15-0.2 per cent of the net value of the holding. Custodians can service more than one fund. Sebi's regulations specify each constituent's role clearly. How well they act in concert determines the quality of the investor's experience with the mutual fund. 5. Registrar and Transfer Agent: They are responsible for
4.

investor servicing functions like maintaining the records of investors in mutual funds, processing applications, issuing and redeeming unitholders, etc. They are appointed by the Mutual Fund sponsor. Many Mutual Funds carry out this task themselves.

6.

Distributors: They look after the function of selling various

mutual funds and providing financial advisory services; for which they earn commission from the mutual fund. We at BSDL perform this function for all mutual funds and also have a further huge network of associates/sub-brokers.

Advantages of UTI
The Unit Trust of India claims a distinct legal identity, which places it at an advantage over other mutual funds. Amendments to the UTI Act allow UTI to undertake activities like lease finance, housing and construction finance, portfolio management services, and bill discounting. Other funds are restricted to capital and money market instruments. The role of trustees is different. UTIs executive trustee manages operations, business development, marketing and investments, along with top trust officials. UTI has no share capital and operates on a no profit, no loss principle. So it doesnt collect AMC fees like the others, but charges loads on some schemes. UTIs loads arent subject to the maximum spread of 7 per cent between unit repurchase and sale prices.

Earlier, it did not have to adhere to Sebi guidelines such as those on portfolio disclosure or frequent NAV declaration. It has since relented slightly; it now discloses portfolios in annual reports, though not all its investors get to see one.

Mutual Fund Industry in India (HISTORY)

The Evolution
The formation of Unit Trust of India marked the evolution of the Indian mutual fund industry in the year 1963. The primary objective at that time was to attract the small investors and it was made possible through the collective efforts of the Government of India and the Reserve Bank of India. The history of mutual fund industry in India can be better understood divided into following phases:

Phase 1. Establishment and Growth of Unit Trust of India 1964-87

Unit Trust of India enjoyed complete monopoly when it was established in the year 1963 by an act of Parliament. UTI was set up by the Reserve Bank of India and it continued to operate under the regulatory control of the RBI until the two were de-linked in 1978 and the entire control was tranferred in the hands of Industrial Development Bank of India (IDBI). UTI launched its first scheme in 1964, named as Unit Scheme 1964 (US64), which attracted the largest number of investors in any single investment scheme over the years. UTI launched more innovative schemes in 1970s and 80s to suit the needs of different investors. It launched ULIP in 1971, six more schemes between 1981-84, Children's Gift Growth Fund and India Fund (India's first offshore fund) in 1986, Mastershare (Inida's first equity diversified scheme) in 1987 and Monthly Income Schemes (offering assured returns) during 1990s. By the end of 1987, UTI's assets under management grew ten times to Rs 6700 crores.

Phase II. Entry of Public Sector Funds - 1987-1993

The Indian mutual fund industry witnessed a number of public sector players entering the market in the year 1987. In November 1987, SBI Mutual Fund from the State Bank of India became the first non-UTI mutual fund in India. SBI Mutual Fund was later followed by Canbank Mutual Fund, LIC Mutual Fund, Indian Bank Muatual Fund, Bank of India Mutual Fund, GIC Mutual Fund and PNB Mutual Fund. By 1993, the assets under management of the industry increased seven times to Rs. 47,004 crores. However, UTI remained to be the leader with about 80% market share.

1992-93 UTI Public Sector Total

Amount Mobilised 11,057 1,964 13,021

Assets Under Management 38,247 8,757 47,004

Mobilisation as % of gross Domestic Savings 5.2% 0.9% 6.1%

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

The permission given to private sector funds including foreign fund management companies (most of them entering through joint ventures with Indian promoters) to enter the mutal fund industry in 1993, provided a wide range of choice to investors and more competition in the industry. Private funds introduced innovative products, investment techniques and investor-servicing technology. By 1994-95, about 11 private sector funds had launched their schemes.

Phase IV. Growth and SEBI Regulation - 1996-2004

The mutual fund industry witnessed robust growth and stricter regulation from the SEBI after the year 1996. The mobilisation of funds and the number of players operating in the industry reached new heights as investors started showing more interest in mutual funds. Invetors' interests were safeguarded by SEBI and the Government offered tax benefits to the investors in order to encourage them. SEBI (Mutual Funds) Regulations, 1996 was introduced by SEBI that set uniform

standards for all mutual funds in India. The Union Budget in 1999 exempted all dividend incomes in the hands of investors from income tax. Various Investor Awareness Programmes were launched during this phase, both by SEBI and AMFI, with an objective to educate investors

and make them informed about the mutual fund industry. In February 2003, the UTI Act was repealed and UTI was stripped of its Special legal status as a trust formed by an Act of Parliament. The primary objective behind this was to bring all mutal fund players on the same level. UTI was re-organised into two parts: 1. The Specified Undertaking, 2. The UTI Mutual Fund Presently Unit Trust of India operates under the name of UTI Mutual Fund and its past schemes (like US-64, Assured Return Schemes) are being gradually wound up. However, UTI Mutual Fund is still the largest player in the industry. In 1999, there was a significant growth in mobilisation of funds from investors and assets under management which is supported by the following data:

FROM 01-April-98 01-April-99 01-April-00 01-April-01 01-April-02 01-Feb.-03 01-April-03 01-April-04 01-April-05

GROSS FUND MOBILISATION (RS. CRORES) PUBLIC PRIVATE TO UTI SECTOR SECTOR 31-March-99 11,679 1,732 7,966 31-March-00 13,536 4,039 42,173 31-March-01 12,413 6,192 74,352 31-March-02 4,643 13,613 1,46,267 31-Jan-03 5,505 22,923 2,20,551 31-March-03 * 7,259* 58,435 31-March-04 68,558 5,21,632 31-March-05 1,03,246 7,36,416 31-March-06 1,83,446 9,14,712

TOTAL 21,377 59,748 92,957 1,64,523 2,48,979 65,694 5,90,190 8,39,662 10,98,158

AS ON 31-March-99

ASSETS UNDER MANAGEMENT (RS. CRORES) UTI PUBLIC SECTOR PRIVATE SECTOR TOTAL 53,320 8,292 6,860 68,472

Phase V. Growth and Consolidation - 2004 Onwards

The industry has also witnessed several mergers and acquisitions recently, examples of which are acquisition of schemes of Alliance Mutual Fund by Birla Sun Life, Sun F&C Mutual Fund and PNB Mutual Fund by Principal Mutual Fund. Simultaneously, more international mutal fund players have entered India like Fidelity, Franklin Templeton Mutual Fund etc. There were 29 funds as at the end of March 2006. This is a continuing phase of growth of the industry through consolidation and entry of new international and private sector players.

Regulations
Mutual Funds in India are governed by the SEBI (Mutual Fund) Regulations 1996 as amended from time to time.

Securities and Exchange Board of India (Mutual Funds) Regulations 1996

Date 29-Jul2010 Details Securities and Exchange Board Of India (Mutual Funds) (Amendment) Regulations, 2010

Securities and Exchange Board of India (Mutual Funds) 05-Jun- (Second Amendment) Regulations, 2009 2009 Securities and Exchange Board of India (Mutual Funds) 08-Apr- (Amendment) Regulations, 2009 2009 Securities and Exchange Board of India (Mutual Funds) 29-Sep- (Third Amendment) Regulations, 2008 2008 Securities and Exchange Board of India (Mutual Funds) 22-May- (Second Amendment) Regulations, 2008 2008 Securities and Exchange Board of India (Mutual Funds) 16-Apr- (Amendment) Regulations, 2008 2008

Notification under sub-regulation (1) of regulation 2 of the Securities and Exchange Board of India (Mutual Funds) (Second Amendment) Regulations, 2007 and regulation 2 of 08-Apr- the Securities and Exchange Board of India (Foreign 2008 Institutional Investors) (Second Amendment) Regulations, 2007

31-MarSEBI (Payment of Fees) (Amendment) Regulations, 2008 2008 Securities And Exchange Board Of India (Mutual Funds) 31-Oct- (Second Amendment) Regulations, 2007 2007 Securities And Exchange Board Of India (Mutual Funds) 29-May- (Amendment) Regulations, 2007 2007 Securities And Exchange Board Of India (Mutual Funds) 03-Aug- (Third Amendment) Regulations, 2006 2006 Securities And Exchange Board Of India (Mutual Funds) 09-Dec- Regulations, 1996 -(as amended upto June 29, 2010") 1996
For further details please visit the SEBI website http://www.sebi.gov.in

TYPES OF MUTUAL FUNDS

General Classification of Mutual Funds
Open-end Funds | Closed-end Funds Open-end Funds
Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day.

Closed-end Funds
Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closed-end Funds. The corpus of a Closed-end Fund remains unchanged at all times. After the closure of the offer, buying and redemption of units by the investors directly from the Funds is not allowed. However, to protect the interests of the investors, SEBI provides investors with two avenues to liquidate their positions: 1. Closed-end Funds are listed on the stock exchanges where investors can buy/sell units from/to each other. The trading is generally done at a discount to the NAV of the scheme. The NAV of a closed-end fund is computed on a weekly basis (updated every Thursday).. 2. Closed-end Funds may also offer "buy-back of units" to the unit holders. In this case, the corpus of the Fund and its outstanding units do get changed.

Load Funds | No-load Funds Load Funds

Mutual Funds incur various expenses on marketing, distribution, advertising, portfolio churning, fund manager's salary etc. Many funds recover these expenses from the investors in the form of load. These funds are known as Load Funds. A load fund may impose following types of loads on the investors: 1. Entry Load - Also known as Front-end load, it refers to the load charged to an investor at the time of his entry into a scheme. Entry load is deducted from the investor's contribution amount to the fund. 2. Exit Load - Also known as Back-end load, these charges are imposed on an investor when he redeems his units (exits from the scheme). Exit load is deducted from the redemption proceeds to an outgoing investor. 3. Deferred Load - Deferred load is charged to the scheme over a period of time. 4. Contingent Deferred Sales Charge (CDSC) - In some schemes, the percentage of exit load reduces as the investor stays longer with the fund. This type of load is known as Contingent Deferred Sales Charge.

No-load Funds
All those funds that do not charge any of the above mentioned loads are known as No-load Funds.

Tax-exempt Funds | Non-Tax-exempt Funds Tax-exempt Funds

Tax (tax for distributing income to investors). Long term capital gains and dividend income in the hands Funds that invest in securities free from tax are known as Tax-exempt Funds. All open-end equity oriented funds are exempt from distribution of investors are tax-free.

Non-Tax-exempt Funds
Funds that invest in taxable securities are known as Non-Tax-exempt Funds. In India, all funds, except open-end equity oriented funds are liable to pay tax on distribution income. Profits arising out of sale of units by an investor within 12 months of purchase are categorized as short-term capital gains, which are taxable. Sale of units of an equity oriented fund is subject to Securities Transaction Tax (STT). STT is deducted from the redemption

proceeds to an investor.

BROAD MUTUAL FUND TYPES

1. Equity Funds
Equity funds are considered to be the more risky funds as compared to other fund types, but they also provide higher returns than other funds. It is advisable that an investor looking to invest in an equity fund should invest for long term i.e. for 3 years or more. There are different types of equity funds each falling into different risk bracket. In the order of decreasing risk level, there are following types of equity funds: Aggressive Growth Funds - In Aggressive Growth Funds, fund managers aspire for maximum capital appreciation and invest in less researched shares of speculative nature. Because of these speculative investments Aggressive Growth Funds become more volatile and thus, are prone to higher risk than other equity funds. Growth Funds - Growth Funds also invest for capital appreciation (with time horizon of 3 to 5 years) but they are different from Aggressive Growth Funds in the sense that they invest in companies that are expected to outperform the market in the future. Without entirely adopting speculative strategies, Growth Funds invest in those companies that are expected to post above average earnings in the future. Speciality Funds - Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds.. There are following types of speciality funds: i. Sector Funds: Speciality Funds have stated criteria for investments and their portfolio comprises of only those companies that meet their criteria. Criteria for some speciality funds could be to invest/not to invest in particular regions/companies. Speciality funds are concentrated and thus, are comparatively riskier than diversified funds.. There are following types of speciality funds: ii. Foreign Securities Funds: Foreign Securities Equity Funds have the option to invest in one or more foreign companies. Foreign securities funds achieve international diversification and hence they are less risky than sector funds. However,

a.

b.

c.

d.

e.

foreign securities funds are exposed to foreign exchange rate risk and country risk. iii. Mid-Cap or Small-Cap Funds: Funds that invest in companies having lower market capitalization than large capitalization companies are called Mid-Cap or Small-Cap Funds. Market capitalization of Mid-Cap companies is less than that of big, blue chip companies (less than Rs. 2500 crores but more than Rs. 500 crores) and Small-Cap companies have market capitalization of less than Rs. 500 crores. Market Capitalization of a company can be calculated by multiplying the market price of the company's share by the total number of its outstanding shares in the market. The shares of Mid-Cap or Small-Cap Companies are not as liquid as of Large-Cap Companies which gives rise to volatility in share prices of these companies and consequently, investment gets risky. iv. Option Income Funds*: While not yet available in India, Option Income Funds write options on a large fraction of their portfolio. Proper use of options can help to reduce volatility, which is otherwise considered as a risky instrument. These funds invest in big, high dividend yielding companies, and then sell options against their stock positions, which generate stable income for investors. Diversified Equity Funds - Except for a small portion of investment in liquid money market, diversified equity funds invest mainly in equities without any concentration on a particular sector(s). These funds are well diversified and reduce sectorspecific or company-specific risk. However, like all other funds diversified equity funds too are exposed to equity market risk. One prominent type of diversified equity fund in India is Equity Linked Savings Schemes (ELSS). As per the mandate, a minimum of 90% of investments by ELSS should be in equities at all times. ELSS investors are eligible to claim deduction from taxable income (up to Rs 1 lakh) at the time of filing the income tax return. ELSS usually has a lock-in period and in case of any redemption by the investor before the expiry of the lock-in period makes him liable to pay income tax on such income(s) for which he may have received any tax exemption(s) in the past. Equity Index Funds - Equity Index Funds have the objective to match the performance of a specific stock market index. The portfolio of these funds comprises of the same companies that form the index and is constituted in the same proportion as the index. Equity index funds that follow broad indices (like S&P CNX Nifty, Sensex) are less risky than equity index funds that follow narrow

f.

g.

sectoral indices (like BSEBANKEX or CNX Bank Index etc). Narrow indices are less diversified and therefore, are more risky. Value Funds - Value Funds invest in those companies that have sound fundamentals and whose share prices are currently undervalued. The portfolio of these funds comprises of shares that are trading at a low Price to Earning Ratio (Market Price per Share / Earning per Share) and a low Market to Book Value (Fundamental Value) Ratio. Value Funds may select companies from diversified sectors and are exposed to lower risk level as compared to growth funds or speciality funds. Value stocks are generally from cyclical industries (such as cement, steel, sugar etc.) which make them volatile in the short-term. Therefore, it is advisable to invest in Value funds with a long-term time horizon as risk in the long term, to a large extent, is reduced. Equity Income or Dividend Yield Funds - The objective of Equity Income or Dividend Yield Equity Funds is to generate high recurring income and steady capital appreciation for investors by investing in those companies which issue high dividends (such as Power or Utility companies whose share prices fluctuate comparatively lesser than other companies' share prices). Equity Income or Dividend Yield Equity Funds are generally exposed to the lowest risk level as compared to other equity funds.

Debt / Income Funds

Funds that invest in medium to long-term debt instruments issued by private companies, banks, financial institutions, governments and other entities belonging to various sectors (like infrastructure companies etc.) are known as Debt / Income Funds. Debt funds are low risk profile funds that seek to generate fixed current income (and not capital appreciation) to investors. In order to ensure regular income to investors, debt (or income) funds distribute large fraction of their surplus to investors. Although debt securities are generally less risky than equities, they are subject to credit risk (risk of default) by the issuer at the time of interest or principal payment. To minimize the risk of default, debt funds usually invest in securities from issuers who are rated by credit rating agencies and are considered to be of "Investment Grade". Debt funds that target high returns are more risky. Based on different investment objectives, there can be following types of debt funds: a. Diversified Debt Funds - Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor.

b.

c.

d.

e.

Focused Debt Funds* - Debt funds that invest in all securities issued by entities belonging to all sectors of the market are known as diversified debt funds. The best feature of diversified debt funds is that investments are properly diversified into all sectors which results in risk reduction. Any loss incurred, on account of default by a debt issuer, is shared by all investors which further reduces risk for an individual investor. High Yield Debt funds - As we now understand that risk of default is present in all debt funds, and therefore, debt funds generally try to minimize the risk of default by investing in securities issued by only those borrowers who are considered to be of "investment grade". But, High Yield Debt Funds adopt a different strategy and prefer securities issued by those issuers who are considered to be of "below investment grade". The motive behind adopting this sort of risky strategy is to earn higher interest returns from these issuers. These funds are more volatile and bear higher default risk, although they may earn at times higher returns for investors. Assured Return Funds - Although it is not necessary that a fund will meet its objectives or provide assured returns to investors, but there can be funds that come with a lock-in period and offer assurance of annual returns to investors during the lock-in period. Any shortfall in returns is suffered by the sponsors or the Asset Management Companies (AMCs). These funds are generally debt funds and provide investors with a low-risk investment opportunity. However, the security of investments depends upon the net worth of the guarantor (whose name is specified in advance on the offer document). To safeguard the interests of investors, SEBI permits only those funds to offer assured return schemes whose sponsors have adequate net-worth to guarantee returns in the future. In the past, UTI had offered assured return schemes (i.e. Monthly Income Plans of UTI) that assured specified returns to investors in the future. UTI was not able to fulfill its promises and faced large shortfalls in returns. Eventually, government had to intervene and took over UTI's payment obligations on itself. Currently, no AMC in India offers assured return schemes to investors, though possible. Fixed Term Plan Series - Fixed Term Plan Series usually are closed-end schemes having short term maturity period (of less than one year) that offer a series of plans and issue units to investors at regular intervals. Unlike closed-end funds, fixed term plans are not listed on the exchanges. Fixed term plan series usually invest in debt / income schemes and target short-term investors. The objective of fixed term plan schemes is to gratify investors by generating some expected returns in a short period.

Gilt Funds

Also known as Government Securities in India, Gilt Funds invest in government papers (named dated securities) having medium to long term maturity period. Issued by the Government of India, these investments have little credit risk (risk of default) and provide safety of principal to the investors. However, like all debt funds, gilt funds too are exposed to interest rate risk. Interest rates and prices of debt securities are inversely related and any change in the interest rates results in a change in the NAV of debt/gilt funds in an opposite direction.

4. Money Market / Liquid Funds

Money market / liquid funds invest in short-term (maturing within one year) interest bearing debt instruments. These securities are highly liquid and provide safety of investment, thus making money market / liquid funds the safest investment option when compared with other mutual fund types. However, even money market / liquid funds are exposed to the interest rate risk. The typical investment options for liquid funds include Treasury Bills (issued by governments), Commercial papers (issued by companies) and Certificates of Deposit (issued by banks). 5. Hybrid Funds As the name suggests, hybrid funds are those funds whose portfolio includes a blend of equities, debts and money market securities. Hybrid funds have an equal proportion of debt and equity in their portfolio. There are following types of hybrid funds in India: a. Balanced Funds - The portfolio of balanced funds include assets like debt securities, convertible securities, and equity and preference shares held in a relatively equal proportion. The objectives of balanced funds are to reward investors with a regular income, moderate capital appreciation and at the same time minimizing the risk of capital erosion. Balanced funds are appropriate for conservative investors having a long term investment horizon. b. Growth-and-Income Funds - Funds that combine features of growth funds and income funds are known as Growth-and-Income Funds. These funds invest in companies having potential for capital appreciation and those known for issuing high dividends. The level of risks involved in these funds is lower than growth funds and higher than income funds. c. Asset Allocation Funds - Mutual funds may invest in financial assets like equity, debt, money market or non-financial (physical) assets like real estate, commodities etc.. Asset allocation funds adopt a variable asset allocation strategy that allows fund managers

to switch over from one asset class to another at any time depending upon their outlook for specific markets. In other words, fund managers may switch over to equity if they expect equity market to provide good returns and switch over to debt if they expect debt market to provide better returns. It should be noted that switching over from one asset class to another is a decision taken by the fund manager on the basis of his own judgment and understanding of specific markets, and therefore, the success of these funds depends upon the skill of a fund manager in anticipating market trends.

6. Commodity Funds
Those funds that focus on investing in different commodities (like metals, food grains, crude oil etc.) or commodity companies or commodity futures contracts are termed as Commodity Funds. A commodity fund that invests in a single commodity or a group of commodities is a specialized commodity fund and a commodity fund that invests in all available commodities is a diversified commodity fund and bears less risk than a specialized commodity fund. "Precious Metals Fund" and Gold Funds (that invest in gold, gold futures or shares of gold mines) are common examples of commodity funds.

7. Real Estate Funds

Funds that invest directly in real estate or lend to real estate developers or invest in shares/securitized assets of housing finance companies, are known as Specialized Real Estate Funds. The objective of these funds may be to generate regular income for investors or capital appreciation.

8. Exchange Traded Funds (ETF) Exchange Traded Funds provide investors with combined benefits of a closed-end and an open-end mutual fund. Exchange Traded Funds follow stock market indices and are traded on stock exchanges like a single stock at index linked prices. The biggest advantage offered by these funds is that they offer diversification, flexibility of holding a single share (tradable at index linked prices) at the same time. Recently introduced in India, these funds are quite popular abroad.

9. Fund of Funds
Mutual funds that do not invest in financial or physical assets, but do

invest in other mutual fund schemes offered by different AMCs, are known as Fund of Funds. Fund of Funds maintain a portfolio comprising of units of other mutual fund schemes, just like conventional mutual funds maintain a portfolio comprising of equity/debt/money market instruments or non financial assets. Fund of Funds provide investors with an added advantage of diversifying into different mutual fund schemes with even a small amount of investment, which further helps in diversification of risks. However, the expenses of Fund of Funds are quite high on account of compounding expenses of investments into different mutual fund schemes. * Funds not yet available in India

Risk Heirarchy of Different Mutual Funds

Thus, different mutual fund schemes are exposed to different levels of risk and investors should know the level of risks associated with these schemes before investing. The graphical representation hereunder provides a clearer picture of the relationship between mutual funds and levels of risk associated with these funds:

ADVANTAGES OF MUTUAL FUND :S. No. 1. Advantage Particulars

2.

3.

4.

5.

6.

7.

8.

Mutual Funds invest in a well-diversified portfolio of Portfolio securities which enables investor to hold a diversified Diversification investment portfolio (whether the amount of investment is big or small). Fund manager undergoes through various research Professional works and has better investment management skills Management which ensure higher returns to the investor than what he can manage on his own. Investors acquire a diversified portfolio of securities even with a small investment in a Mutual Fund. The risk Less Risk in a diversified portfolio is lesser than investing in merely 2 or 3 securities. Low Due to the economies of scale (benefits of larger Transaction volumes), mutual funds pay lesser transaction costs. Costs These benefits are passed on to the investors. An investor may not be able to sell some of the shares Liquidity held by him very easily and quickly, whereas units of a mutual fund are far more liquid. >Mutual funds provide investors with various schemes with different investment objectives. Investors have the Choice of option of investing in a scheme having a correlation Schemes between its investment objectives and their own financial goals. These schemes further have different plans/options Funds provide investors with updated information pertaining to the markets and the schemes. All material Transparency facts are disclosed to investors as required by the regulator. Investors also benefit from the convenience and flexibility offered by Mutual Funds. Investors can switch their holdings from a debt scheme to an equity Flexibility scheme and vice-versa. Option of systematic (at regular intervals) investment and withdrawal is also offered to the investors in most open-end schemes.

9. Safety

Mutual Fund industry is part of a well-regulated investment environment where the interests of the investors are protected by the regulator. All funds are registered with SEBI and complete transparency is forced.

DISADVANTAGES OF MUTUAL FUND

S. Disadvantage No. Costs Control Not in the 1. Hands of an Investor

Particulars

Investor has to pay investment management fees and fund distribution costs as a percentage of the value of his investments (as long as he holds the units), irrespective of the performance of the fund. The portfolio of securities in which a fund invests is a No decision taken by the fund manager. Investors have no 2. Customized right to interfere in the decision making process of a Portfolios fund manager, which some investors find as a constraint in achieving their financial objectives. Many investors find it difficult to select one option from Difficulty in the plethora of funds/schemes/plans available. For this, Selecting a 3. they may have to take advice from financial planners in Suitable order to invest in the right fund to achieve their Fund Scheme objectives.

PERFORMANCE OF MUTUAL FUNDS IN INDIA

The performance of mutual funds in India from the day the concept of mutual fund took birth in India. The year was 1963. Unit Trust of India invited investors or rather to those who believed in savings, to park their money in UTI Mutual Fund. For 30 years it goaled without a single second player. Though the 1988 year saw some new mutual fund companies, but UTI remained in a monopoly position. The performance of mutual funds in India in the initial phase was not even closer to satisfactory level. People rarely understood, and of course investing was out of question. But yes, some 24 million shareholders was accustomed with guaranteed high returns by the begining of liberalization of the industry in 1992. This good record of UTI became marketing tool for new entrants. The expectations of investors touched the sky in profitability factor. However, people were miles away from the praparedness of risks factor after the liberalization. The Assets Under Management of UTI was Rs. 67bn. by the end of 1987. Let me concentrate about the performance of mutual funds in India through figures. From Rs. 67bn. the Assets Under Management rose to Rs. 470 bn. in March 1993 and the figure had a three times higher performance by April 2004. It rose as high as Rs. 1,540bn. The net asset value (NAV) of mutual funds in India declined when stock prices started falling in the year 1992. Those days, the market regulations did not allow portfolio shifts into alternative investments. There were rather no choice apart from holding the cash or to further continue investing in shares. One more thing to be noted, since only closed-end funds were floated in the market, the investors disinvested by selling at a loss in the secondary market. The performance of mutual funds in India suffered qualitatively. The 1992 stock market scandal, the losses by disinvestments and of course the lack of transparent rules in the whereabout rocked confidence among the investors. Partly owing to a relatively weak stock market performance, mutual funds have not yet recovered, with funds trading at an average

discount of 1020 percent of their net asset value. The supervisory authority adopted a set of measures to create a transparent and competitve environment in mutual funds. Some of them were like relaxing investment restrictions into the market, introduction of open-ended funds, and paving the gateway for mutual funds to launch pension schemes. The measure was taken to make mutual funds the key instrument for longterm saving. The more the variety offered, the quantitative will be investors. At last to mention, as long as mutual fund companies are performing with lower risks and higher profitability within a short span of time, more and more people will be inclined to invest until and unless they are fully educated with the dos and donts of mutual funds.

ASSOCIATION OF MUTUAL FUNDS IN INDIA (AMFI)

With the increase in mutual fund players in India, a need for mutual fund association in India was generated to function as a non-profit organisation. Association of Mutual Funds in India (AMFI) was incorporated on 22nd August, 1995. AMFI is an apex body of all Asset Management Companies (AMC) which has been registered with SEBI. Till date all the AMCs are that have launched mutual fund schemes are its members. It functions under the supervision and guidelines of its Board of Directors. Association of Mutual Funds India has brought down the Indian Mutual Fund Industry to a professional and healthy market with ethical lines enhancing and maintaining standards. It follows the principle of both protecting and promoting the interests of mutual funds as well as their unit holders. The objectives of Association of Mutual Funds in India The Association of Mutual Funds of India works with 30 registered AMCs of the country. It has certain defined objectives which juxtaposes the guidelines of its Board of Directors. The objectives are as follows: This mutual fund association of India maintains a high professional and ethical standards in all areas of operation of the industry. It also recommends and promotes the top class business practices and code of conduct which is followed by members and related people engaged in the activities of mutual fund and asset management. The agencies who are by any means connected or involved in the field of capital markets and financial services also involved in this code of conduct of the association. AMFI interacts with SEBI and works according to SEBIs guidelines in the mutual fund industry.

Association of Mutual Fund of India do represent the Government of India, the Reserve Bank of India and other related bodies on matters relating to the Mutual Fund Industry.

It develops a team of well qualified and trained Agent distributors. It implements a programme of training and certification for all intermediaries and other engaged in the mutual fund industry. AMFI undertakes all India awarness programme for investors inorder to promote proper understanding of the concept and working of mutual funds. At last but not the least association of mutual fund of India also disseminate informations on Mutual Fund Industry and undertakes studies and research either directly or in association with other bodies.

The sponsorers of Association of Mutual Funds in India Bank Sponsored SBI Fund Management Ltd. BOB Asset Management Co. Ltd. Canbank Investment Management Services Ltd. UTI Asset Management Company Pvt. Ltd. Institutions GIC Asset Management Co. Ltd. Jeevan Bima Sahayog Asset Management Co. Ltd. Private Sector Indian: BenchMark Asset Management Co. Pvt. Ltd. Cholamandalam Asset Management Co. Ltd. Credit Capital Asset Management Co. Ltd. Escorts Asset Management Ltd. JM Financial Mutual Fund Kotak Mahindra Asset Management Co. Ltd. Reliance Capital Asset Management Ltd. Sahara Asset Management Co. Pvt. Ltd Sundaram Asset Management Company Ltd. Tata Asset Management Private Ltd.

Predominantly India Joint Ventures: Birla Sun Life Asset Management Co. Ltd. DSP Merrill Lynch Fund Managers Limited HDFC Asset Management Company Ltd. Predominantly Foreign Joint Ventures: ABN AMRO Asset Management (I) Ltd. Alliance Capital Asset Management (India) Pvt. Ltd. Deutsche Asset Management (India) Pvt. Ltd. Fidelity Fund Management Private Limited Franklin Templeton Asset Mgmt. (India) Pvt. Ltd. HSBC Asset Management (India) Private Ltd. ING Investment Management (India) Pvt. Ltd. Morgan Stanley Investment Management Pvt. Ltd. Principal Asset Management Co. Pvt. Ltd. Prudential ICICI Asset Management Co. Ltd. Standard Chartered Asset Mgmt Co. Pvt. Ltd. Association of Mutual Funds in India Publications AMFI publices mainly two types of bulletin. One is on the monthly basis and the other is quarterly. These publications are of great support for the investors to get intimation of the knowhow of their parked money. The mailing address of Association of Mutual Funds in India Association of Mutual Funds in India 106, Free Press House, Free Press Journal Marg, Nariman Point, Mumbai - 400 021, India. Telephone : 91-22-5637 39 07 / 5637 39 08 Fax : 91-22-5637 3909

To choose the right Mutual Fund scheme

Once you are comfortable with the basics, the next step is to understand your investment choices, and draw up your investment plan relevant to your requirements. Before investing in Mutual Funds, the following steps must be given due weightage to decide on the right type of scheme: 1. Identifying your Investment Objective 2. Selecting the right Scheme Category 3. Selecting the right Mutual Fund 4. Evaluating the Portfolio

A) Identifying your Investment Objective

Your financial goals will vary, based on your age, lifestyle, financial independence, family commitments, level of income and expenses, among many other factors. Therefore, the first step is to assess your needs. Begin by asking yourself these simple questions: Reason for investment: A) Regular income B) Need to buy a house, car, etc. C) Some major payment is due on some future date. D) Surplus cash which you want to invest.

Risk-taking capacity
The risk-taking capacity of individuals varies depending on various factors. You need to ask yourself as to till what extent you are willing to bear losses in case of market losses in order to get higher returns.

Cash flow requirements

For example, you may require: regular Cash Flow like a monthly income A A lump sum after a fixed period of time for some specific need in the future

 No need, but want to earn better returns on cash lying with you or in the bank.

A) Selecting the scheme category

Investment Objective Short-term Investment Long term Capital Appreciation Regular Income Tax Saving Investment horizon 1- 6 months Over 3 years or more Flexible 3 yrs lock-in Ideal Instruments Liquid/Short-term plans Diversified Equity/ Balanced Funds Monthly Income Plans / Income Funds Equity-Linked Saving Schemes (ELSS)

B) Selecting the right Mutual fund:

Once you have a clear strategy in mind, you now have to choose which Mutual fund and scheme you want to invest in. The offer document of the scheme tells you its objectives and provides supplementary details like the track record of other schemes managed by the same Fund Manager. Some important factors to evaluate before choosing a particular Mutual Fund are: The track record of performance over that last few years in relation to the appropriate yardstick and similar funds in the same category. Do a scheme comparison available on our website to get a better idea about the returns. How well the Mutual Fund is organized to provide efficient, prompt and personalized service. Though this role is played more by the distributor/financial advisor and with BSDL you need not worry and can be assured of the best services The degree of transparency as reflected in frequency and quality of their communications.

A) Evaluation of portfolio:

The NAV or the net Assets Under Management (AUM) alone cannot give a correct picture of the MF. There are many other statistics that one needs to go into. Evaluation of equity fund involves analysis of: 1. 2. 3. 4. 5. 6. 7. 8. Risk Returns NAV AUM Volatility Expense ratio Portfolio diversification Fund manager's experience.

Good equity fund should provide consistent returns over a period of time. Also expense ratio should be within the prescribed limits. These days fund house charge around 2.50% as management fees. Evaluation of bond funds involve it's assets allocation analysis, return's consistency, it's rating profile, maturity profile, and it's performance over a period of time. The bond fund with ideal mix of corporate debt and gilt fund should be selected.

THE RISKS INVOLVED

Investment in Mutual Fund is subject to standard and specific risk factors.For scheme specific risk factors please refer to the full offer documents of the respective scheme. STANDARD RISK FACTORS: Mutual funds and securities are subject to market risks and there is no assurance and no guarantee that the objectives of the mutual fund will be achieved. The NAV of the units issued under the scheme may go up or down depending on the factors and forces affecting capital markets. Past performance of the Sponsor/AMC/Mutual fund does not indicate the future performance of the schemes of the Mutual Fund. LIC Nomura MF LIQUID FUND is the name of the scheme and does not in any manner indicate either the quality of the scheme or its future prospects and returns. The sponsor is not liable for any loss resulting from the operation of the scheme beyond the initial contribution made by it for an amount of rupees 2 Crores towards setting up of the Mutual Fund. Investors in the scheme are not being offered any assured /guaranteed returns.

RISK VS. RETURN

Points to Remember:
Do not speculate: Always evaluate risk-taking capacity. Do not chase returns: Because what goes up must come down. Do not put all eggs in one basket: Diversification reduces the risk. Do not stop working on Mutual Funds: Continuous evaluation of funds is a must. Do not time the market: Every time is good for investments. Mutual Funds are subject to market risks and there is no assurance that the fund objective will be achieved. NAVs fluctuate depending on forces affecting the Capital market. Past performance may or may not be sustained in the future. Returns are neither guaranteed nor assured. Think long-term while identifying stocks. In case of a correction in the markets never get into panic mode and sell. Always hold your investments if you are sure that the longterm potential of the company is the same.
EQUITY SCHEMES OTHER SCHEMES DIVID END DIVIDEND DISTRIBUTION TAX

SCHE MES SHOR T TERM CAPIT AL GAINS LONG TERM CAPIT AL GAINS SHOR T TERM CAPIT AL GAINS LONG TERM CAPIT AL GAINS EQUIT ALL Y LIQUID SCHE SCHE SCHEMES MES MES OTHER SCHEMES

TDS

TDS

RESIDEN T 11.33% INDIVISU AL/ HUF

NIL

NIL

10% AS (20% PER with SLAB indexizat ion)

NIL

TAX FREE

NIL

28.325% 14.1625% (25% (12.5%+10% +10% SURCHARGE SURCRGE +3% EDUCATION + 3% CESS) EDUCATI ON CESS) 28.325% 22.66% (25% (20% + 10% +10% SURCHARGE + SURCHAR 3% EDUCATION GE+ CESS) 3%EDUCA TION CESS) 28.325% 22.66% (25% +10% (20% + 10% SURCHAR SURCHARGE + GE+ 3% EDUCATION 3%EDUCA CESS) TION CESS) 28.325% 22.66% (25% +10% (20% + 10% SURCHAR SURCHARGE + GE+ 3% EDUCATION 3%EDUCA CESS) TION CESS) 14.1625% (12.5% + 10% SURCHARGE +3% EDUCATION CESS)

PARTNER SHIP 11.33% FIRMS

NIL

NIL

10% (20% 33.99% with indexizat ion)

NIL

TAX FREE

NIL

AOP/BOI

11.33%

NIL

NIL

10% AS (20% PER with SLAB indexizat ion)

NIL

TAX FREE

NIL

DOMESTI C 11.33% COMPANI ES

NIL

NIL

10% (20% 33.99% with indexizat ion)

NIL

TAX FREE

NIL

NRIs

11.33%

NIL

STCG 11.33% LTCGNIL

STCG30% 10% LTCGAS (20% 20% PER with (After SLAB indexizat providi ion) ng for indexati on)

TAX FREE

NIL

28.325% (25% +10% SURCHAR GE+ 3%EDUCA TION CESS)

Note: 1. STCG in equity and other schemes include 10% surcharge and 3% education cess. 2. Securities Transaction Tax is deducted @ 0.25% on redemption. 3. Mutual Fund investments are not liable to wealth tax. 4. Income-Tax benefits under Sec 80C are subject to a ceiling of Rs. 1, 00,000 of investment. 5. Service tax applicable on the AMC fees is charged @ 12.36%. 6. These figures are based on the latest finance bill and are only for Resident Indians. 7. Mutual Fund schemes do not attract any gift tax. 8. For tax-rates applicable to NRIs check the NRI investment section.

SET UP OF THE FUND:Life Insurance Corporation of India set up LIC Mutual Fund on 19th June 1989 and contributed Rs. 2 Crores towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. The settlor is not responsible for the management of the Trust. The settlor is also not responsible or liable for any loss or shortfall resulting in any of the schemes of LIC Mutual Fund. The Trustees of the LIC Mutual Fund have exclusive ownership of Trust Fund and are vested with general power of superintendence,discretion and management of the affairs of the Trust. LIC Mutual Fund Asset Management Company Ltd. was formed on 20th April 1994 in compliance with the Securities and Exchange Board of India (Mutual Funds) Regulations,1993. The Company commenced business on 29th April 1994. The Trustees of LIC Mutual Fund have appointed LIC Mutual Fund Asset Management Company Ltd. as the Investment Managers for LIC Mutual Fund. The Trustees are responsible for appointing a Custodian. The Trustees should also ensure that the activities of the Trust and the Asset Management Company are in accordance with the Trust Deed and the SEBI Mutual Fund Regulations as amended from time to time. The Trustees have also to report periodically to SEBI on the functioning of the Fund. The investors under the schemes can obtain a copy of the Trust Deed, the text of the concerned Scheme as also a copy of the Annual Report,on a written request made to the LIC Mutual Fund Asset Management Company Ltd. at a nominal price of Rs. 10/-.

INFORMATION ABOUT THE SPONSOR:Life Insurance Corporation of India (LIC), the sponsor of LIC Mutual Fund is one amongst the largest insurance companies in the world, serving over 32 crore policy holders and managing a Fund of over Rs. 560806.33 crore. There are very few organizations in India, which manage funds of this size. However beyond the initial contribution of Rs. 2 crore towards setting up of the corpus LIC is not responsible or liable for any loss or shortfall resulting from the operations of any scheme of the Mutual Fund.

INFORMATION ABOUT LIC MUTUAL FUND:LIC Mutual Fund was set up as a separate Trust by the Life Insurance Corporation of India having its central office at Yogakshema,Jeevan Bima Marg, Mumbai 400 021. The Trust deed dt.20.04.89 was modified through a deed of modification as mentioned in schedule III of SEBI (Mutual Fund) Regulations 1996. The Trust Deed will not be modified without the prior approval of SEBI and Unit holders approval will be obtained where it affects the interest of the Unit holders. LIC has made an initial contribution of Rs.2 crore towards Trust Fund. LIC Mutual Fund Trustee Co. Pvt. Ltd. Is formed and appointed to supervise the activities of the Fund. The Trustee company has entrusted the work of management of the Fund to LIC Mutual Fund Asset Management Company Ltd., which is a company promoted by Life Insurance Corporation of India with an authorized capital of Rs.25 crore. Further details regarding the set up are furnished in the following paragraphs:

A) Objective of LIC Mutual Fund:-

The basic objective of LIC Mutual Fund is to mobilize savings from investors who are spread in various parts of the country and have no easy access to the capital market, with a view to providing them a vehicle for investment of their funds to ensure safety, security, easy liquidity and reasonably good returns.

B) The Trustee Fees:In accordance with the Trust Deed constituting the Mutual Fund, and the Deed of Modification the Trustee Co. is entitled to receive in addition to the reimbursement of all costs, charges and expenses a fee not exceeding 0.01% of the weekly / daily average net assets or a sum of 25 lakh per annum whichever is higher subject to regulations.

C) Certificate of Registration:In accordance with the Regulation 9 of the Securities & Exchange Board of India Regulations, the LIC Mutual Fund has obtained a Certificate of Registration from SEBI on 9/5/94 vide Registration Code No.MF/012/94/5.

HOW DOES LIC Nomura Mutual Fund WORK ?

In accordance with the Securities & Exchange Borad of India (Mutual Fund) LIC Nomura Mutual Fund was set up as a separate Trust by the Life Insurance Corporation of India (who is the Sponsor). LIC has made an initial contribution of Rs.2 crores towards Trust Fund and has appointed a Board of Trustees to supervise the activities of the Fund. The Board of Trustees have entrusted the work of management of the Fund to Jeevan Bima Sahayog Asset Management Company Ltd., which is a company promoted by Life Insurance Corporation of India with an authorised capital of Rs.25 crores. JBS AMC is responsible for promoting different schemes on behalf of LIC Nomura Mutual Fund and also to manage them. The day to day operations of the AMC are looked after by experienced and qualified professionals, consisting of senior officials on deputation from Life Insurance Corporation of India as well as directly recruited officials of the AMC. LIC Nomura Mutual Fund has appointed Stock Holding Corporation of India as the custodian for the scheme to take delivery of all properties belonging to the Mutual Fund schemes and hold them in custody and separately from the assets of the custodian and their other clients.

LIC MF TO BE RENAMED AS LIC NOMURA MF

Life Insurance Corporation of India (LIC), being the sponsor of LIC Mutual Fund (Fund), has agreed to enter into a joint venture with Nomura Asset Management Strategic Investments Pte. Ltd. (Nomura), pursuant to which LIC Mutual Fund Asset Management Company Limited (LIC MF AMC) along with the current shareholders of LIC MF AMC (i.e., LIC, LIC Housing Finance Limited and GIC Housing Finance Limited) and the LIC Mutual Fund Trustee Company Private Limited (Trustee Company) along with the current shareholders of the Trustee Company (i.e., LIC, LIC Housing Finance Limited, LICHFL Care Homes Limited and GIC Housing Finance Limited), have entered into agreements with Nomura (the Joint Venture). Nomura is a wholly owned subsidiary of Nomura Asset Management Co., Ltd. In terms of the agreements, Nomura will invest through purchase and subscription to the extent of 35% of the total paid-up equity share capital of the LIC MF AMC and acquire 35% of the total paid-up equity share capital of the Trustee Company, subject to completion of necessary statutory and regulatory requirements in this regard. The balance 65% of the paid-up equity share capital of LIC MF AMC and the Trustee Company, will continue to be held by LIC and LIC Housing Finance Limited. On the completion of Nomuras investment in LIC MF AMC and the Trustee Company, LIC will continue to be the sole sponsor of the Fund and the Fund will be renamed as LIC NOMURA Mutual Fund. LIC MF AMC will be renamed as LIC NOMURA Mutual Fund Asset Management Company Limited and the Trustee Company will be renamed as LIC NOMURA Mutual Fund Trustee Company Private Limited. Further, the names of each of the schemes of the fund which currently are prefixed with LICMF will be prefixed with LIC NOMURA MF. Nomura is a company incorporated on 22 June 2009 and registered under the laws of Singapore.The unit holders who wish to redeem their investments with the Fund, the option to exit without any exit load can be exercised within the time period at the relevant applicable Net Asset Value.Further, the exit option is not available to the unit holders who have invested in any scheme of LIC MF AMC under the statutory lock-in period under Section 80 C of the Income Tax Act, 1961, namely, LICMF Tax Plan and LICMF Unit Linked Insurance Scheme.

INFORMATION ABOUT THE ASSET

MANAGEMENT COMPANY (AMC):In terms of Securities & Exchange Board of India (Mutual Fund) Regulations, an Asset Management Company called the LIC Mutual Fund Asset Management Company Ltd. With an authorized capital of Rs. 25 crore has been appointed, as approved by the Securities & Exchange Board of India, to manage the affairs of LIC Mutual Fund and operate the schemes of the Fund. Promoted by LIC, LICMFAMC was incorporated in April 1994 and has since been managing the schemes of LICMF.

A) AMC FeesIn accordance with the Investment Management Agreement and the SEBI regulations the AMC is entitled to receive investment management and advisory fee at the rate of 1.25%, per annum of the weekly average net assets outstanding in an accounting year, for net assets upto Rs. 100 crore, and at the rate of 1% per annum of the weekly average net assets outstanding in an accounting year, for net assets above Rs. 100 crore.

B) CUSTODIANS:LIC Mutual Fund has appointed Stock Holding Corporation of India situated at Mittal Court, B Wing, Nariman Point, Mumbai 400021,having SEBI Regulation no. IN/CUS/011 as per the custodian agreement with them, signed on 22/4/94 and HDFC Bank Ltd. Situated at Sandoz House, Dr. Annie Besant road, Worli, Mumbai 400 018, having SEBI Regulation no.IN/CUS/001 as per the custodian agreement with them, signed on 2/12/2002. LIC Mutual Fund may also appoint any other Depository as the custodian for the scheme.

Functions and Responsibilities of Custodians:The custodian is required to take delivery of all properties belonging to the Mutual Fund schemes and hold them in custody separately from the assets of the custodian and their other clients. The custodian will make efforts to have the properties of the Fund registered in the name of the Fund and will deliver them only as per the instructions of the AMC and on receipt of the consideration. The custodian shall collect, receive and

deposit in the account or accounts of the Fund with the bank, income, dividends, interest, rights and other payments of whatever kind with respect to the securities and other assets and items of a like nature of the Fund held by or to the order of the custodian and shall execute such ownership and other confirmations as are necessary. LIC Mutual Fund shall have the right to change the Custodians if at any point of time it is observed that the service of the appointed Custodians is not upto the mark.

C) REGISTRARS AND TRANSFER AGENTS:All the activities such as processing of applications, issuance of statement of account / unit certificate and other such activities are proposed to be carried out by our Registrar and Transfer agents Registrars M/s. Karvy Mutual Fund Services (A division of Karvy Computershare Pvt. Ltd.) The address of the Registrar isKarvy Plaza", H.No.8-2-596, Avenue 4, Street No.1, Banjara Hills, Hyderabad 500 034 The AMC shall have the right to change the Registrars and Transfer agent later. The Board of Trustees and the Board of AMC have ensured that the registrar and transfer agent M/s Karvy Computershare Pvt. Ltd. Has adequate capacity to discharge responsibilities with regard to processing of applications and dispatching unit certificates to unitholders within the time limit prescribed in the Regulations and also has sufficient capacity to handle investor complaints.

D) AUDITOR:M/s. Shah Gupta & Co., Chartered Accountants, 38, Bombay Mutual Building, Fort, Mumbai 400 001 LIC Mutual Fund shall review the appointment of Auditors after every three years or at such time as may be deemed fit in the opinion of the Board.

E) BANKERS:Presently HDFC Bank Ltd., Corporation Bank, Kotak Mahindra Bank, ABN Amro Bank, Standard Chartered Bank, Union Bank of India and

AXIS Bank are the Bankers to the schemes. The AMC reserves the right to change the Banker or introduce additional banker/s to the scheme at a later date.

OVERVIEW OF ECONOMY :
The Indian economy grew by 7.4 per cent in FY2009-10, above the expected growth of 7.2 per cent. On global economic slowdown, the GDP had moderated to 6.7 per cent in 2008-09 after recording a growth rate of 9 per cent in the three preceding years. The economic growth in FY10 was backed mainly by the manufacturing output that grew 16.3 percent yo-y and the surprised farm output of 0.7% though the service sector growth slowed down. In 2009-10, fourteen out of seventeen industries achieved higher growth than in the previous year 2008-09. Only three sectors namely the food products, beverages, tobacco & related products and jute textiles have continued to suffer from discernibly low growth in output. Core sectors grew at a satisfactory rate of 5.5 percent in 2009-10 as compared to 3.3 percent growth in the previous fiscal. The growth was mainly on account of the cement sector followed by coal and power sectors. Inflation had been the main area of concern to the government and the Reserve Bank of India. The average annual inflation based on the wholesale price index (WPI) in fiscal 2009-10 was lower at 3.7 per cent,as compared with a 14-year high of 8.4 per cent recorded in 2008-09. In the last quarter of the FY10, the WPI inflation crossed the nine per cent mark. The upward pressure on prices of food articles and fuel commodities pushed up the aggregate price level of the economy. Indian industry recovered substantially in the later half of 2009-10. The Index of Industrial Production (IIP) figures available for the entire fiscal shows industrial production register growth of 10.4 percent as against 2.8 percent during the same period of 2008-09. At the disaggregated level, all three sectors, i.e. mining, electricity and manufacturing witnessed a perceptible growth during the year 2009-10. The manufacturing sector, in particular, contributed significantly to this overall strong performance with a comprehensive growth of 10.9 percent during the period. As per use, based classification, capital goods industry led the frontier attaining growth of 19.2 percent during 2009-10. The consumer goods sector secured a robust growth of 7.4 percent on account of consumer durables segment.

The RBI has raised key rate twice since March 19, 2010 by a total 50 basis points citing inflationary pressures and an improving economy. Indian merchandise trade managed to recover from the severe impact of global turmoil. Though the Indian exports showed a growth of 54% in March 2010 against 33% in March 2009, for the financial year 2009-10 Indian exports contracted by ( -) 4.7 percent while the growth figure was positive 3.4 percent during 2008-09. Capital flows continued to remain buoyant throughout the year 200910.During the year 2009-10 total foreign investments amounted to be USD 66.5 billion as against USD 21.3 billion recorded during the same period last year. Due to this Indias foreign exchange reserves increased by US$ 27.1 billion during 2009-10 to reach US$ 279.1 billion at the end of March 2010. The INR closed at Rs 44.80 per US $ as on 31st March10 as against Rs 50.73 per US $ as on 31st March 2009 appreciating 12.86%. This was mainly due to the weakening of dollar due to weak US economy and huge inflow of foreign funds into the Capital market, speculating importers increasing their purchases of foreign currency to make payments. The price of Brent Crude closed at US $ 77.88 a barrel at the end of 31st March 2010, up by 67% from 31st March 2009, the price then being US$46.63 a barrel.

PERFORMANCE OF THE FUND

LIC Mutual Fund Asset Management Company Ltd. (LICMF AMC Ltd.) maintained its out- performance in 2009-10 on the back of a superlative performance in 2008-09. The Average Asset Under Management (AAUM) of the Fund grew by 83% to Rs.42304 crore during 2009-10 as against the growth rate of 51.5% registered by the Mutual Fund Industry. LICMF AMC Ltd. Improved its market share of AAUM by over 1% to 5.66% as at March

2010. LICMF AMC Ltd. stood at number 6 among 38 mutual funds in the industry on AAUM basis. Out of the 26 ongoing schemes, continuous sale and repurchase is available under 18 open-ended schemes. In the financial year ended 31st March 2010, LICMF made a gross mobilisation of Rs.990716.03 crores as against Rs.364925.61 crores in the previous year showing a growth rate of 171.48%. The total number of investors during the year stood at 474629. The distribution network of LICMF has also grown in strength through new addition of Chief Agents, Marketing Associates and Businesss Associates as at 31/03/2010. During the year LICMF AMC Ltd. Opened four new Area Offices at Pune, Lucknow, Dehradun and Madurai taking the total number of Area Offices to 26, besides increasing the number of Businesss centres to 102 for further penetration into the untapped semiurban and retail market. During the year dividends were distributed under debt and debt oriented schemes. Dividends declared under various schemes during the year 2009-10 have been shown in Annexure A.

AWARDS :
For the 12 months period ending October 2009, Mr. Ashish Kumar, Fund Manager of Debt schemes of the Fund was chosen as the Fund Manager of the Year Debt by the Businesss Standard Newspaper. The Fund also maintained its track record of winning accolades in the annual ICRA Mutual Fund Awards with : LICMF Floating Rate Fund winning two SEVEN STAR GOLD AWARDS and LICMF Saving Plus Fund winning 1 SEVEN STAR GOLD AWARD; LICMF Income Plus Fund and LICMF Liquid Fund won a FIVE STAR FUND AWARD each, in the Award function held on 9th February 2010. FIVE STAR AWARDS are given to Funds whose performance exceeds the category average by 2 standard deviations. Not more than 2 or 3 funds qualify for such awards in each Fund Product category. SEVEN STAR AWARDS, the highest awards by ICRA, are given to the Best performing funds from amongst the 5-STAR category. The stellar performance of the individual debt schemes of LIC Mutual Fund was crowned by the Fund being awarded the STAR FUND HOUSE OF THE YEAR DEBT in the ICRA Mutual Fund Awards 2010.

RATINGS UPGRADE
The rating of LICMF Liquid Fund which is amongst the top performing Liquid Funds in the Mutual Fund Industry was upgraded by two notches by Fitch Ratings from AA to AAA MMF (Ind) on 19th March, 2010. The Fund already had a rating of MFA1+ from ICRA and with the rating upgrade by Fitch, the fund has the highest rating from two independent rating agencies.

ON-GOING SCHEMES
The salient features of live schemes are detailed in Annexure B. Performance Review of on going schemes is given in Annexure C.

FUTURE OUTLOOK OF THE FUND

LICMF has performed impressively over the last 5 years. In the year gone

by the operating environment has become more challenging with increasing competition and tougher regulatory oversight. The Fund has drawn up ambitious growth plans and it is hoped that with the operationalisation of the proposed joint venture with Nomura Asset Management Strategic Investments Plc. Ltd., a wholy owned subsidiary of Nomura Asset Management Co. Ltd., the respected global giant from Japan, will successfully execute its growth plans.

FUNCTIONS AND RESPONSIBILITIES OF CONSTITUENTS OF THE FUND VIZ.SPONSORS AND TRUSTEES

Life Insurance Corporation of India, the settlor, set up LIC Mutual Fund on 20th April 1989 and contributed Rs.2 crore towards the corpus of the Fund. LIC Mutual Fund was constituted as a Trust in accordance with the provisions of the Indian Trust Act, 1882. The settlor is not responsible for the management of the Trust. The settlor is also not responsible or liable for any loss or shortfall resulting in any of the schemes of LIC Mutual Fund. The Trustees of the LIC Mutual Fund have exclusive ownership of Trust Fund and are vested with general power of superintendence, discretion and management of affairs of the Trust. LIC Mutual Fund Asset Management Company Ltd., was formed on 20th April 1994 in compliance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1993. The Company commenced Businesss on 29th April 1994. The Trustees of LIC Mutual Fund have appointed LIC Mutual Fund Asset Management Company Ltd. as the Investment Manager to LIC Mutual Fund. The Trustees are responsible for appointing Custodians. The Trustees should also ensure that the activities of the Trust and the Asset Management Company are in accordance with the Trust Deed and the SEBI Mutual Fund Regulations as amended from time to time. The Trustees have also to report periodically to SEBI on the functioning of the Fund. The investors under the Schemes can obtain a copy of the Trust Deed, the text of the Scheme concerned as also a copy of the Annual Report, on a request made to the LIC Mutual Fund Asset Management Company Limited.

An nexure B

LIC MUTUAL FUND SCHEMES

Following are the various Open-Ended LIC MF schemes / Plans which we will study one by one:-

OPEN ENDED SCHEMES 1. LICMF UNIT LINKED INSURANCE SCHEME

Launched on 19th June 1989 as open-ended Insurance Linked Tax saving scheme named as Dhanraksha 89. Renamed as LICMF UNIT LINKED INSURANCE SCHEME.

The investment objective of the scheme is to generate long- term capital appreciation and offer tax benefit as well as additional benefits of a life insurance cover and free accident insurance cover. The basis and policy of investment underlying the scheme is to invest in a mix of fixed income securities, equity & equity related instruments and money market instruments. Two options available (a) Single Premium 5 /10 years (b) Regular Contribution 10/15 years. Both the options are under Dividend Reinvestment Plan. Tax rebate u/s 80 C and capital gains tax benefits u/s 48 and 112 of the IT act of 1961.

Entry load Nil Exit load Nil

Minimum Target Amount - (a) Single Premium : Rs.10000/(b) Regular Premium : Rs.10000/- under 10-year term, Rs.15000/under 15-year term, Rs.12000/- under monthly SIP 10-year term, Rs.18000/- under monthly SIP 15-year term. Minimum Investment Amount - Regular Premium : Monthly Rs.100/- , Half Yearly Rs.500/- and Yearly Rs.1000/- Single Premium:Rs.10000/Initial lock in of 3 years and thereafter redemption available on any Businesss day

Maturity Bonus will be paid subject to payment of all renewal contributions in time. Single Premium Plan : 5% of target amount for 5-year term plan 10% of target amount for 10-year term plan. Regular Premium Plan : 10% of target amount for 10-year term plan 15% of target amount for 15-year term plan. Calculation and declaration of NAV, Sale and Repurchase price on a daily basis at the end of each Business day. Nomination facility available. Additional benefits of Systematic Investment Plan (SIP),) and Systematic Transfer Plan (STP)
Date : 27-Jun-11

Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst 1.10 0.34 1.71 -1.65 1 Month [%] 1.06 1.22 3.16 -0.40 3 Month [%] -0.10 1.88 7.65 -2.30 6 Month [%] -5.37 -4.12 4.55 -9.35 1 Year [%] 0.58 3.98 17.78 -4.21 3 Year [%] 4.69 11.47 22.39 0.69 5 Year [%] 7.12 11.66 19.04 3.13

Since INC [%] 10.82 12.28 23.61 -1.80

Asset Allocation

1.LICMF BALANCED FUND

Launched on 1st January 1991 as an open ended scheme named as Dhanasahayog.

Renamed as LICMF BALANCED FUND.

 The investment objective of the scheme is to provide regular returns and capital appreciation as per the selection of plan by investing in equities and debt.

Options Available (i) Dividend Option (payout and reinvestment) (ii) Growth Option. The basis and policy of investment underlying the scheme is to invest in a mix of fixed income securities, equity & equity related instruments and money market instruments. Entry load Nil Exit load 1% if exit within 1 year from the date of allotment of units. Minimum investment of Rs.1000/- and thereafter in the multiple of Re 1/-. Calculation and declaration of NAV, Sale and Repurchase price on a daily basis at the end of each Business day.

Nomination facility available. Additional benefits of Systematic Investment Plan (SIP), Systematic

Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).
Date : 27-Jun-11

Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst 1.18 0.34 1.71 -1.65 1 Month [%] 1.45 1.22 3.16 -0.40 3 Month [%] 1.70 1.88 7.65 -2.30 6 Month [%] -6.86 -4.12 4.55 -9.35 1 Year [%] 4.07 3.98 17.78 -4.21 3 Year [%] 5.54 11.47 22.39 0.69 5 Year [%] 8.02 11.66 19.04 3.13

Since INC [%] 7.37 12.28 23.61 -1.80

Asset Allocation

1.LICMF EQUITY FUND

Launched on 11th January 1993, named DHANVIKAS (1) as a five year close ended and Pure Growth Oriented Scheme. Made open-ended from 16th April 1998. The Scheme has two options: i. Dividend option, and, ii. Growth option. Under Dividend option investor can choose either dividend payout or dividend reinvestment.

The investment objective of the scheme is to distribute dividend out of the distributable surplus and generate capital appreciation as per the selection of the plan. The basis and policy of investment underlying the scheme is to invest in equity & equity-related instruments and a small portion in debt and money market instruments.

Entry load Nil Exit load 1% if exit within 1 year from the date of allotment of units. Minimum investment of Rs.2000/-.

Calculation and declaration of NAV, Sale and Repurchase Prices on a daily basis at the end of each Business day.

Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP),Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).
Date : 27-Jun-11

Performance(%)

1 Week [%] 1.70 0.21 2.18 -3.17

1 Month [%] 1.37 1.20 5.79 -2.16

3 Month [%] -1.15 1.65 10.12 -4.51

6 Month [%] -10.41 -8.29 4.07 -23.24

1 Year [%] 1.38 1.38 15.50 -29.00

3 Year [%] 7.99 10.95 25.85 -23.59

5 Year [%] 9.74 12.39 25.93 -7.86

Since INC [%] 9.06 12.62 47.53 -24.84

Scheme Return Category Avg Category Best Category Worst

Asset Allocation

1.LICMF GROWTH FUND

Launched on 21st July 1994, as a five-year close ended and Pure

Growth Oriented Scheme with the name as Dhanasamriddhi.

Made an Open-ended scheme from 1st September 1999. Renamed as LICMF GROWTH FUND.

The Scheme has two options: i. Dividend option, and, ii. Growth option. Under Dividend option investor can choose either dividend payout or dividend re-investment. The investment objective of the scheme is to distribute dividend out of the distributable surplus and generate capital appreciation as per the selection of the plan. The basis and policy of investment underlying the scheme is to invest in equity & equity-related instruments and a small portion in debt and money market instruments.

Entry load Nil Exit load 1% if exit within 1 year from the date of allotment of units. Minimum investment of Rs.2000/- and thereafter in multiples of Re1/-.

Calculation and declaration of NAV, Sale and Repurchase Prices on a daily basis at the end of each Business day. Nomination facility available. Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).

Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst 1.66 0.21 2.18 -3.17 1 Month [%] 0.82 1.20 5.79 -2.16 3 Month [%] -1.68 1.65 10.12 -4.51 6 Month [%] -10.70 -8.29 4.07 -23.24 1 Year [%] 1.41 1.38 15.50 -29.00 3 Year [%] 10.87 10.95 25.85 -23.59 5 Year [%] NA 12.39 25.93 -7.86

Date : 27-Jun-11

Since INC [%] -1.77 12.62 47.53 -24.84

Asset Allocation

1.LICMF TAX PLAN

Launched on 1st January 1997 as a 10-year close-ended Equity Linked Savings Scheme named Dhan Tax Saver 1997. The scheme was made open-ended w.e.f. 17th April 2000 under a new name LICMF TAX PLAN. The Scheme has two options: i. Dividend option (payout and reinvestment), and, ii. Growth option.

The investment objective of the scheme is to declare dividend and provide long-term capital growth along with tax rebates u/s 80C of the Income Tax Act 1961. The basis and policy of investment underlying the scheme is to invest in equity and equity related Instruments, and a small portion in Debentures and Money Market instruments. Entry load Nil

Exit load Nil

Minimum investment of Rs.500/- and further investments in multiples of Rs. 100/- thereafter. Initial lock in of 3 year and thereafter redemption available on any Business day. Calculation and declaration of NAV, Sale and Repurchase price on a daily basis at the end of each Business day.

Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).
Date : 27-Jun-11

Performance(%)

1 Week [%] 1.53 0.63 1.80 -1.81

1 Month [%] 1.38 1.41 3.56 -0.15

3 Month [%] -1.18 1.11 7.67 -3.29

6 Month [%] -9.39 -8.45 1.21 -14.19

1 Year [%] 2.48 1.51 9.80 -12.14

3 Year [%] 6.59 9.90 20.61 -7.28

5 Year [%] 6.00 11.18 18.25 5.33

Since INC [%] 9.74 16.36 46.04 -12.25

Scheme Return Category Avg Category Best Category Worst

Asset Allocation

1.LICMF MONTHLY INCOME PLAN

Launched on 1st April 1998 as a 5-year close-ended Income cum Growth Scheme as Dhanvarsha (12). Made open-ended with effect from 1st June 2003 and renamed as LICMF Monthly Income Plan.

Investment under four options: (i). Monthly Dividend option, (ii) Quarterly Dividend option, (iii). Yearly Dividend option, (iv). Growth option. Dividend option will have dividend payout and dividend re-investment facilities.

The investment objective of the scheme is to provide regular income by investing mainly in quality debt and money market instruments. It also seeks to generate long-term capital appreciation by investing in equity and equity related instruments. The basis and policy of investment underlying the scheme is to invest in quality debt instruments, equity and equity related in struments and money market instruments.

Entry load Nil Exit load 1% if exit within 1 year from the date of allotment of units. Minimum investment- Rs.5000/- and thereafter in multiples of Re.1/-.

Calculation of NAV and Repurchase price on a daily basis at the end of each Business day.

Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).

Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst Statistical Ratios \ 0.13 0.16 0.20 0.09 1 Month [%] 0.56 0.73 0.92 0.52 3 Month [%] 1.82 2.12 2.58 -6.03 6 Month [%] 3.73 4.09 4.70 -4.99 1 Year [%] 6.91 7.07 8.19 -2.36 3 Year [%] NA 6.16 7.69 -2.73 5 Year [%] NA 6.71 7.78 1.16

Date : 27-Jun-11

Since INC [%] 6.26 49.11 979.95 0.55

Asset Allocation

1.LICMF BOND FUND

Launched as an open-ended debt fund on 26th March 1999, closed for initial subscription on 8th May 1999. The Scheme reopened for subscription on 23rd June 1999. Further sale and repurchases are available on all Business days, except during book closure if any. The Scheme has two options viz., Dividend (payout and reinvestment) and Growth options. The primary investment objective of the scheme is to generate reasonable returns through investments mainly in fixed income securities. The basis and policy of investment underlying the scheme is to invest in a wide range of quality debt instruments including money market instruments.

 Entry load Nil Exit load 1% if exit within 1 year from the date of allotment of units.

Minimum investment of Rs 5000/-. Further investments in multiples of Rs.500/- thereafter. Calculation and declaration of NAV, Sale and Repurchase price on a daily basis at the end of each business day.

Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), and Automatic Withdrawal of Capital Appreciation (AWOCA). Under Dividend option, dividend to be declared out of the distributable surplus if any on quarterly basis i.e. as on 30th June, 30th September,31st December and 26th March.

Performance(%)

Date : 27-Jun-11

1 Week [%] 0.14 0.18 0.59 -0.38

1 Month [%] 0.67 0.76 1.36 -2.84

3 Month [%] 1.47 1.84 3.21 -8.55

6 Month [%] 2.72 3.43 5.12 -6.62

1 Year [%] 4.71 5.45 14.73 -8.29

3 Year [%] 6.56 5.91 14.70 -20.01

5 Year [%] 5.12 6.16 10.38 -9.50

Since INC [%] 7.06 6.53 68.61 -4.43

Scheme Return Category Avg Category Best Category Worst

Asset Allocation

1.LICMF GOVT. SECURITIES FUND

Launched as open-ended dedicated Government Securities (Gilt) Scheme on 15th November 1999, closed for initial subscription on 29th November 1999. The scheme reopened for subscription on 10th December 1999. Further sale and repurchases are available on all Business days, except during book closure if any. The primary investment objective of the scheme is to generate credit risk free and reasonable return through investments in sovereign securities. The basis and policy of investment underlying the scheme is to invest in securities issued by the Central and / or State Government or securities unconditionally guaranteed by Central and / or State Government for repayment of Principal and interest and also in money market instruments.

The scheme has two plans viz., Regular Plan and PF Plan. Under both the plans, two options i.e. Dividend option (payout and reinvestment) and Growth option are available.

Entry load Nil Exit load 1% if exit within 1 year from the date of allotment of units. Minimum investment- I) Regular Plan - Rs. 5000/II) PF Plan - Rs.10000/

Calculation and declaration of NAV, Sale and Repurchase price on a daily basis at the end of each business day. Under Dividend Option, dividend to be declared out of the distributable surplus if any on quarterly basis i.e. as on 30th June, 30th September, 31st December and 26th March.

Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA). REGULAR PLAN

Performance(%)

Date : 27-Jun-11

1 Week [%] 0.14 0.18 0.47 -0.14

1 Month [%] 0.71 0.96 1.82 0.16

3 Month [%] 1.39 1.07 2.39 -0.47

6 Month [%] 3.38 2.51 4.15 -0.41

1 Year [%] 5.35 4.42 9.91 0.09

3 Year [%] 3.88 6.65 14.97 -3.66

5 Year [%] 4.29 6.41 12.23 0.79

Since INC [%] 6.76 6.14 10.81 -1.41

Scheme Return Category Avg Category Best Category Worst

Asset Allocation

PF PLAN
Performance(%)
Date : 27-Jun-11

1 Week [%] 0.15 0.18 0.47 -0.14

1 Month [%] 0.72 0.96 1.82 0.16

3 Month [%] 1.39 1.07 2.39 -0.47

6 Month [%] 3.39 2.51 4.15 -0.41

1 Year [%] 5.33 4.42 9.91 0.09

3 Year [%] 3.38 6.65 14.97 -3.66

5 Year [%] 3.99 6.41 12.23 0.79

Since INC [%] 3.22 6.14 10.81 -1.41

Scheme Return Category Avg Category Best Category Worst

Asset Allocation

1.LICMF CHILDRENS FUND

An open-ended debt scheme for children launched on 26th September 2001. The investment objective of the scheme is to provide longterm capital appreciation. A free personal accident cover to unit holders equal to 10 times the amount invested subject to a maximum of Rs.3 lac. The basis and policy of investment underlying the scheme is to invest in a mix of quality debt, equity and money market instruments.

Beneficiary Child less than 18 years of age. Entry load Nil Exit load 1% if exit within 1 year from the date of allotment of units.

 Option: Growth

Minimum investment of Rs.5000/- and thereafter in multiples of Rs.500/Calculation and declaration of NAV, Sale and Repurchase Prices on a daily basis at the end of each business day.

Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).

Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst 0.44 0.10 0.60 -0.88 1 Month [%] -0.96 0.68 1.48 -0.96 3 Month [%] -2.95 1.18 4.07 -5.82 6 Month [%] -9.47 -0.51 4.56 -9.47 1 Year [%] -6.19 5.39 23.09 -6.19 3 Year [%] -5.37 8.72 13.23 -5.37 5 Year [%] -5.82 8.07 11.72 -5.82

Date : 27-Jun-11

Since INC [%] -0.10 8.84 15.05 -0.10

Asset Allocation

1.LICMF LIQUID FUND

Open ended Liquid Scheme launched on 11th March 2002. The investment objective of the scheme is to generate reasonable returns with low risk and high liquidity. The basis and policy of investment underlying the scheme is to invest in a mix of money market instruments and quality debt instruments. No exit/entry load.

The scheme has two options: i. Dividend option (payout and reinvestment), ii. Growth option

Minimum investment of Rs.25,000/-. Calculation and declaration of NAV, Sale and Repurchase Prices on a daily basis including holidays.

Nomination facility available. Additional benefits of Systematic Transfer Plan (STP).

DIVIDEND OPTION
Performance(%)
Date : 27-Jun-11

1 Week [%] 0.13 0.16 0.20 0.12

1 Month [%] 0.60 0.70 0.86 0.52

3 Month [%] 1.99 2.07 2.50 1.43

6 Month [%] 3.90 4.01 4.95 2.79

1 Year [%] 7.06 7.09 8.94 3.17

3 Year [%] 6.75 6.14 7.86 0.93

5 Year [%] 7.16 6.72 7.93 1.64

Since INC [%] 6.49 33.79 756.93 -98.93

Scheme Return Category Avg Category Best Category Worst

ASSET ALLOCATION

GROWTH OPTION
Performance(%)
Date : 27-Jun-11

1 Week [%] Scheme Return Category Avg Category Best Category Worst 0.15 0.16 0.20 0.12

1 Month [%] 0.66 0.70 0.86 0.52

3 Month [%] 2.03 2.07 2.50 1.43

6 Month [%] 3.96 4.01 4.95 2.79

1 Year [%] 7.19 7.09 8.94 3.17

3 Year [%] 6.77 6.14 7.86 0.93

5 Year [%] 7.28 6.72 7.93 1.64

Since INC [%] 6.70 33.79 756.93 -98.93

ASSET ALLOCATION

1.LICMF INDEX FUND

Open-ended index linked equity scheme launched on 14th November 2002. Choice of plans : Sensex Plan, Nifty Plan and Sensex Advantage Plan. Each Plan has two options: i. Dividend option (payout and reinvestment), ii. Growth option. The investment objective of the scheme is to distribute dividend out of the distributable surplus and generate capital appreciation as per the selection of the plan by investing in index stocks. The basis and policy of investment underlying the scheme is to invest in the respective index stocks

Entry load Nil

 Exit load 1% if exit within 1 year from the date of allotment of units. Minimum investment of Rs.2000/- and thereafter in multiples of Re.1/

Calculation and declaration of NAV, Sale and Repurchase Priceson a daily basis at the end of each Businesss day.

Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).

DIVIDEND FUND
Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst 2.12 1.79 2.14 -0.45 1 Month [%] 1.62 1.61 2.27 0.31 3 Month [%] -0.29 -0.33 1.40 -1.33 6 Month [%] -8.91 -8.81 -6.24 -9.72 1 Year [%] 3.28 2.87 5.67 0.11 3 Year [%] 7.56 7.62 14.18 -18.15 5 Year [%] 9.40 9.99 15.20 -11.32
Date : 27-Jun-11

Since INC [%] 12.53 11.08 31.85 -13.90

ASSET ALLOCATION

GROWTH FUND
Performance(%)
Date : 27-Jun-11

1 Week [%] 2.12 1.79 2.14

1 Month [%] 1.62 1.61 2.27

3 Month [%] -0.28 -0.33 1.40

6 Month [%] -8.93 -8.81 -6.24

1 Year [%] 3.26 2.87 5.67

3 Year [%] 7.56 7.62 14.18

5 Year [%] 9.42 9.99 15.20

Since INC [%] 16.74 11.08 31.85

Scheme Return Category Avg Category Best

Category Worst

-0.45

0.31

-1.33

-9.72

0.11

-18.15

-11.32

-13.90

ASSET ALLOCATION

1.LICMF SAVINGS PLUS FUND

Open ended Debt Fund launched on 9th May 2003 as SHORT TERM PLAN

Renamed as LICMF SAVINGS PLUS FUND.

The scheme has four options: (i). Daily Dividend option, (ii).Weekly Dividend Option, (iii). Monthly Dividend Option and, (iv).Growth option. In Dividend option investor can choose for dividend payout or dividend re-investment. The investment objective of the scheme is to generate reasonable returns. The basis and policy of investment underlying the scheme is to invest in quality short-term debt instruments.

Entry load - Nil. Exit load - Nil.

 Under Dividend Option the investor can opt for payout or reinvestment. Minimum investment of Rs 5,000/- and thereafter in multiples of Re.1/ Calculation and declaration of NAV, Sale and Repurchase Prices on a daily basis at the end of each Businesss day. Nomination facility available.

Additional benefits of Systematic Investment Plan (SIP), Systematic Withdrawal Plan (SWP), Systematic Transfer Plan (STP) and Automatic Withdrawal of Capital Appreciation (AWOCA).

DAILY DIVIDEND OPTION

Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst 0.13 0.16 0.20 0.09 1 Month [%] 0.56 0.73 0.92 0.52 3 Month [%] 1.82 2.12 2.58 -6.03 6 Month [%] 3.73 4.09 4.70 -4.99 1 Year [%] 6.91 7.07 8.19 -2.36 3 Year [%] NA 6.16 7.69 -2.73 5 Year [%] NA 6.71 7.78 1.16
Date : 27-Jun-11

Since INC [%] 6.26 49.11 979.95 0.55

ASSET ALLOCATION

WEEKLY DIVIDEND OPTION

Performance(%)
Date : 27-Jun-11

1 Week [%] 0.14 0.16 0.20

1 Month [%] 0.62 0.73 0.92

3 Month [%] 1.83 2.12 2.58

6 Month [%] 3.60 4.09 4.70

1 Year [%] 6.52 7.07 8.19

3 Year [%] NA 6.16 7.69

5 Year [%] NA 6.71 7.78

Since INC [%] 6.14 49.11 979.95

Scheme Return Category Avg Category Best

Category Worst

0.09

0.52

-6.03

-4.99

-2.36

-2.73

1.16

0.55

ASSET ALLOCATION OPTION

MONTHLY DIVIDEND OPTION

Performance(%)
Date : 27-Jun-11

1 Week [%] 0.14 0.16 0.20 0.09

1 Month [%] 0.61 0.73 0.92 0.52

3 Month [%] 1.88 2.12 2.58 -6.03

6 Month [%] 3.84 4.09 4.70 -4.99

1 Year [%] 6.74 7.07 8.19 -2.36

3 Year [%] 7.28 6.16 7.69 -2.73

5 Year [%] 6.85 6.71 7.78 1.16

Since INC [%] 5.94 49.11 979.95 0.55

Scheme Return Category Avg Category Best Category Worst

ASSET ALLOCATION OPTION

GROWTH DIVIDEND OPTION

Performance(%) 1 Week [%] Scheme Return Category Avg Category Best Category Worst 0.14 0.16 0.20 0.09 1 Month [%] 0.61 0.73 0.92 0.52 3 Month [%] 1.88 2.12 2.58 -6.03 6 Month [%] 3.82 4.09 4.70 -4.99 1 Year [%] 6.75 7.07 8.19 -2.36 3 Year [%] 6.50 6.16 7.69 -2.73 5 Year [%] 6.55 6.71 7.78 1.16
Date : 27-Jun-11

Since INC [%] 5.85 49.11 979.95 0.55

ASSET ALLOCATION

DATA REPRESENTATION
Have you ever invested/ interested to invest in mutual funds?

YES NO

135 65

.what is the most important reason for not investing in

mutual funds? (only for above 65 participants)

Lack of knowledge about mutual 25 funds Enjoys investing in other options 10

Its benefits are not enough to 18 drive you for investment No trust over the fund managers 12

 .where do you find yourself as a mutual fund investor?

28 Totally ignorant Partial knowledge of MFs 37 Aware of only scheme in which 46 invested Good knowledge of MFs 24

.where from you purchases mutual funds?

Directly from the AMCs Brokers only ( 33 large 28

intermediaries) Broker/ sub-brokers Other sources

59 15

ANALYSIS & INTERPRETATION OF THE DATA

1. (a) Age distribution of the Investors of BHOPAL

Age Group No. of Investors

<= 30 12

31-35 18

36-40 30

41-45 24

46-50 20

>50 16

Interpretation:
According to this chart out of 120 Mutual Fund investors of bhopal the most are in the age group of 36-40 yrs. i.e. 25%, the second most investors are in the age group of 41-45yrs i.e. 20% and the least investors are in the age group of below 30 yrs.

(b). Educational Qualification of investors of bhopal

Educational Qualification Graduate/ Post Graduate Under Graduate Others Total

Number of Investors 88 25 7 120

Interpretation:
Out of 120 Mutual Fund investors 71% of the investors in bhopal are Graduate/Post Graduate, 23% are Under Graduate and 6% are others (under HSC).

c). Occupation of the investors of bhopal

Occupation

No. of Investors

Govt. Service Pvt. Service Business Agriculture Others .

30 45 35 4 6

Interpretation:
In Occupation group out of 120 investors, 38% are Pvt. Employees, 25% are Businessman, 29% are Govt. Employees, 3% are in Agriculture and 5% are in others.

(d). Monthly Family Income of the Investors of bhopal. Income Group

<=10,000 10,001-15,000 15,001-20,000 20,001-30,000

No. of Investors
5

12 28 43

>30,000

32

Interpretation:
In the Income Group of the investors of bhopal, out of 120 investors, 36% investors that is the maximum investors are in the monthly income group Rs. 20,001 to Rs. 30,000, Second one i.e. 27% investors are in the monthly income group of more than Rs. 30,000 and the minimum investors i.e. 4% are in the monthly income group of below Rs. 10,000

(2) Investors invested in different kind of investments. Kind of Investments

Saving A/C

No. of Respondents 195 148 152 120 75 50 30 65

Fixed deposits Insurance Mutual Fund Post office (NSC) Shares/Debentu res Gold/Silver Real Estate Interpretation:

From the above graph it can be inferred

that out of 200 people, 97.5% people have invested in Saving

A/c, 76% in Insurance, 74% in Fixed Deposits, 60% in Mutual Fund, 37.5% in Post Office, 25% in Shares or Debentures, 15% in Gold/Silver and 32.5% in Real Estate.

3. Preference of factors while investing

Factors (a) Liquidity No. of Respondents 40 (b) Low Risk 60 (c) High Return 64 (d) Trust 36

Interpretation:
Out of 200 People, 32% People prefer to invest where there is High Return, 30% prefer to invest where there is Low Risk, 20% prefer easy Liquidity and 18% prefer Trust

4. Awareness about Mutual Fund and its

Response No. of Respondents

Yes 135

No 65

Operations

Interpretation:
From the above chart it is inferred that 67% People are aware of Mutual Fund and its operations and 33% are not aware of Mutual Fund and its operations.

5.

Source of information for customers

about Mutual Fund

Source of information Advertisement Peer Group Bank Financial Advisors No. of Respondents 18 25 30 62

Interpretation:
From the above chart it can be inferred that the Financial Advisor is the most important source of information about Mutual Fund. Out of 135 Respondents, 46% know about Mutual fund Through Financial Advisor, 22% through Bank, 19% through Peer Group and 13% through Advertisement.

6. Investors invested in Mutual Fund

Response No. of

Respondents YES NO Total 120 80 200

Interpretation:
Out of 200 People, 60% have invested in Mutual Fund and 40% do not have invested in Mutual Fund.

7. Reason for not invested in Mutual Fund

Reason No. of Respondents Not Aware Higher Risk Not any Specific Reason

65 5 10

Interpretation:
Out of 80 people, who have not invested in Mutual Fund, 81% are not aware of Mutual Fund, 13% said there is likely to be higher risk and 6% do not have any specific reason.

8. Investors invested in different Assets Management Co. (AMC) Name of AMC

LICMF UTI HDFC Reliance ICICI Prudential Kotak Others

No. of Investors 55 75 30 75 56 45 70

Interpretation:
In bhopal most of the Investors preferred UTI and Reliance Mutual Fund. Out of 120 Investors 62.5% have invested in each of them, only 46% have invested in SBIMF, 47% in ICICI Prudential, 37.5% in Kotak and 25% in HDFC.

9. Reason for invested in SBIMF Reason No. of Respondents

Associated with SBI Better Return Agents Advice 35 5 15

Interpretation:
Out of 55 investors of SBIMF 64% have invested because of its association with Brand SBI, 27% invested on Agents Advice, 9% invested because of better return.

10. Reason for not invested in SBIMF Reason No. of Respondents

Not Aware Less Return Agents Advice 25 18 22

Interpretation:
Out of 65 people who have not invested in SBIMF, 38% were not aware with SBIMF, 28% do not have invested due to less return and 34% due to Agents Advice.

11.

Preference

of

Investors

for

future

investment in Mutual Fund

Name of AMC
SBIMF UTI HDFC Reliance ICICI Prudential Kotak Others

No. of Investors 76 45 35 82 80 60 75

Interpretation:
Out of 120 investors, 68% prefer to invest in Reliance, 67% in ICICI Prudential, 63% in LICMF, 62.5% in Others, 50% in Kotak, 37.5% in UTI and 29% in HDFC Mutual Fund.

12. Channel Preferred by the Investors for Mutual Fund Investment

Channel Financial Advisor No. of Respondents 72 18 30 Bank AMC

Interpretation:
Out of 120 Investors 60% preferred to invest through Financial Advisors, 25% through AMC and 15% through Bank.

13. Mode of Investment Preferred by the Investors

Mode of Investment No. of Respondents One time Investment 78 Systematic Investment Plan (SIP) 42

Interpretation:
Out of 120 Investors 65% preferred One time Investment and 35 % Preferred through Systematic Investment Plan.

14. Preferred Portfolios by the Investors Portfolio

Equity Debt Balanced

No. of Investors
56 20 44

Interpretation:
From the above graph 46% preferred Equity Portfolio, 37% preferred Balance and 17% preferred Debt portfolio

15. Option for getting Return Preferred by the Investors

Option Dividend Payout Dividend Reinvestment No. of Respondents 25 10 85 Growth

Interpretation:
From the above graph 71% preferred Growth Option, 21% preferred Dividend Payout and 8% preferred Dividend

Reinvestment Option.

16. Preference of Investors whether to invest in Sectoral Funds Response No. of

Respondents Yes No 25 95

Interpretation:
Out of 120 investors, 79% investors do not prefer to invest in Sectoral Fund because there is maximum risk and 21% prefer to invest in Sectoral Fund.

MAJOR Findings
Findings
In BHOPAL in the Age Group of 36-40 years were more in numbers. The second most Investors were in the age group of 41-45 years and the least were in the age group of below 30 years. In BHOPAL most of the Investors were Graduate or Post Graduate and below HSC there were very few in numbers. In Occupation group most of the Investors were Govt. employees, the second most Investors were Private employees and the least were associated with Agriculture.

In family Income group, between Rs. 20,00130,000 were more in numbers, the second most were in the Income group of more than Rs.30,000 and the least were in the group of below Rs. 10,000.

About all the Respondents had a Saving A/c in Bank, 76% Invested in Fixed Deposits, Only 60% Respondents invested in Mutual fund. Mostly Respondents preferred High Return while investment, the second most preferred Low Risk then liquidity and the least

preferred Trust. Only 67% Respondents were aware about Mutual fund and its operations and 33% were not. Among 200 Respondents only 60% had invested in Mutual Fund and 40% did not have invested in Mutual fund. Out of 80 Respondents 81% were not aware of Mutual Fund, 13% told there is not any

specific reason for not invested in Mutual Fund and 6% told there is likely to be higher risk in Mutual Fund. Most of the Investors had invested in

Reliance or UTI Mutual Fund, ICICI Prudential has also good Brand Position among

investors, LICMF places after ICICI Prudential according to the Respondents. Out of 55 investors of LICMF 64% have invested due to its association with the Brand LIC, 27% Invested because of

Advisors Advice and 9% due to better return. Most of the investors who did not invested in LICMF due to not Aware of LICMF, the second most due to Agents advice and rest due to Less Return. For Future investment preferred second most the maximum Mutual ICICI

Respondents Fund, the

Reliance

preferred

Prudential, LICMF has been preferred after them. 60% Investors preferred to Invest through Financial Advisors, 25% through AMC

(means Direct Investment) and 15% through Bank.

65% preferred

One Time Investment and

35% preferred SIP out of both type of Mode of Investment. The most preferred Portfolio was Equity, the second most was Balance (mixture of both equity and debt), and the least preferred Portfolio was Debt portfolio. Maximum Number of Investors Preferred Growth Option for returns, the second most preferred Dividend Payout and then

Dividend Reinvestment.

Most of the Investors did not want to invest in Sectoral Fund, only 21% wanted to invest in Sectoral Fund.

Suggestions

The most vital problem spotted is of ignorance. Investors should be made aware of the benefits. Nobody will invest until and unless he is fully convinced. Investors should be made to realize that ignorance is no longer bliss and what they are losing by not investing.

Mutual funds offer a lot of benefit which no other single option could offer. But most of the people are not even aware of what actually a mutual fund is? They only see it as just another investment option. So the advisors should try to change their

mindsets. The advisors should target for more and more young investors. Young investors as well as persons at the height

of their career would like to go for advisors due to lack of expertise and time. Mutual Fund Company needs to give the training of the Individual Financial Advisors about the Fund/Scheme and its objective, because they are the main source to influence the investors.

Before making any investment Financial Advisors should first enquire about the risk tolerance of the investors/customers, their need and time (how long they want to invest). By considering these three things they can take the customers into

consideration.

Younger people aged under 35 will be a key new customer group into the future, so making greater efforts with younger

customers who show some interest in investing should pay off.

Customers with graduate level education are easier to sell to and there is a large untapped however, market advisors there. must To succeed sound

provide

advice and high quality.

Systematic Investment Plan (SIP) is one the innovative products launched by Assets Management companies very recently in the industry. SIP is easy for monthly

salaried person as it provides the facility of do the investment in EMI. Though most of the prospects and potential investors are not aware about the SIP. There is a large scope for the companies to tap the salaried persons.

Conclusion
Running a successful Mutual Fund requires complete understanding of the peculiarities of the Indian Stock Market and also the psyche of the small investors. This study has made an attempt to understand the financial behavior of

Mutual Fund investors in connection with the preferences of Brand (AMC), Products, Channels etc. I observed that many of people have fear of Mutual Fund. They think their money will not be secure in Mutual Fund. They need the knowledge of Mutual Fund and its related terms. Many of people do not have invested in mutual fund due to lack of awareness although they have money to invest. As the awareness and income is growing the number of mutual fund investors are also growing. Brand plays important role for the investment. People invest in those Companies where they have faith or they are well known with them. There are many AMCs in Dehradoon but only some are performing well due to Brand

awareness. Some AMCs are not performing well although some of the schemes of them are giving good return because of not awareness about Brand. Reliance, UTI, LICMF, ICICI

Prudential etc. they are well known Brand, they are performing well and their Assets Under

Management is larger than others whose Brand name are not well known like Principle,

Sunderam, etc. Distribution channels are also important for the investment in mutual fund. Financial Advisors are the most preferred channel for the

investment in mutual fund. They can change investors mind from one investment option to others. Many of investors directly invest their money through AMC because they do not have to pay entry load. Only those people invest directly who know well about mutual fund and its operations and those have time.

BIBLIOGRAPHY
NEWS PAPERS OUTLOOK MONEY TELEVISION CHANNEL (CNBC AAWAJ) MUTUAL FUND HAND BOOK FACT SHEET AND STATEMENT WWW.LICMF.COM WWW.MONEYCONTROL.COM WWW.AMFIINDIA.COM WWW.ONLINERESEARCHONLINE.COM WWW. MUTUALFUNDSINDIA.COM WWW.SCRIBD,COM

ANNEXURE

QUESTIONNAIRE
A study of preferences of the investors for investment in mutual funds.
1. Personal Details:

(a). Name:-

(b). Add: -

Phone:-

(c). Age:-

(d). Qualification:-

Graduation/PG

Under Graduate

Others

(e). Occupation. Pl tick ()

Govt. Ser

Pvt. Ser

Business

Agriculture

Others

(g). What is your monthly family income approximately? Pl tick ().

Up to Rs.10,000

Rs. 10,001 to 15000

Rs. 15,001 to 20,000

Rs. 20,001 to 30,000

Rs. 30,001 and above

2. What kind of investments you have made so far? Pl tick (). All applicable.

a. Saving account e. Post Office-NSC, etc

b. Fixed deposits f. Shares/Debentur es

c. Insurance g. Gold/ Silver

d. Mutual Fund h. Real Estate

3. While investing your money, which factor will you prefer? . (a) Liquidity (b) Low Risk (c) High Return (d) Trust

4. Are you aware about Mutual Funds and their operations? Pl tick (). Yes No

5. If yes, how did you know about Mutual Fund?

a. Advertisement

b. Peer Group

c. Banks

d. Financial Advisors

6. Have you ever invested in Mutual Fund? Pl tick (). No

Yes

7. If not invested in Mutual Fund then why?

(a) Not aware of MF (b) Higher risk (c) Not any specific reason

8. If yes, in which Mutual Fund you have invested? Pl. tick (). All applicable.

a. LICMF

b. UTI

c. HDFC

d. Reliance

e. Kotak

f. Other. specify

9. If invested in LICMF, you do so because (Pl. tick (), all applicable).

a. LICMF is associated with LIFE INSURANCE INDIA. b. They have a record of giving good returns year after year. c. Agent Advice

10. If NOT invested in LICMF, you do so because (Pl. tick () all applicable).

a. You are not aware of LICMF. b. LICMF gives less return compared to the others. c. Agent Advice

11. When you plan to invest your money in asset management co. which AMC will you prefer?

Assets Management Co. a. LICMF b. UTI c. Reliance d. HDFC e. Kotak f. ICICI

12. Which Channel will you prefer while investing in Mutual Fund?

(a) Financial Advisor

(b) Bank

(c) AMC

13. When you invest in Mutual Funds which mode of investment will you prefer? Pl. tick ().

a. One Time Investment

b. Systematic Investment Plan (SIP)

14. When you want to invest which type of funds would you choose?

a. Having only debt portfolio

b. Having debt & equity portfolio.

c. Only equity portfolio.

15. How would you like to receive the returns every year? Pl. tick ().

a. Dividend payout

b. Dividend reinvestment

c. Growth in NAV

16. Instead of general Mutual Funds, would you like to invest in sectorial funds? Please tick (). Yes No

BROUCHERS